economic buyers
people who know all the facts and logically compare choices to get the greatest satisfaction from spending their time and money
economic needs
needs concerned with making the best use of a consumer's time and money, as the consumer judges it
different economic needs
1. economy of purchase or use
2. efficiency in operation or use
3. dependability in use
4. improvement of earnings
5. convenience
influence on consumer behavior
economic needs
psychological variables
social influences
purchase situation
needs
the basic forces that motivate a person to do something
(can involve physical well-being or the individual's self-view and relationship with others)
wants
are "needs" that are learned during a person's life
need not satisfied=
drive
drive
is a strong stimulus that encourages action to reduce a need (internal)
PSSP Hierarchy of Needs
physiological needs
safety needs
social needs
personal needs
Physiological needs
concerned with biological needs- food, liquid, rest, and sex
safety needs
concerned with protection and physical well-being (perhaps involving both health, financial security, medicine, and exercise)
Marketers that offer _________ to consumer problems build brand loyalty.
solutions
social needs
concerned with love, friendship, status, and esteem- things that involve a person's interaction
personal needs
concerned with an individual's needs for personal satisfaction- unrelated to what others think or do. (accomplishment, fun, freedom, relaxation, making the world a better place)
perception
how we gather and interpret information form the world around us
selective exposure
our eyes and minds seek out and notice only information that interests us
selective perception
we screen out or modify ideas messages, and information that conflict with previously learned attitudes and beliefs
selective retention
we remember only what we want to remember
psychological variables
motivation
perception
learning
attitude
trust
lifestyle
learning
a change in a person's thought process caused by prior experience
the learning process
drive-> cues -> response
cues
products, signs, ads, and other stimuli in the environment
response
an effort to satisfy the drive, depends on the cues and the person's past experiences
reinforcement
occurs when the response is followed by satisfaction- that is reduction in the drive. (this repeated leads to the development of a habit)
Many ________ are culturally learned.
needs
attitude
a person's point of view toward something, may be a product, advertisement, salesperson, firm or an idea (often action-oriented)
belief
a person's opinion about something, may help shape a consumer's attitudes but don't necessarily involve any liking or disliking
expectation
an outcome or event that a person anticipates or looks forward to
(formed by attitudes and beliefs combining)
trust
the confidence a person has in the promises or actions of another person, brand, or company (drives expectations)
psychographics/lifestyle analysis
the analysis of a person's day-to-day patter of living as expressed in that person's Activities, Interests, and Opinions (referred to as AIOs)
AIO
activities, interests, and opinions
geoVALS
uses psychographics to show where customers live and why they behave as they do (values, attitudes, and lifestyles)
social influences
family
social class
reference groups
culture
social class
a group of people who have approximately equal social position as viewed by others in the society
reference group
the people to whom an individual looks when forming attitudes about a particular topic
opinion leader
a person who influences others
culture
the whole set of beliefs, attitudes, and ways of doing things of a reasonably homogenous set of people
purchase situation
purchase reason, time, surroundings
The consumer decision making process begins when:
a consumer becomes aware of an unmet need
Problem solving steps
1. information search
2. identify alternatives
3. set criteria
4. evaluate alternatives
consumer decision making process
1. need awareness
2. problem solving
3. purchase decision
4. experience after purchase
extensive problem solving
put much effort into deciding how to satisfy a need- as is likely for a complete new purchase or to satisfy an important need (decision to buy and what to buy comes after extensive effort)
limited problem solving
used by consumers when some effort is required in deciding the best way to satisfy a need
routinized response behavior
consumer regularly selects a particular way of satisfying a need when it occurs (requires no new information to purchase)
low involvement purchases
purchases that have little importance or relevance for the customer
adoption process
the steps individuals go through on the way to accepting or rejecting a new idea
steps of the adoption process
1. awareness
2. interest
3. evaluation
4. trial
5. decision
6. confirmation
business and organizational customers
any buyers who buy for resale or to produce other goods and services
types of organizational customers
producers of goods and services
intermediaries
government units
nonprofit organizations
What is the basic need of business customers?
