Value
Personal assessment of the net worth one obtains from making a purchase, or the enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct
Perceived Value
The value a consumer expects to obtain from a purchase
What you expect to get
Ex: Well known brand of coffee. Perceived value that you have a cup of coffee
Hedonic value
A value that acts as an end in itself rather than as a means to an end.
Like the experience of a product. It creates a feeling.
Ex: Morton's Steakhouse- you get pleasure from buying the product
Apple so successful hedonic value to purchase
Utilitarian Value
� A value derived from a product or service that helps the consumer solve problems and accomplish tasks
� Produce solves a problem and accomplishes a task
� Example, coffee maker utilitarian, it makes coffee but the coffee can be hedonic, it creates an ex
1
Need Recognition
Need or desire of state
Want that is driven by a stimulus
Ex: You see a food add and you want it
i. Drive
Goal is ours, but others are driving us to do this.
Doctorate degree example.
Arousal to satisfy need: ex others
Want comes from Internal Stimuli (hunger, thirst), and External Stimuli (packaging, advertisement)
Drive: Arousal to satisfy needs
i.
Direction
Attempts to reduce tension
Factors affecting direction: Needs vs. Wants; Types of Needs; Motivational Conflict; Classifying Consumer Needs; and Maslow's Hierarchy of needs
Strength
Amount of pull exerted
Amount of "Pull" Exerted
How hungry you are
5 steps to purchasing process
Whether to buy or not to buy
When to buy
What to buy (product or brand)
Where to buy
How to pay for it.
Maslow hierarchy
a. Self-Actualization Needs
Self- development, self-realization
Esteem needs,
recognition status
A very unusual amount of individuals reach this level. That is because this in an un materialistic state, because there is nothing you can do materially to re
Selective Exposure
A process whereby a consumer notices certain stimuli and ignores others
What is the issues of selective exposure? Can't encounter all the information, you only select what you are interested in or triggered to or have stimulus with
Product
We select what
Selective distortion
We distort information about ourselves
You already have an inept set (buyer is aware but think poorly of it), you hate AT&T. Every time you see an AT&T ad, you purposely distort it
We distort information about ourselves
Process changes or distorts informa
Selective retention
We remember only those things that we want or information that supports are current belief system.
Risk Issues
1.Financial
2.Performance
3.Physical
4.Psychological
5.Social
ABC model (Affect/Behavior/Cognition)�Slide 35 Why People Buy?
If you are a peripheral processor, it is Affect. Overall feeling about a product
If you are a central processor, it is Cognition. Beliefs & Knowledge about the product
If you are buying due to with whatever you feel like, it is Behavior. Action by buying
Classical conditioning
Relies more on association between stimuli and responses.
Marketers use this to manipulate humans to like their product. Conditioning is a form of manipulation
Ex: See apple products, want to listen to music
Relies more on association between stimuli and
Operant conditioning
Based on voluntary behavior, while classical conditioning often involves involuntary reflexive behavior.
Reinforcement or punishment
Central Processing: When watching the news
Peripheral Processing: Buying something because of the colorful package
Ex: Rei
How to change Attitudes (5 methods)
1.Changing beliefs about the extent to which
a brand has certain attributes
2.Changing the perceived importance of
Attributes
3.Adding new attributes
4.Focusing on consequences of buyer's
Behavior after an attitude change
5.
Focusing on reference group re
Reference Groups
Are people who have a significant effect on an individual's evaluations, aspirations, or behavior -- People you are trying to fit in with
Primary
regular interactions
Small and Informal (Friends and Family, Social media)
Secondary
Not so regular
Large and Formal (Club or Religious group)
Aspirational Group
A group that a person would like to join.
Inner directed
Came from a family that is close nit. Family used that brand.
Aspiration: Group that someone would like to join
Non-Aspiration: Group that someone wants to avoid being identified with
Outer Directed
Antenna people. The people are trying to pick up the latest signal on what is hot and what is not. -- Preferred target market because you can alter their perspective (less money
Social class structures
...
