Download The Marketing Environment - Pearson Higher Education

CHAPTER 15
Understanding Marketing
Processes and Consumer
Behaviour
Business Fifth Canadian edition, Griffin, Ebert & Starke
© 2005 Pearson Education Canada Inc.
Learning Objectives
Explain the concept of marketing and describe the
five forces that constitute the external marketing
environment.
Explain the purpose of a marketing plan and
identify the four components of the marketing
mix.
Explain market segmentation and show how it is
used in target marketing.
Explain the purpose and value of market research.
Business Fifth Canadian edition, Griffin, Ebert & Starke
© 2005 Pearson Education Canada Inc.
15-2
More Learning Objectives
Describe the key factors that influence the
consumer buying process.
Discuss three categories of organizational markets
and explain how organizational buying behaviour
differs from consumer buying behaviour.
Describe the international and small business
marketing mixes.
Business Fifth Canadian edition, Griffin, Ebert & Starke
© 2005 Pearson Education Canada Inc.
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Marketing
Consumer marketing
provides goods to individuals for their personal
use
Industrial marketing
provides products to businesses to use directly,
or indirectly, to produce other products
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© 2005 Pearson Education Canada Inc.
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Products and Services
Marketing can be directed to
Products: tangible goods (food, clothing)
Services: intangible products to serve users’
needs (insurance, health care)
Ideas: thoughts or philosophies
(“Participaction” as a symbol for healthy living)
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© 2005 Pearson Education Canada Inc.
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Relationship Marketing
A type of marketing that emphasizes lasting
relationships with customers and suppliers
Stronger relationships can result in greater
long-term customer satisfaction and client
retention
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© 2005 Pearson Education Canada Inc.
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The Marketing Environment
Competitive
Environment
Political & Legal
Environment
Economic
Environment
The Firm’s
Marketing
Plan
Social & Cultural
Environment
Technological
Environment
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© 2005 Pearson Education Canada Inc.
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Political and Legal Environment
Foreign and domestic politics influence business
through legislation and government programs
designed to support business ventures (exporting)
Companies influence legislation by embarking on
lobbying activities
Companies also make political contributions, within
legal restrictions, to influence government policy
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© 2005 Pearson Education Canada Inc.
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Social and Cultural Environment
Growth in the
number of
single
parent
families
Focus on
reduce,
re-use,
and
recycle
Move
toward
healthy
lifestyles
Women
entering
the work
force
Aging
of the
baby
boomers
Increase
in
violent
crime
Growing
cultural
and ethic
diversity
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© 2005 Pearson Education Canada Inc.
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Technological Environment
Science and technology lead to new ways of
doing everyday things
Consumers can use direct pay systems instead
of carrying cash, or buy using the Internet
new goods continue to emerge (like satellite
dishes and cell phones)
trends create new goods and cause others to
become obsolete
Business Fifth Canadian edition, Griffin, Ebert & Starke
© 2005 Pearson Education Canada Inc.
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Economic Environment
Economic conditions affect the spending
patterns of businesses and individuals
The Canadian Dollar
Inflation
Interest Rates
Trends affect price strategy and the growth
of markets
Business Fifth Canadian edition, Griffin, Ebert & Starke
© 2005 Pearson Education Canada Inc.
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Competitive Environment
Brand competition:similar products
(Coke vs. Pepsi)
Substitute products
dissimilar products that can meet the same need
(juice vs. Pepsi)
International competition
Marketing domestic products against foreign
products (Oldsmobile vs. Honda)
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© 2005 Pearson Education Canada Inc.
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Marketing Plan
A detailed, focused strategy for gearing the marketing
mix to meet consumer needs and wants
Marketing
Mix
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Choosing the Marketing Mix
Product
Price
The basic
design of
the product
How much
consumer
pays
Place
Where and
when the
product is
+
Promotion
=
Product
image and
visibility
Customer
Satisfaction
Business
Profitability
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© 2005 Pearson Education Canada Inc.
