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152 Cards in this Set
- Front
- Back
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buyer behavior
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the decision processes and actions of people involved in buying and using products
why marketers attempt to understand: -customers' reaction to a firm's marketing strategy have a great impact on the firm's success -marketing concept stresses that a firm should create a marketing mix that satisfies customers, to find out what satisfies must examine the why, what how consumers buy -are in a better position to predict how consumers will respond to marketing strategies |
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consumer buyer behavior
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the buying behavior of ultimate consumers--those who purchase products for personal or household use and not for business purposes
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level of involvement
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customer's
the degree of interest in a product and the importance the individual places on that product high-involvement: visible to others and expensive (clothing, furniture, auto); high importance (health care) low-involvement: less expensive, less associated social risk (grocery items) |
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enduring involvement
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a person's interest that is ongoing and long term
with a few items (interested in technology) |
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situational involvement
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temporary and dynamic, results from a particular set of circumstances
(need to buy a new car after an accident) once purchase is made interest and involvement taper off |
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routinized response behavior
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a consumer problem solving process used when buying frequently purchased, low-cost items that require very little search-and-decision effort
-consumers view more than one brand as acceptable, but may prefer one -low-involvement products bought |
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limited problem solving
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a consumer problem-solving process used when purchasing products occasionally or needing information about an unfamiliar brand in a familiar product category
-moderate amount of time for info gathering -asking a friend who used it, watching a commercial, etc. |
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extended problem solving
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a consumer problem-solving process employed when purchasing unfamiliar, expensive, or infrequently bought products
ex: car, home, or college education --for purchasing high involvement products |
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purchases of a particular product does not always
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elicit the same type of problem solving process
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impulse buying
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an unplanned buying behavior resulting from a powerful urge to buy something immediately
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consumer buying decision process
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a five-stage purchase decision process that includes:
1. recognition 2. information search 3. evaluation of alternatives 4. purchase 5. post purchase evaluation -purchasing is just one stage in process -not all decision processes lead to a purchase, may end at any stage -not all consumer decisions include all stages |
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Problem Recognition
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when a buyer becomes aware of a difference between a desired state and an actual condition
-can be rapid of slow--person might not know of need until marketers use sales personnel and advertising ex: needing a programmable calculator |
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Information search
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after problem recognition (if continues process), buyer searches for product information that will help resolve the problem or satisfy the need
--information's impact depends on how interpret it Two aspects: 1. internal search 2. external search |
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internal search
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an information search in which buyers search their memories for information about products that might solve their problem
if can't retrieve enough info--external search |
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external search
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an information search in which buyers seek information from sources other than their memories
--focus on communication with friends/family, comparison of brands, marketer-dominated sources, public sources personal contacts--most influential because person trusts and respects them -research suggests that consumers overestimate friends' knowledge about products and their ability to evaluate them -little work for marketer-dominated info -consumer/government reports--viewed as highly credible because factual |
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repetition
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increases consumers' learning of information
-possibility of wear out |
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information presented
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verbally, numerically, or visually
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Evaluation of Alternatives
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successful information search yields a group of brands that buyer views as possible alternatives
--framing the alternatives --brand willing to buy, the consumer moves on to the next process |
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consideration set (evoked set)
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a group of brands within a product category that a buyer views as alternatives for possible purchase
--assign greater value to brands that they've heard of --use evaluative criteria |
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evaluative criteria
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to assess the products in a consideration set, objective characteristics (size of calculator) and subjective characteristics (such as style) that are important to him or her
--buyers also assigns a certain level of importance to each criterion, some carry more weight than others |
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framing the alternatives
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marketers may influence consumers' evaluations (in the evaluation of alternatives step) by describing the alternatives and their attributes in a certain manner
-make a characteristic more important to a consumer and facilitate its recall from memory ex: directing superiority of cars -influences inexperienced buyers more than experienced |