Upper Classes:
--Capitalist Class 1%
--Upper-Middle Class: 14%
Middle Classes:
Middle Class 33%
--Working Class 32%
Lower Classes:
Working Poor 11-12%
--Underclass 8-9%
Product recall
It happens when there is a problem with one of the products
Ex: Problem with a car all Subaru's most come back into the dealership
Must bring all the Subaru's back into business
Ethnic structures (see for segmentation also)
First set of product that comes
Purchase Heuristics
Heuristics help people make quick decisions, but are not guaranteed to be optimal. And sometimes heuristics are leveraged (or exploited) by businesses to increase sales.
Post-purchase dissonance
Buyer's remorse is thought to stem from cognitive dissonance, specifically post-decision dissonance, that arises when a person must make a difficult decision, such as a heavily invested purchase between two similarly appealing alternatives.
Business Buying Behavior�Why do organizations buy?
Trends�partnerships, use of B2C promo techniques online, use of telescopic marketing, etc.�issues covered in first four slides (some are in text)
Mass Advertising
focuses on high sales and low prices and aims to provide products and services that will appeal to the whole market. Designed to reach large numbers of people, for example through newspapers and television.
Telescopic marketing
A strategic planning tool designed to enhance intelligence gathering and improve marketing planning. Marketing strategy which promotes demand for the product embodying or made of the firm's product
Derived Demand
�Demand for business or organizational products derived from demand for consumer goods or services.
�Marketers must be alert to changes in consumer trends.
Inelastic Demand
Demand for products that does not change because of increases or decreases in price.
Price increases in component parts usually has little effect on the consumer price.
Fluctuating Demand
� Changing consumer demand that can create large increases or decreases in business demand.
� Causes of fluctuating demand
o Acceleration Principle
o Life Expectancy
o Company's Inventory
o Company's Inventory Policy
B2C
Business-to-consumer, is a process for selling products directly to consumers.
B2B
Business-to-business, is a process for selling products or services to other businesses.
Reducing costs
Integrating online and traditional media
Building and supporting branding
Building partnerships and alliances
Developing customer-focused technology an
Geographic Segmentation
Segmenting markets by region of a a country or the world, market size, market density, or climate
Psychographic Segmentation
Segmenting markets on the basis of personality, motives, lifestyles, and geodemographics
Concentrated Targeting Strategy
A strategy used to select one segment of a market for targeting marketing efforts
Undifferentiated Targeting Strategy
A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix
Selective exposure
( taking in what you want) issues
We select what we exposed ourselves to
Process where consumers notices certain stimuli and ignores others
MARKET RESEARCH
TYPES OF DEMAND FORECASTS
Types of demand forecasts (Delphi, trend analyses, etc.)
Research�what it is designed to do
The process of collecting, analyzing, and interpreting data about customers, competitors, and the business environment, in order to improve marketing effectiveness
Jury of Executive Opinion
Benefits: Opinions come from executives in many different departments: quick, inexpensive
Limitations: Managers may lack sufficient knowledge and experience to make meaningful predictions
5. Delphi Technique
Benefits: Group of experts can accurately predict long- term events such as technological breakthroughs
Hire people who know market and ask people's opinions on it
Effective, expensive and time consuming
Limitations: Time- consuming; expensive
7. Survey of buyer intentions
Benefits: Useful in predicting short- term and intermediate sales for firms that serve only a few customers
Limitations: Intentions to buy may not result in actual purchases; time- consuming: expensive
Steps in Marketing Research
1.Defining the Problem
2. Determining the Research Technique
3. Gathering Data
4. Ensuring the Quality of the Data
5. Implementing the Results
Three market research databases
1.Planning
2. Problem Solving
3. Control/ Evaluation
Exploratory Research
� Is important part of any marketing or business strategy. It focuses on the discovery of ideas and insights as opposed to collecting statistically accurate data.
o Ex: Further identifying company issues, areas for potential growth, alternative courses of
Descriptive Research
� Bulk of online surveying and is considered conclusive in nature
o Preplanned and structured in design info collected can be statistically inferred on a population.
Causal Research
� Quantitative in nature as well as preplanned or structured in design.
� Also known as conclusive research.
� Explain the cause and effect relationship between variables.
