Bnad 303 test 2

Company Capabilities

-the first factor that affects the consumer is the company itself -Successful marketing firms focus on satisfying customer needs that match their core competencies -Marketers can use an analysis of the external environment, like the SWOT analysis to categorize an opportunity as either attractive or unattractive. -if attractive, evaluate in terms of core competencies -core competencies are the primary strengths of businesses

Involvement and Consumer Buying Decisions

.Consumers make two types of buying decisions depending on their level of involvement: extended problem solving or limited problem solving (which includes impulse purchases and habitual decision making) Involvement is the consumer's degree of interest in the product or service. Consumers may have different levels of involvement for the same type of product. One consumer behavior theory, the elaboration likelihood model, proposes that high- and low-involvement consumers process different aspects of a message or advertisement. a low-involvement consumer will likely process the same advertisement in a less thorough manner. Such a consumer might pay less attention to the key elements of the message (price, fabric quality, construction) and focus on elements such as brand name (Macy's I·N·C) or the presence of a celebrity endorser. The impressions of the low-involvement consumer are likely to be more superficial.

Consumer protection legislation

1906 Federal Food and Drug Act-Created the Food and Drug Administration (FDA); prohibited the manufacture or sale of adulterated or fraudulently labeled food and drug products. 1914 Federal Trade Commission Act-Established the Federal Trade Commission (FTC) to regulate unfair competitive practices and practices that deceive or are unfair to consumers. 1966 Fair Packaging and Labeling Act-Regulates packaging and labeling of consumer goods; requires manufacturers to state the contents of the package, who made it, and the amounts contained within. 1966 Child Protection Act-Prohibits the sale of harmful toys and components to children; sets the standard for child-resistant packaging. 1967 Federal Cigarette Labeling and Advertising Act- Requires cigarette packages to display this warning: "Warning: The Surgeon General Has Determined That Cigarette Smoking Is Dangerous to Your Health." 1972 Consumer Product Safety Act-Created the Consumer Product Safety Commission (CPSC), which has the authority to regulate safety standards for consumer products. 1990 Children's Television Act-Limits the number of commercials shown during children's programming. 1990 Nutrition Labeling and Education Act Requires food manufacturers to display nutritional contents on product labels. 1995 Telemarketing Sales Rule-Regulates fraudulent activities conducted over the telephone. Violators are subject to fines and actions enforced by the FTC. 2003-Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act)-Prohibits misleading commercial e-mail, particularly misleading "subject" and "from" lines. 2003 Amendment to the Telemarketing Sales Rule Establishes a National Do Not Call Registry, requiring telemarketers to abstain from calling consumers who opt to be placed on the list. 2003 Do Not Spam Law-Laws created to reduce spam or unwarranted e-mails. 2010 Financial Reform Law-Created the Consumer Financial Protection Bureau whose aim is to enforce appropriate consumer-oriented regulations on a number of financial firms such as banks, mortgage businesses, and payday and student lenders. It also set up the Financial Services Oversight Council to act as an early warning system.

Stage 3: RFP Process

A common process through which organizations invite alternative vendors or suppliers to bid on supplying their required components The purchasing company may simply post its RFP needs on its website or work through various B2B web portals or inform their preferred vendors directly. Smaller companies may lack the ability to attract broad attention to their requests, so they might turn to a web portal, an Internet site whose purpose is to be a major starting point for users when they connect to the web. Although there are general portals such as Yahoo! or MSN, B2B partners connect to specialized or niche portals to participate in online information exchanges and transactions. These exchanges help streamline procurement or distribution processes. Portals can provide tremendous cost savings because they eliminate periodic negotiations and routine paperwork, and they offer the means to form a supply chain that can respond quickly to the buyer's needs. Small- to medium-sized companies looking for skilled service workers also can use portals such as Guru.com, started to help freelance professionals connect with companies that need their services, whether those services entail graphic design and cartooning or finance and accounting advice. Currently, more than 1.5 million professionals list their offerings on this service-oriented professional exchange, and more than 30,000 companies regularly visit the site to post work orders. Guru.com thus provides value to both companies and freelancers by offering not only a site for finding each other but also dispute resolution, escrow for payments, and a means to rate freelancer quality.

multi-attribute model

A compensatory model of customer decision making based on the notion that customers see a product as a collection of attributes or characteristics. The model uses a weighted average score based on the importance of various attributes and performance on those issues. Hanna assigns weights to the importance of each factor. These weights must add up to 1.0. So, for instance, for Hanna, taste is the most important, with a weight of 0.4, and calories are least important, with a weight of 0.1. She assigns weights to how well each of the cereals might perform, with 1 being very poor and 10 being very good. Hanna thinks Cheerios has the best taste, so she assigns it a 10. Then she multiplies each performance rating by its importance rating to get an overall score for each cereal. This multi-attribute model allows the trade-off between the various factors to be incorporated explicitly into a consumer's purchase decision.

Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor. Many of the best-known retailers in the United States are also successful global franchisors, including McDonald's, Pizza Hut, Starbucks, Domino's Pizza, KFC, and Holiday Inn, all of which have found that global franchising entails lower risks and requires less investment than does opening units owned wholly by the firm. However, when it engages in franchising, the firm has limited control over the market operations in the foreign country, its potential profit is reduced because it must be split with the franchisee, and, once the franchise is established, there is always the threat that the franchisee will break away and operate as a competitor under a different name.

generational cohort

A group of people of the same generation—typically have similar purchase behaviors because they have shared experiences and are in the same stage of life. Members of Generation Z (Gen Z) are also known as Digital Natives because people in this group were born into a world that already was full of electronic gadgets and digital technologies such as the Internet and social networks.16 These technologies are being developed and adopted at an unprecedented rate, creating novel marketing possibilities and channels Members of Generation Y (Gen Y), also called Millennials, include more than 60 million people born in the United States between 1977 and 2000. As the children of the Baby Boomers, this group is the biggest cohort since the original post-World War II boom. It also varies the most in age, ranging from teenagers to adults who have their own families the next group, Generation X (Gen X), includes people born between 1965 and 1976 and represents some 41 million Americans. Vastly unlike their Baby Boomer parents, Xers are the first generation of latchkey children (those who grew up in homes in which both parents worked), and 50 percent of them have divorced parents. After World War II, the birthrate in the United States rose sharply, resulting in a group known as the Baby Boomers, the 78 million Americans born between 1946 and 1964. Now that the oldest Boomers are collecting Social Security, it is clear that this cohort will be the largest population of 50-plus consumers the United States has ever seen.

Tariff

A tax on imported goods In most cases, tariffs are intended to make imported goods more expensive and thus less competitive with domestic products, which in turn protects domestic industries from foreign competition. In other cases, tariffs might be imposed to penalize another country for trade practices that the home country views as unfair.

Purchase and Consumption

After evaluating the alternatives, customers are ready to buy. However, they don't always patronize the store or purchase the brand or item on which they had originally decided. It may not be available at the retail store, for example. Retailers therefore turn to the conversion rate to measure how well they have converted purchase intentions into purchases. One method of measuring the conversion rate is the number of real or virtual abandoned carts in the retailer's store or website.

psychological factors

Although marketers can influence purchase decisions, a host of psychological factors affect the way people receive marketers' messages. Among them are motives, attitudes, perception, learning, and lifestyle.

Assessing Global Markets

Because of globalization, marketers are presented with a variety of opportunities, which means that firms must assess the viability of various potential market entries. we examine four sets of criteria necessary to assess a country's market: economic analysis, infrastructure and technological analysis, government actions or inactions, and sociocultural analysis. Information about these four areas offers marketers a more complete picture of a country's potential as a market for products and services.

ethnicity

Because of immigration and increasing birthrates among various ethnic and racial groups, the United States continues to grow more diverse. Approximately 80 percent of all population growth in the next 20 years is expected to come from African American, Hispanic, and Asian communities. Minorities now represent approximately one-quarter of the population; by 2050 they will represent about 50 percent, and nearly 30 percent of the population will be Hispanic.26 The United Nations also estimates that approximately 1 million people per year will emigrate from less developed nations to the United States over the next 40 years. Many foreign-born Americans and recent immigrants tend to concentrate in a handful of metropolitan areas, such as New York, Los Angeles, San Francisco, and Chicago.

