Flurry MKTG320 Exam1

Consumer Behavior

Consumer Behavior

The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. ch1

Two Consumer Entities

Personal Consumer and Organizational Consumer ch1

Personal Consumer

Def: The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

• Also called end user or ultimate consumer. ch1

Organizational Consumer

A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function. ch1

Why study consumer behavior?

To be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition. ch1

Marketing Concept

The essence of marketing consists of satisfying consumers' needs, creating value, and retaining customers. ch1

Marketing Concept requirements

-Consumer Research-Market Segmentation,Targeting and Positioning- The Marketing Mix (4 Ps): Product or service, Price, Place, Promotion ch1

Consumer Research

the process and tools used to study consumer behavior ch1

Segmentation

the process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics ch1

Market Targeting

The selection of one or more of the segments identified to pursue ch1

Positioning

• Developing a distinct image for the product in the mind of the consumer- Successful positioning includes: communicating the benefits of the product & communicating a unique selling proposition ch1

Example of Positioning?

Got _____? (Milk)ch1

Marketing Mix

Product, Price, Place, Promotion ch1

Customer Value

•Def: the ratio between the customer's perceived benefits and the resources used to obtain those benefits- perceived value is relative and subjective- developing a value proposition is critical- what the consumers gained versus what they gave up ch1

developing value propositions

statements of the value their product offers to consumers ch1

Customer satisfaction

Def: individual's perception of the performance of the product or service in relation to his or her expectations•Customer groups based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries ch1

customer satisfaction- loyalists

highly satisfied ch1

customer satisfaction- apostles

loyalist who continue to purchase; provide very positive word of mouth ch1

customer satisfaction- defectors

disappointed customers ch1

customer satisfaction- terrorist

defectors who spread negative word-of-mouth ch1

customer satisfaction- hostages

unhappy customers who stay with he company ch1

customer satisfaction- mercenaries

satisfied customers who are not loyal and will move from company to company ch1

customer retention

•The objective of providing value is to retain highly satisfied customers. •Loyal customers are key-They buy more products-They are less price sensitive-Servicing them is cheaper- They spread positive word of mouth ch1

Socially responsible marketing

The notion that business should conduct itself in the best interests of consumers and society. EX: PETA (People for the Ethical Treatment of Animals) ch1

impact of digital technology

marketers: - more products and services through customization - instantaneous exchanges - collect and analyze data Consumers: - power - information - computers, phones, GPS and smart TV ch1

Consumer behavior is Interdisciplinary

-psychology-sociology-social psychology-anthropology-economicsch1

Consumer Decision Making

Three Components: 1. the input 2. process 3. output stages of decision-making ch1

Consumer Decision Making- input

-Firm marketing efforts-Sociocultural influences ch1

Consumer Decision Making- process

-Psychological factors-Need Recognition, Decision Type, Prepurchase Search, Evaluation of Alternatives-Learning ch1

Consumer Decision Making- Outputs

-Purchase-Post-purchase evaluation ch1

What is the macro-environment?

•forces outside of marketing which directly or indirectly affect management's ability to develop and maintain successful transactions with its target market•Largely uncontrollable factors external to the companych1b

Why is the macro environment so important?

•Environment is uncertain; change can occur suddenly •Change may create opportunities or threats-Threats: unfavorable disturbance or trend which may lead to major impact on the company, product or brand-Opportunity: potentially favorable trend, requires tracking to forecast impact ch1b

Competitive Force

-firms who market similar or substitute products •Factors affecting the strength of competitive force -Number of firms•Market structure: Monopoly, oligopoly, monopolistic competition, purely competitive market -Competitive tools•Examples: brand, price, distribution, niche Implication:Monitor the competition!ch1b

Economic force

•Factors that affect consumer purchasing power and spending patterns •Trends:-Stage of economy causes changes in spending patterns (savings, debt, credit)-Recession! •Implications:Types of goods sold and to whomch1b

Recession

• Income, production and employment fall

• Reduced demand for goods and services

• Recession marketing strategies:Improve existing products;Introduce new products;Maintain customer services;Emphasize top-of -the line products and promote product valuech1b

Inflation

• Prices rise with no wage increase; Purchasing Power decreases

• Increase profit margins by increasing efficiency

• Consumers reaction:Search for lowest prices;Rely on coupons and salesch1b

Political Force

•laws, government agencies, and pressure groups that affect organizations-Examples: pro-competitive legislation, consumer protection legislation, FDA •Trend:-Increasing consumer protection-Powerful public interest groups •Implications:-Increased need for management by organization-Varies by controlling political partych1b

Technological Forces

•knowledge of how to accomplish tasks and goals of organization •Trends:-Constant evolution - accelerating pace of change-Unlimited opportunities, new levels of mobility •Implications:-Makes some products obsolete-Marketing challenges and new opportunities-Minor improvements more common than major innovations-May lead to public opposition or governmental interventionch1b

Socio-cultural Force

•factors that affect society's basic values and behaviors; includes attitudes, lifestyles, norms and customs •Trends:-Time poverty-Immediate satisfaction-Easy life-Informal relationships-Healthy lifestyles •Implications:-Product expectations-Customer relationshipsch1b

