MRKT 341 University of Nebraska-Lincoln (Simon) Exam 2 (Ch. 5-8)

Consumer Buyer Behavior

Buying behavior of final customers--individuals and households that buy goods and services for personal consumption.

Consumer Market

1. Made up of final consumers.
2. All individuals that buy/acquire goods for personal consumption.

What is the central question for marketers?

How do consumers respond to various marketing efforts the company might use?

What are the 8 marketing stimuli?

Product, price, place, promotion, economic, technological, social, cultural.

What are the 3 cultural factors?

Culture, subculture, social class.

Culture:

Most basic cause of person's wants and behaviors. Learned from family and other institutions.

Cultural Shifts

Marketers try to spot thsese to discover new products that might be wanted.

Subculture

Group of people w/ shared value systems based on common life experiences/situations.
Ex: Targeting Hispanic consumers w/ online advertisements; African Americans w/ "Brand New" Ford campaign.

Cross-cultural Marketing

Practice of including ethnic themes and cross-cultural perspectives within their mainstream marketing. Appeals to consumer similarities across subcultures (rather than differences).

Social Class

Relatively permanent and ordered divisions in a society whose members share similar values, interest, and behaviors.

What are the 7 social classes?

1. Upper Class
*Upper Uppers (1%): Social elite who live on inherited wealth; give large sums to charity; own multiple homes; send kids to nice schools.
*Lower Uppers (2%): Americans who have earned high income/wealth through exceptional ability; active in social/civic affairs; buy expensive homes/education/cars.
2. Middle Class
*Upper Middles (12%): Professionals, independent businesspersons, and corporate managers who possess neither family status nor unusual wealth; belive in education; joiners and highly civic minded; want "better things in life.
*Middle Class (32%): Average-pay white- and blue-collar workers who live "on the better side of town". Buy popular products to keep up w/ trends; better living means owning nice home in nice neighborhood w/ good school.
3. Working Class (38%): Those who lead a "working-class lifestyle" whatever their income, school background, or job. Depend heavility on relatives for economic/emotional support, advice on purchases, assitance in times of trouble.
4. Lower Class
*Upper Lowers (9%): Working poor. Although living standards just above poverty, strive toward higher class. Often lack education and poorly paid for unskilled work.
*Lower Lowers (7%): Visibly poor, often poorly educated unskilled laborers. Often out of work, some depend on public assistance. Tend to live day-to-day existence.

What social factors influence a consumers behavior?

Small groups, social networks, family, social roles and status.

Group

Two or more people who interact to accomplish individual or mutual goal.

Membership Groups

Groups that have direct influence and to which person belongs.

Reference Groups

Direct (face to face interactions) or indirect points of comparison or reference in forming person's attitudes or behavior.

Aspirational Group

One individual wishes belong. Ex: Young basketball player wants to be like LeBron James and play in NBA.

Work-of-Mouth Infuence

Impact of personal words/recommendations of trusted friends, associates, other consumers on buying behavior.
*92% of consumers trust recommendations from friends/family above any form of advertising.

Opinion Leader

Person w/in reference group who, because of special skills, knowledge, personality, exert social influence on others.

Buzz Marketing

enlisting/creating opinion leaders to serve as "brand ambassadors" who spread word about company's products.
Ex: Nike in Olympics w/ incandescent green/yellow shoes.

Online Social Networks

Online communities where people socialize/exchange information and opinions.
-Range from blogs (Consumerist, Gizmodo, Zenhabits) and message boards (Craigslist) to social media sites (Facebook, Twitter, Pinterest, Foursquare) and virtual worlds (Second Life and Everquest).
**Become part of consumers conversations and lives.

Family

Strongly influence behavior--wife vs. husband; mother vs. father.
Ex: Tide and Go-Gurt target stay at home dad b/c of changing households.

What Personal Characteristics influence buyer behavior?

Age and life-cycle stage, occupation, economic situation, lifestyle, personality and self-concept.

Occupation

blue-collar vs. businessman (rugged shirts vs. suits). Ex: Carhartt

Economic Situation

Watch trends in income, savings, interest rates.--Might cause companies to consider redesign, reposition, reprice products.

Lifestyle

Person's patter of living as expressed in his/her activities, interests, opinions.

Personality

Unique psychological characteristics that distinguish person/group.
--self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, aggressiveness.

Brand personality

Specific mix of human traits that may be attributed to particular brand. Ex: Gucci brand is associated w/ "class" and "sophistication". --Consumers more likely to choose brands w/ personalities that match their own.

