Marketing 220 term paper

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Consumer and Business Buying

Behavior

Week 3 Notes MKT 220

Charter Oak State College Principles of Marketing Kevin W. Fitzgerald, 2012

Notes based on Marketing, an Introduction by Gary Armstrong & Philip Kotler

Introduction

Week 5 Notes MKT 220

Consumer and business buyers vary greatly in their characteristics and circumstances. Understanding consumer and business buying behavior is one of the biggest challenges marketers face.

The consumer market consists of all the individuals and households who buy or acquire goods and services for personal consumption.

The business market comprises all organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit.

This Week’s Objectives…

Week 3 Notes MKT 220

At the end of this week you should be able to:

1. Understand the consumer market and the major factors that influence consumer buying behavior.

2. Identify and discuss the stages in the buyer decision.

3. Describe the adoption and diffusion process for new products

4. Define the business market and identify the major factors that influence business buying behavior.

5. List and define the steps in the business buying behavior.

Consumer Markets and Consumer Buyer Behavior

Model of Consumer Behavior

Characteristics Affecting Consumer Behavior

•Culture

•Social

•Personal

•Psychological

•Buyer

Week 3 Notes MKT 220

The Buyer Decision

•Need Recognition

•Information Search

•Evaluation of Alternatives

•Purchase Decision

•Post-purchase Decision

Buyer Decision (New Products)

Consumer Behavior Across Borders

Factors Influencing Consumer Behavior

Cultural

Culture

Sub-culture

Social Class

Social

Reference Group

Family

Roles & status

Personal

Age & Lifestyle

Occupation

Economic

Lifestyle

Personality

Psychology

Motivation

Perception

Learning

Belief & Attitude

Buyer

Week 3 Notes MKT 220

Maslow’s Hierarchy of Needs

Psychological Needs (food, water, shelter)

Safety Needs (security, protection)

Social Needs (sense of belonging, love)

Esteem Needs (self-esteem, recognition)

Self- Actualization

(self-development and realization)

Week 3 Notes MKT 220

Example: Loyalty

Week 3 Notes MKT 220

Krispy Kreme has groups that follow them around.

Brand loyalty in Krispy Kreme is very high. There are groups that attend every store opening and newsletters that talk about the latest Krispy Kreme news. These grass roots campaigns use customers to spread brand awareness, not marketers like in most company’s.

Consumer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Post-purchase Behavior

Purchase Decision

Week 3 Notes MKT 220

Charter Oak State College Kevin W. Fitzgerald 2005

Buyer Decision for New Products

Adoption Process

•Awareness

•Interest

•Evaluation

•Trial

•Adoption

Individual Differences

Week 3 Notes MKT 220

Influence of Product Characteristics

•Relative Advantage

•Compatibility

•Complexity

•Divisibility

•Communicability

Model of Business Buyer Behavior

Week 3 Notes MKT 220

The Environment

Market Stimuli

Product

Price

Placement

Promotion

Other Stimuli

Economy

Technology

Political Culture

Competitive

The Buying Organization

Organizational Influences

The Buying Center

Interpersonal and Individual Influences

Buying Decision Process

Buyer Response

Product or Service Choice

Supplier Choice

Order Quantity

Delivery Terms and Times

Service Times

Payment

Major Business Behavior Buying Influences

Environmental

Economic Development

Supply Conditions

Technological Change

Political and Regulatory

Development

Competitive Developments

Cultural and Customs

Organizational

Objectives

Policies

Procedures

Organizational Structure

Systems

Interpersonal

Authority

Status

Empathy

Persuasiveness

Individual

Age

Income

Education

Job Position

Personality

Risk Attitude

Buyer

Week 3 Notes MKT 220

Example: Loyalty

Week 3 Notes MKT 220

Mattel’s Barbie doll is timeless and trendy.

Barbie has changed her look many times over the years to keep in-tune with girls’ current trends. Most customers buy several dolls and set’s of clothing (although, only one Ken).