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Purchase
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the consumer chooses the product or brand to be bought
-based on evaluation stage --influenced by product availability also pick seller to buy from --may affect final product selection and terms of sale prices, delivery, warranties, maintenance agreements, installation, and credit arrangements are settled actual purchase takes place, unless buyer decides to terminate at this point |
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Postpurchase Evaluation
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after purchase, evaluates the product to ascertain if its actual performance meets expected levels
-criteria from evaluating alternatives cognitive dissonance outcome: satisfaction or dissatisfaction --complains, communicates with other buyers, repurchases |
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cognitive dissonance
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a buyer's doubts shortly after a purchase about whether the decision was the right one
--most likely to arise when a person has bought an expensive, high inovlvement that lacks some of the features of competing brands --may return product or seek positive information to justify choosing it -marketers sometimes attempt to reduce by having sales people phone or recent buyers sent study results showing satisfaction of other buyers |
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situational influences
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influences that result from circumstances, time, and location that affect the consumer buying decision process
-can influcen the buyer during any stage of the consumer buying decision process -may cause the individual to shorten, lengthen, or terminate the process -classified into 5 categories 1. physical surrounding--retail store chains should design environment to make browsing as easy as possible to increase shopper's willingness to make choose/purchase (weather, climate) 2. social surroundings- interactions with others present during a purchase decision, buyers feel pressured (friends, salespeople, etc.) 3. time perspective- amount of time to inform and search; frequency of product use; time of day/season 4. reason for purchase- for whom (present) 5. buyer's momentary mood and condition- precede current situation (happy vs. sad buyers) |
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psychological influences
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factors that in part determine people's general behavior, thus influencing their behavior on consumers
1. perception 2. motives 3. learning 4. attitude 5. personality 6. self-concept 7. lifestyle |
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perception
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the process of selecting, organizing, and interpreting information inputs to produce meaning (perceive things differently than others)
-three step process -marketers try to influence through info |
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information inputs
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sensations received through sight, taste, hearing, smell, and touch
(ex. using fragrances in Westen Hotels or Sony-Style) |
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selective exposure
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an individual selects which inputs will reach awareness, we receive inputs but do not reach awareness until they are pointed out
--affected by current set of needs (ex: fast food commercials purposely air during meal time) -part of selecting step of perception |
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selective distortion
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changing or twisting currently received information; it occurs when a person receives information inconsistent with personal feelings or beliefs
--significantly lessens the effect of the advertisement on the individual -part of selecting step of perception |
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selective retention
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a person remembers information inputs that support personal feelings and beliefs and forgets inputs that do not
-part of selecting step of perception |
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perceptual organization
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organize information inputs and integrate with what's already stored in memory
-many methods (closure) |
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closure
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a method to organize information inputs when a person mentally fills in missing elements in a pattern on statement
-advertiser will use incomplete sounds, images, or statements |
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interpretation
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third step in perceptual process:
the assignment of meaning to what has already been organized -bases or what he or she expects or what is familiar (ex: Smuckers jar) |
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Problems with marketers trying to influence buyer's perception though information
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1. a consumer's perceptual process may operate such that a seller's info never reaches them
2. a buyer may receive a seller's info but perceive it differently than intended 3. buyer who perceives info. inputs to be inconsistent with prior beliefs is likely to forget the information quickly |
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motive
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an internal energizing force that directs a person's activities toward satisfying needs or achieving goals
-affected by a set of motives -based on hierarchy of needs |
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Maslow's hierarchy of needs
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most to least important:
1. physiological needs- survival (food, water, sex) 2. safety needs- security and freedom from physical and emotional pain and suffering (life insurance, air bags) 3. social needs- the human requirements for love and affection and a sense of belonging (NIke, jewelry, etc.) 4. esteem needs- people require respect and recognition from others as well as self-esteem, a sense of one's own worth 5. self-actualization needs- people's need to grow and develop and to become all they are capable of becoming (fitness center, self-improvement classes) ex: U.S. Army "be all that you can be" |
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patronage motives
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motives that influence where a person purchases products on a regular basis
-shop at a specific store -marketers emphasize characteristics in marketing mix |
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learning
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changes in a person's thought processes and behavior caused by information and experience