The Appeal of the BRIC Countries

Changes in technology, especially communications, have been a driving force for growth in global markets for decades. The telegraph, radio, television, computers, and the Internet have increasingly connected distant parts of the world. Today, communication is instantaneous. Sounds and images from across the globe are delivered to televisions, radios, and computers in real time, which enables receivers in all parts of the world to observe how others live, work, and play. Perhaps the greatest change facing the global community in recent years has been the growth and expansion of four countries that together have come to be known as the BRIC countries: Brazil, Russia, India, and China.

competitors

Competition also significantly affects consumers in the immediate environment. It is therefore critical that marketers understand their firm's competitors, including their strengths, weaknesses, and likely reactions to the marketing activities that their own firm undertakes. For example, in one of the most competitive markets, the weight loss industry, the current ruling competitors are Jenny Craig and Weight Watchers. As both companies work to gain market share in this competitive industry, they tend to avoid direct confrontations. Thus when asked about Weight Watchers, the Jenny Craig CEO Monty Sharma has chosen not to comment, other than to explain that the differences in their programs make any such comparison unfair.4 In particular, whereas Jenny Craig focuses on delivered meals and personal consultants, Weight Watchers is famous for its point system. Yet Weight Watchers' recent partnership with Oprah Winfrey has prompted more comparisons. That is, Jenny Craig has long relied on Kirstie Alley as a spokesperson, a marketing strategy that has been credited with helping the company expand its membership rolls by 25 percent.5 This success of a well-known spokesperson for one diet company likely was instrumental in Weight Watchers' decision to team up with Winfrey. Although Weight Watchers experienced revenue and profit declines in recent years, following the announcement of its partnership with Winfrey, the price of the company's stock more than tripled.6 These efforts represent the companies' recognition of what their closest competitor is doing. But at the same time, each company touts its benefits over its competitors because the ultimate goal, of course, is to appeal to consumers

shopping situation

Consumers might be ready to purchase a product or service but be completely derailed once they arrive in the store. Marketers use several techniques to influence consumers at this choice stage of the decision process. Store Atmosphere Some retailers and service providers have developed unique images that are based at least in part on their internal environment, also known as their atmospherics. Research has shown that, if used in concert with other aspects of a retailer's strategy, music, scent, lighting, and even color can positively influence the decision process Salespeople Well-trained sales personnel can influence the sale at the point of purchase by educating consumers about product attributes, pointing out the advantages of one item over another, and encouraging multiple purchases. Although technical expertise is a must, Apple also looks for salespeople with "magnetic personalities" and trains them in a five-point selling technique: approach customers warmly, probe politely to assess their needs, present solutions the customer can do today, listen and resolve worries the customer may still have, end by giving the customer a warm goodbye and invite them back Crowding Customers can feel crowded because there are too many people, too much merchandise, or lines that are too long. If there are too many people in a store, some people become distracted and may even leave. Others have difficulty purchasing if the merchandise is packed too closely together. This issue is a particular problem for shoppers with disabilities. In-Store Demonstrations The taste and smell of new food items may attract people to try something they normally wouldn't. Similarly, some fashion retailers offer trunk shows, during which their vendors show their whole line of merchandise on a certain day. During these well-advertised events, customers are often enticed to purchase that day because they get special assistance from the salespeople and can order merchandise that the retailer otherwise does not carry. Promotions Retailers employ various promotional vehicles to influence customers once they have arrived in the store. An unadvertised price promotion can alter a person's preconceived buying plan. Multi-item discounts, such as "buy one, get one free" sales, are popular means to get people to buy more than they normally would packaging

purchase situation

Customers may be predisposed to purchase certain products or services because of some underlying psychological trait or social factor, but these factors may change in certain purchase situations. For instance, Samantha Crumb considers herself a thrifty, cautious shopper—someone who likes to get a good deal. But her best friend is having a birthday, and she wants to get her some jewelry. If she were shopping for herself, she might seek out the clearance merchandise at Macy's. But because it is for her best friend, she went to Tiffany & Co. Why? She wanted to purchase something fitting for the special occasion of having a birthday.

Global Pricing Strategies

Determining the selling price in the global marketplace is an extremely difficult task. Many countries still have rules governing the competitive marketplace, including those that affect pricing. For example, in parts of Europe, including Belgium, Italy, Spain, Greece, and France, sales are allowed only twice a year, in January and June or July. In most European countries retailers can't sell below cost, and in others they can't advertise reduced prices in advance of sales or discount items until they have been on the shelves for more than a month. For firms such as Walmart and other discounters, these restrictions threaten their core competitive positioning as the lowest-cost provider in the market. Other issues, such as tariffs, quotas, antidumping laws, and currency exchange policies, can also affect pricing decisions. Competitive factors influence global pricing in the same way they do home country pricing, but because a firm's products or services may not have the same positioning in the global marketplace as they do in their home country, market prices must be adjusted to reflect the local pricing structure

Corporate Partners

Few firms operate in isolation. For example, automobile manufacturers collaborate with suppliers of sheet metal, tire manufacturers, component part makers, unions, transport companies, and dealerships to produce and market their automobiles successfully. Parties that work with the focal firm are its corporate partners.

wholesaler

Firm engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users.

Evaluating Real Income

Firms can make adjustments to an existing product or change the price to meet the unique needs of a particular country market. Such shifts are particularly common for low-priced consumer goods. In settings in which consumers earn very low wages, the market is known as the bottom of the pyramid. That is, there is a large, impoverished population that still wants and needs consumer goods but cannot pay the prices that the fewer, wealthier consumers in developed nations can.

Actual or Perceived Risk

Five types of risk associated with purchase decisions can delay or discourage a purchase: performance, financial, social, physiological, and psychological. The higher the risk, the more likely the consumer is to engage in an extended search. Marketers may seek to minimize these risks and make the search easier performance risk-involves the perceived danger inherent in a poorly performing product or service. An example of performance risk is the possibility that Katie Smith's new interview outfit is prone to shrinking when dry cleaned. financial risk-is risk associated with a monetary outlay and includes the initial cost of the purchase as well as the costs of using the item or service. Katie is concerned not only that her new outfit will provide her with the professional appearance she is seeking but also that the cost of dry cleaning will not be exorbitant. Retailers recognize that buying professional apparel can be a financial burden and therefore offer guarantees that the products they sell will perform as expected. social risk-involves the fears that consumers suffer when they worry others might not regard their purchases positively. When buying a fashionable outfit, consumers like Katie consider what their friends would like physiological risk-could also be called safety risk. Whereas performance risk involves what might happen if a product does not perform as expected, physiological (or safety) risk refers to the fear of an actual harm should the product not perform properly. Although physiological risk is typically not an issue with apparel, it can be an important issue when buying other products, such as a car psychological risks-those risks associated with the way people will feel if the product or service does not convey the right image. Katie Smith, thinking of her outfit purchase, read several fashion magazines and sought her friends' opinions because she wanted people to think she looked great in the outfit—and she wanted to get the job! Recent research suggests that psychological risks might help explain why consumers often think that "bigger is better." In particular, this research helps explain why some enjoy buying large-sized menu items at restaurants. Especially when consumers feel powerless or more vulnerable, they equate larger sizes—whether in televisions, houses, or menu items—with improved status.

China

For most of the 20th century, China experienced foreign occupation, civil unrest, major famine, and a strict one-party Communist regime. However, since 1978, China's leadership, while maintaining communist political ideals, has embraced market-oriented economic development, which has led to startlingly rapid gains. For many Chinese, recent developments have dramatically improved their living standards and their levels of personal freedom. Increasing liberalization in the economy has prompted a large improvement in China's Global Retail Development Index (GRDI); it enjoyed the greatest retail growth in 2014. Even as growth in its gross domestic product has slowed, China maintains a thriving retail market, likely to reach the $8 trillion mark soon and surpass the United States as the world's largest Yet the country continues to suffer from drastically unequal economic distribution, which has led to a significant migrant workforce that subsists on part-time, low-paying jobs. These workers were hit hard by the global financial crisis, which reduced demand for Chinese exports for the first time in years. Furthermore, actual growth of the 1.3 billion-strong Chinese population slowed as a result of government population controls that limit each family to one child

Global distribution strategies

Global distribution networks form complex value chains that involve middlemen, exporters, importers, and different transportation systems. These additional intermediaries typically add cost and ultimately increase the final selling price of a product. As a result of these cost factors, constant pressure exists to simplify distribution channels wherever possible. The number of firms with which the seller needs to deal to get its merchandise to the consumer determines the complexity of a channel. In most developing countries, manufacturers must go through many types of distribution channels to get their products to end users, who often lack adequate transportation to shop at central shopping areas or large malls.

Target market: segmentation, targeting, and positioning

Global segmentation, targeting, and positioning (STP) are more complicated than domestic STP for several reasons. First, firms considering a global expansion have much more difficulty understanding the cultural nuances of other countries. Second, subcultures within each country also must be considered. Third, consumers often view products and their role as consumers differently in different countries.A product, service, or even a retailer often must be positioned differently in different markets. Even when an STP strategy appears successful, companies must continually monitor economic and social trends to protect their position within the market and adjust products and marketing strategies to meet the changing needs of global markets. In this sense, global marketing is no different from local or national marketing. When any firm identifies its positioning within the market, it then must decide how to implement its marketing strategies using the marketing mix. Just as firms adjust their products and services to meet the needs of national target markets, they must alter their marketing mix to serve the needs of global markets.

analyzing governmental actions

Governmental actions, as well as the actions of non governmental political groups, can significantly influence firms' ability to sell goods and services because they often result in laws or other regulations that either promote the growth of the global market or close off the country and inhibit growth.

