chapters 5 and 6 principles of marketing

Within the organization, buying activity consists of two major parts:

1. The buying center and 2. The buying decision process.

Model of Buyer Behavior

1. The environment 2. Buyer's Black Box 3. Buyer Responses

cultural factors: culture

•Set of basic values, perceptions, wants, and behaviors learned by an individual from family and other important institutions

geographic segmentation

•Such as nations, states, regions, counties, cities, or neighborhoods

Culture

is the most basic cause of a person's wants and behavior.

Five stages of the adoption process

knowledge, persuasion, decision, implementation, confirmation

e-procurement, refers to purchasing through electronic connections between buyers and sellers—usually online.

-procurement, refers to purchasing through electronic connections between buyers and sellers—usually online.

A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits:

1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-to-date) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper class and charming) 5. Ruggedness (outdoorsy and tough)

Buyer Decision Process

1. Need recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase behavior This figure shows that the buyer decision process consists of five stages. The first stage is need recognition. The need can be triggered by internal stimuli when one of the person's normal needs rises to a level high enough to become a drive. A need can also be triggered by external stimuli. The second stage is information search. Consumers can obtain information from several sources like personal, commercial, public, and experiential sources. The third stage is the evaluation of alternatives, that is, how consumers process information to choose among alternative brands. The fourth stage is the purchase decision. Two factors can come between the purchase intention and the purchase decision: the attitudes of others and unexpected situational factors. The last stage is postpurchase behavior. Determining if the consumer is satisfied or dissatisfied with the purchase lies in the relationship between the consumer's expectations and the product's perceived performance. However, all major purchases result in cognitive dissonance, or discomfort caused by postpurchase conflict.

The buyer decision process consists of five stages:

1. need recognition, 2. information search, 3. evaluation of alternatives, 4. purchase decision, and 5. postpurchase behavior.

Business Buying Decision Process

1. problem recognition 2. general need description 3. product specification 4. supplier search 5. proposal solicitation 6. supplier selection 7. order-routine specification 8. performance review

Stages of Business Buying Behavior

1. problem recognition 2. general need description 3. product specification 4. supplier search 5. proposal solicitation 6. supplier selection 7. order-routine specification 8. performance review

A buying center

A buying center consists of all the individuals and units that play a role in the business purchase decision-making process. The buying center is not a fixed and formally identified unit within the buying organization.

Benefit segmentation

Benefit segmentation divides the market into segments according to the different benefits that consumers seek from the product. For example, to meet varying benefit preferences, Schwinn makes affordable, quality bikes in seven major benefit groups: cruisers, hybrid, bike path, mountain, road, urban, and kids.

Business buyer behavior

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

•Derived demand:

Business demand that comes from the demand for consumer goods

Segmenting International Markets

Companies can segment international markets using one or a combination of several variables. · Geographic factors: Nations close to one another will have many common traits and behaviors. · Economic factors: Countries may be grouped by population income levels or by their overall level of economic development. · Political and legal factors: Type and stability of government, receptivity to foreign firms, monetary regulations, and the amount of bureaucracy should be considered. · Cultural factors: Markets can be grouped according to common languages, religions, values and attitudes, customs, and behavioral patterns.

Consumer buyer behavior

Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption.

business buying process,

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

Individual marketing

Individual marketing is the tailoring of products and marketing programs to the needs and preferences of individual customers.

Intermarket segmentation

Intermarket segmentation is segmenting consumers who have similar needs and buying behaviors even though they are located in different countries.

Perceptual positioning maps shows

Perceptual positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions.

Local marketing involves tailoring

Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores.

Market Structure and Demand

Many business markets have inelastic demand; that is, total demand for many business products is not affected much by price changes. Business markets have more fluctuating demand. The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. Business demand is derived demand—it ultimately derives from the demand for consumer goods.

Personal Factors occupation age and life stage economic situation lifestyle

Personal Factors Occupation. A person's occupation affects the goods and services bought. Age and Life Stage. People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Economic Situation. A person's economic situation will affect product choice. Lifestyle is a person's pattern of living as expressed in his or her psychographics.

Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

More for More positioning involves More for the Same positioning involves The Same for Less positioning Less for Much Less positioning "Less-for-much-less"

More for More positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. More for the Same positioning involves introducing a brand offering comparable quality but at a lower price. The Same for Less positioning can be a powerful value proposition—everyone likes a good deal. Less for Much Less positioning is offering products that offer less and therefore cost less. "Less-for-much-less" positioning involves meeting consumers' lower performance or quality requirements at a much lower price. More for Less positioning is the winning value proposition.

Supplier development involves

Supplier development involves systematically developing networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell to others.

personal factors

Occupation Age and family life-cycle Economic situation Lifestyle Personality and self-concept A buyer's decisions also are influenced by personal characteristics of the buyer. A person's occupation affects the goods and services bought. Marketers try to identify the occupational groups that have an above-average interest in their products and services. A company can specialize in making products needed by a given occupational group. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle. One of the leading life-stage segmentation systems is the Nielsen PRIZM Lifestage Groups system. PRIZM classifies every American household into one of 66 distinct life-stage segments, which are organized into 11 major life-stage groups. A person's economic situation will affect his or her store and product choices. Marketers watch trends in spending, personal income, savings, and interest rates. Lifestyle is a person's pattern of living as expressed in his or her psychographics. It involves measuring consumers'major AIO dimensions - activities, interests, and opinions. The lifestyle concept can help marketers understand changing consumer values and how they affect buyer behavior.