Projective research
Relating stories
Mechanistic research
Basic science and mechanistic research deals with uncovering physiological mechanisms underlying normal and abnormal function of the human body.
Ethnographies
The aim is to gather insight into how people live; what they do; how they use things; or what they need in their everyday or professional lives.
Go into the business and watching them
Ex: Mexico- company moving in on the consumers
Focus groups
Primary v. Secondary data�know this well enough to distinguish, for example, what IRI programs do as opposed to what laboratory research does (your text handles this quite nicely)
Data mining
Sophisticated analysis techniques used by firms to take advantage of the massive amount of transaction information now available.
Sampling
Process of selecting respondents who statistically represent a Larger population of interest.
Sampling Errors'
3 Types
...
Non Response Sampling Error
Sample interviewed differs from sample drawn
Frame Error:
sample drawn differs from target population
Random Error
sample is an imperfect
CREATING AND Managing the Product
...
MARKET RESEARCH PROCESS
...
Validity
Did research measure what it was intended to measure?
Reliability
Are the research techniques free of errors?
Representativeness
Is the group measured similar to the population?
Consumer Behavior�Why do consumers buy?
Types of problem-solving (involvement, etc.)
Persil Tablets: Consumers see laundry as a chore, so the tablets are introduced as more convenient and less messy alternative to do laundry
Problem and tension
Problem Recognition: Situation where you see the difference between your current state of affairs and some desired state of affairs
Current state is where you are, and desired state is where you want to be. This causes tension
Involvement
This is the want/strength/direction ? Ego, Value-laden, and Self-image
Low involvement
Low involvement in Habitual Decision Making (soda)
Low Involvement, Some Information Search = Snack foods and cereals
Low Involvement, Little Information Search = Paper towels and dishwashing liquids
Medium involvement
Limited Problem Solving (clothing)
High involvement
Extended Problem Solving (car)
Extensive Information Search = Higher price items and shopping goods
High Involvement, Little Information Search = Personal care products and soft drinks
Search Extent
( how involved you are making a purchasing decisions) : This is the goal/drive ? Time, Energy, and Fact gathering
Information search from: Memory, TV commercials, Friend's recommendations, and Brochures from car dealers
5 Risk Issues
...
Financial
Tesla is expensive and might cause financial hardship
Performance
Risk That the product will physically harm buyer (will the car protect buyer in a crash?)
Physical
Risk that the product will physically harm buyer (will the car protect buyer in a crash?)
Social
Will friends think buyer is showing them up by buying a Porsche?
Pyshological Risk
Risk that product will lower buyer's self-image (will people think I'm an idiot for buying a hybrid)
Ideals Oriented (Inner Directed)
Family will influence a lot about the products you use ? Thinkers and Believers
Status Oriented
(Other Directed): These people are most vulnerable to marketing ? Achievers and Strivers
Self Expressive
More interest in the product than the brand identity. The experience is what makes it worthwhile, not the brand ?
Social class structures
Refers to the overall rank of people in a society. Measured by occupation, income, education, and wealth. Common tastes in clothing, decorating styles, and leisure activities
Aspirational
Anytime we can buy out of our own working class, we will
Heuristics
Mental shortcuts; simplifying decision making and spend less energy when thinking about buying things
Brand Loyalty Heuristic:
If you need deodorant, you always buy that same brand you buy
Country-of-Origin Heuristic:
You buy things that associate with the country you usually buy from
Some people only buy things made in the U.S
Dissonance
Dissonance: The space between what you know and what you are observing
This is the consumer's expectations of product quality and performance. If the product exceeded the performance test, the customer is satisfied and vice versa
Situational behavior
...
Physical surroundings
the concrete physical and spatial aspects of the environment encompassing a consumer activity.
Social surroundings:
the effects of other people on a consumer in a consumer activity.
Task definition
The reasons that occasion the need for consumers to buy or consume a product or service.
Time
the effects of the presence or absence of time on consumer activities.
Antecedent states:
the temporary physiological states and moods that a consumer brings to a consumption activity.
Socialization Process:
The passing down of cultural values and norms to children resulting in pattern recognition (About 50% of adult daughters use TIDE is their mothers use it)
Consumption and Self Concept
...
...
