Requirements of a Market
Must need or desire a particular product in a product category. Have the ability to purchase the product. Be willing to use their buying power. Have the authority to buy specific products.
Types of Markets
Consumer Markets and Business Markets
Consumer Markets
Purchasers and individuals in households. Purchase for personal consumption, not profit.
Business Markets
Purchase products for resale, direct use to produce other products, or use in daily business operations. Producers, resellers, government, and institutional markets.
Targeting Strategies
Undifferentiated Strategy, Concentrated Strategy, and Differentiated Strategy.
Undifferentiated Strategy
Entire market is target market. One marketing mix. Similar product needs. One marketing mix satisfies most.
Concentrated Strategy
Targets one market segment with one marketing mix.
Differentiated Strategy
Targets two or more market segments. Marketing mix for each segment.
Market Segments
Subsets with similar characteristics. Have similar product needs. Respond Similarly to marketing mix.
Segmentation Variables
Characteristics of individuals, groups, or organizations used to divide a market into segments.
Demographic Segmentation Variables
Distribution of population characteristics such as age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, and social class.
Geographic Segmentation Variables
Customer product needs are influenced by region, urban, suburban, rural, city size, county size, state size, market density, climate, terrain.
Psychographic Segmentatino Variables
Personality attributes, motives, and lifestyles.
Behavioristic Segmentation Variables
volume usage, end use, benefit expectations, brand loyalty, price sensitivity.
Geodemographic/PRIZM
Segmentation that clusters people in zip clode areas and smaller neighborhood units based on lifestyle and demographic information. Include travel, eating out, shopping, auto purchases, education, income, housing, and race/ethnicity.
Market Segment Profile
Describes the similarities among potential customers within a segment. Explains differences between market segments. Profile may use several segmentation variables.
Sales Forecast
Amount of product a company expects to sell during a specific period at a specified level of marketing activities. 2 Techniques- Surveys and Executive Judgment.
Product Positioning
Creating and maintaining a certain concept of a product in customers' minds. Product's position results from customers' perceptions of a product's attributes relative to competing products.
Approaches for Measuring Sales Potential
Breakdown Approach and Buildup Approach
Breakdown Approach
measures company sales potential based on a general economic forecast for a specific time period and the sales potential derived from it. The marketing manager starts with broad comprehensive forecasts of general economic activity, estimates market potent
Buildup Approach
Measures company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given time period, multiplying the estimate by the total number of potential buyers in that area, and adding the totals
Levels of Involvement
High, low, enduring, and situational
High Involvement
Expensive and highly visible
Low Involvement
Less expensive and less social risk.
Enduring Involvement
ongoing interest in product category and long term.
Situational Involvement
temporary resulting from circumstances and is short term.
Four Steps for Consumer Problem Solving Process
Routinized Response Behavior
Limited Problem Solving
Extended Problem Solving
Impulse Buying
Routinized Response Behavior
process used when buying frequently purchased, low-cost items that require little search and decision effort.
Limited Problem Solving
Employed when purchasing occasionally or when they need information about an unfamiliar brand in a familiar product category.
Extended Problem Solving
Most complex process employed when purchasing unfamiliar, expensive, or infrequently bought products.
Impulse Buying
Unplanned buyig behavior resulting from a powerful urge to buy something immediately.
Consumer Buying Decision Process
(5 Steps)
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Postpurchase Evaluation
Problem Recognition
Buyer becomes aware of a difference between a desired state and an actual condition. may occur rapidly or slowly.
Information Search
Internal Search- Buyer searches their memories for information about products that might solve their problem.
External Search- Where the buyer seeks information from outside sources.
Evolution of Alternatives
Buyer must consider brands that are alternatives.
Buyer evaluates the objective and subjective characteristics that are important.
Buyer Describes product attributes to make a particular characteristic appear more important.
Purchase
Choosing a product or brand to be bought based on outcome of evaluation stage. Choice of seller may affect final product selection. Factors that may affect sale include availability, price/payment terms, transaction negotiation, delivery, and warranties.
Postpurchase Evaluation
Evaluate if product's performance meets expectations.
Cognitive Dissonance- Buyer doubts whether the purchase decision was the right one. Typer for high involvement, expensive purchases. More likely to seek reassurance.
Situation Influence
Result from circumstance, time, and location. May cause buyer to shorten, lengthen, or teminate the buying decision process.
Perception
Process of selecting, organizing, and interpreting information inputs to produce meaning.
Maslow's Hierarchy of Needs
Five levels of needs that humans are motivated to seek and satisfy, from most to least important.
Physiollogical
food, water, sex, clothing, shelter.
Safety
security, freedom from pain
Social
love, affection, belonging.
Esteem
respect, recognition, and self worth.
Self-actualization
personal growth.
Consumer Socialization
Consumers learn about products by experiencing the products personally, and informatino from others.
Attitudes
Individual's enduring evaluation of, feelings about, and behavioral tendencies toward an object or are. Knowledge, feelings, and actions.
Learning
Changes in an individual's thought processes and behavior caused by information and experience. Behavior that produce satisfying consequences are likely to be repeated.
Social Influences
Forces other people exert on one's buying behavior. Ex- roles, family influences, reference groups, opinion leaders, social classes, and culture.
Reference Groups
Group that a person identifies with so strongly that he adopts the values, attitudes, and behavior of group members.
Ex. membership, aspirational, and disassociative.
Social Class
Open group of individuald with similar social rank. common behavior, similar shopping patterns, and similar attitudes.
Subcultures
Subset whose characteristic values and behavior patterns are similar and different from those of the surrounding culture. Ethnicity, race, religion, geography.
Business Markets Buying Purposes
A business purchase a specific kind of product to either...
Resale
Direct use in producing products
Use in daily operations
Types of Business Markets
Producer, Reseller, Government, and Institutional
Producer
Organizations that purchase products to make profits by using them to produce other products or using them in operations. Buy raw materials, semi-finished, and finished items used to produce products.
Reseller
Intermediaries, Wholesalers, and Retailers
Intermediaries
Buy finished goods and resell them for profit
Wholesalers
Purchase products for resale to retailers.
Retailers
purchase products and resell them to final customers.
Government
Federal, state, county, and local governments. Purchase goods and servces to support internal poerations and provide products to constituencies. Complex buying prodcedures requiring bids and negotiated contracts.
Instituional
Organizations with charitable, educatonal, community, or other non-business goals. Churches, hospitals, fraternity, charities, and private colleges.