Performance Review

Order-Routine Specification

Supplier Selection

Proposal Solicitation

Supply Watch

Product Specification

Consumer Buying Process

Week 3 Notes MKT 220

General Need Description

Problem Recognition

Charter Oak State College Kevin W. Fitzgerald 2005

Key Terms

Week 3 Notes MKT 220

•Adoption Process

•Attitude

•Belief

•Business Buyer Behavior

•Buying Center

•Cognitive Dissonance

•Consumer Buyer Behavior

•Consumer Market

•Culture

•Derived Demand

•Groups

•Learning

•Lifestyle

•Modified Rebuy

•Motive (or Drive)

•New Product

•New Task

•Opinion Leaders

•Perception

•Social Class

•Straight Rebuy

•Subculture

•Systems Selling

•Value Analysis

Relevant Websites

Week 3 Notes MKT 220

US Census Bureau http://www.census.gov

USA Data http://www.usdata.com

Forrester Research http://www.forrester.com

American Demographics http://www.demographics.com

Target Marketing http://www.napco.com/tm/tmcover.html

Market Segmentation Resource Locator http://www.awool.com

Target Marketing & Creative Services http://www.targetweb.com

Advertising Research Foundation (ARF) http://www.arfsite.org

Marketing Research Association (MRA) http://www.mra-net.org

http://www.census.gov/

http://www.usdata.com/

http://www.forrester.com/

http://www.demographics.com/

http://www.napco.com/tm/tmcover.html

http://www.awool.com/

http://www.targetweb.com/

http://www.arfsite.org/

http://www.mra-net.org/

Market Segmentation, Targeting and Positioning for

Competitive Advantage

Week 3 Notes MKT 220

Charter Oak State College Principles of Marketing Kevin W. Fitzgerald, 2012

Notes based on Marketing, an Introduction by Gary Armstrong & Philip Kotler

Introduction

Week 3 Notes MKT 220

Marketers realize that they cannot appeal to all consumers in their markets – or at least not to all consumers the same way. The day’s of mass marketing (one type of marketing approach for all consumers) are over! Consumers are too numerous and too varied in their needs and buying practices.

Instead, today’s marketers practice target marketing – identifying unique consumer marketing segments which they target with different messages, prices, distribution, advertising, etc. The right products are tailored to reach each market more efficiently.

This Week’s Objectives…

Week 3 Notes MKT 220

At the end of this week you should be able to:

1. Define the 3 stages of target marketing: marketing segmentation, market targeting and market positioning.

2. List and discuss the major levels of marketing segmentation and bases for segmenting consumer and business markets.

3. Explain how companies identify attractive market segments and chose a market coverage strategy.

4. Discuss how companies position their products for maximum competitive advantage in the marketplace.

Target Marketing

Week 3 Notes MKT 220

Market Segmentation – Dividing a market into distinct groups of buyers with different needs, Characteristics or behaviors

Market Targets – Evaluate each market segments attractiveness

Market Positioning – Setting the competitive positioning for the product and creating a detailed marketing plan

Market Environment

Week 3 Notes MKT 220

Marketing Position

Marketing Target

Marketing Segmentation

6. Develop marketing mix for each segment

5. Develop positioning for each target segment

4. Select the target segments

3. Develop measures of segment attractiveness

2. Develop profiles of resulting segments

1. Identify bases for market segmentation

Marketing Segmentation

Week 3 Notes MKT 220

Mass Market

Segment Market

Niche Market Micromarketing

No Segmentation

Complete Segmentation

Levels of Marketing Segmentation

Week 3 Notes MKT 220

Mass Marketing

Segment Marketing

Niche Marketing

Micro Marketing

Local Marketing

Individual Marketing

Fitzgerald Fun Fact

Week 3 Notes MKT 220

The Ford Model T is a great example of what happens when you don’t segment your market.