How a person actually perceives himself or herself
Ideal self
How a person would like to perceive himself or herself
Social Self
How a person thinks others perceive him or her
Ideal social self
How a person would like others to perceive him or her
Expected self
An image of self somewhere in between the actual and ideal self
Situational Self
A person's self image in a specific situation
Telescopic marketing
Need to advertise to consumers directly
Ex Intel marketing not to Dell but to consumers
This is a type of mass marketing
Telescopic marketing consists of magazines, radio, and radio sponsorships
Stickiness
Site Reach x Frequency x Duration = Stickiness
By measuring the stickiness factor of a website before and after a design or function chance, marketers can quickly determine whether visitors embraced the change
4 Business Demands
...
Derived Demand
A demand for commodity, service that is a consequence of the demand for something else. Marketers must be alert to changes in consumer goods
Example: Condiments and Microprocessors
Inelastic Demand
Demand for products that does not change because of increases or decreases in price. Price increases in component parts usually has little effect on the consumer price
Gas is an example
Flunctuating Demand
Changing consumer demand that can create large increases or decreases in business demand. Causes of this demand are:
Acceleration Principle
If demand for consumer goods increases, then the percentage change in the demand for machines and other investment necessary to make these goods will increase even more, and vice versa
Positioning Alternatives
Better than the competition (Same product but ours is better quality)
Against the competition:
Targeting another company (Same product but ours is made differently, thus we are competing against you)
Away from the competition:
You're completely unique than other companies even though we are in the same industry (Tesla saying that our cars are electric and is better than other car companies)
Brand personality
What makes the brand unqiue
Perceptual Mapping
When selling cars, you give a graph of comparison for each product. Basically, it's a conceptual map for comparison
Positioning Strategy
Analyze competitors' positions
Identify competitive advantage
Finalize the marketing mix
Evaluate responses & monitor
Joint Demand
Need two goods to make a product. Can't only have one good
If demand for peanut butter is up, demand for jelly is up too
Nature of buyer/seller relationships in business markets
Positioning Strategy
Analyze competitors' positions
Identify competitive advantage
Finalize the marketing mix
Evaluate responses & monitor
Alport's notion of positioning
(Gordon Allport, neurologist focused on habit forming and addiction) think Campbell's Soup
Gordon Allport (a psychologist): When you think of soup, you think of Campbell Soup
Segmentation Strategies
...
Undifferentiated
Market to the entire market, no specific area you're wanting to focus on
Concentrated
Putting all of your effort into one market area
Multi- Segment
Trying to hit two or three of the market area with one strategy
Types of Business Buyers
...
Initiator
Is the person who first suggests making a purchase
Influencers/evaluators
Are people who influence the buying decision. They often help define specifications and provide information for evaluating options. Technical personnel are especially important as influencers.
Gatekeepers
are group members who regulate the flow of information. Frequently, the purchasing agent views the gatekeeping role as a source of his or her power. A secretary may also act as a gatekeeper by determining which vendors get an appointment with a buyer.
The decider
is the person who has the formal or informal power to choose or approve the selection of the supplier or brand. In complex situations, it is often difficult to determine who makes the final decision.
The purchaser
is the person who actually negotiates the purchase. It could be anyone from the president of the company to the purchasing agent, depending on the importance of the decision.
Users
are members of the organization who will actually use the product. Users often initiate the buying process and help define product specifications.
Sales Force Composite
...
3 Market Research Databases
...
Ongoing Information:
Daily/weekly information that measures progress toward marketing goals. Example: Weekly sales data
Monitored Information:
Marketing intelligence. Information about a firm's external environment that affects or creates demand
Specific Information:
Needs such as brand's sales performance, or opportunities for new products
Convienence Products
--Frequently purchased with little effort
Low priced
--Must be convenient
necessities, emergency, impulse purchases
Shopping Products
Considerable time and effort in selection
Moderately brand loyal
Comparison shop
Clothing, appliances, services
Specialty Products
Significant purchase efforts
Brand Loyalty
Unique characteristics important to buyer
Rolex, Apple, Piggly Wiggly.
Product Acuquistion
When a product is trying to buy out a product elsewhere