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Product Strategy
Offering a good, service, or idea that satisfies the
buyers’ needs is the goal of the firm
Product differentiation
creating a product that has a different image than
existing products on the market to attract consumers
May involve
changing existing products by responding to trends or
improving current offerings
adding new products
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© 2005 Pearson Education Canada Inc.
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Pricing Strategy
Choosing the right price to attract
consumers and meet the firm’s profit goals
May be low price strategy (salt) or high
price strategy (mink coat
Price must consider all costs
operation and administration
marketing research
advertising
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© 2005 Pearson Education Canada Inc.
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Promotion Strategy
Choosing the right method of selling the product
to the consumer
choice of promotional technique and media
determination of product image
development of promotional campaigns and budgets
Communicating the product image to “position”
the product in the minds of consumers
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Promotional Techniques
Sales
Promotion
Personal
Selling
Publicity
Advertising
Public Relations
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Promotional Techniques (1of 2)
Advertising
any paid form of non-personal communication
by a sponsor
persuading or informing customers about the
product via various media
Personal Selling
Selling using sales representatives
Commonly used for industrial marketing
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© 2005 Pearson Education Canada Inc.
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Promotional Techniques (2of 2)
Sales Promotion
using specialty items & methods to
promote the product
(Gifts, coupons, package inserts, samples)
Public Relations
Used to build good relations with
buyers, suppliers and other stakeholders
May involve “good deeds” such as
charitable donations and sponsorship
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Publicity
Any non-paid communication about a firm
and/or its products
outside the control of the firm
Includes press articles by the initiative of
the firm (through press releases) or by
reporting news agencies at their own
initiative
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© 2005 Pearson Education Canada Inc.
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Place (Distribution Strategy)
The part of the marketing mix concerned
with
Getting the product from producer to buyer
Physical transportation
Choice of sales outlets
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© 2005 Pearson Education Canada Inc.
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Target Market and Segmentation
Target market
a group of potential customers who have
similar wants and needs
Segmentation
dividing a consumer market into categories
selecting specific market segment(s) to pursue
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© 2005 Pearson Education Canada Inc.
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Identifying Market Segments
• Search for common traits between
consumers
• Focus on traits that affect product need or
purchase behaviour
•
Geographic region
Customer demographics
Customer psychographics
Behavioural variables
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© 2005 Pearson Education Canada Inc.
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Geographics
Area of residence affects
product consumption
rainfall and umbrellas
snowfall and snowmobiles
or snow blowers
hot summers and backyard
pools
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Demographics
Age
Gender
Marital Status
Religion
Income
Family Size
Ethnicity
Language
Education
Occupations
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Psychographics
Psychological traits:
Attitudes
Interests and hobbies
Opinions
Motivations
Activities
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Behavioural Variables
Occasion for use
Benefits Sought
Reasons for
Purchasing
Loyalty Level
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Market Research
A systematic study of consumer needs
Focuses on the marketing mix elements
Leads to more effective marketing
Increases the accuracy and effectiveness of
market segmentation
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© 2005 Pearson Education Canada Inc.
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The Research Process
Study the
Current
Situation
Select a
Research
Method
Collect Data
Analyze Data
Focus Group
Use
Secondary
Data
Prepare
Report
Survey
Use
Primary
Data
Make
Recommendations
Observation
Experimentation
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© 2005 Pearson Education Canada Inc.
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Observation
Viewing or monitoring human behaviour
Useful for cases where actions occur
automatically without thinking
grocery shopping
May be human observation or technological
supermarket scanners
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© 2005 Pearson Education Canada Inc.
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Survey
Administration of a questionnaire, a list of
questions, to prospective buyers
Relies on a reliable random sample
Administered in person, via phone, mail, or the
Internet
Key issues include choosing appropriate
questions and ensuring honest answers
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© 2005 Pearson Education Canada Inc.