Five Brand Personality Traits

Sincerity, excitement, competence, sophistication, ruggedness.

Four Major Psychological Factors:

1. Motivation
2. Perception
3. Learning
4. Beliefs and attitudes

Motive (drive)

Need that is sufficiently pressing to direct person to seek satisfaction of the need.

Sigmund Freud theory

Person's buying decisions affected by subconscious motives that even buyer may not fully understand.

Abraham Maslow theory

Human needs arranged in hierarchy w/ most pressing at bottom to least at top. From bottom to top:
1. Physiological (hunger, thirst)
2. Safety (security, protection)
3. Social (sense of belonging, love)
4. Esteem (self-esteem, recognition, status
5. Self-actualization (self-development, realization)

Perception

Process by which people select, organize, interpret information to form meaningful picture of the world.

What are the 3 perceptual processes?

1. Selective Attention: tendency for people to screen out most information exposed to--must work hard to attract their attention.
2. Selective distortion: Tendency of people to interpret info in way that will support what they already believe.
3. Selective retention: Consumers likely to remember good points made about brand they favor/forget good points made about competing brands.

Learning

Changes in individuals behavior arising from experience.
Ex: Buying Nikon camera and using it a lot--next time goes to buy product, chance they will look at Nikon is high.

Belief

Descriptive thought that person holds about something.

Attitude

Person's consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.--Liking or disliking something. Try to fit product into existing attitudes instead of change them.

Buyer Decision Process (5 Stages)

1. Need Recognition: recognize problem/need that is triggered by internal or external stimuli.
2. Information Search
3. Evaluation of alternatives
4. Purchase Decision: Attitudes of others and unexpected situational factors are factors that can come b/t purchase intention and decision.
5. Postpurchase Behavior: Consumer is satisfied or dissatisfied--depends on relationship b/t expectations and perceived performance.--Cognitive Dissonance

Cognitive Dissonance

Discomfort caused by postpurchase conflict.
Might feel uneasy about acquiring drawbacks of chosen brand and losing benefits of brand not purchased.

New Product

Good/service/idea perceived by potential customers as new.

Adoption Process

Mental process through which individual passes from first hearing about an innovation to final adoption.

Five Stages of Adoption Process

1. Awareness: consumer becomes aware of new product but lacks information about it.
2. Interest: Consumer seeks information about new product.
3. Evaluation: Consumer considers whether trying new product makes sense.
4. Trial: Consumer tries new product on small scale to improve his/her estimate of its value.
5. Adoption: Consumer decides to make full/regular use of new product.

Five Adopter Groups

1. Innovators: try new ideas at some risk.
2. Early adopters: Guided by respect; opinion leaders in their communities and adopt new ideas early but carefully.
3. Early mainstream: deliberate; although rarely are leaders, adopt new ideas before average person.
4. Late mainstream: skeptical; adopt innovation only after majority of people have tried it.
5. Lagging adopters: tradition bound; suspicious of changes and adopt innovation only when it has become something of tradition itself.

Five Influencing Characteristics of Rate of Adoption

1. Relative Advantage: Degree to which innovation appears superior to existing products.
2. Compatibility: Degree to which innovation fits values and experiences of potential consumres.
3. Complexity: Degree to which innovation is difficult to understand or use.
4. Divisibility: Degree to which innovation may be tried on limited basis.
5. Communicability: Degree to which results of using innovation can be observed or described to others.

Business Buyer Behavior

Buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

Business Buying Process

Decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands.

Derived Demand

Business demand that ultimately derives from the demand for consumer goods.
ex: Gore-Tex fabrics markets directly to buyers of outdoor apparel and other brands made from its fabrics--both brands win!

Supplier Development

Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

Three Types of Buying Situations

1. Straight Rebuy
2. Modified Rebuy
3. New Task

Straight Rebuy

Business buying situation in which buyer routinely reorders something without any modifications.
-Routine
-In maintain product quality; out find new ways to add value/expoloit dissatisfaction so buyer will consider them.

Modified Rebuy

Business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.
-In suppliers may become nervous/feel pressured to put best foot forward to protect account.
-Out suppliers see modified rebuy situation as opportunity to make better offer and gain new business.

New Task

Business buying situation in which the buyer purchases a product or service for the first time.

Systems selling (solutions selling)

Buying packaged solution to problem from single seller, thus avoiding all separate decisions involved in complex buying situation.
Ex: Delivering fun/safe experience for Six Flags guests requires careful/effective management of thousands of park assets across its 19 regional theme parks. IBM works hand in hand w/ Six Flags to provide not just software but complete solution.