A marketing environment analysis framework

In all marketing activities, the consumer is at the center. Anything that affects consumers affects marketers. Any change in one of these environments likely requires an adjustment to the firm's marketing mix. By identifying potential environmental trends, firms often can take proactive steps. By paying close attention to customer needs and continuously monitoring the business environment in which the company operates, a good marketer can identify potential opportunities. Exhibit 5.1 illustrates factors that affect the marketing environment. The centerpiece, as always, is consumers. Consumers may be influenced directly by the immediate actions of the focal company, the company's competitors, or corporate partners that work with the firm to make and supply products and services to consumers. The firm, and therefore consumers indirectly, is influenced by the macroenvironment, which includes various impacts of culture; demographics; and social, technological, economic, and political/legal factors.

institutions

Institutions such as hospitals, educational organizations, and religious organizations also purchase all kinds of goods and services. A public school system might have a $40 million annual budget for textbooks alone, which gives it significant buying power and enables it to take advantage of bulk discounts. However, if each school makes its own purchasing decisions, the system as a whole cannot leverage its combined buying power. Public institutions also engage in B2B relationships to fulfill their needs for capital construction, equipment, supplies, food, and janitorial services.

perceived benefit versus perceived cost

Is it worth the time and effort to search for information about a product or service? For instance, most families spend a lot of time researching the housing market in their preferred area before they make a purchase because homes are a very expensive and important purchase with significant safety and enjoyment implications. They likely spend much less time researching which inexpensive dollhouse to buy for the youngest member of the family

Evaluating the General Economic Environment

In general, healthy economies provide better opportunities for global marketing expansions, and there are several ways a firm can use metrics to measure the relative health of a particular country's economy. Each way offers a slightly different view, and some may be more useful for some products and services than for others. To determine the market potential for its particular product or service, a firm should use as many metrics as it can obtain. One metric is the relative level of imports and exports. The United States, for example, suffers a trade deficit, which means that the country imports more goods than it exports. For U.S. marketers this deficit can signal the potential for greater competition at home from foreign producers. Firms would prefer to manufacture in a country that has a trade surplus, or a higher level of exports than imports, because it signals a greater opportunity to export products to more markets. The most common way to gauge the size and market potential of an economy, and therefore the potential the country has for global marketing, is to use standardized metrics of output. Gross domestic product (GDP), the most widely used of these metrics, is defined as the market value of the goods and services produced by a country in a year. Gross national income (GNI) consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy).4 In other words, U.S. firms that invest or maintain operations abroad count their income from those operations in the GNI but not the GDP. Another frequently used metric of an overall economy is the purchasing power parity (PPP), a theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, if expressed in the same currency. A novel metric that employs PPP to assess the relative economic buying power among nations is The Economist's Big Mac Index, which suggests that exchange rates should adjust to equalize the cost of a basket of goods and services, wherever it is bought around the world. These various metrics help marketers understand the relative wealth of a particular country, though they may not give a full picture of the economic health of a country because they are based solely on material output. Nor is a weak dollar always a bad thing. For U.S. exporters, a weak dollar means greater demand for their products in foreign countries because they can sell at a lower price. Although an understanding of the macroeconomic environment is crucial for managers facing a market entry decision, of equal importance is the understanding of economic metrics of market size and population growth rate.

government

In most countries, the central government is one of the largest purchasers of goods and services

Stage 5: Order Specification

In the fifth stage of the B2B buying process, the firm places its order with its preferred supplier (or suppliers). The order includes a detailed description of the goods, prices, delivery dates, and, in some cases, penalties for noncompliance. The supplier then sends an acknowledgment that it has received the order and fills it by the specified date.

customer loyalty

In the postpurchase stage of the decision-making process, marketers attempt to solidify loyal relationships with their customers. They want customers to be satisfied with their purchases and buy from the same company again. Loyal customers will buy only certain brands and shop at certain stores, and they include no other firms in their evoked set. As we explained in Chapter 2, such customers are therefore very valuable to firms, and marketers have designed detailed analytics software and customer relationship management (CRM) programs specifically to acquire and retain them. Although firms want satisfied, loyal customers, sometimes they fail to attain them. Passive consumers are those who don't repeat purchase or recommend the product to others. More serious and potentially damaging, however, is negative consumer behavior such as negative word of mouth and rumors. Negative word of mouth occurs when consumers spread negative information about a product, service, or store to others. When customers' expectations are met or even exceeded, they often don't tell anyone about it. But when consumers believe that they have been treated unfairly in some way, they usually want to complain, often to many people. The Internet and social media have provided an effective method of spreading negative word of mouth to millions of people instantaneously through personal blogs, Twitter, and corporate websites. In turn, some firms rely on listening software offered by companies such as Salesforce.com, then respond to negative word of mouth through customer service representatives—whether online, on the phone, or in stores—who have the authority to handle complaints. Many companies also allow customers to post comments and complaints to proprietary social media sites. If a customer believes that positive action will be taken as a result of the complaint, he or she is less likely to complain to family and friends or through the Internet.

income

Income distribution in the United States has grown more polarized—the highest-income groups are growing, whereas many middle- and lower-income groups' real purchasing power keeps declining. Although the trend of wealthy households outpacing both poor and middle classes is worldwide, it is particularly prominent in the United States. For 2014, the average weekly income of the richest 5 percent of the population was more than $3,970, the average (median) weekly income for the United States as a whole was $1,031, and the poorest 10 percent of the population earned less than $412 per week.18 Furthermore, the number of people who earn less than the poverty line annually ($24,230 for a family of four in 2014) continues to grow.19 The wealthiest 1 percent control 34.6 percent of Americans' total net worth; in comparison, the bottom 90 percent control only 26.9 percent.20 The increase in wealthy families may be due to the maturing of the general population, the increase in dual-income households, and the higher overall level of education. It also may prompt some ethical concerns about the distribution of wealth. However, the broad range in incomes creates marketing opportunities at both the high and low ends of the market.

Analyzing Infrastructure and Technological Capabilities

Infrastructure is defined as the basic facilities, services, and installations needed for a community or society to function, such as transportation and communications systems, water and power lines, and public institutions such as schools, post offices, and prisons. Marketers are especially concerned with four key elements of a country's infrastructure: transportation, distribution channels, communications, and commerce. First, there must be a system to transport goods throughout the various markets and to consumers in geographically dispersed marketplaces—trains, roads, refrigeration. Second, distribution channels must exist to deliver products in a timely manner and at a reasonable cost. Third, the communications system, particularly media access, must be sufficiently developed to allow consumers to find information about the products and services available in the marketplace. Fourth, the commercial infrastructure, which consists of the legal, banking, and regulatory systems, allows markets to function.

The business to business buying process

It both parallels the B2C process and differs in several ways. Both start with need recognition, but the information search and alternative evaluation steps are more formal and structured in the B2B process. Typically, B2B buyers specify their needs in writing and ask potential suppliers to submit formal proposals, whereas B2C buying decisions are usually made by individuals or families and do not need formal proposals. For a school to buy thousands of tablet computers, however, it must complete requisition forms, accept bids from manufacturers, and obtain approval for the expenditure. The final decision rests with a committee, as is the case for most B2B buying decisions, which often demand a great deal of consideration. Finally, in B2C buying situations, customers evaluate their purchase decision and sometimes experience postpurchase cognitive dissonance. But formal performance evaluations of the vendor and the products sold generally do not occur in the B2C setting, as they do in the B2B setting.

Factors affecting consumers search process

It is important for marketers to understand the many factors that affect consumers' search processes. Among them are the following three factors: perceived benefits versus perceived costs of search, the locus of control, and the actual or perceived risk.

Stage 6: Vendor Performance Assessment Using Metrics

Just as in the consumer buying process, firms analyze their vendors' performance so they can make decisions about their future purchases. The difference is that in a B2B setting, this analysis is typically more formal and objective. using the following metrics: delivery (based on promised delivery date), quality, customer service, and issue resolution. The buying team develops a list of issues that it believes are important to consider in the vendor evaluation. To determine the importance of each issue (column 1), the buying team assigns an importance score to each (column 2). The more important the issue, the higher its score, but the importance scores must add up to 1. In this case, the buying team believes that customer service and quality are most important, whereas the issue resolution and delivery are comparatively less important. In the third column, the buying team assigns numbers that reflect its judgments about how well the vendor performs. Using a 5-point scale, where 1 equals poor performance and 5 equals excellent performance, the university decides that the tablet vendor performs quite well on all issues except product quality. To calculate an overall performance score in the fourth column, the team combines the importance of each issue and the vendor's performance scores by multiplying them. Because the tablet vendor performed well on the most important issues, when we add the importance/performance scores in column 4, we find that the overall evaluation is pretty good—4.2 on a 5-point scale.

