Intro To Marketing Exam 2 Study Set

What are the 5 steps in the consumer decision making process?

1. Problem Recognition

2. Information Search

3. Evaluation of Alternatives

4. Product Choice

5. Post-Puchase Evaluation

What happens in the Problem Recognition step?

Customer realizes there is a DIFFERENCE between their current state and desired state.

ex: “My old car keeps breaking down, I need a new car”

What happens during the Information Search step?

Consumer looks for information about possible solutions.

Sources like : Friends/Family, Reviews, Salespeople, Personal Memory/Associations

What happens during the Evaluation of Alternatives step?

Consumer compares different options using EVALUATIVE CRITERIA

ex: “Car A is cheaper, but Car B gets better gas mileage, but car C is the most comfortable”

What happens during the Product Choice stage?

The consumer actually chooses and purchases an option.

***heuristics become important

What happens during the PostPurchase evaluation step?

Consumer decides whether the product lived up to their expectations

Performance Vs. Expectations = Satisfaction Vs. Dissatisfaction

T or F : Consumers put the same level of effort into every purchase decision?

FALSE! Depending on the risk involved in the purchase, customers will have different levels of INVOLVEMENT.

What is Involvement?

How important the purchase decision is perceived to be.

High Involvement would mean…

Extensive Problem Solving occurred

Moderate Involvement would mean…

Limited Problem Solving occurred

low involvement would mean…

It was likely habitual decision making taking place.

For example, buying an Alani would be what type of decision making?

-Low Risk

-Low Involvement

-Little Thought

=HABITUAL!

For example, the purchase of a bed-side lamp or vanity mirror would be…?

Moderate Risk

Moderate Involvement

Moderate thought

=Limited Problem Solving!

For example, the purchase of a house or car would be…

-High Risk

-High Involvement

-LOTS of thought / info needed

=EXTENSIVE problem solving occurred.

During step 2 (the information search), consumers may come up with an evoked set and a consideration set. What is the difference between these things?

The Evoked Set - the initial list of brands that come to mind when a consumer is searching for information on a product category (enters your mind)

the Consideration Set - the brands that actually make the cut. What we consider actually purchasing. (makes the cut)

What is Evaluative Criteria?

the attributes and features customers use to compare product alternatives.

What are the 2 types of evaluative criteria?

1. Objective - measurable/factual features (Price, MPG, Caffeine, Calories, Storage)

2. Subjective - personal preference/opinion (Taste, Appearance, Style, Brand Image, Comfort)

Why do marketers care about evaluative criteria?

Because it shows what features/attributes matter MOST to the customer when comparing similar products.

-If they know what customers are using to judge, they can better communicate their brand’s superiority.

What are Heuristics?

“rules of thumb” / mental shortcuts used to simplify purchase decision

ex: I’ve always bought Nike, so I’m buying Nike.

Higher Price = Better Quality (wine example from class)

What do customers compare during post purchase evaluations?

expectations vs actual performance of a product.

• If performance meets/exceeds expectations, satisfied

• If performance does not meet expectations, dissatisfied

What is Buyer’s Remorse?

Remember her car example?

It’s anxiety/regret after making a purchase decision!

• Did I make the right choice?

• Usually occurs after a MAJOR purchase where there were alternatives.

What are the 3 types of influences on consumer decisions?

1. Internal Influences - things happening INSIDE the customer

2. Situational Influences - things about the situation/environment

3. External Influences - things outside the individual that affect their decisions

Influences like : Perception, Motivation, Learning, Attitudes, and Personality are what type of influences on consumer decisions?

INTERNAL

Factors like : Culture, Social Class, Reference Groups, Family, and Opinion Leaders are what type of influences on consumer decisions?

External!

Factors like : Physical Environment, Time, and Social Influence are what type of influence on customer decision making?

Situational!

What is Perception?

The way consumers interpret what they experience.

-They DO NOT always match reality!

What is Motivation?

The internal force driving customers to satisfy their needs.

What does Maslow’s hierarchy of needs demonstrate?