Buying Center

Individuals/units that play role in purchase decision-making process.

Product Value Analysis

Carefully analyzing product's or service's components to determine if they can be redesigned and made more effectively/efficiently to provide greater value.

E-Procurement

Purchasing through electronic connections b/t buyers/sellers--usually online.

Ch. 5 Objective 1 Overview

1. Consumer market consists of individuals who buy goods/services for consumption.
2. Model of Consumer behavior--marketing stimuli/other forces enter consumer's "black box" which has two parts: buyer characteristics & decision process.
3. In box, inputs result in responses like attitudes and preferences in purchasing behavior.
4. Consumer buyer behavior influenced by four key sets of buyer characteristics: cultural, social, personal, psychological.--marketers can identify interested buyers/shape products that appeal to consumers needs.
5. Culture, subculture, social factors--affect product brand choice.
6. Buying behavior influenced by four major sets of psychological factors: motivation, perception, learning, beliefs and attitudes.

Ch. 5 Objective 2 Overview

Decision process when making purchase:
1. Need recognition
2. information search
3. Alternative eval
4. Purchase decision
5. Postpurchase behavior--satisfied or dissatisfied (take action).
*Marketer needs to understand behavior at each stage and influences that are operating.

Ch. 5 Objective 3 Overview

Adoption process is made of five stages:
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption

Diffusion Process
1. Innovators
2. Early adopters--usually are given most attention
3. Early majority
4. Later majority
5. Laggards

Ch. 5 Objective 4 Overview

Business market: comprises all organizations that buy goods and services for use in production of other products/service.
-Usually have fewer, larger buyers.
-Make decisions that vary w/ three types of buying situations:
1. Straigh rebuys
2. Modified rebuys
3. New taks
-Buying center
Marketer needs to know:
-Who are major buying center participants?
-What decisions do they exercise influence and to what degree?
-What is each participants eval criteria?
-Major environmental, organizational, interpersonal, individual influences on buying process.

Ch. 5 Objective Overview

Business buying decision process:
1. Problem recognition
2. General need description
3. Product specification
4. Supplier search
5. Proposal solicitation
6. Supplier Selection
7. Order-routine specification
8. Performance Review

Market Segmentation

Dividing market into smaller segments of buyers w/ distinct needs, characteristics, behaviors that might require separate marketing strategies or mixes.

Market Targeting

Evaluating each market segment's attractiveness and selecting one or more segments to enter.

Differentiation

Differentiating market offering to create superior customer value.

Positioning

Arranging for market offering to occupy clear, distinctive, and desirable place relative to competing products in minds of target consumers.

Geographic segmentation

Dividing market into different geographic units--nations, states, regions, counties, cities, neighborhoods.
Ex: Dominos Pizza keeps focus local--can use app to locate stores, order locally, use coupons, etc.

Demographic Segmentation

Dividing market into segments based on variables--age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation.

Age and life-cycle segmentation

Dividing market into different age/life-cycle groups
Ex: Kraft promotes JELL-O to children as fun snack that "taught the world to wiggle"; adults its tasty, guilt-free indulgence.
Amazon introduced FreeTime Unlimited--target toward 3-8 year olds.

Gender Segmentation

Dividing market into different segments based on gender.
Ex: used in clothing, cosmetics, toiletries, magazines--Secret deodorant formulated for woman's chemistry packaged and advertised to reinforce female image.

Income

Dividing market into different income segments. Low/middle -income groups vs high-income (dollar general)
-Real estate scouts neighborhoods where people have less-expensive houses, cars, clothes, etc to build stores.

Psychographic Segmentation

Dividing market into different segments based on social class, lifestyle, personality characteristics.
Ex: VF Corporation offers closet full of over 30 premium lifestyle brands, each of which "taps into consumer aspirations to fashion, status, and well-being" in a well-defined segment.

Lifestyle Segmentation

W Hotels positions itself as "an iconic lifestyle brand," inviting guests to "step inside the worlds of design, music, and fashion."

Behavioral Segmentation

Dividing market into segments based on consumer knowledge, attitudes, uses of a product, responses to a product.

Occasion Segmentation

Dividing market into segments according to occasions when buyers get idea to buy, actually make their purchase, or use purchased item.
Ex: Home Depot runs springtime promotions for lawn and garden products; M&M's runs ads throughout year but prepares special ads and packaging for holidays/events

Benefit Segmentation

Dividing market into segments according to different benefits that consumers seek from product.
Ex: Bike buyers look for numerous benefits, from competitive racing and sports performance to recreation, fitness, touring, transportation, and just plain fun. --Trek makes road bikes, mountain bikes, town bikes.