Brazil

Long a regional powerhouse, Brazil's ability to weather, and even thrive, during economic storms has transformed it into a global contender. Currently, Brazil is the world's seventh largest economy, but high inflation and political crises have prompted Brazil to project some significant economic declines in the near future. Still, Brazil's impressive economic growth in the 21st century largely can be attributed to the expansion of its literate population and the impositions of social programs that have allowed more than half of the 201 million Brazilians to enter the middle class. Even as the nation struggles with a recession, it continues to experiment with innovative financial approaches in an effort to ensure that the Brazilian economy rebounds.30 This large South American democracy also welcomes foreign investors.

manufacturers and service providers

Manufacturers buy raw materials, components, and parts that allow them to make and market their own goods and ancillary services. For example, the German-based Volkswagen Group, the largest auto manufacturer in Europe, owns and distributes the Audi, Bentley, Bugatti, Lamborghini, Seat, Skoda, Scania, VW, and VW Commercial Vehicles brands.14 Whereas purchasing agents formerly spent 70 percent of their time searching for, analyzing, validating, and forwarding information about parts and components, today they can use VWSupplyGroup.com to communicate with suppliers for all transactions, from procurement to logistics.

social factors

Many purchase decisions are made about products or services that the entire family will consume or use. Thus, firms must consider how families make purchase decisions and understand how various family members might influence these decisions. When families make purchase decisions, they often consider the needs of all the family members. In choosing a restaurant, for example, all the family members may participate in the decision making. In other situations, however, different members of the family may take on the purchasing role. For instance, the husband and teenage child may look through car magazines and Consumer Reports to search for information about a new car. But once they arrive at the dealership, the husband and wife, not the child, decide which model and color to buy, and the wife negotiates the final deal. Influencing a group that holds this much spending power is vitally important.

trade agreements

Marketers must consider the trade agreements to which a particular country is a signatory or the trading bloc to which it belongs. A trade agreement is an intergovernmental agreement designed to manage and promote trade activities for a specific region, and a trading bloc consists of those countries that have signed the particular trade agreement. Together, the following major trade agreements cover two-thirds of the world's international trade: the European Union (EU), the North American Free Trade Agreement (NAFTA), Central America Free Trade Agreement (CAFTA), Mercosur, and the Association of Southeast Asian Nations (ASEAN)

situational factors

Psychological and social factors typically influence the consumer decision process the same way each time. For example, your motivation to quench your thirst usually drives you to drink a Coke or a Pepsi, and your reference group at the workplace coerces you to wear appropriate attire. But sometimes situational factors, or factors specific to the situation, override or at least influence psychological and social issues. These situational factors are related to the purchase and shopping situation as well as to temporal states.

Evaluation of Alternatives

Once a consumer has recognized a problem and explored the possible options, he or she must sift through the choices available and evaluate the alternatives. Alternative evaluation often occurs while the consumer is engaged in the process of information search. For example, Katie Smith would rule out various stores because she knows they won't carry the style she needs for the job interview. Once in the right kind of store, she would try on lots of outfits and eliminate those that do not fit, do not look good on her, or are not appropriate attire for the occasion. Consumers forgo alternative evaluations altogether when buying habitual (convenience) products; you'll rarely catch a loyal Pepsi drinker buying Coca-Cola.

temporal state

Our state of mind at any particular time can alter our preconceived notions of what we are going to purchase. For instance, some people are morning people, whereas others function better at night. Therefore, a purchase situation may have different appeal levels depending on the time of day and the type of person the consumer is. Mood swings can alter consumer behavior

locus of control

People who have an internal locus of control believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities. With an external locus of control, consumers believe that fate or other external factors control all outcomes. In that case, they believe it doesn't matter how much information they gather; if they make a wise decision, it isn't to their credit, and if they make a poor one, it isn't their fault. People who do a lot of research before purchasing individual stocks have an internal locus of control; those who purchase mutual funds are more likely to believe that they can't predict the market and probably have an external locus of control. These beliefs have widespread effects. For example, when people believe that they can choose their own consumption goals (internal locus of control), they work harder to achieve them than if those goals feel imposed upon them (external locus of control)

Russia

Since the fall of the former Soviet Union, Russia has undergone multiple upturns and downturns in its economy. However, its overall growth prospects appear promising, especially as a consumer market. Long denied access to consumer goods, the well-educated population of 143 million exhibits strong demand for U.S. products and brands. In particular, the number of Russian Internet users, presently at 83 million, is growing at a rate of approximately 10 percent annually, and is already Europe's largest Internet market. The country also is negotiating to enter the World Trade Organization (WTO) to improve trade relations with other countries. In 2015 it ranked as one of the top countries in terms of retail growth; even though economic and political issues challenge its retail growth prospects, the market simply is too big for most firms to disregard. Yet Russia still faces an aging population and low birthrates. If these trends persist, Russia's population could decline by one-third in the next half century.

education

Studies show that higher levels of education lead to better jobs and higher incomes. According to the U.S. Bureau of Labor Statistics, employment that requires a college or secondary degree accounts for nearly half of all projected job growth in the near future. Moreover, average annual earnings are higher for those with degrees than for those without. Young adults who did not graduate from high school have an average annual salary of about $23,900, high school grads earn $30,000, and those with bachelor's degrees earn around $48,500.23 Page For some products, marketers can combine education level with other data such as occupation and income and obtain pretty accurate predictions of purchase behavior. For instance, a full-time college student with a part-time job may have relatively little personal income but will spend his or her disposable dollars differently than would a high school graduate who works in a factory and earns a similar income. Marketers need to be cognizant of the interaction among education, income, and occupation.

postpurchase cognitive dissonance

The psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance; buyers' remorse. Postpurchase cognitive dissonance generally occurs when a consumer questions the appropriateness of a purchase after his or her decision has been made. Postpurchase cognitive dissonance is especially likely for products that are expensive, are infrequently purchased, do not work as intended, or are associated with high levels of risk. Marketers direct efforts at consumers after the purchase is made to address this issue

need recognition

The first stage of the buyer decision process, in which the consumer recognizes a problem or need Wants are goods or services that are not necessarily needed but are desired. Regardless of the level of your hunger, your desire for ice cream will never be satisfied by any type of salad. Consumer needs like these can be classified as functional, psychological, or both

Evaluating Market Size and Population Growth Rate

The global population has been growing dramatically since the turn of the 20th century. But from a marketing perspective, this growth has never been equally dispersed. Today, many less developed nations by and large are experiencing rapid population growth, while many developed countries are experiencing either zero or negative population growth. The countries with the highest purchasing power today may become less attractive in the future for many products and services because of stagnated growth. And the BRIC countries are likely to be the source of most market growth. Another aspect related to market size and population growth pertains to the distribution of the population within a particular region: Is the population located primarily in rural or urban areas? This distinction determines where and how products and services can be delivered. Long supply chains, in which goods pass through many hands, are often necessary to reach rural populations in less developed countries and therefore add to the products' cost. The business impacts of these combined trends of increasing urbanization, a growing middle class, a degree of protectionism by the central government, and a youthful populace make India an absolutely enormous market for consumer goods.

economic analysis using metrics

The greater the wealth of people in a country, generally, the better the opportunity a firm will have in that particular country. A firm conducting an economic analysis of a country market must look at three major economic factors using well-established metrics: the general economic environment, the market size and population growth rate, and real income.

Global Communication Strategies

The major challenge in developing a global communication strategy is identifying the elements that need to be adapted to be effective in the global marketplace. For instance, literacy levels vary dramatically across the globe. Consider again the BRIC nations: In India, approximately 71 percent of the adult population is literate, compared with 86 percent in Brazil, more than 90 percent in China, and more than 99 percent in Russia.55 Media availability also varies widely; some countries offer only state-controlled media. And advertising and privacy regulations differ too Differences in language, customs, and culture also complicate marketers' ability to communicate with customers in various countries. Language can be particularly vexing for advertisers. For example, in the United Kingdom a thong is only a sandal, whereas in the United States it can also be an undergarment. To avoid the potential embarrassment that language confusion can cause, firms spend millions of dollars to develop brand names that have no preexisting meaning in any known language

post purchase behavior

The stage of the buyer decision process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction Marketers are particularly interested in postpurchase behavior because it entails actual rather than potential customers. Satisfied customers, whom marketers hope to create, become loyal, purchase again, and spread positive word of mouth, so they are quite important.

