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BUSINESS 7e PART 3 UNDERSTANDING PRINCIPLES OF MARKETING 1 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e CHAPTER 10 Understanding Marketing Processes and Consumer Behavior 2 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Chapter Outline What Is Marketing? Target Marketing and Market Segmentation Marketing Research Understanding Consumer Behavior Organizational Marketing and Buying Behavior International Marketing Mix Small Business and the Marketing Mix 3 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Marketing? Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives 4 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Marketing: Providing Value and Satisfaction Value and Benefits Value is the relative comparison of a products benefits versus its costs Benefits include the functions of the product and the emotional satisfactions associated with owning, experiencing or possessing it 5 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Marketing: Providing Value and Satisfaction Value and Utility Utility is the ability of a product to satisfy a human want or need. Four kinds: Time Utility Place Utility Ownership Utility Form Utility 6 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Marketing: Goods, Services and Ideas Consumer goods are products purchased by consumers for personal use Industrial goods are products used by companies to produce other products Services are intangible products that can be purchased 7 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Relationship Marketing? Marketing strategy that emphasizes lasting relationships with customers and suppliers 8 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e The Marketing Environment External environment is the outside factors that influence marketing programs by posing opportunities and threats. Five environmental factors: 9 Political–Legal Environment Social–Cultural Environment Technological Environment Economic Environment Competitive Environments Copyright 2004 Prentice Hall, Inc. BUSINESS 7e The External Marketing Environment 10 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Competitive Environment Substitute products differ from those of competitors but can fill the same need 11 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Competitive Environment Brand competition occurs between similar products 12 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Competitive Environment International competition matches domestic products against foreign products 13 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Who Are Marketing Managers? Manager who plans and implements the marketing activities that result in the transfer of products or services from producer to consumer 14 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is a Marketing Plan? Detailed strategy for focusing marketing efforts on consumer needs and wants 15 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is the Marketing Mix (or the “Four P’s”)? Combination of product, pricing, promotion and distribution (place) strategies used to market products 16 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is a Product? A product is a good, service or idea designed to fill a consumer need or want. 17 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is a Product? Product differentiation is the creation of a product feature or product image that differs enough from competing products to attract consumers How do they differentiate themselves? 18 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Pricing? Pricing is selecting the best price at which to sell a product. Prices must support a variety of costs Prices must be competitive Low- and high-price strategies can be effective in different situations 19 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Distribution (Place)? Distribution is part of the marketing mix concerned with getting products from producers to consumers. Decisions about warehousing, inventory control and transportation options Decisions about channels 20 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Promotion? Promotion is the techniques for communicating information about products. Four promotional tools: Advertising Personal Selling Sales Promotions Public Relations 21 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Target Marketing and Market Segmentation? Target markets are groups of people with similar wants and needs Market segmentation is the process of dividing a market into categories of customer types 22 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Identifying Market Segments Geographic variables are geographical units Demographic variables are characteristics of populations 23 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Demographic Variables 24 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Identifying Market Segments Psychographic variables are consumer characteristics such as lifestyles, opinions, interests and attitudes Behavioral variables are consumer characteristics based on the use of a product, benefits sought from it, reasons for its purchase and brand loyalty Toothpaste w/ -Whiteners -Fluoride -etc. 25 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Marketing Research? Study of consumer needs and wants and the ways in which sellers can best meet them 26 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Market Research and the Marketing Process 27 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e The Research Process . Study the current situation . . Select a research method Collect data • Secondary data are already available from previous research • Primary data are developed through new research . . 28 Analyze the data Prepare a report Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Research Methods Observation involves watching and recording consumer behavior Survey uses a questionnaire either mailed to individuals or used as the basis of interviews 29 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Research Methods Focus group involves a small gathering of people that are presented with an issue and asked to discuss it in depth Experimentation compares the responses of the same or similar people under different circumstances 30 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Data Warehousing and Data Mining? Data warehousing is the process of collecting, storing and retrieving data in electronic files Data mining is the application of electronic technologies for searching, sifting and reorganizing data to uncover useful marketing information and target products in the marketplace 31 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Consumer Behavior? Study of the decision process by which people buy and consumer products 32 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Influences on Consumer Behavior Psychological influences: individual’s motivations, perceptions and attitudes Personal influences: lifestyle, personality and economic status Social influences: family, opinion leaders and reference groups Cultural influences: culture, subculture and social class 33 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Brand Loyalty? Pattern of regular consumer purchasing based on satisfaction with a product 34 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Consumer Buying Behavior 35 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e The Consumer Buying Process Problem/Need Recognition Consumer recognizes a problem or need Information Seeking Consumer often seeks information Evaluation of Alternatives Consumer compares products by analyzing product attributes Purchase Decision Consumer makes “buy” decision based on rational and/or emotional motives Postpurchase Evaluations Consumer repurchases products based on levels of satisfaction 36 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e What Is Organizational Marketing and Buying Behavior? Organizational marketing deals with buyers from organizational (or commercial) markets and with buying behaviors distinct from those found in consumer markets 37 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Organizational Markets Industrial market includes businesses that buy goods to be converted into other products or used during production Reseller market consists of intermediaries that buy and resell finished goods Government and institutional market consists of nongovernmental buyers of goods and services 38 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Organizational vs. Consumer Buying Behaviors Differences in Buyers: Organizational buyers are professional, specialized and expert Differences in the BuyerSeller Relationship: Organizational buying involves frequent and enduring buyerseller relationships 39 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e The International Marketing Mix International Products Some products can be sold abroad with few changes International Pricing Marketers must consider the higher costs of transporting and selling products abroad International Distribution Delays in starting new distribution networks can be costly International Promotion A good ad campaign is a good campaign just about everywhere 40 Copyright 2004 Prentice Hall, Inc. BUSINESS 7e Small Business and the Marketing Mix Small-Business Products Small firms should understand consumer wants before creating new products or services Small-Business Pricing Small firms should set prices by assessing costs Small-Business Distribution Small firms should select a facility location aimed at attracting and retaining customers Small-Business Promotion Small firms should plan promotional expenses as part of start-up costs 41 Copyright 2004 Prentice Hall, Inc.