Psychographic segmentation

Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics.

A person's behavior is influenced by many small groups. groups reference groups opinion leaders word-of-mouth influence influencer marketing online social networks

Reference groups serve as direct (face-to-face interactions) or indirect points of comparison or reference in forming a person's attitudes or behavior. Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. Word-of-mouth influence is the impact of the personal words and recommendations of trusted friends, associates, and other consumers on buying behavior. Influencer marketing involves enlisting or creating opinion leaders to serve as "brand ambassadors" who spread the word about a company's products. Online social networks are online communities where people socialize or exchange information and opinions.

Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Selective attention Selective distortion Selective retention Subliminal advertising r Learning

Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective retention is the retaining of information that supports their attitudes and beliefs. Subliminal advertising refers to marketing messages received without consumers knowing it. Studies find no link between subliminal messages and consumer behavior. Learning describes changes in an individual's behavior arising from experience.

•Supplier development:

Systematic development of networks of supplier-partners to ensure a dependable supply of products and materials

Systems selling (solutions selling)

Systems selling (solutions selling) is often a key business marketing strategy because many business buyers prefer to buy a packaged solution to a problem from a single seller. In this situation, a buyer may ask sellers to supply the components and assemble the package or system.

Social classes are

Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors.

Major Types of Buying Situations

Straight rebuy: the buyer reorders something without any modifications. Modified rebuy: the buyer wants to modify product specifications, prices, terms, or suppliers. New-task buy: the company is buying a product or service for the first time.

The African American market is The U.S. Hispanic market Asian Americans

The African American market is growing in affluence and sophistication. The U.S. Hispanic market consists of more than 59 million consumers. Asian Americans are the most affluent U.S. demographic segment.

The business buying process

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

The differentiation and positioning task consists of three steps:

The differentiation and positioning task consists of three steps: 1. Identifying a set of differentiating competitive advantages upon which to build a position, 2. Choosing the right competitive advantages, and 3. Selecting an overall positioning strategy.

Model of Business Buyer Behavior

The environment - marketing stimuli and other stimuli.-> The buying organization-The buying center, and the buying decision process.-> Buyer responses

User status refers Usage rate involves Loyalty status

User status refers to segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product. Usage rate involves grouping markets into light, medium, and heavy product users. Loyalty status is dividing buyers into groups according to their degree of loyalty.

differentiated marketing

Using a differentiated marketing (or segmented marketing) strategy, a firm decides to target several market segments and designs separate offers for each.

Value proposition:

Value proposition: How a company will create differentiated value for targeted segments and what positions it wants to occupy in those segments.

concentrated marketing (or niche marketing) strategy,

When using a concentrated marketing (or niche marketing) strategy, instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches.

new task

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

straight rebuy

a business buying situation in which the buyer routinely reorders something without any modifications

modified rebuy

a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers

new product

a good, service, or idea that is perceived by some potential customers as new

Stages in the Adoption Process

awareness, interest, evaluation, trial, adoption The first stage is awareness. In this stage the consumer becomes aware of the new product but lacks information about it. The second stage is interest, which involves the consumer seeking information about the new product. The third stage is evaluation, where the consumer considers whether trying the new product makes sense. The fourth stage is trial. In this stage, the consumer tries the new product on a small scale to improve his or her estimate of its value. The final stage is adoption where the consumer decides to make full and regular use of the new product.

total marketing strategy—

total marketing strategy—the practice of including ethnic themes and cross-cultural perspectives within their mainstream marketing.

All of these consumers combine to make up the

consumer market

Factors Influencing Consumer Behavior

cultural, social, personal, psychological

Major Influences on Business Buying Behavior

environmental: the economy, supply conditions, technology, politics/regulation, competition, culture and customs organizational: objectives, strategies, structure, systems, procedures interpersonal: influence, expertise, authority, dynamics individual: age/education, job position, motives, personality, preferences, buying style

Major Segmentation Variables for Consumer Markets

geographic, demographic, psychographic, behavioral

social factors

groups word-of-mouth influence opinion leader online social networks family roles and status Groups that have a direct influence and to which a person belongs are called membership groups. Reference groups serve as direct or indirect points of comparison or reference in forming a person's attitudes or behavior. An aspirational group is one to which the individual wishes to belong. Word-of-mouth influence refers to the impact of the personal words and recommendations of trusted friends, associates, and other consumers on buying behavior. Rather than leaving it to chance, marketers can help to create positive conversations about their brands. An opinion leader is a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others. Opinion leaders are also referred to as influentials or leading adopters. Buzz marketing involves enlisting or even creating opinion leaders to serve as brand ambassadors who spread the word about a company's products. Online social networks are online communities where people socialize or exchange information and opinions. Family members can strongly influence buyer behavior. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. A person's position in each group can be defined in terms of both role and status. People usually choose products appropriate to their roles and status.