The buying situation

The type of buying situation also affects the B2B decision process. Most B2B buying situations can be categorized into three types: new buys, modified rebuys, and straight rebuys

country culture

The visible nuances of a country's culture, such as artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors, tastes, and food preferences, are easy to spot. But the subtler aspects of country culture generally are trickier to identify and navigate. Sometimes the best answer is to establish a universal appeal within the specific identities of country culture. Disney and other global firms have successfully bridged the cultural gap by producing advertising that appeals to the same target market across countries. The pictures and copy are the same. The only thing that changes is the language.

Global product or service strategies

There are three potential global product strategies: (1) sell the same product or service in both the home-country market and the host country, referred to as glocalization; (2) sell a product or service similar to that sold in the home country but include minor adaptations; and (3) sell totally new products or services. The strategy a firm chooses depends on the needs of the target market. The level of economic development, as well as differences in product and technical standards, helps determine the need for and level of product adaptation. Cultural differences such as food preferences, language, and religion also play a role in product strategy planning. Same Product or Service The most typical method of introducing a product outside the home country is to sell the same product or service in other countries. However, in reverse innovation, companies initially develop products for niche or underdeveloped markets and then expand them into their original or home markets. Similar Product or Service with Minor Adaptations referred to as glocalization, some firms also standardize their products globally but use different promotional campaigns to sell them. The original Pringles potato chip product remains the same globally, as do the images and themes of the promotional campaign, with limited language adaptations for the local markets, although English is used whenever possible. Totally New Product or Service The level of economic development and cultural tastes also affects global product strategy because it relates directly to consumer behavior.

Analyzing Sociocultural Factors

Understanding another country's culture is crucial to the success of any global marketing initiative. Culture, or the shared meanings, beliefs, morals, values, and customs of a group of people, exists on two levels: visible artifacts (e.g., behavior, dress, symbols, physical settings, ceremonies) and underlying values (thought processes, beliefs, and assumptions). Visible artifacts are easy to recognize, but businesses often find it more difficult to understand the underlying values of a culture and appropriately adapt their marketing strategies to them To address or avoid such issues, one important cultural classification scheme that firms can use is Geert Hofstede's cultural dimensions concept, which sheds more light on these underlying values. Hofstede initially proposed that cultures differed on four dimensions, but he has added two more dimensions in recent years. Despite some arguments for using other models, Hofstede's cultural dimensions offer a foundation for most research into culture: Power distance: willingness to accept social inequality as natural. Uncertainty avoidance: the extent to which the society relies on orderliness, consistency, structure, and formalized procedures to address situations that arise in daily life. Individualism: perceived obligation to and dependence on groups. Masculinity: the extent to which dominant values are male oriented. A lower masculinity ranking indicates that men and women are treated equally in all aspects of society; a higher masculinity ranking suggests that men dominate in positions of power. Time orientation: short- versus long-term orientation. A country that tends to have a long-term orientation values long-term commitments and is willing to accept a longer time horizon for, say, the success of a new product introduction. Indulgence: the extent to which society allows for the gratification of fun and enjoyment needs or else suppresses and regulates such pursuits. Another means of classifying cultures distinguishes them according to the importance of verbal communication. In the United States and most European countries, business relationships are governed by what is said and written down, often through formal contracts. In countries such as China and South Korea, however, most relationships rely on nonverbal cues, so that the situation or context means much more than mere words. For instance, business relationships in China often are formalized by just a handshake, and trust and honor are often more important than legal arrangements. Overall, culture affects every aspect of consumer behavior: why people buy; who is in charge of buying decisions; and how, when, and where people shop. After marketing managers have completed the four parts of the market assessment, they are better able to make informed decisions about whether a particular country possesses the necessary characteristics to be considered a potential market for the firm's products and services.

Choosing a Global Entry Strategy

When a firm has concluded its assessment analysis of the most viable markets for its products and services, it must then conduct an internal assessment of its capabilities. this analysis includes an assessment of the firm's access to capital, the current markets it serves, its manufacturing capacity, its proprietary assets, and the commitment of its management to the proposed strategy. These factors ultimately contribute to the success or failure of a market expansion strategy, whether at home or in a foreign market. After these internal market assessments, it is time for the firm to choose its entry strategy. A firm can choose from many approaches when it decides to enter a new market, which vary according to the level of risk the firm is willing to take. Many firms actually follow a progression in which they begin with less risky strategies to enter their first foreign markets and move to increasingly risky strategies as they gain confidence in their abilities and more control over their operations

direct investment

When a firm maintains 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries. This entry strategy requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments. A dramatic economic downturn caused by a natural disaster, war, political instability, or changes in the country's laws can increase a foreign entrant's risk considerably. Many firms believe that in certain markets, these potential risks are outweighed by the high potential returns. With this strategy, none of the potential profits must be shared with other firms. In addition to the high potential returns, direct investment offers the firm complete control over its operations in the foreign country.

india

With more than 1.2 billion people, or approximately 15 percent of the world's population, together with expanding middle and upper classes, India is one of the world's fastest-growing markets. India also has one of the youngest populations in the world, with a median age of 26.7 years. Its young inhabitants increasingly are adopting global attitudes while living in growing urban centers and shopping at large malls. The well-educated, modern generation is largely fluent in English, and the highly skilled workforce holds great attraction for firms that hope to expand using local talent, especially in technical fields. India's retail environment is still dominated by millions of small stores and lacks modern supply chain management facilities and systems. Recent changes by the Indian government, however, have the potential to significantly modernize the retail landscape. For example, foreign retailers that carry multiple brands, such as Walmart, are now allowed to own up to 51 percent of joint ventures in India, and retailers that carry only their own brand, such as adidas and Reebok, can now own 100 percent of their Indian businesses. India is also projected to become the fastest-growing e-commerce market in the world, with e-commerce sales forecasted to reach $55 billion by 2018.

Gender

Years ago gender roles appeared clear, but those male and female roles have been blurred. In particular, women today outperform men scholastically, earn higher grades on average, and graduate from both high school and college at greater rates. Perhaps unsurprisingly, recent studies also show that approximately 15 percent of married women in Western economies earn more than their husbands do in the workplace. These shifts in status, attitudes, and behaviors affect the way many firms need to design and promote their products and services. More firms are careful about gender neutrality in positioning their products and attempt to transcend gender boundaries, especially through increased interactions with their customers

new buy

a customer purchases a good or service for the first time, which means the buying decision is likely to be quite involved because the buyer or the buying organization does not have any experience with the item. In the B2B context, the buying center is likely to proceed through all six steps in the buying process and involve many people in the buying decision. Typical new buys might range from capital equipment to components that the firm previously made itself but now has decided to purchase instead. For example, a small college might need to decide which apparel company to approach for a sponsorship. Another example of a new buy occurs in the fashion industry, where runway shows offer wholesale buyers an opportunity to inspect new lines of clothing and place orders. Designer sales often occur during private meetings with buyers, both before and after runway shows. Buyers meet with the designers, discuss the line, and observe a model wearing the clothing. The buyer's challenge, then: determine which items will sell best in the retail stores he or she represents while trying to imagine what the item will look like in regular, as opposed to model, sizes. Buyers must also negotiate purchases for orders that may not be delivered for as long as six months. Buyers can suggest modifications to make the clothing more or less expensive or more comfortable for their customers. Buyers and designers recognize the significant value of this relationship, which occasionally prompts buyers to purchase a few items from a designer even if those items do not exactly fit the store's core customers' tastes. Doing so ensures that the buyer will have access to the designer's collection for the next season.

macroenvironmental factors

aspects of the external environment that affect a company's business, such as the culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment

Quotas

designates a minimum or maximum quantity of a product that may be brought into a country during a specified time period. The United States, for instance, has committed to allowing at least 1.23 million tons of sugar to be imported (the quota) without a tariff because the country generally consumes more than it produces. It then monitors consumption closely to protect domestic sugar farmers. If demand exceeds supply, it increases the quota, but the level depends on annual consumption and production rates. Tariffs and quotas can have fundamental and potentially devastating impacts on a firm's ability to sell products in another country Tariffs artificially raise prices and therefore lower demand, and quotas reduce the availability of imported merchandise. Conversely, tariffs and quotas benefit domestically made products because they reduce foreign competition.