Intermarket (cross-market) segmentation

Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries.

Requirements for Effective Segmentation

Measurable: Size, purchase power, profiles of segments can be measured.
Accessible: Market segments can be effectively reached and served.
Substaintial: Market segments are large or profitable enough to serve. Segment should be largest possible homogeneous grup worth pursuing w/ tailored marketing program. Would not pay for automobile manufacturer to develop cares especially for people whose height is greater than seven feet.
Differentiable: Segments are conceptually distinguishable and respond differently to different marketing mix elemtns and programs.
Actionable: Effective programs can be designed for attracting and serving segments.

Target Market

Set of buyers sharing common needs or characteristics that company decides to serve.

Undifferentiated (mass) marketing

A market-coverage strategy in which firm decides to ignore market segment differences and go after whole market with one offer.--appeal to greatest number of buyers

Differentiated (segmented) marketing

Strategy in which firm decides to target several market segments and designs separate offers for each.

Concentrated (niche) marketing

Strategy in which a firm goes after large share of one or a few segments or niches.

Micromarketing

Tailoring products and marketing programs to needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing.

Local marketing

Tailoring brands and marketing to the needs/wants of local customer segments--cities, neighborhoods, and even specific stores.

Individual marketing

Tailoring products and marketing programs to the needs/preferences of individual customers.

Product Position

Way a product is defined by consumers on important attributes--the place the product occupies in consumers' minds relative to competing products.--how they are position in a consumer's mind.

Competitive Advantage

Advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices.

Product Differentiation

SoadaStream promises simple, convenient, ecofriendly alternative for turning home tap water into fresh, homemade soda. Gives you "smart. simple. soda".

Value Proposition

Full positioning of a brand--the full mix of benefits on which it is positioned.

More-for-more Positioning

Hearts on Fire Diamonds have created more-for-more niche as "The World's Most Perfectly Cut Diamond--for those who expect more and give more in return.

Positioning Statement

Statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference).
Ex: To busy multitaskers who need help remembering things, Evernote is digital content management application that makes it easy to capture and remember moments and ideas from you everyday life using your computer, phone, tablet, and the Web. (Evernote)

Ch. 6 Objective 1 Overview

Customer-driven marketing strategy begins w/ selecting which customers to serve/determining a value proposition that best serves the targeted customers. It consists of four steps.
1. Market segmentation is act of dividing market into distinct segments of buyers with different needs, characteristics, or behaviors who might require separate products or marketing mixes.
2. Market Targeting: evaluates each market segment's attractiveness and selects one or more segments to serve.
3. Differentiation: Involves differentiating the market offering to create superior customer value.
4. Positioning: Positioning the market offering in the minds of target customers.
**customer-driven market strategy seeks to build the right relationships w/ the right customers.

Ch. 6 Objective 2 Overview

Consumer segmentation variables are: geographic, demographic, psychographic, behavioral.
Businesses segmented by: demographics, operating characteristics, purchasing approaches, situational factors, personal characteristics.
Effectiveness--depends on finding segments that are measurable, accessible, substantial, differentiable, actionable.

Ch. 6 Objective 3 Overview

To target best segments company must:
1. Evaluate size/growth characteristics, structural attractiveness, compatibility w/ company objectives and resources.
2. Chooses one of four market-targeting strategies: undifferentiated, differentiated, concentrated, micromarketing (local/individual).

Ch. 6 Objective 4

Decide on differentiation and positioning strategy:
1. Identify set of possible differentiations that create competitive advantage.
2. Choosing advantages on which to build a position
3. Selecting overall positioning strategy.

Brands full positioing (value proposition) is mix of benefits on which brand is positioned.
1. More 4 more
2. More 4 same
3. Same 4 less
4. Less 4 less
5. More 4 less

Product

Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Service

Activity, benefit, satisfaction offered for sale that is essentially intangible and does not result in ownership of anything.

Consumer Product

Product bought by final consumers for personal consumption.

Convenience product

Consumer product that customers usually buy frequently, immediately, and w/ minimal comparison and buying effort.

Shopping product

Product that customer, in process of selecting and purchasing usually compares on such attributes as suitability, quality, price and style.

Specialty product

Consumer product w/ unique characteristics or brand identification for which a significant group of buyers is willing to make special purchase effort.