Subcultures are

groups of people with shared value systems based on common life experiences and situations.

Requirements for Effective Segmentation

measurable, accessible, substantial, differentiable, actionable

psychological factors

motivation, perception, learning, beliefs and attitudes A motive (or drive) is a need that is sufficiently pressing to direct a person to seek satisfaction. Many companies employ teams of psychologists, anthropologists, and other social scientists to carry out motivation research. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective retention means that consumers are likely to remember good points made about a brand they favor and forget good points made about competing brands. Some consumers worry that they will be affected by marketing messages without even knowing it—through subliminal advertising. Learning describes changes in an individual's behavior arising from experience. The practical significance of learning theory for marketers is that they can build up demand for a product by associating it with strong drives by using motivating cues and providing positive reinforcement. A belief is a descriptive thought that a person holds about something. Marketers are interested in the beliefs that people formulate about specific products and services because these beliefs make up product and brand images that affect buying behavior. Attitudes put people into a frame of mind of liking or disliking things, of moving toward or away from them.

•Business-to-business (B-to-B) marketers

must do their best to understand business markets and business buyer behavior. Then, like businesses that sell to final buyers, they must engage business customers and build profitable relationships with them by creating superior customer value.

Maslow's Hierarchy of Needs

physiological, safety, love/belonging, esteem, self-actualization

characteristics influencing an innovation's rate of adoption

relative advantage compatability complexity divisability communicability Relative advantage is the degree to which the innovation appears superior to existing products. The second characteristic is compatibility, which is the degree to which the innovation fits the values and experiences of potential consumers. The third characteristic is complexity, which refers to the degree to which the innovation is difficult to understand or use. The fourth characteristic is divisibility, which is the degree to which the innovation may be tried on a limited basis. The fifth characteristic is communicability. This refers to the degree to which the results of using the innovation can be observed or described to others.

Designing a Customer-Driven Marketing Strategy

segmentation, targeting, differentiation, positioning In the first two steps, the company selects the customers that it will serve. Market segmentation involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Market targeting (or targeting) consists of evaluating each market segment's attractiveness and selecting one or more market segments to enter. In the final two steps, the company decides on a value proposition. Differentiation involves actually differentiating the firm's market offering to create superior customer value. Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place, relative to competing products in the minds of target consumers.

adoption

the consumer decides to make full and regular use of the new product

adoption process

the mental process through which an individual passes from first hearing about an innovation to final adoption

undifferentiated marketing (or mass-marketing) strategy,

undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment differences and target the whole market with one offer.

The full positioning of a brand is called the brand's for

value proposition

Stages in the Adoption Process

· Awareness: The consumer becomes aware of the new product but lacks information about it. · Interest: The consumer seeks information about the new product. · Evaluation: The consumer considers whether trying the new product makes sense. · Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value. · Adoption: The consumer decides to make full and regular use of the new product.

To be useful, market segments must be:

· Measurable: The size, purchasing power, and profiles of the segments can be measured. · Accessible: The market segments can be effectively reached and served. · Substantial: The market segments are large or profitable enough to serve. · Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. · Actionable: Effective programs can be designed for attracting and serving the segments.

buying center

•: All the individuals and units that play a role in the purchase decision-making process

consumer market

•All the individuals and households that buy or acquire goods and services for personal consumption

Benefits and Problems of E-Procurement

•Benefits -Cuts transaction costs -Results in efficient purchasing for both buyers and suppliers -Reduces the time between order and delivery -Helps an organization keep better track of all purchases -Frees buyers from a lot of paperwork •Problems -Can affect the customer-supplier relationship -Pits suppliers against one another

consumer buyer behavior

•Buying behavior of final consumers

•Factors influencing consumer behavior

•Cultural •Social •Personal characteristics •Psychological factors

•Demographic segmentation

•Demographic segmentation: Dividing a market into segments based on variables •Such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation

•E-procurement occurs through

•E-procurement occurs through •Reverse auctions •Online trading exchanges •Company buying sites •Extranet links with key suppliers

cultural factors: subculture

•Group of people with shared value systems based on common life experiences and situations •Total market strategy integrates ethnic themes and cross-cultural perspectives within a brand's mainstream marketing

•Intermarket (cross-market) segmentation:

•Intermarket (cross-market) segmentation: Grouping consumers with similar needs and buying behaviors irrespective of their location

•Occasion segmentation •Benefit segmentation

•Occasion segmentation: Segments divided according to occasions, when the buyers •Get the idea to buy •Make their purchase •Use the purchased item •Benefit segmentation: Segments divided according to the different benefits that consumers seek from the product.

•Product position

•Product position is the way a product is defined by consumers on important attributes.

business buyer behavior STOPPED AT SLIDE 27

•Purchasing goods and services are used in the production of other products and services

cultural factors: social class

•Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors