Ch. 1: Consumer Behavior and Marketing Strategy(Notes + Review Q & A)

Describe the process of market segmentation.

A market segmentation is a portion of a larger market whose needs differ somewhat from the larger market. Because a market segment has unique needs, a firm that develops a total product focused solely on the needs of that segment will be able to meet the segment's desires better than a firm whose product or service attempts to meet the needs of multiple segments. To be viable, a segment must be large enough to be served profitably. - However, it should be noted that technology advances such a flexible manufacturing and customized media are allowing for mass customization such that firms can target smaller segments and even individuals profitably. Market segmentation involved four steps: 1) Identifying product-related need sets. 2) Grouping customers with similar need sets 3) Describing each group. 4) Selecting an attractive segment(s) to serve.

What is a marketing mix?

A marketing mix is the product, price, communications, distribution, and services provided to the target market. It is the combination of these elements that meets customer needs and provides customer value.

What is a product?

A product is anything a consumer acquires or might acquire to meet a perceived need. - The term product refers to physical products and primary or core services. - To be successful, a product must meet the needs of the target market better than the competition's product does.

target market

A target market are the segment(s) of the larger market on which we will focus our marketing effort. - This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit. Thus, the size and growth of the segment, the intensity of the current and anticipated competition, the cost of providing the superior value, and so forth are important considerations.

What does an effective communications strategy require?

An effective communications strategy requires answers to the following questions: 1) With whom, exactly, do we want to communicate? - While most messages are aimed at the target-market members, others are focused on channel members, or those who influence the target-market members. - Often it is necessary to determine who within the target market should receive the marketing message. 2) What effects do we want our communications to have on the target audience? - The ultimate objective states that the purpose of advertising and other marketing communications is to increase sales - The behavioral objective for most marketing communications is often much more immediate. That is, it may seek to have the audience learn something about the product, seek more information about the product, like the product, recommend the product to others, feel good about having bought the product, or a host of other communications effects. 3) What message will achieve the desired effect on our audience? - What words, pictures, and symbols should we use to capture attention and product the desired effect? - The best approach depends on the situation at hand. Developing an effective message requires a thorough understanding of the meanings the target audience attaches to words and symbols, as well as knowledge of the perception process. 4) What means and media should we use to reach the target audience? - Should we use personal sales to provide information? - Can we rely on the package to provide needed information? - Should we advertise in mass media, use direct mail, or rely on consumers to find us on the Internet? - If we advertise in mass media, which media ( television programs, specifics magazines, websites, banner ads, and so forth) should we use? - Is it necessary. or desirable to adjust the language used? 5) When should we communicate with the target audience? - Should we concentrate our communications near the time that purchases tend to be made or evenly throughout the week, month, or year? - Do consumers seek information shortly before purchasing our product? If so, where? - Answering these questions requires knowledge of the decision process used by the target market for this product.

Describe the consumer decision process.

Consumer decisions result from perceived problems and opportunities. We will use the term problem to refer to problems and opportunities. - Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior. - A consumer's needs/desires may trigger one or more levels of the consumer decision process. It it important to note that for most purchases, consumers devote very little effort to this process, and emotions and feelings often have as much or more influence on the outcome as do facts and product features. Despite the limited effort that consumers often devote to the decision process, the results have important effects on the individual consumer, the firm and the larger society. Decision Process: Situations Problem Recognition ↓ ----Information Search | ↓ | Alternative Evaluation | and Selection | ↓ |→ Outlet Selection and Purchase ↓ Post-purchase Processes

What is involved in creating satisfied customers?

Creating satisfied customers involves: - Convincing consumers that your brand offers superior value is necessary in order to make the initial sale. - However, creating satisfied customers, and thus future sales, requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. You must deliver as much or more value than your customers initially expected, and it must be enough to satisfy their needs. Doing so requires an even greater understanding of consumer behavior.

What is customer value, and why is it important to marketers?

Customer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits. Customer value is important to marketers because it allows them to form a marketing strategy catered to providing customers with more value than the competition while still producing a profit for the firm.

distribution

Distribution, having the product available where target customers can buy it, is essential to success. - Good channel decisions require a sound knowledge of where target customers shop for the product in question. - Today's distribution decisions also require an understanding of cross-channel options.

What is involved in the company analysis phase of market analysis in Figure 1-1?

In the company analysis phase of market analysis in Figure 1-1, marketers must fully understand the firm's own ability to meet customer needs. - This involves evaluating all aspects of the firm, including its financial conditions, general managerial skills, production capabilities, research and development capabilities, technological sophistication, reputation, and marketing skills. - Marketing skills would include new-product development capabilities, channel strength, advertising abilities, service capabilities, marketing research abilities, market and consumer knowledge, and so forth. - Failure to fully understand strengths and weaknesses can cause serious problems.

What is involved in the competitor analysis phase of market analysis in Figure 1-1?

In the competitor analysis phase of market analysis in Figure 1-1, marketers must be able to have a thorough understanding of the competition's capabilities and strategies in order to consistently do a better job than the competition of meeting customer needs. - This understanding requires the same level of knowledge of a firm's key competitors that is required of one's own firm. In addition, for any significant marketing action, the following questions must be answered: 1) If we are successful, which firms will be hurt (lose sales or sales opportunities)? 2) Of those firms that are injured, which have the capability (financial resources, marketing strengths) to respond? 3) How are they likely to respond (reduce prices, increase advertising, introduce a new product)? 4) Is our strategy (planned action) robust enough to withstand the likely action of our competitors, or do we need additional contingency plans?

What is involved in the consumer analysis phase of market analysis in Figure 1-1?

In the consumer analysis phase of market analysis shown in Figure 1-1, marketers must have a complete understanding of consumer behavior. - This involves conducting market research and knowing the different consumer groups as well as understanding the behavioral principles that guide consumption behaviors. Otherwise, it is not possible to anticipate and react to customers' needs and desires.

What is meant by injuries consumption?

Injurious consumption occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well being. Examples can include: a) overspending due to aggressive marketing efforts and cheap credit b) consuming products that are not healthy including fast foods, cigarettes, alcohol, and so on c) engaging in activities such as gambling that can have devastating financial consequences for some

What conclusions can be drawn from the examples at the beginning of the chapter?

Left ex. - Depicts color and fancy items as definition of high quality and luxury - making the customer the center of attention Right ex. - The experience of being on a private line and service defines high quality and luxury

lifestyle

Lifestyle is how one lives. - Includes the products one buys, now one uses them, what one thinks about them, and how one feels about them. - Lifestyle is the manifestation of the individual's self-concept, the total image the person has of him- or herself as a result of the culture he or she lives in and the individual situations and experiences that comprise his and her daily existence. - It is the sum of the person's past decisions and future plans.

What is marketing strategy?

Marketing strategy answered the question, "How will we provide superior customer value to our target market?" - The answer to this question requires the formulation of a consistent marketing mix. The marketing mix meets customer needs and provides customer value.

What is a price? How does the price of a product differ from the cost of the product to the consumer?

Price is the amount of money one must pay to obtain the right to use the product. - One can buy ownership of a product or, for many products, limited usage rights. - Price can sometimes serve as a signal of quality. A product priced "too low" might be perceived as having low quality. Owning expensive items also provides information about the owner. If nothing else, it indicated that the owner can afford the expensive item. The price of a product or service can define a certain desired image and lifestyle to consumers. Therefore, setting a price requires a thorough understanding of the symbolic role that price plays for the product and target marketing in question. The price of a product differs from the cost of the product to the consumer. - Consumer cost is everything the consumer must surrender in order to receive the benefits of owning/using the product. - One of the ways firms seek to provide customer value is to reduce the non-price costs of owning or operating a product. If successful, the total cost to the customer decreases while the revenue to the market stays the same or even increases.

What is product position?

Product position is an image of the product or brand in the consumer's mind relative to competing products and brands. - This image consists of a set of beliefs, pictorial representations, and feelings about the product or brand. - A brand whose position matches the desired position of a target market is likely to be purchased when a need for that produce arises.

self-concept

Self-concept is the totality of an individual's thoughts and feelings about him-or herself.

How is service defined in the text?

Service refers to auxiliary or peripheral activities that are performed to enhance the primary product or primary service. - Although many texts do not treat service as a separate component of the marketing mix, we do because of the critical role it plays in determining market share and relative price in competitive markets. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage. - Auxiliary services cost money to provide. Therefore, it is essential that the firm furnish only those services that provide value to the target customers. - Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value.

What is social marketing?

Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.

How is the field of consumer behavior defined?

The field of consumer behavior is the study of individuals, groups, or organizations and the processes that they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumes and society. Four key aspects regarding consumer behavior are highlighted in this text: 1) Consumer behavior is a complex, multidimensional process. 2) Successful marketing decisions by firms, nonprofit organizations, and regulatory agencies require an understanding of the process underlying consumer behavior. 3) Successful marketing decisions require organizations to collect information about specific consumers involved in the marketing decision at hand. 4) Marketing practices designed to influence consumer behavior involve ethical issues that affect the firm, the individual, and society.

What are the four major uses or applications of an understanding of consumer behavior?

The four major uses of applications of an understanding of consumer behavior are: 1) Marketing Strategy 2) Regulatory Policy 3) Social Marketing 4). Informed Individuals

What are the major outcomes for society of the marketing process and consumers' responses to it?

The major outcomes for the firm of the marketing process and consumers' responses to it are: 1) Economic Outcomes 2) Physical Environment Outcomes 3) Social Welfare

What are the major outcomes for the firm of the marketing process and consumers' responses to it?

The major outcomes for the firm of the marketing process and consumers' responses to it are: 1) Product Position 2) Sales and Profits 3) Customer Satisfaction

What is required to provide superior customer value?

The marketing mix, is required to provide superior customer value. It involves determining the product features, price, communications, distribution, and services to help form a marketing strategy.

need set

The term need set is used to reflect the fact that most products in developed economies satisfy more than one need. - Identifying the various need sets that the firm's current or potential product might satisfy typically involves consumer research, particularly focus groups and depth interviews, as well as logic and intuition. - These need sets often are associated with other variables such as age, stage in the household life cycle, gender, social class, ethnic group, or lifestyle, and many firms start the segmentation process focusing first on one or more of the groups defined by one of these variables.

What is total product?

The total product consists of the entire set of characteristics known as the marketing mix. - The marketing mix involves determining the product features, price, communications, distribution, and services that will provide customers with superior value. - The total product also involves an experience. Increasingly, marketers sell experiences as much as or more than actual products and services. An "experience" occurs when a company intentionally creates a memorable event for customers. An experience is largely internal to each customer. The experience exists in the mind of an individual who have been engaged on an emotional, physical, intellectual or even spiritual level.