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Fourth Edition PART 4 . . . . . . . . . . . . . . . . . . . . . . . . Understanding Principles of Marketing Copyright ©2003 Prentice Hall, Inc. Chapter 10 Understanding Marketing Processes and Consumer Behavior Copyright ©2003 Prentice Hall, Inc. 10 - 2 “In our factory, we make lipstick. In our advertising, we sell hope.” ~ Charles Revson Revlon Cosmetics Copyright ©2003 Prentice Hall, Inc. 10 - 3 Key Topics Definition of marketing The external marketing environment Segmentation and target marketing The consumer buying process Organizational markets and buying behavior Consumer and industrial products Branding and packaging Copyright ©2003 Prentice Hall, Inc. 10 - 4 What Is Marketing? “Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives” OR Finding a need and filling it! Copyright ©2003 Prentice Hall, Inc. 10 - 5 The Influence of Marketing Permeates Everyday Life Goods Consumer Industrial Services Ideas Copyright ©2003 Prentice Hall, Inc. Relationship marketing emphasizes lasting relationships with customers and suppliers 10 - 6 The External Environment Shapes Marketing Programs Political & Legal Environment Competitive Environment The Firm & It's Marketing Plan Plans Strategies Social & Economic Cultural Decisions Environment Environment Technological Environment Copyright ©2003 Prentice Hall, Inc. 10 - 7 The Competitive Environment Drives Marketing Decisions Substitute product competition Brand competition International competition Copyright ©2003 Prentice Hall, Inc. 10 - 8 Marketing Mix The “Four P’s” roduct ricing lace (Distribution) Copyright ©2003 Prentice Hall, Inc. romotion 10 - 9 The Promotional Mix Advertising Sales Promotions Copyright ©2003 Prentice Hall, Inc. Personal Selling Public Relations 10 - 10 Market Segmentation & Target Marketing Market Segmentation Dividing a market into customer categories Target Marketing Selecting a category of customers with similar wants and needs who are likely to respond to the same products Copyright ©2003 Prentice Hall, Inc. 10 - 11 Identifying Market Segments Geographic Demographic Variables Variables Psychographic Variables Copyright ©2003 Prentice Hall, Inc. 10 - 12 Consumer Behavior Why do consumers purchase and consume products? Psychological Influences Personal Influences Social Influences Cultural Influences Copyright ©2003 Prentice Hall, Inc. 10 - 13 The Consumer Buying Process Personal & Environmental Factors Psychological Problem Recognition Personal Information Seeking Social Evaluation of Alternatives Purchase Decision Cultural Postpurchase Evaluation Marketing Factors Product Copyright ©2003 Prentice Hall, Inc. Pricing Promotion Place 10 - 14 Organizational Markets Industrial Market Reseller Market Copyright ©2003 Prentice Hall, Inc. Government & Institutional Market 10 - 15 Organizational Buying Behavior Differences in buyers Professionals Specialists Experts Differences in buyer/seller relationships Copyright ©2003 Prentice Hall, Inc. 10 - 16 Product Features and Benefits Features Tangible and intangible qualities that a company builds into its products Benefits The results of using those products Copyright ©2003 Prentice Hall, Inc. 10 - 17 Classifying Products Consumer Industrial Convenience Goods Expense Items Shopping Goods Capital Items Specialty Goods Copyright ©2003 Prentice Hall, Inc. 10 - 18 Product Offerings Product Line A group of similar products, intended for similar buyers, who will use them in similar ways. Product Mix The total group of products that a company offers for sale. Copyright ©2003 Prentice Hall, Inc. 10 - 19 Developing New Products The New Product Development Process Product Mortality Rates Strategy of introducing new products to respond quickly to customer or market changes Copyright ©2003 Prentice Hall, Inc. 10 - 20 Creating Product Brands Branding Using symbols to communicate the qualities of a given product to create loyal consumers Types of Brands: National Brands Licensed Brands Private Brands Copyright ©2003 Prentice Hall, Inc. 10 - 21 The World’s 10 Most Valuable Brands 1. Coca Cola 6. Intel 2. Microsoft 7. Disney 3. IBM 8. Ford 4. GE 9. McDonald’s 5. Nokia 10.AT&T Source: “The Best Global Brands,” BusinessWeek, August 6, 2001 Copyright ©2003 Prentice Hall, Inc. 10 - 22 The Future of Top Brands Gaining Value… Losing Value… Starbucks +32% Xerox -38% Samsung +22% Amazon.com -31% Financial Times +14% Yahoo! -31% GE +11% Duracell -30% Guinness +11% Ford -17% Source: “The Best Global Brands,” BusinessWeek, August 6, 2001 Copyright ©2003 Prentice Hall, Inc. 10 - 23 Product Packaging Attracts consumers Displays brand name Protects contents Supplies information Communicates features and benefits Provides features and benefits (e.g. easy pour spout) Copyright ©2003 Prentice Hall, Inc. 10 - 24 The International Marketing Mix PRODUCTS PRICING PROMOTION DISTRIBUTION Copyright ©2003 Prentice Hall, Inc. 10 - 25 Small Business and the Marketing Mix Products Pricing Promotion Distribution Copyright ©2003 Prentice Hall, Inc. 10 - 26 Chapter Review Define marketing Describe the forces of the external marketing environment Explain market segmentation and target marketing Describe the consumer buying process Discuss the organizational market categories Copyright ©2003 Prentice Hall, Inc. 10 - 27 Chapter Review Define product and distinguish between consumer and industrial products Explain the importance of branding and packaging Copyright ©2003 Prentice Hall, Inc. 10 - 28