to satisfy their own customers and clients
purchasing specifications
a written (or electronic) description of what the firm wants to buy (can be simple or specific)
ISO 9000
a way for a supplier to document its quality procedures according to internationally recognized standards (assures customer that the supplier has effective quality checks in place)
multiple buying influence
means that several people- perhaps even top management- play a part in making a purchase decision
buying center
all the people who participate in or influence a purchase (buyers, influencers, deciders, gatekeepers, users)
vendor analysis
a formal rating of suppliers on all relevant areas of performance (goal is to lower the total costs associated with purchases)
requisition
a request to buy something
new-task buying
occurs when a customer organization has a new need and wants a great deal of information (can involve setting product specifications, evaluating sources, establishing routine)
straight rebuy
routine repurchase that may have been made many times before (often automatically handled by e-commerce)
modified rebuy
the in-between process where some review of the buying situation is done
white papers
reports designed to help buyers make decisions about a particular topic (often advocate seller's solution and help establish firm as a thought leader in particular area)
case studies
used to learn how other companies had addressed similar needs
competitive bid
the terms of sale offered by the supplier in response to the purchase specifications posted by the buyer (marketer should look for the competitive advantage in the buyer's spec-to beat out the lower price offer)
5 key dimensions that characterize buyer-seller relationship
1. cooperation
2. information sharing
3. operational linkages
4. legal bonds
5. relationship-specific adaptations
cooperative relationship (bt buyer and seller)
the buyer and seller work together to achieve both mutual and individual objectives; two firms treat problems that arise as a joint responsibility
operational linkages
direct ties between the internal operations of the buyer and the seller firms; usually involve ongoing coordination of activities between the firms
just-in-time delivery
suppliers reliably getting products there JUST before the customer needs them (because keeping too much inventory is expensive)
negotiated contract buying
agreeing to contracts that allow for changes in the purchase agreements; the general project and basic price is described buy with provision for changes and price adjustments up or down
relationship specific adaptations
involve changes in a firm's product or procedures that are unique to the needs or capabilities of a relationship partner
outsource
contract with an outside firm to produce goods or services rather than to produce them internally; often to cut costs
North American Industry Classification System (NAICS) codes
codes used to identify groups of firms in similar lines of business
open to buy
the buyers have budgeted funds that can be spent during the current period
resident buyers
independent buying agents who work in central markets for several retail or wholesaler customers based on outlying areas or countries
Foreign Corrupt Practices Act
passed by the U.S. Congress in 1977, prohibits U.S. firms from paying bribes to foreign officials
Two key sources for information (to help mkting managers make better decisions)
1. Marketing research
2. Marketing information system
marketing research
procedures that develop and analyze new information about the market
(questionnaires, interviews, observation, etc.)
marketing information system (MIS)
an organized way of continually gathering, accessing, and analyzing information that marketing managers need to make ongoing decisions
Characteristics of an MIS
accessing multimedia data, data warehouses, decision support systems, marketing models
intranet
a system for linking computers within a company
data warehouse
a place where databases are stored so that they are available when needed
decision support system (DSS)
a computer program that makes it easy for a marketing manager to get and use information as they are making a decision (helps change raw data in to useful information)
marketing dashboard
displays up-to-the-minute markering data in an easy to read format; usually customized to the manager's areas of responsibility
marketing model
a statement of relationships among marking variables
scientific method
a decision-making approach that focuses n being objective and orderly in testing ideas before accepting them (guides market research)
hypotheses
marketers use their intuition and observations to make educated guesses about the relationships between things or about what will happen in the future
marketing research process
a five-step application of the scientific method that includes:
1. defining the problem
2. analyzing the situation
3. getting problem-specific data
4. interpreting the data
5. solving the problem
defining the problem
1. researcher must identify the real problem area and what info is needed
2. don't confuse problems with symptoms
3. make sure there are narrow research objectives
situation analysis
informal study of what information is already available in the problem area; can help define the problem and specify what additional information is needed
secondary data
information that has been collected or published already
primary data
information specifically collected to solve a current problem
where to find secondary data
internet, databases, special-interest groups, government data, private sources
situation analyst
tries to determine the exact nature of the situation and the problem
research proposal
a plan that specifies what information will be obtained and how- to be sure no misunderstanding occur later.
research plan (may) include:
information about costs, what data will be collected, how it will be collected, who will analyze it and how, and how long the process will take
questioning and observing
two basic methods for obtaining information about customers
qualitative research
seeks in-depth, open-ended responses, not yes or no answers; researcher tries to get people to share their thoughts on a topic- without giving them many directions or guidelines about what to say
focus group interview
stimulates discussion; involves interviewing 6 to 10 people in an informal group setting
quantitative research
seeks structured responses that can be summarized in numbers, like percentages, averages, or other statistics
response rate
the percentage of people contacted who complete the questionnaire
types of surveys
mail, online, telephone, personal interviews
observation method
researchers try to see or record what the subject does naturally; don't want it to influence the subject's behavior
consumer panels
a group of consumers who provide information on a continuing basis (grocery store example)
experimental method
a research approach in which researchers compare the responses of two or more groups that are similar except on the characteristic being tested
statistical packages
easy-to-use computer programs that analyze data
population
the total group they are interested in
sample
a part of the relevant population
confidence intervals
the range on either side of an estimate that is likely to contain the true value for the whole population
validity
concerns the extent to which data measure what they are intended to measure
elements of product planning
product idea
branding
packaging
warranty
product classes
product
the need-satisfying offering of a firm; potential customer satisfaction or benefit
quality
a product's ability to satisfy a customer's needs or requirements; focuses on the customer and how the customer thinks a product will fit some purpose
tangible
a good is a _________ item
intangible
services are an ___________ item
product assortment
the set of all product lines and individual products that a firm sells
product line
a set of individual products that are closely related
individual product
a particular products within a product line
branding
the use of a name, term, symbol, or design- or a combo of these- to identify a product
brand name
a word, letter, or group of words or letters
trademark
includes only those words, symbols, or marks that are legally registered for use by a single company
service mark
same as a trademark except that it refers to a service offering
keys to successful branding
1. easy to label and identify
2. quality is easy to maintain and best value for price
3. dependable and widespread availability
4. branding effort is profitable
5. economies of scale
6. favorable shelf locations or display space
4 levels of meaning
1. attribute
2. value
3. personality
4. benefits
brand familiarity
how well customers recognize and accept a company's brand; effects where the product should be offered and what promotion is needed
five levels of brand familiarity
1. rejection
2. non-recognition
3. recognition
4. preference
5. insistence
brand rejection
potential customers won't buy a brand unless its image is changed; may lead to changing the product or a shift in target customers
brand nonrecognition
final customers don't recognize a brand at all- even though intermediaries may use the brand name for identification and inventory control
brand recognition
customers remember the brand
brand preference
target customers usually choose the brand over other brands, because of habit or favorable past experiences
brand insistence
customers insist on a firm's branded product and are willing to search for it
characteristics of a good brand name
short and simple
easy to spell and read
easy to recognize and remember
easy to pronounce
pronounced only one way
suggestive of product benefits
adaptable to packaging/labeling
no undesirable imagery
always timely
adaptable to advertising media
legally available
brand equity
the value of a brand's overall strength in the market
Lanham Act
spells out what kinds of marks can be protected and the exact method of protecting them; registering under this act is often the first step toward protecting a trademark to be used in international markets
family brand
the same brand name for several products
licensed brand
a well-known brand that sellers pay a fee to use
individual brands
separate brand names for each product- used when it's important for the products to each have a separate identity, as when products vary in quality or type
generic brands
products that have no brand at all other than identification of their contents and the manufacturer or intermediary
manufacturer brands
brands created by producers
dealer brands (private brands)
brands created by the intermediaries
battle of the brands
competitions between dealer brands and manufacturer brands- just a question of whose brandes will be more popular and who will be in control
packaging
involves promoting, protecting, and enhancing the product
universal product code (UPC)
identifies each product with marks readable by electronic scanners; used to speed handling of fast-selling products
Federal Fair Packaging and Labeling Act
requires that consumer goods be clearly labeled in easy-to-understand terms to give consumers more information
warranty