Motives

a motive is a need or want that is strong enough to cause the person to seek satisfaction. People have several types of motives. One of the best-known paradigms for explaining these motive types, developed by Abraham Maslow more than 70 years ago, is called Maslow's hierarchy of needs. Maslow categorized five groups of needs: physiological (e.g., food, water, shelter), safety (e.g., secure employment, health), love (e.g., friendship, family), esteem (e.g., confidence, respect), and self-actualization (people engage in personal growth activities and attempt to meet their intellectual, aesthetic, creative, and other such needs). physiological needs deal with the basic biological necessities of life—food, drink, rest, and shelter. Although for most people in developed countries these basic needs are generally met, there are those in developed as well as less developed countries who are less fortunate. However, everyone remains concerned with meeting these basic needs. safety needs pertain to protection and physical well-being. The marketplace is full of products and services that are designed to make you safer, such as airbags in cars and burglar alarms in homes, or healthier, such as vitamins and organic meats and vegetables. Love needs relate to our interactions with others. Haircuts and makeup make you look more attractive, deodorants prevent odor, and greeting cards help you express your feelings toward others. Esteem needs allow people to satisfy their inner desires. Yoga, meditation, health clubs, and many books appeal to people's desires to grow or maintain a happy, satisfied outlook on life. Finally, self-actualization occurs when you feel completely satisfied with your life and how you live. You don't care what others think. You drive a Ford Fusion because it suits the person you are, not because some celebrity endorses it or because you want others to think better of you.

Building B2B Relationships

a multitude of ways to enhance relationships, and these methods seem to be advancing and evolving by the minute. EX: blogs and social media can build awareness, provide search engine results, educate potential and existing clients about products or services, and warm up a seemingly cold corporate culture. An expert who offers advice and knowledge about products increases brand awareness, and a blog is a great medium for this information. Web analytics, like traffic on the website and the number of comments, can offer tangible evaluations, but a better measure is how often the blog gets mentioned elsewhere, the media attention it receives, and the interaction, involvement, intimacy, and influence that it promotes. EX: Twitter, the micro-blogging site, is valuable for B2B markets, because they can communicate with other businesses as often as they want. The LinkedIn.com social network is mainly used for professional networking in the B2B marketplace. Companies such as HootSuite make it easier for companies using Twitter to manage their followers, update their posts, track analytics, and even schedule tweets, just as they would to manage a traditional marketing campaign When executives confront an unfulfilled business need, they normally turn to white papers prepared by potential B2B marketers. White papers are a promotional technique used by B2B sellers to provide information about a product or service in an educational context, thereby not appearing like a promotion or propaganda. The goal of white papers is to provide valuable information that a potential B2B buyer can easily understand and that will help the company address its problems with new solutions. For instance, say a B2B seller has a technologically advanced solution for an inventory problem. Because the executives of the potential B2B buying firm are not technologically oriented, the B2B seller creates a white paper to explain the solution in non technological terms so that the buying firm's executives can understand and appreciate the solution before they consider a purchase.

attitude

a person's enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea. Attitudes are learned and long lasting, and they might develop over a long period of time, though they can also abruptly change. You might like your instructor for much of the semester—until she returns your first exam. The one thing attitudes have in common for everyone is their ability to influence our decisions and actions. An attitude consists of three components. The cognitive component reflects our belief system, or what we believe to be true; the affective component involves emotions, or what we feel about the issue at hand, including our like or dislike of something; and the behavioral component pertains to the actions we undertake based on what we know and feel.

distributor

a type of reseller or marketing intermediary that resells manufactured products without significantly altering their form. distributors often buy from manufacturers and sell to other business like retailers

search for information

after a consumer recognizes a need, is to search for information about the various options that exist to satisfy that need. -The length and intensity of the search are based on the degree of perceived risk associated with purchasing the product or service. Regardless of the required search level, there are 2 key types of information search: internal and external.

Stage 2: Product Specification

after recognizing the need and considering alternative solutions, the company writes a list of potential specifications that vendors might use to develop their proposals

political/regulatory environment

comprises political parties, government organizations, and legislation and laws

evaluative criteria

consist of a set of salient, or important, attributes about a particular product For example, when Katie is looking for her outfit, she might consider things such as the selling price, fit, materials and construction quality, reputation of the brand, and the service support that the retailer offers. At times, however, it becomes difficult to evaluate different brands or stores because there are so many choices, especially when those choices involve aspects of the garment that are difficult to evaluate, such as materials and construction quality. Consumers use several shortcuts to simplify the potentially complicated decision process: determinant attributes and consumer decision rules. Determinant attributes are product or service features that are important to the buyer and on which competing brands or stores are perceived to differ. Because many important and desirable criteria are equal among the various choices, consumers look for something special—a determinant attribute—to differentiate one brand or store from another. Determinant attributes may appear perfectly rational, such as health and nutrition claims offered by certain foods and beverages, or they may be more subtle and psychologically based, such as the stitching on the rear pockets of those 7 For All Mankind jeans that Reese Witherspoon was wearing.

Attribute Sets

consumer's mind organizes and categorizes alternatives to aid his or her decision process Universal sets include all possible choices for a product category, but because it would be unwieldy for a person to recall all possible alternatives for every purchase decision, marketers tend to focus on only a subset of choices. One important subset is retrieval sets, which are those brands or stores that can be readily brought forth from memory. Another is a consumer's evoked set, which comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision. If a firm can get its brand or store into a consumer's evoked set, it has increased the likelihood of purchase and therefore reduced search time because the consumer will think specifically of that brand when considering choices.

noncompensatory decision rule

consumers choose a product or service on the basis of one characteristic or one subset of a characteristic, regardless of the values of its other attributes

customer satisfaction

customers' evaluation of a good or service in terms of whether it has met their needs and expectations Setting unrealistically high consumer expectations of the product through advertising, personal selling, or other types of promotion may lead to higher initial sales, but it eventually will result in dissatisfaction if the product fails to achieve high performance expectations. This failure can lead to dissatisfied customers and the potential for negative word of mouth. Setting customer expectations too low is an equally dangerous strategy. Many retailers fail to put their best foot forward. For instance, no matter how good the merchandise and service may be, if a store is not clean and appealing from the entrance, customers are not likely to enter. Marketers can take several steps to ensure postpurchase satisfaction: Build realistic expectations, not too high and not too low. Demonstrate correct product use—improper usage can cause dissatisfaction. Stand behind the product or service by providing money-back guarantees and warranties. Encourage customer feedback, which cuts down on negative word of mouth and helps marketers adjust their offerings. Periodically make contact with customers and thank them for their support. This contact reminds customers that the marketer cares about their business and wants them to be satisfied. It also provides an opportunity to correct any problems. Customers appreciate human contact, though it is more expensive for marketers than are e-mail or postal mail contacts.

extended problem solving

decision-making mode in which inexperienced but highly involved consumers go through a deliberate decision-making process common when the customer perceives that the purchase decision entails a lot of risk

joint venture

formed when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared In addition to sharing financial burdens, a local partner offers the foreign entrant greater understanding of the market and access to resources such as vendors and real estate. Some countries require joint ownership of firms entering their domestic markets, as is the case with the new regulations affecting multi-line retailers entering India, though many of these restrictions have loosened as a result of WTO negotiations and ever-increasing globalization pressures. Problems with this entry approach can arise when the partners disagree or if the government places restrictions on the firm's ability to move its profits out of the foreign country and back to its home country

modified rebuy

the buyer has purchased a similar product in the past but has decided to change some specifications, such as the desired price, quality level, customer service level, options, or so forth Current vendors are likely to have an advantage in acquiring the sale in a modified rebuy situation as long as the reason for the modification is not dissatisfaction with the vendor or its products. The Ohio State University's sports department might ask adidas to modify the specifications for its basketball shoes after noticing some improvements made to the adidas shoes used by the University of Michigan.

Social Trends

health and wellness concerns, greener consumers, privacy concerns health and wellness-New advertising guidelines therefore require marketers to produce food in reasonably proportioned sizes. Advertised food items must provide basic nutrients, have less than 30 percent of their total calories from fat, and include no added sweeteners. The advertising also cannot be aired during children's programming, and companies cannot link unhealthy foods with cartoon and celebrity figures. Greener Consumers-involves a strategic effort by firms to supply customers with environmentally friendly, sustainable merchandise and services.As we noted in Chapter 4, sustainability is a critical ethical consideration for marketers. Many consumers, concerned about everything from the purity of air and water to the safety of beef and salmon, believe that each person can make a difference in the environment. Demand for green-oriented products has been a boon to the firms that supply them. privacy concerns-More and more consumers worldwide sense a loss of privacy. At the same time that the Internet has created an explosion of accessibility to consumer information, improvements in computer storage facilities and the manipulation of information have led to more and better security and credit check services. In recent years there have been a number of hacking scandals, perhaps most notably the 2013 Target breach that put millions of customers' credit and personal information at risk. Although companies continuously develop new ways to keep customer information safe, some observers suggest hackers are just getting more effective Realizing consumers are upset about this issue, the marketing industry as a whole has sought to find solutions and self-regulations that would calm customers, satisfy cautious regulators, and still enable marketing firms to gain access to invaluable information about consumer behaviors. Those attempts appear to have stalled. The online marketing industry simply has not been able to agree about how to police itself. It looks like it may be up to Congress to address this growing issue.