Demographic Force

•effect of human populations in terms of size, density, location, age, sex, ethnicity, occupation and other statistics •Trends:-Changing age structure-Changing American family-Geographic shifts / diversity-Americans becoming more educated-Cultural diversity •Implications:-Greater in elderly market- power of children and teens-Non-traditional family structures-Cultural marketingch1b

Population

US 283.5 millionEarth 6.1 Billionch1b

Role of Families and Women

•58% of all females (ages 16-65) are in the workforce •Purchasing power from dual-career families is rising •"Traditional" purchasing roles and patterns are changingch1b

Age Groups: Generation Y

• Born between 1979 and 1994 ages (41- 26)

• Size creates immense marketing impact

• Love customized products and servicesch1b

Age Groups: Generation X

• Born between 1965 and 1978 (55-41)

• Savvy and cynical consumers

• Indulge themselves with meals/alcohol, clothing, and electronicsch1b

Age Groups: Baby Boomers

Born between 1946 and 1964 (age 56 - 74) Cherish youth, convenience, and individuality In the "nesting stage" of lifech1b

Age Groups: Older Consumers

• Age "55 plus"

• Healthier, wealthier, better educated

• Definite about wants and needs

• Not happy with advertising treatmentch1b

Growing Ethnic Markets

• U.S. population is becoming a multicultural society and workforce

• Trend in U.S. is toward greater multiculturalism

• Growth in three ethnic minorities:African-Americans;U.S. Hispanics;Asian-Americansch1b

Natural environment

•natural resources used by marketers or affected by marketing activities •Trends:-Resource shortages-Increased cost of energy-Societal control - environmental protection •Implications-Must use resources wisely-Opportunities for environmental products-Caution for governmental controlch1b

How does Qantas position its offering for different market segments?

Has 4 different classes: Coach passengers (4), premium economy(3), business class (2), first class (1) ch2

To be an effective target market it must be the following:

•Identifiable•Sizeable•Stable and growing•Reachable•Congruent with the marketer's objectives and resources ch2

Implementing Target Market Strategies

•Concentrated-One segment •Differentiated-Several segments with individual marketing mixes ch2

Counter segmentation

involves combing existing seg,mnets for a company to become more efficient and profitable ch2

demographic segmentation

core of almost all segmentation because they are easy and logical. Segments: Age, Gender, Marital Status, Household type and size, Income and Wealth; occupation, geographical location ch2

geodemographic segmentation

suggest that birds of a feather flock together, such that where a person lives helps determine his/her consumption behavior. ch2

Segmenting Green Consumers

Several dif. ways to segment these consumers. There were 5 segments in the table provided: Alpha Ecos (1), Eco-Centrics (2), Eco-Chics (3), Economically Ecos (4), Eco-Moms (5) ch2

Personality Traits

Many psychographic factors overlap with personality or traits. ch2

Psychographics

Consumers' lifestyles, which include consumers' activities, interests, and opinions ch2

psychographic segmentation

• No standard definition of dimensions as there are for other consumer grouping because all are defined in the scope of the specific study.

• widely used; together with demographics are included in almost all segmentation frameworks.

• example: Factor: Apparel and Fashion; Sample statements: I buy clothes no matter the trend, my friends often come to me for fashion advice, Men do not notice women who do not dress well ch2

Benefit Segmentation

the process of grouping customers into market segments according to the benefits they seek from the product or service

• important for positioning ch2

occasion segmentation

dividing the market into segments according to specific occasions ch2

Behavioral Targeting

Sending consumers personalized prompt offers and promotional messages designed to reach the right consumers to deliver them a highly relevant message at the right time. It is more accurate than when using conventional segmentation techniques. ch2

Tracking Online Navigation Includes:

-Websites visited-Engagement on sites-Lifestyles and personalities-Purchases, almost purchases, returns, exchanges ch2

Predictive Analytics

Measures that predict consumers' future purchases on the bases of past buying information and other data, and also evaluate the impact of personalized promotions stemming from the predictions. ch2

Positioning

The process by which a company creates a distinct image and identity for its products, services, or brands in consumers' minds. ch2

Positioning Process

1.Define the market, buyers and competition.2.Identify key attributes and research consumers' perceptions3.Research consumers' perceptions on competing offerings.4.Determine preferred combination of attributes.5.Develop positioning concept that communicates attributes as benefits.6.Create a positioning statement and use it to communicate with the target audiences. ch2

Umbrella Positioning

statement or slogan that describes the universal benefit of the company's offering. EX: Cambell's Soup is good food. It promotes all soups and does not reference any brand. ch2

Other Types of Positioning

•Premier positioning ( focus on brand's exclusivity)•Positioning against the competition•Key attribute (positioning on brands's superiority on relevant attributes)•Un-owned positioning ch2

Repositioning

changing consumers' perceptions of a brand in relation to competing brands

• process by which a company strategically changes the distinct image and identity that its product or brand occupies in consumers' minds. ch2

