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Chapter 11
Marketing Process and Consumer
Behavior: Selected topics
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What is Marketing
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What is Marketing
Marketing: is an organizational function and a set of processes for
creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organization
and its stakeholders.”
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Delivering Value – Value and Benefits
• Customers buy products that offer the best value when it comes to
meeting their needs and wants.
• Value is a relative comparison of a product’s benefits versus its costs
Value =
𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠
𝐶𝑜𝑠𝑡𝑠
• A satisfied customer perceives the benefits derived from the
purchase to be greater than its costs.
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Delivering Value – Value and Utility
• Utility is the Ability of a product to satisfy a human want or need.
• Marketing strives to provide four kinds of utility:
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Form utility. Designing products with features that customers want.
Time utility. Providing products when customers will want them.
Place utility. Providing products where customers will want them.
Possession utility. Marketing creates a possession utility by transferring
product ownership to customers by
• Setting selling prices,
• Setting terms for customer credit payments
• Providing ownership documents.
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Goods, Services, and Ideas
• Marketing apply to:
• Consumer Goods physical products purchased by consumers for personal use.
(Medicine, car, food)
• Industrial Goods physical products purchased by companies to produce other
products (Raw materials, Machines)
• Services products having nonphysical features or activity that can be
purchased. (information, expertise)
• Marketers also promote ideas such as
 Ads warn us against copyright infringement and piracy.
 Advantages of avoiding fast foods.
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Relationship Marketing and Customer
Relationship Management
• Relationship Marketing: is a marketing strategy that emphasizes
building lasting relationships with customers and suppliers.
• Stronger relationships can result in:
 Greater long-term satisfaction.
 Greater customer loyalty.
 Greater customer retention.
• Customer Relationship Management (CRM): is an organized methods
that a firm uses to build better information connections with clients,
so that stronger company-client relationships are developed.
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Strategy: The Marketing Mix
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• In planning and implementing strategies, marketing managers
develop the four basic components (often called the “Four Ps”) of the
marketing mix: Product, Pricing, Place, and Promotion.
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Product
• Product :is a good, service, or idea that is Marketed to fill consumers’
needs and wants.
• Product Differentiation creation of a product feature or product
image that differs enough from existing products to attract customers
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Price
• Pricing process of determining the best price at which to sell a
product.
• Successful pricing means finding a profitable middle ground between
Costs and competitor’s prices.
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Place (Distribution)
• Place (Distribution) part of the marketing mix concerned with getting
products from producers to consumers.
• Includes decisions about:
• warehousing and inventory control.
• transportation options.
• Channels.
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Promotion
• Promotion: Refers to techniques for communicating information
about products.
• It is the most visible component of the marketing mix.
• The most important promotional tools include:
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Advertising,
Personal selling,
Sales promotions,
Publicity/public relations,
Direct or interactive marketing.
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Blending It All Together: Integrated
Strategy
• Integrated Marketing Strategy: Strategy that blends (Mixes) together
the Four Ps of marketing to ensure their compatibility with one
another and with the company’s non-marketing activities as well
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Target Marketing and Market
Segmentation
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• Target Market group of people who have Similar wants and needs
and can be expected to show interest in the same products.
• Target marketing requires market segmentation.
• Market Segmentation process of dividing a market into categories of
customer types, or “segments”.
• Product Positioning process of fixing, adapting, and communicating
the nature of a product
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Identifying Market Segments
• Most important five variables for identifying market segments:
1. Geographic Variables geographic units that may be considered in
developing a segmentation strategy. (East – West – middle east)
2. Demographic Variables characteristics of populations that may be
considered in developing a segmentation strategy. (Age – income – Gender)
3. Geo-Demographic Variables combination of geographic and demographic
traits used in developing a segmentation strategy.
4. Psychographic Variables consumer characteristics, such as lifestyles,
opinions, interests, and attitudes that may be considered in developing a
segmentation strategy.
5. Behavioral Variables behavioral patterns displayed by groups of consumers
and that are used in developing a segmentation strategy (Heavy users –
specific purposes)
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Understanding Consumer
Behavior
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Consumer Behavior
• Consumer Behavior: is study of the decision process by which people
buy and consume products.
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The consumer Buying Process
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Developing New Products
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Product life cycle
• When a product reaches the market, it enters the product life cycle.
• Product life cycle (PLC): is a series of stages through which it passes
during its commercial life.
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Product life cycle stages
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• Introduction.
• This stage begins when the product reaches the marketplace.
• Marketers focus on making potential customers aware of the product and its benefits.
• Extensive development, production, and sales costs erase all profits.
• Growth.
• Sales start to climb rapidly.
• Marketers lower price slightly and continue promotional expenditures to increase sales.
• The product starts to show a profit as revenues surpass costs, and other firms move
rapidly to introduce their own versions.
• Maturity.
• Sales growth starts to slow.
• Although the product earns its highest profit level early in this stage, increased
competition eventually forces price cutting, increasing advertising and promotional
expenditures, and lower profits.
• Toward the end of the stage, sales start to fall.
• Decline.
• Sales and profits continue to fall, as new products in the introduction stage take away
sales.
• Firms end or reduce promotional support (ads and salespeople), but may let the
product linger to provide some profits.
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