Stage 1: Need Recognition

in the first stage of the B2B buying process, the buying organization recognizes, through either internal or external sources, that it has an unfilled need. Sellers actively work to prompt such need recognition

Demographics

indicate the characteristics of human populations and segments, especially those used to identify consumer markets. Typical demographics such as age (which includes generational cohorts), gender, race, and income are readily available from marketing research firms such as IRI. Many firms undertake their own marketing research as well

Choosing a Global Marketing Strategy

just like any other marketing strategy, a global marketing strategy includes two components: determining the target markets to pursue and developing a marketing mix that will sustain a competitive advantage over time

economic situation

macroeconomic factor that affects the way consumers buy merchandise and spend money, both in a marketer's home country and abroad Some major factors that influence the state of an economy include the rate of inflation, foreign currency exchange rates, and interest rates. Inflation refers to the persistent increase in the prices of goods and services. Increasing prices cause the purchasing power of the dollar to decline; in other words, the dollar buys less than it used to. In a similar fashion, foreign currency fluctuations can influence consumer spending. For instance, in the summer of 2002 the euro was valued at slightly less than US$1. By 2008, it had risen to an all-time high of $1.60, but in early 2016, the euro and the dollar were nearly equivalent.40 When the euro is more expensive than the dollar, merchandise made in Europe is more costly for Americans, but European shoppers enjoy bargains on U.S. products. When the dollar is worth more than the euro, American-made products become more costly for European consumers, but U.S. buyers can get great deals in Europe. Interest rates represent the cost of borrowing money. When customers borrow money from a bank, they agree to pay back the loan, plus the interest that accrues. The interest, in effect, is the cost to the customers or the fee the bank charges those customers for borrowing the money. Likewise, if a customer opens a savings account at a bank, he or she will earn interest on the amount saved, which means the interest becomes the fee the consumer gets for loaning the money to the bank. If the interest rate goes up, consumers have an incentive to save more because they earn more for loaning the bank their money; when interest rates go down, however, consumers generally borrow more. How do these three important economic factors—inflation, foreign currency fluctuations, and interest rates—affect firms' ability to market goods and services? Shifts in the three economic factors make marketing easier for some and harder for others. For instance, when inflation increases, consumers probably don't buy less food, but they may shift their expenditures from expensive steaks to less expensive hamburgers. Grocery stores and inexpensive restaurants win, but expensive restaurants lose. Consumers also buy less discretionary merchandise, though off-price and discount retailers often gain ground at the expense of their full-price competitors. Similarly, the sales of expensive jewelry, fancy cars, and extravagant vacations decrease, but the sale of low-cost luxuries, such as personal care products and home entertainment, tends to increase.

technological advances

macroenvironmental factor that has greatly contributed to the improvement of the value of both products and services in the past few decades The power and precision of Netflix's predictive analytics have become such common knowledge that even Netflix pokes fun at itself. In one April Fool's joke, it revised its recommended television and movie categories to include classifications such as "TV Shows Where Defiantly Crossed Arms Mean Business!" Netflix gathers data about every aspect of the viewing process, including not just the basics, such as customer ratings, searches, time of day and week, and location, but also customer behaviors that take place during the movie, such as rewinds, fast-forwards, pauses, and how long they let the credits roll. Going even a step further, Netflix analyzes every hue of color contained in the cover art of the options that it offers and can create a profile of the average color of titles viewed by each customer. From the firm's perspective, the technology called radio frequency identification device (RFID) enables the firm to track an item from the moment it was manufactured, through the distribution system, to the retail store, and into the hands of the final consumer. Because they are able to determine exactly how much of each product is at a given point in the supply chain, retailers can also communicate with their suppliers and collaboratively plan to meet their inventory needs.

Resellers

marketing intermediaries that resell manufactured products without significantly altering their form For instance, wholesalers and distributors buy Xerox products and sell them to retailers (B2B transaction), then retailers resell those Xerox products to the ultimate consumer (B2C transaction). Alternatively, these retailers may buy directly from Xerox. Thus, wholesalers, distributors, and retailers are all resellers. Retailers represent resellers and engage in B2B transactions when they buy fixtures, capital investments, leasing locations, financing operations, and merchandise for their stores. To appeal to resellers and keep them interested in what it has to offer

straight rebuy

occur when the buyer or buying organization simply buys additional units of products that had previously been purchased Many B2B purchases are likely to fall in the straight rebuy category. For example, sports teams need to repurchase a tremendous amount of equipment that is not covered by apparel sponsorships, such as tape for athletes' ankles or weights for the weight room. The purchase of bottled water also typically involves a straight rebuy from an existing supplier. These varied types of buying situations call for very different marketing and selling strategies. The most complex and difficult is the new buy because it requires the buying organization to make changes in its current practices and purchases. As a result, several members of the buying center will likely become involved, and the level of their involvement will be more intense than in the case of modified and straight rebuys. In new buying situations, buying center members also typically spend more time at each stage of the B2B buying process, similar to the extended decision-making process that consumers use in the B2C process. In comparison, in modified rebuys the buyers spend less time at each stage of the B2B buying process, similar to limited decision making in the B2C process In straight rebuys, however, the buyer is often the only member of the buying center involved in the process. Like a consumer's habitual purchase, straight rebuys often enable the buyer to recognize the firm's need and go directly to the fifth step in the B2B buying process, skipping the product specification, RFP process, proposal analysis, and supplier selection steps.

limited problem solving

occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. Customers engage in this type of buying process when they have had some prior experience with the product or service and the perceived risk is moderate. Limited problem solving usually relies on past experience more than on external information. For many people, an apparel purchase, even an outfit for a job interview, could require limited effort. A common type of limited problem solving is impulse buying, a buying decision made by customers on the spot when they see the merchandise Some purchases require even less thought. Habitual decision making describes a purchase decision process in which consumers engage in little conscious effort. Marketers strive to attract and maintain habitual purchasers by creating strong brands and store loyalty because these customers don't even consider alternative brands or stores

internal search for information

occurs when the buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences

external search for information

occurs when the buyer seeks information outside his or her personal knowledge base to help make the buying decision Consumers might fill in their personal knowledge gaps by talking with friends, family, or a salesperson. They can also scour commercial media for unsponsored and (it is hoped) unbiased information, such as that available through Consumer Reports, or peruse sponsored media such as magazines, television, or radio. One of the most effective and long-standing ways to search for information is to do so right in the store.

reference group

one or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors. A consumer might have various reference groups, including family, friends, coworkers, or famous people the consumer would like to emulate. These reference groups affect buying decisions by (1) offering information and (2) enhancing a consumer's self-image. Reference groups provide information to consumers directly through conversation, either face-to-face or electronically, or indirectly through observation Consumers can identify and affiliate with reference groups to create, enhance, or maintain their self-image. Customers who want to be seen as earthy might buy Birkenstock sandals, whereas those wanting to be seen as high fashion might buy Lana Marks bags. Reference groups are a powerful force, especially among young consumers. For example, the primary way teenagers have expressed their personalities has long been through their fashion choices, which has made them an appealing market for retailers such as Abercrombie and Fitch and American Eagle. The teen market is also using social media, smartphones, and various apps to communicate and express their self image. As a consequence teens seek out places that offer free WiFi, such as fast-food restaurants, coffee shops, and casual eateries.

functional needs

pertain to the performance of a product or service

psychological needs

pertain to the personal gratification consumers associate with a product or service These examples highlight that most goods and services seek to satisfy functional as well as psychological needs, albeit to different degrees. Whereas the functional characteristics of a BMW K1600 are its main selling point, it also maintains a fashionable appeal for bikers and comes in several colors to match buyers' aesthetic preferences. Lana Marks purses satisfy psychological needs that overshadow the functional needs, though they still ultimately serve the function of carrying personal items. Successful marketing requires determining the correct balance of functional and psychological needs that best appeal to the firm's target markets.

exporting

producing goods in one country and selling them in another This entry strategy requires the least financial risk but also allows for only a limited return to the exporting firm. Global expansion often begins when a firm receives an order for its product or service from another country, in which case it faces little risk because it has no investment in people, capital equipment, buildings, or infrastructure. By the same token, it is difficult to achieve economies of scale when everything has to be shipped internationally.

strategic alliance

refer to collaborative relationships between independent firms, though the partnering firms do not create an equity partnership; that is, they do not invest in one another Therefore, when Cisco Systems Inc. of San Jose, California, and Tata Consultancy Services of Mumbai, India, entered into their strategic alliance, they both continued to develop market-ready infrastructure and network solutions for customers, but they relied on each other to provide the training and skills that one or the other might have lacked. At the same time, Cisco maintains alliances with various other companies, including Microsoft, Nokia, IBM, and Accenture.

learning

refers to a change in a person's thought process or behavior that arises from experience and takes place throughout the consumer decision process. After Katie Smith recognized that she needed an outfit for her job interview, she started looking for ads and searching for reviews and articles on the Internet. She learned from each new piece of information, so her thoughts about the look she wanted in an outfit were different from those before she had read anything. She liked what she learned about the clothing line from Macy's. She learned from her search, and it became part of her memory to be used in the future, possibly so she could recommend the store to her friends. Learning affects attitudes as well as perceptions. Throughout the buying process, Katie's attitudes shifted. The cognitive component came into play for her when she learned Macy's had one of the most extensive collections of career apparel. Once she was in the store and tried on some outfits, she realized how much she liked the way she looked and felt in them, which involved the affective component. Then she made her purchase, which involved the behavioral component. Each time she was exposed to information about the store or the outfits, she learned something different that affected her perception.