By 1924 over half of the world’s cars were Ford Model T’s. Reputedly, Henry Ford said, “You can have it in any color, as long as it’s black.” General Motors realized consumers wanted to be individuals. They created the Chevrolet in many styles (sedan, roadster and truck) and offered

them in a wide variety of colors, thanks to Du Pont’s colorful paint. GM’s President said, “A car for every purse and purpose.” GM’s market segmentation won out and in 1927 Ford ceased production on the Model T.

Consumer Marketing Segmentation

Week 3 Notes MKT 220

Geographic

Demographic

Age & Life Cycles

Gender

Income

Psychographic

Behavioral

Example: Segmentation

Week 3 Notes MKT 220

Iams Dog food uses a dual approach to market segmentation

The dog food itself is segmented by the pet’s age (puppy, adult, active adult and mature). Each formula targets a different age and need. The dog food also targets the behavioral and psychographic segments of the pet’s owners, who want to buy the best brand of food for their dog.

Requirements for Effective Segmentation

Week 3 Notes MKT 220

Measurable

Accessible

Substantial

Differentiable

Actionable

Market Coverage Strategies

Week 3 Notes MKT 220

(a) Undifferentiated Marketing

(b) Differentiated Marketing

Company Marketing

Mix

Company Marketing

Mix

Company Marketing Mix 1

Company Marketing Mix 2

Company Marketing Mix 3

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

Company Marketing

Mix

Positioning Strategies

Week 3 Notes MKT 220

Product Differentiation

Service Differentiation

People Differentiation

Image Differentiation

Example: Positioning

Week 3 Notes MKT 220

Targeting Children for a car sales.

In the May ’97 issue of Sports Illustrated for Kids, Chevy ran a 2- page spread advertising their Chevy Ventura. They showed kids watching video’s in the back-seat of the minivan.

They were targeting the children (or what they called the “backseat consumer”) as potential decision makers/ influencers in the car-buying process.

USP (Unique Selling Proposition)

Week 3 Notes MKT 220

Pick an attribute and become “Number one” in it:

Important

Distinctive

Superior

Communicable

Preemptive

Affordable

Profitable

Communicate the USP to the consumers

Example: USP

Week 3 Notes MKT 220

Companies use unique USPs to differentiates themselves from their competition and stand-out to consumers.

Domino’s Delivers. Pizza delivered in 30 minutes or less or it’s free.

Guaranteed Overnight Delivery. When it absolutely, positively has to be there overnight.

Constant span, virus and internet protection and security. It’s better with the Butterfly.

Key Terms

Week 3 Notes MKT 220

•Age & Life-Cycle Segmentation

•Behavioral Segmentation

•Benefit Segmentation

•Competitive Advantage

•Concentrated Marketing

•Demographic Segmentation

•Differentiated Marketing

•Gender Segmentation

•Geographic Segmentation

•Income Segmentation

•Individual Marketing

•Intermarket Segmentation

•Local Marketing Market

•Market Positioning

•Market Segmentation Market Targeting Micromarketing

•Niche Marketing Occasion Segmentation

•Product Position

•Psychographic Segmentation

•Segment Marketing Target Market

•Undifferentiated Marketing

Relevant Websites

Week 3 Notes MKT 220

SRI Company’s Value & Lifestyle segmentation questionnaire http://www.future.sri.com/VALS/presurvey.shtml

DSS Research’s segmentation information http://www.dssresearch.com/library/segment/understanding.asp

USADATA http://www.usadata.com

Cheskin Research’s analysis of the Hispanic market http://www.cheskin.com/think/articles/teempaper.html

American Demographics http://www.demographics.com

Marketing Tools http://www.marketingtools.com

American Business Press (ABP) http://www.americanbusinesspress.com

American Marketing Association (AMA) http://www.ama.org

BrandWeek http://www.brandweek.com

http://www.future.sri.com/VALS/presurvey.shtml

http://www.dssresearch.com/library/segment/understanding.asp

http://www.usadata.com/

http://www.cheskin.com/think/articles/teempaper.html

http://www.demographics.com/

http://www.marketingtools.com/

http://www.americanbusinesspress.com/

http://www.ama.org/

http://www.brandweek.com/