explains what the seller promises about its product; area where the legal environment, as well as customer needs and competitive offerings should be considered
Magnuson-Moss Act
says that producers must provide a clearly written warranty if they choose to offer one
consumer products
products meant for the final customer; based on how consumer think about and shop for products
business products
products meant for use in producing other products; based on how buyers think about products and how they'll be used
4 consumer product classes
1. convenience
2. shopping
3. specialty
4. unsought
(each class based on the way people buy products)
convenience products
products a consumer needs but isn't willing to spend much time or effort shopping for; often bought, require little service or selling, low cost, bought by habit
staples
products that are bought often, routinely, and without much thought
impulse products
products that are bought quickly- as unplanned purchases- because of strong felt need
emergency products
products that are purchased immediately when the need is great (umbrella when its raining)
shopping products
products that a customer feels are worth the time and effort to compare with competing products (homogenous and heterogenous)
homogenous shopping products
shopping products the customer sees as basically the same and wants at the lowest price
heterogeneous shopping products
shopping products the customer sees as different and wants to inspect for quality and suitability
specialty products
consumer products that the customer really wants and makes a special effort to find
unsought products
products that potential customers don't yet want or know they can buy
new unsought products
products offering really new ideas that potential customers don't know about yet
regularly unsought products
products, like gravestones, life insurance, and encyclopedias, that stay unsought but not unbought forever
derived demand
the demand for business products derives from the demand for final consumer products
expense item
a product whose total cost is treated as a business expense in the year it's purchased
capital item
a long-lasting product that can be used and depreciated for many years
business product classes
1. installations
2. accessories
3. raw materials
4. components
5. supplies
6. professional services
installations
such as buildings, land rights, and major equipment- are important capital items
accessories
short lived capital items- tools and equipment used in production or office activities
raw materials
unprocessed expense items that are moved to the next production process with little handling (become a part of a physical good and are expense items)
farm products
grown by farmers
natural products
products that occur in nature
components
processed expense items that become part of a finished product
component parts
are finished items that are ready for assembly into the final product
supplies
expense items that do not become part of a finished product (divided into maintenance, repair, and operating)
professional services
specialized services that support a firm's operations
product life cycle
describes the stages a really new products idea goes through from beginning to end
4 stages of product life cycle
1. market introduction
2. market growth
3. market maturity
4. sales decline
market introduction
a stage of the product life cycle when sales are low as a new idea is first introduced to the marker
market growth
a stage of the product life cycle when industry sales grow fast- but industry profits rise and start falling (time of the biggest profits for the industry & towards the end start to decline)
market maturity
a stage of the product life cycle when industry sales level off and competition gets tougher (industry profits go down)
sales decline
a stage of the product life cycle when new products replace the old
products that move fast through the product life cycle
#NAME?
fashion
the currently accepted or popular style; tend to have a short life cycle
fad
an idea that is fashionable only to certain groups who are enthusiastic about it
Federal Trade Commission (FTC)
the federal government agency that policies antimonopoly laws; says a firm can only call its product new for 6 months
new-product development process
1. idea generation
2. screening
3. idea evaluation
4. development
5. commercialization
Consumer Product Safety Act
set up the consumer product safety commission to encourage safety in product design and better quality control
product liability
means the legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products
ROI
return on investment
concept testing
getting reactions from customers about how well a new-product idea fits their needs
product (brand) managers
manage specific products; often main responsibility is promotion
total quality management (TQM)
the philosophy that everyone in the organization is concerned about quality throughout all of the firm's activities, to better serve customer needs
continuos improvement
a commitment to constantly make things better one step at a time
Pareto chart
graph that shows the number of times a problem cause occurs, with problem causes ordered from most frequent to least
fishbone diagram
a visual aid that helps organize cause-and-effect relationships for "things gone wrong
empowerment
giving employees the authority to correct a problem with out first checking with management