Stage 4: Proposal Analysis, Vendor Negotiation, and Selection

the buying organization in conjunction with its critical decision makers, evaluates all the proposals it receives in response to its RFP. Many firms narrow the process to a few suppliers, often those with which they have existing relationships, and discuss key terms of the sale, such as price, quality, delivery, and financing. Some firms have a policy that requires them to negotiate with several suppliers, particularly if the product or service represents a critical component or aspect of the business. This policy keeps suppliers on their toes; they know that the buying firm can always shift a greater portion of its business to an alternative supplier if it offers better terms.

business to business marketing

refers to the process of buying and selling goods or services to be used in the production of other goods and services for consumption by the buying organization and/or resale by wholesalers and retailers. Therefore, a typical B2B marketing transaction involves manufacturers (e.g., GE, Levi's, Siemens, IBM, Ford) selling to wholesalers that, in turn, sell products to retailers. B2B transactions can also involve service firms (e.g., UPS, Oracle, Accenture) that market their services to other businesses but not to the ultimate consumer (e.g., you). The distinction between a B2B and a business-to-consumer (B2C) transaction is not the product or service itself; rather, it is the ultimate user of that product or service. Another key distinction is that B2B transactions tend to be more complex and involve multiple members of both the buying organization (e.g., buyers, marketing team, product developers) and the selling organization (e.g., sellers, R&D support team), whereas B2C often entails a simple transaction between the retailer and the individual consumer. The demand for B2B sales is often derived from B2C sales in the same supply chain. More specifically, derived demand reflects the link between consumers' demand for a company's output and the company's purchase of necessary inputs to manufacture or assemble that particular output

globalization

refers to the processes by which goods, services, capital, people, information, and ideas flow across national borders. Global markets are the result of several fundamental changes such as reductions or eliminations of trade barriers by country governments, the decreasing concerns of distance and time with regard to moving products and ideas across countries, the standardization of laws across borders, and globally integrated production processes. Each of these fundamental changes has paved the way for marketing to flourish in other countries. The elimination of trade barriers and other governmental actions, for instance, allows goods and ideas to move quickly and efficiently around the world, which in turn facilitates the quick delivery of goods to better meet the needs of global consumers. As a consequence, consumers have easy access to global products and services.

exchange control

refers to the regulation of a country's currency exchange rate the measure of how much one currency is worth in relation to another. A designated agency in each country, often the central bank, sets the rules for currency exchange. In the United States, the Federal Reserve sets the currency exchange rates. In recent years the value of the U.S. dollar has changed significantly compared with other important world currencies. When the dollar falls, it has a twofold effect on U.S. firms' ability to conduct global business. For firms that depend on imports of finished products, raw materials that they fabricate into other products, or services from other countries, the cost of doing business goes up dramatically. At the same time, buyers in other countries find the costs of U.S. goods and services to be much lower than they were before. Prices are nearly always lower in the country of origin because there are no customs or import duties to pay, and international transportation expenses are less than domestic ones. For many products, the price difference might not be significant. But for luxury items that cost thousands of euros (or tens of thousands of Chinese yuan), buying overseas thus has long been a habit for consumers As economies and currencies continue their constant rising and falling relative to one another, marketers must keep revising their pricing strategies to reflect the current international conditions.

lifestyle

refers to the way consumers spend their time and money to live. For many consumers, the question of whether the product or service fits with their actual lifestyle (which may be fairly sedentary) or their perceived lifestyle (which might be outdoorsy) is an important one. Some of the many consumers sporting North Face jackets certainly need the high-tech, cold weather gear because they are planning their next hike up Mount Rainier and want to be sure they have sufficient protection against the elements. Others, however, simply like the image that the jacket conveys—the image that they might be leaving for their own mountain-climbing expedition any day now—even if the closest they have come has been shoveling their driveway.

organizational culture

reflects the set of values, traditions, and customs that guide a firm's employees' behavior The firm's culture often comprises a set of unspoken guidelines that employees share with one another through various work situations. For example, Walmart buyers are not allowed to accept even the smallest gift from a vendor, not even a cup of coffee. This rule highlights its overall corporate culture: It is a low-cost operator whose buyers must base their decisions only on the products' and vendors' merits. Organizational culture also can have a profound influence on purchasing decisions. Corporate buying center cultures can be divided into four general types: autocratic, democratic, consultative, and consensus Knowing which buying center culture is prevalent in a given organization helps the seller decide how to approach that particular client, how and to whom to deliver pertinent information, and to whom to make sales presentations. In an autocratic buying center, even though there may be multiple participants, one person makes the decision alone, whereas the majority rules in a democratic buying center. Consultative buying centers use one person to make a decision but solicit input from others before doing so. Finally, in a consensus buying center, all members of the team must reach a collective agreement that they can support a particular purchase. Cultures act like living, breathing entities that change and grow, just as organizations do. Even within some companies, culture may vary by geography, by division, or by functional department. Whether you are a member of the buying center or a supplier trying to sell to it, it is extremely important to understand the buying center's culture and the roles of the key players in the buying process. Not knowing the roles of the key players could waste a lot of time and even alienate the real decision maker.

culture

shared meanings, beliefs, morals, values, and customs of a group of people The challenge for marketers is to have products or services identifiable by and relevant to a particular group of people. Our various cultures influence what, why, how, where, and when we buy. Two dimensions of culture that marketers must take into account as they develop their marketing strategies are the culture of the country and that of a region within a country.

The buying center

the group of people typically responsible for the buying decisions in large organizations participants can range from employees who have a formal role in purchasing decisions (i.e., the purchasing or procurement department) to members of the design team who will specify the equipment or raw materials needed for employees who will be using a new machine that is on order. All these employees are likely to play different roles in the buying process, which vendors must understand and adapt to in their marketing and sales efforts. We can categorize six buying roles within a typical buying center . One or more people may take on a certain role, or one person may take on more than one of the following roles: (1) initiator, the person who first suggests buying the particular product or service; (2) influencer, the person whose views influence other members of the buying center in making the final decision; (3) decider, the person who ultimately determines any part of or the entire buying decision—whether to buy, what to buy, how to buy, or where to buy; (4) buyer, the person who handles the paperwork of the actual purchase; (5) user, the person who consumes or uses the product or service; and (6) gatekeeper, the person who controls information or access, or both, to decision makers and influencers.

regional culture

the influence of the area within a country in which people live affects many aspects of people's lives, including their dietary tastes and preferences. For national and global restaurant chains, it is particularly important to cater to these preferences. But implementing completely different menus for each region would create significant strains on supply chains. To resolve this dilemma, McDonald's keeps the staple elements of its menu consistent throughout the United States, but it offers slightly different variations to appeal to specific regions.

Perception

the process by which we select, organize, and interpret information to form a meaningful picture of the world. Perception in marketing influences our acquisition and consumption of goods and services through our tendency to assign meaning to such things as color, symbols, taste, and packaging. Culture, tradition, and our overall upbringing determine our perception of the world. For instance, Lisa Martinez has always wanted an apartment in the Back Bay neighborhood of Boston because her favorite aunt had one, and they had a great time visiting for Thanksgiving one year. However, from his past experiences Matt has a different perception. Matt thinks Back Bay apartments are small, expensive, and impractical for a couple thinking about having children—though they would be convenient for single people who work in downtown Boston

Consumer Decision Process

the series of steps a consumer goes through before, during, and after a purchase

consumer decision rules

the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives A compensatory decision rule assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics. For instance, Hanna Jackson is looking to buy breakfast cereal and is considering several factors such as taste, calories, price, and natural/organic claims. But even if the cereal is priced a little higher than Hanna was planning to spend, a superb overall rating offsets, or compensates for, the higher price.

Culture

the shared meanings, beliefs, morals, values, and customs of a group of people. As the basis of the social factors that affect your buying decisions, the culture or cultures in which you participate are not markedly different from your reference groups. That is, your cultural group might be as small as your reference group at school or as large as the country in which you live or the religion to which you belong. Like reference groups, cultures influence consumer behavior.