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Focus Group
A small discussion group of prospective customers
or product users
Allows in-depth discussion of complex or
subjective issues regarding products or services
Usually a blind research study where participants
do not know who the sponsor of the group is
Researchers analyze the results by searching for
common themes in participants’ feedback
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© 2005 Pearson Education Canada Inc.
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Experimentation
A controlled research design allows the
determination of how consumers react to
specific situations or appeals
The situations can be manipulated to
compare responses to such things as shelf
placement of products, package colours and
design, advertising strategy
Very costly
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© 2005 Pearson Education Canada Inc.
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Consumer Behaviour
The study of the processes by which
customers come to purchase and consume a
product or service
Influenced by
psychological factors
personal factors
social factors
cultural factors
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© 2005 Pearson Education Canada Inc.
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The Consumer Purchase Process
Marketing Factors
Purchase Process
Personal & Environmental
Factors
Problem
Recognition
Product
Information
Seeking
Price
Evaluation
of
Alternatives
Place
Purchase
Decision
Promotion
PostPurchase
Evaluation
Psychological
Personal
Social
Cultural
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© 2005 Pearson Education Canada Inc.
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The Consumer Buying Process (1 of 2)
Problem Recognition
Consumer becomes aware of a problem or need
May be automatic (the need for food or sleep)
Due to a lifestyle change (new parents, retirement)
Information Seeking
The information search may be long and
detailed, or short and limited
buying a car versus buying a candy bar
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© 2005 Pearson Education Canada Inc.
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The Consumer Buying Process (2 of 2)
Evaluation of Alternatives
Products are compared to identify the best choice
Purchase Decision
choice may be made based upon rational or emotional
motivations
Rational motives include cost, quality, usefulness
Emotional motives include fear, sociability, aesthetics,
imitation of others
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Post-Purchase Evaluation
Marketers must market after the sale to
ensure satisfaction & reduce purchase
anxiety
Purchase anxiety (buyer’s remorse) is fear
on the part of purchasers that they have
purchased the wrong product
(especially crucial for expensive purchases)
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© 2005 Pearson Education Canada Inc.
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Organizational Markets
Organizations purchase goods and services
to be used in the production of other goods
and services
Industrial Market
Reseller Market
Government & Institutional Market
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© 2005 Pearson Education Canada Inc.
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Unique Aspects of Organizational
Markets
Differences in Buyers
Differences in the Buyer-Seller Relationship
Decision making is more rational
Industrial buyers are usually product experts
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© 2005 Pearson Education Canada Inc.
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Differences in Demand
Derived demand
demand for industrial products is derived from
demand for consumer products
Inelasticity of demand
a price change for a product has little impact
on demand because the product is needed in
production and cannot be easily substituted
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Differences in Buyers
Professionals
trained in arranging/negotiating purchase
terms, usually dealing in formal contracts
Specialists
specialize in product lines
Experts
have a lot of knowledge about their purchases
with which to make decisions
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© 2005 Pearson Education Canada Inc.
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Differences in Decision-Making and
Relationships
Industrial purchase processes begin by
developing product specifications
detailed evaluation of alternatives
systematic and detailed post-purchase evaluation
Industrial buyer-seller relationships are longerlasting and have more frequent contact
Sellers make suggestions for product and service
improvement that will benefit their customers
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© 2005 Pearson Education Canada Inc.
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International
Marketing Mix
Products may require substantial change before they can be
marketed to different countries
Pricing requires consideration of product manufacturing
costs, transportation and delivery
Promotion must accommodate cultural differences and
social traditions
Distribution may involve cooperation with other
international firms and adherence to foreign packaging and
labelling legislation
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© 2005 Pearson Education Canada Inc.
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Small Business Marketing Mix
Care must be taken to:
offer products to markets substantial enough to
support the organization
do a complete analysis of costs prior to setting
prices
develop a comprehensive promotional program
using more than personal selling
choose a location that will attract and retain
customers
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© 2005 Pearson Education Canada Inc.
15-46