The idea that consumers typically try to satisfy their lower-level needs before their higher-level needs.

What are the levels of Maslow’s Hierarchy of Needs?

1. Physical

2. Safety

3. Love

4. Esteem

5. Self

How do marketer’s use Maslow’s Hierarchy of needs?

They determine which need is most relevant to their target consumer so they can tailor their message accordingly.

What are the 3 types (categories) of learning?

1. Behavioral - through associations/consequences

2. Cognitive - through mental processing/comprehension

3. Observational - Learning by watching other people’s behavior and observing the outcomes.

What are the two methods of behavioral learning we covered?

1. classical conditioning - association is created between separate things

2. operant learning - rewards/punishmenrts

What is the term for, “A relatively permanent change in behavior caused by information or experience”?

Learning

What is the target marketing strategy?

Dividing the total market into SEGMENTS according to customer characteristics, selecting 1 or more of those segments, and developing products to meet the needs there.

What are the 3 stages of the Target Marketing Strategy?

1. Segmentation

2. Targeting

3. Positioning

What happens during segmentation?

Identify and describe market segments

What happens during Targeting?

Evaluate the segments and decide which to go after.

What happens during Positioning?

Develop the marketing mix to create competitive advantage in the minds of the target market.

In order to develop a marketing plan, marketers must engage in….

1. Segmentation

2. Targeting

3. Positioning

How does Segmentation work?

Marketers divide a market into defined groups based on similar wants and needs.

What 4 categories help segment a market?

1. Demographics

2. Psychographics

3. Behavioral

4. Geographics

Age, Gender, Income, Marital Status, and Ethnic Background are what kind of market segmentation?

Demographics!

Activities, Personality and Values, and Attitudes are what kind of market segmentation?

Psychographics

Benefits, Usage Rates, and Patterns are what type of market segmentation?

Behavioral

Local, National, International, and Regional are what kind of market segmentation?

Geographics!

What is a consumer persona?

A fictional but realistic profile of a typical customer within a target market segment.

What are the Criteria for Evaluating Market Segments to Target?

• Substantiality

• Identifiability & Measurability

• Accessibility

• Responsiveness

What does Substantiality mean?

The Segment must be large enough to warrant a special marketing mix.

What does Identifiability/Measurability mean?

Segments must be identifiable and their size (and purchasing power) must be measurable.

What does Accessibility mean?

Members of the targeted segments must be reachable with the marketing mix.

What does Responsiveness mean?

If the segment doesn’t respond differently to a marketing mix, no separate treatment is needed.

What should I viable market segment have?

• Members with similar wants/needs that are unique to that segment

• Measurable in size and purchasing power

• Large enough to be profitable

• Can be efficiently reached by marketing communications

• Has needs the marketer can satisfy better than competition can.

What is the Undifferentiated Marketing Strategy?

Assumes there is 1 broad market

• Customers have similar needs

• We’re going after pretty much everybody

• Ex: Walmart

What is the Differentiated Marketing Strategy?

There are Multiple Segments

• Develops different products/strategies for different distinct customer groups

• Think Car Brand and different luxury/economy/family cars they make.

What is the Concentrated Marketing Strategy?

ONE segment

• They focus on targeting a single segment

• best for smaller firms with fewer resources

What is the Customized Marketing Strategy?

ONE customer!

• Develops a separate marketing mix for every customer

• Like Legal papers

What is Positioning?

How you want your target market to perceive YOUR brand.

Goal = creating and communicating competitive advantage

What are the steps in a positioning decision? (Hint: there are 4!)

1. Analyze Competitor’s Positions

2. Define Your Competitive Advantage

3. Finalize the Marketing Mix

4. Evaluate Responses and Modify as needed

What does step 1 entail? (Analyzing competitor’s positions)

Look at DIRECT and INDIRECT competitors!

Direct - similar product/category

Indirect - Different product/category satisfying a similar need.

What happens in Step 2: Define Your Competitive Advantage?

You find something that customers value that differentiates you from direct and indirect competition

(price-based advantages often don’t last)

What happens during Step 3: Finalize the Marketing Mix?

You create a marketing mix (the 4 P’s) that communicate the positioning. (Why YOUR brand is unique!)

What happens in Step 4: Evaluate Responses and Modify as Needed?

Research whether your customers perceive your brand well (did the positioning work? *Modify if needed.)

What does a perceptual map show?

Where products/brands are located in consumer’s minds relative to their competitors.

Changing Consumer needs, Changing Consumer Values/behaviors, Demographic Changes, and Superior Competition entering the market may mean what?

A company may need to reposition themselves to adapt!

T or F : 20% of purchasers account for 80% of volume/purchases

TRUE! so companies want to retain their heavy users.

What is innovation?

innovation = anything customers perceive as NEW and DIFFERENT

***must create value

What are the 3 Product Layers?

1. Core Product - the thing the customers are ACTUALLY buying/ the benefit they’re receiving from this product

2. Actual Product - The physical aspects of the good that delivers the service

3. Augmented Product - What else you get with the product

If a customer purchases a washing machine, what is the core product?

The ability to wash clothes / have clean laundry

What is the Actual Product the customer is getting by purchasing a washing machine?

The washing machine itself/ the glass, plastic, the buttons, the cord, the lint holder, the metal spinner.

What is the Augmented product the buyer is receiving after purchasing the washing machine?

The warranty on the machine, instructions coming with the machine, installation, repairs, delivery, service contracts, etc.

Easy way to remember the 3 Product layers:

Core - WHY you buy

Actual - WHAT you buy

Augmented - WHAT ELSE you get

How can products be classified?

Products are classified according to how consumers purchase them

What are Convenience Products?

Products that consumers:

• Buy often

• usually spend little/no time or effort choosing

• typically inexpensive

• widely available

• typically non-durable goods

What are the 3 types of convenience products?

1. Staples - bare necessities (your milk, eggs, gas)

2. Impulse Products - candy at the checkout (I suddenly want this!)

3. Emergency Products - immediate need! (I suddenly NEED this!)

Shopping Products are…

Products that consumers spent time and effort comparing alternatives.

• Purchased less often

• More expensive/ involving that convenience products

• consumers will compare alternatives before purchasing

Speciality Products are…

Products with unique characteristics that are VERY important to buyers

Shopping products = I want to compare alternatives (Phone replacement)

Speciality Products = I want THIS SPECIFIC product (like a Rolex)

Unsought Products…

Products customers have little awareness about or interest in until a need arises.

• Include Personal Selling

• Significant Advertising

• Life insurance

• Retirement Plans

• Funeral Services

How are types of innovation classified?

According to degree of newness and how much learning is required

Modification of an EXISTING product would be an example of…

Continuous Innovation

(new Doritos flavor)

Small Change, NO learning

A Pronounced or Major change to an existing product would be…

Dynamically Continuous Innovation

Bigger change, some new learning required

(audio tech)

A major change in how people live would be…

Discontinuous Innovation

LOTS of new learning required

MASSIVE change

First automobile, Airplane, first iphone

T or F: Most new products fail

TRUE!

What are the 3 main reasons why most products fail?

1. No Discernible benefit - consumers don’t see reason to purchase/switch

2. Wrong Market - over-estimates the market size or targets the wrong market

3. Poor Marketing Strategy/Execution - wrong price, bad positioning, bad 4 P’s

What are the 7 Phases of the New Product Development Process? (ICMBTTC)

1. Idea Generation

2. Product Concept/Screening

3. Marketing Strategy Development

4. Business Analysis

5. Technical Development

6. Test Marketing

7. Commercialization

What is the product Adoption Process?

The Process the Customer goes through after encountering the product.

What are the stages of the product adoption process?

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

6. Confirmation

What is Diffusion?

The Process by which the use of a product spreads through the WHOLE population

(the WHOLE market/Population)

What is a tipping point?

When sales jump from slow growth to a new level

What are the Adopter Categories?

1. Innovators

2. Early Adopters

3. Early Majority

4. Late Majority

5. Laggards