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Unit 5: Consumer Behavior & Competition Name:________________________________
Marketing Education
DIRECTIONS: Complete the following outline during the class discussion.
What Will You Learn?
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Why an understanding of consumer behavior is important to marketing.
How buyers are motivated to make purchases.
Why competition is important and how business competes for customers.
How markets are segmented and why this is important to marketing.
I. Understanding Consumer Behavior
A. _____________ ____________ is the study of consumers and how they make decisions.
B. The Steps of the Consumer Decision-Making Process:
1. Problem Recognition – always begins with this step
2. Information Search
3. Evaluation of Alternatives
4. Purchase
5. Post-Purchase Evaluation
C. Why Study Consumer Behavior? Understanding __________________ behavior will
help marketers make sure their products and services match customer needs.
D. Needs And Wants
1. The primary focus of the business should be on the customer’s _____________ and
______________. Remember the marketing concept?
2. A ____________is an unfulfilled desire. Products purchased to satisfy a want are not
essential for living, but needed to maintain a certain lifestyle.
3. A ___________________ want is a desire that cannot be satisfied with a purchase.
An example of a non-economic want is friendship.
4. A _____________ is anything you require to live. Food, clothing, shelter, and water
are considered needs.
E. Discretionary Income Vs. Disposable Income
1. _________________ income is the amount of income left after paying basic living
expenses and taxes.
2. _______________ income is the amount of income left after paying taxes, it is
available for saving and spending.
3. Wants are purchased with discretionary income.
4. Needs are purchased with disposable income.
F. Maslow’s Hierarchy of Needs
1. ___________ _____________ was an American physiologist who studied needs and
determined that people satisfy their needs in a rank order (known as a hierarchy) with
lower level needs being satisfied first.
2. Maslow said that people are on _____________ levels of his hierarchy. Some people
feel safety needs as more important to them, than social or esteem needs.
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3. The Steps of Maslow’s Hierarchy of Needs:
a. Physiological Needs: __________________________________
b. Security Needs: ______________________________________
c. Social Needs: ________________________________________
d. Esteem Needs: _______________________________________
e. Self-Actualization Needs: ________________________________
G. Cultural and Social Environment
1. Culture is the history, beliefs, customs, and traditions of a group.
2. A reference group is a group of people or an organization that an individual admires,
identifies with, and wants to be part of.
3. __________________ is the history, beliefs, customs, and traditions of a group.
4. A _____________ ___________ is a group of people or an organization that an
individual admires, identifies with, and wants to be part of.
5. Your reference group has an important influence on much of your behavior and image
II. Buyer Motivation
A. __________________ is the set of positive or negative factors that direct individual
behavior. All of our actions are influenced by motivation.
B. ___________ _____________ are the reasons that customers buy.
1. _________________ motives are reasons to purchase based on feelings, beliefs, or
attitudes.
2. _________________ motives are reasons to buy based on facts or logic.
3. _________________ motives are based on loyalty to a particular company or brand.
C. ________________reasons for buying are based on logic or facts.
1. Includes factors such as saving _________________ or obtaining the highest quality
or greatest value.
2. Virtually _________ buyers have a combination of rational and emotional motive.
E. If you shop in the same store time after time, your motivation for choosing the business
is a _______________ motive – loyalty.
III. The Importance of Competition
A. ______________________is defined as the rivalry among business for customers.
Competition is also defined as the term that encompasses the notion of individuals and
firms striving for a greater share of a market to sell or buy.
B. The Benefits of Competition
1. Competition forces businesses to offer reasonable ______________ for the products
and services that consumers use.
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2. Competition encourages _________________in products with the addition of unique
features and benefits.
3. Businesses are always looking for ____________ and improved products to beat
their competition.
4. Competition offers consumers the benefit of a wide ____________ of products from
which to choose.
C. Price and Non-Price Competition
1. ____________ competition is a rivalry among businesses on the basis of price and
value.
2. ________________ competition occurs when businesses decide to emphasize
factors of their marketing mix other than price.
D. Direct and Indirect Competition
1. _______________ competition occurs with businesses that offer the same type of
product or service.
2. _________________ competition occurs when a business competes with other
companies offering products that are not in the same category but satisfy a similar
need.
E. Monopolies
1. A ________________ is a type of market in which there is only one supplier offering
a unique product.
2. Some ________________ monopolies are allowed to exist because it would not
make sense to have more than one provider of that product or service.
F. _________________ cofounded Microsoft, with Paul Allen. He is ranked by Forbes
magazine as the wealthiest man in the world with a net worth of over $55 billion. Who
is his BIGGEST competitor?
G. _________________ is an entrepreneur and founder of the Oracle Corporation, a
major software company. He is listed on the Forbes list of billionaires as the fourth
richest person in the world. He has been described as the MOST competitive man in
the world.
IV. Markets Can Be Segmented
A. ________________ ______________ is the process of dividing a large group of
consumers into subgroups based on specific characteristics and common needs.
B. A ______________ _____________ is a group of individuals or organizations within a
larger market that share one or more important characteristics.
C. Market Segmentation Categories:
1. _____________________ market segmentation is based on the concept that people
who live in the same geographic area might have the same needs and wants.
2. _____________________ market segmentation consists of dividing the market
based on age, gender, race, income level, ethnicity, educational attainment level, or
religious affiliation.
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3. ___________________ market segmentation is based on people’s interests and
values. This is directly related to lifestyles and social interests.
D. Born between 1980 and 2005, this generation is known as ______________________.
This generation accounts for 14% of the population of the United States.
V. Mass Marketing Vs. Market Segmentation
A. ___________ marketing directs a company’s marketing mix at a large and
heterogeneous group of customers.
1. With mass marketing, ______________ is considered to be a potential customer.
2. However, ____________ products are sold using market segmentation.
3. Companies that practice the marketing concept will use market segmentation.
B. A _____________ ______________ is an identified market with excellent potential
based on careful research.
1. _____________ ______________ is the total revenue that can be obtained from the
market segment.
2. Target markets should be selected from the segments that have the _____________
potential.
3. _________ Companies tend to use Mass Marketing.
4. Soft drinks tend to be Mass Marketed.
5. Soft drink companies also use Market Segmentation.
6. The Coca-Cola Company offers more than 3,000 different products in over 200
countries.
C. Target Marketing
1. A _____________ ______________ is a clearly defined segment of the market which
a business or non-profit organization wants to appeal to.
2. The target market is a group of customers with very ________________ needs to
whom the company can sell its products.
3. The product can be associated with a _________________ or type of user of the
product.
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