Perceptual Map

constructing a map-like diagram representing consumers' perceptions of competing brands along relevant product attributes. ch2

Simplified Consumer Decision Process

Stimulus- Problem Recognition- Information Search- Alternative Evaluation-Purchase- Outcomech14

Stimulus

anything that affects the senses ch14

Types of Stimulus

•Internal-Physiological •External-Marketing mix-Sociocultural influences•Family•Peers•Social class•Reference groups•Culture/subculture -Communicationsch14

Problem Recognition

..."the recognition of a problem is the result of a discrepancy between a desired state and an actual state that is sufficient to arouse and activate the decision process"ch14

Problem Recognition Process

-Exists when there is a discrepancy between the actual state and the desired state-Discrepancy must exceed personal threshold to be recognized-Does not always result in an action-Only results in action if consumers feel that a solution is within their meansch14

Factors Affecting Actual State

•Product consumption and replacement•Related product acquisitions•Existing product fails to meet expectations•Physiological need•Advertising and promotion•Time•Changed circumstancesch14

Factors Affecting Desired State

•Influences of:-Culture / Sub-culture-Reference groups-Lifestyle trends•Individual aspirations / imagination•Personality differences•Advertising and promotionch14

What are the types of problems recognized by consumers?

•Routine problems•Emergency problems•Planning problems•Evolving problemsch14

Marketing Strategy Implications of Problem Recognition

•Activate consumer problem recognition-Generic vs Selective problem recognition•GENERIC: a discrepancy that a variety of brands within a product category can reduce•SELECTIVE: a discrepancy that only a specific brand can reduce-Firms attempt to cause selective recognition to gain or retain market share-Generic recognition generally results in expansion of the total marketch14

Marketing Strategy Implications of Problem Recognition

•Solve existing consumer problems / needs-modify the marketing mix; may involve:•developing / altering product offering•modifying channels of distribution•changing pricing policy•revising advertising strategych14

Internal Search

•Information stored in memory from prior experience•Always occurs first•Resulting action depends on consumers' existing knowledge and ability to retrieve information from memorych14

External Search

•Information received via communication process from external sources•Sources-Stores Visited-Friends/ Family-Buying Guides / Independent Evaluators-Salespersons-Advertisements / Promotionsch14

pre-purchase search

begins when a consumer perceives a need that might be satisfied by the purchase and consumption of a productch14

Information Search: Contextual Factors

•Task complexity•Information organization•Time constraints Consumers have limited information-processing capacitych14

What are the managerial implications of information search?

•Must identify the type of search typically employed by consumers-Measurement methods: retrospective questioning and observation•Remember: Search behavior varies by individual-Some people search more than others-Most consumers perform as little external search as possiblech14

What are the managerial implications of information search?

•Identify the typical sources consumers consult during information search •Select an appropriate promotional strategy •Select an appropriate distribution strategych14

Alternative Evaluation

•Making a selection from the available alternatives •Complexity of the process will vary depending on the type of decision ch14

Determine Evaluative Criteria

•Particular dimensions or attributes that are used in judging the choice alternatives•Some alternative criteria that might be used are as follows:-Price-Brand name-Country of origin-Retail outlet-Prestige, stylech14

Determine Choice Alternatives

• determine list of products from a selection- Evoked set (consideration set): specific brands a consumer considers acceptable within a category: usually consist of 3-5 brands & members of set are function of internal and external factors and search EX: ch14 sl29

Assess Performance of Alternatives

•Process of rating or ranking each of the alternatives based on the chosen criteria •Every person has different cutoff points or levels of acceptability •Consumers use surrogate indicators-price-brand namesch14

Apply Decision Rule

•Help consumers make comparisons •Compensatory decision rules-Simple additive-Weighted additive •Noncompensatory decision rules-Conjunctive-Lexicographic-Disjunctivech14

Compensatory Decision Rules

A type of decision rule in which a consumer evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score.ch14

Non-compensatory DecisionRules

A type of consumer decision rule by which positive evaluation of a brand attribute does not compensate for a negative evaluation of the same brand on some other attribute.ch14

Conjunctive Decision Rule

A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration.ch14

Lexicographic Rule

A noncompensatory decision rule in which consumers first rank product attributes in terms of their importance, then compare brands in terms of the attribute considered most important. If one brand scores higher than the other brands, it is selected; if not, the process is continued with the second ranked attribute, and so onch14

Disjunctive Rule

A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each relevant product attribute; any brand meeting or surpassing the cutoff point for any one attribute is considered an acceptable choice.ch14

Segmentation by Shopping Strategy

Practical Loyalist,Bottom-Line Price Shoppers,Opportunistic Switchers,Deal Hunters,ch14

Practical Loyalists

those who look for ways to save on the brand but purchase anywaych14

Opportunistic Switchers

those who use coupons or sales to decide among brands and products that fall within tiger evoked setch14

•Deal Hunters

looks for the best bargain and not brand loyal ch14

Coping with Incomplete Information

•Delay the decision until information is obtained•Ignore missing information•Change the decision strategy to accommodate missing information•"Construct" the missing informationch14