Download Chapter 1

Chapter 1
Introduction: Diversity in the
Marketplace
Consumer
Research
Methodology used to study
consumer behavior.
©2000 Prentice Hall
Market
Segmentation
The process of dividing a
potential market into distinct
subsets of consumers and
selecting one or more
segments as a target market
to be reached with a distinct
marketing mix.
©2000 Prentice Hall
Personal
Consumer
The individual who buys
goods and services for his or
her own use, for household
use, for the use of a family
member, or for a friend.
(Also referred to as the
Ultimate Consumer or End
User.)
©2000 Prentice Hall
Organizational
Consumer
A business, government
agency, or other institution
(profit or nonprofit) that
buys the goods, services,
and/or equipment necessary
for the organization to
function.
©2000 Prentice Hall
Consumer Behavior as an Academic
Discipline and an Applied Science
• Factors that contributed to the growing interest
in consumer behavior:
– accelerated rate of new product
development
– consumer movement
– public policy concerns
– environmental concerns
– the opening of national markets throughout
the world
©2000 Prentice Hall
Consumer
Behavior
The behavior that consumers
display in searching for,
purchasing, using,
evaluating, and disposing of
products, services, and ideas.
©2000 Prentice Hall
The Marketing Concept
• To be successful, a company must determine
the needs and wants of specific target markets
and deliver the desired satisfactions better than
the competition.
©2000 Prentice Hall
Marketing
Concept
A consumer-oriented
philosophy that suggests that
satisfaction of consumer
needs provides the focus for
product development and
marketing strategy to enable
the firm to meet its own
organizational goals.
©2000 Prentice Hall
The Scope of Consumer
Behavior
• How do individuals make decisions to spend their
resources (time, money, effort).
– Includes: what they buy, why they buy it, when they
buy it, where they buy it, how often they buy it, and
how often they use it.
• How do individuals dispose of their once-new
purchases.
– Includes: do they store it, throw it or give it away, sell
it, rent it, or lend it out?
©2000 Prentice Hall
Consumer Behavior’s
Interdisciplinary Roots
• Consumer Behavior borrows from psychology,
sociology, social psychology, anthropology.
• All factors combine to form a comprehensive
model that reflects both the cognitive and
emotional aspects of consumer decision making.
©2000 Prentice Hall
A Simplified Model of Consumer Decision
Making
• The decision-making process can be viewed as
three interlocking stages:
– The input stage:
• marketing efforts
• sociological influences
– The process stage:
• psychological factors
– The output stage:
• purchase behavior
• postpurchase evaluation
©2000 Prentice Hall
External Influence
Input
Firm’s Marketing Efforts
1. Product
2. Promotion
3. Price
4. Channels of distribution
Need
Recognition
Process
Prepurchase
Search
Evaluation of
Alternatives
Output
Purchase
1. Trial
2. Repeat purchase
Postpurchase Evaluation
Sociocultural Environment
1. Family
2. Informal sources
3. Other noncommercial
sources
4. Social class
5. Subculture and culture
Psychological Field
1. Motivation
2. Perception
3. Learning
4. Personality
5. Attitudes
Experience
Figure 1-1
A Simple Model of
Consumer Decision
Making
©2000 Prentice Hall
Ethics in Marketing
• Unethical practices occur at every level of the
marketing mix:
– in the design of the products, in packaging, in
pricing, in advertising, and in distribution
• There are two different types of theories:
– teleological theories and deontological theories
©2000 Prentice Hall
Table 1.1 Unethical Marketing Behavior
TYPES OF UNETHICAL MARKETING BEHAVIOR EXAMPLES
PRODUCT
•Safety
•Shoddy goods
•Inadequate warranties
•Environmental pollution
•Mislabeled products
•Development
•Manufacturing
•Brand “knock-offs”
PRICE
•Excessive markups
•Price differentiation
•Price discrimination
PACKAGING
•Deceptive quantities
Manufacture of flammable stuffed animals
Products that cannot withstand ordinary wear and tear
Warranties with insufficient time or parts coverage
Dumping hazardous wastes
Flavored sugar water sold as apple juice for babies
Bribery of FDA officials to secure agency approval of generic
pharmaceuticals
Unauthorized substitutions in generic drugs after FDA approval
Counterfeit branded goods sold as genuine brands
High prices used by retailers to connote quality
Yield-management pricing of airline tickets, resulting in day- to-day
differential pricing of adjacent seats
Favored pricing to preferred racial or ethnic groups
Some marketers use “packaging-to-price” tactics that mask a
decrease in product quantity while maintaining the same price and
traditional product size
©2000 Prentice Hall
Table 1.1 continued
PROMOTION
•Exaggerated claims
•Tasteless advertising
•Inappropriate targeting
•Deceptive advertising
•Persuasive role models
for inappropriate
products
•Naïve audiences
•Captive audiences
•Telemarketing
DISTRIBUTION
•Fraudulent sales
•Bait-and-switch tactics
•Direct marketing
Razor blade manufacture advertises that its razors offered “the
closest shave known to man”
Sexual innuendoes and gender disparagement
Inner-city billboards for luxury products
Ads for cereal claiming it prevents heart disease
Celebrity spokespersons in beer, liquor, or cigarette ads targeted to
youths
Billboards for cigarettes and alcohol in poor urban neighborhoods,
where many people are dying from related causes
Ads on children’s TV for nutritionally unsound products
Mandatory viewing of TV commercials by students in schools
subscribing to closed channel newscasts
Offers of fabulous prizes in return for credit-card purchases of touted
goods
Phony markdowns based on “kited” retail list prices
Luring consumers with ads for low-priced merchandise and
switching them to higher-priced models
Deceptive, misleading product size and performance claims
©2000 Prentice Hall
Table 1.2 Unethical Consumer
Practices
•Shoplifting
•Switching price tags
•Returning clothing that has been worn
•Abusing products and returning them as damaged goods
•Redeeming coupons without the requisite purchase
•Redeeming coupons that have expired
•Returning products bought at sale and demanding the full-price refund
•Sealing belts from store clothing
•Cutting buttons off store merchandise
•Returning partially used products for full store credit
•Abusing warranty or unconditional guarantee privileges
•Damaging merchandise in a store and then demanding a sales discount
•Duplicating copyrighted materials without permission
©2000 Prentice Hall
Teleology
An ethical philosophy which
considers the moral worth of
a behavior as determined by
its consequences.
©2000 Prentice Hall
Utilitarianism
A teleological theory
summarized best by the idea
of “the greatest good for the
greatest number.”
©2000 Prentice Hall
Deontology
An ethical philosophy that
places greater weight on
personal and social values
than on economic values.
©2000 Prentice Hall
Ethics and Social Responsibility
• Corporate Codes of Ethics
• Trade Associations Codes of Ethics
• Mission-Based Social Goals
©2000 Prentice Hall
Figure 1.2 Example of a Company
Policy Statement Stressing Social
Responsibility
©2000 Prentice Hall
The Societal Marketing Concept
• All companies prosper when society prospers.
• Companies as well as individuals, would be
better off it social responsibility was an
integral component of every marketing
decision.
• Requires all marketers adhere to
principles of social responsibility in
marketing of their goods and services.
©2000 Prentice Hall
Societal
Marketing
Concept
A revision of the traditional
marketing concept that
suggests that marketers adhere
to principles of social
responsibility in the marketing
of their goods and services;
that is, they must endeavor to
satisfy the needs and wants of
their target markets in ways
that preserve and enhance the
well-being of consumers and
society as a whole.
©2000 Prentice Hall