-behaviors that result in satisfying consequences tend to be repeated until no longer bringing satisfaction -experienced vs. inexperienced buyers processing information -marketers help by allowing consumers experience with them (samples and coupons) -learn indirectly, not always successful in holding customer's attention |
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attitude
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an individual's enduring evaluation of feelings about and behavioral tendencies toward an object or idea
-tend to remain stable, little variance -some stronger than others -through experience and interaction with others -very important to success/failure of firm -significant # consumers with negative attitude-- change marketing mix; lengthy, expensive, etc. (ex: California Prune Growers) |
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Three major components of attitude
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1. cognitive- the person's knowledge and information about the object or idea
2. affective- the individual's feelings and emotions toward the object or idea 3. behavioral- in person's actions regarding the object or idea -changes in one may alter the other component |
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attitude scale
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usually consists of a series of adjectives, phrases, or sentences about an object
-respondents indicate the intensity of their feelings toward the object by reacting to it in a certain way |
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personality
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set of internal traits and distinct behavioral tendencies that result in consistent patterns of behavior in certain situations
-hereditary and personal experiences -relationships between characteristics and buying behavior, but many results inconclusive VALS--consumer framework program -focused on positive characteristics not negative |
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self-concept/ self-image
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closely linked to personality
perception or view of oneself develop and alter based on an interaction between psychological and social dimensions buyers purchase products to enhance their self-concept ex: Lowes targeting women who make 90% of household decisions |
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lifestyle
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an individual's pattern of living expressed through activities, interests, and opinions
-determine own but also affected by personality and demographic factors |
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SRI Consulting Business Intelligence- VALS program
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explores consumer lifestyles and classifies in 8 different groups, links personality with lifestyle
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social influences
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forces other people exert on one's buying behavior
eight major areas: 1. roles 2. family 3. reference groups 4. opinion leaders 5. opinion leaders 6. networks 7. social classes 8. culture and subcultures |
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role
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a set of actions and activities a person in a particular position is supposed to perform based on expectations of both the individual and surrounding persons
ex: father, son, husband, church member, etc... expectation of those around us affect our purchases (acceptable clothing for different situations) |
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consumer socialization
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the process through which a person acquires the knowledge and kills to function as a consumer
-children gain by observing parent's purchase decisions -combo of group and individual decision making four categories 1. autonomic 2. husband dominant 3. wife dominant 4. syncratic --women are primary decision makers for 80-85% of all consumer buying decisions family life cycles can affect which family members are involved in purchase decisions -each member may be responsible for certain purchase tasks |
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gatekeeper
influencer decider buyer user |
the household member who collects and controls information
-price and quality comparisons, locations of sellers, and assessment of which brand best suits the family's needs influencer: a family member who expresses his or her opinions and tries to influence buying decisions decider: a member who makes the buying choices; switches based on type and expense buyer: actually makes the purchase user: a household member who consumes or uses the product |
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reference group
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a group that a person identifies with so strongly that he or she adopts the values, attitudes, and behavior of group members
-large or small -have several (family, work, church) -point of comparison and source of information -depends on product's conspicuousness and individual's susceptibility to reference group influence (more conspicuous, more influence) -influence by ridiculing people who violate |
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three types of reference groups
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1. membership- one to which an individual actually belongs; the individual identifies with group members strongly enough to take on the values, attitudes, and behaviors of people in that group
2. aspirational-- a group to which a person aspires to belong; the individual aspires to be like those group members 3. dissociative (negative reference)-- a group that a person does not wish to be associated with; individual does not wish to take on the values, attitudes, and behavior of group members |
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opinion leader
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a member of an informal group who provides information about a specific topic, like software, to other group members who seek that information
-in a position or has knowledge or expertise = a credible source of information - feel responsibility to remain informed - most successful when high product involvement but low product knowledge and product details are numerous and complicated |
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digital networks
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turn to during decision-making process
ex: CNET.com and consumerreports.org blogs and wikis |
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blog
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web journal in which writers can editorialize
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wikis
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software that create an interface that enable users to add or edit the content of some types of websites
ex: wikipedia.com |
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social networks
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allow members to share personal personal profiles that include blogs, pictures, audios, and videos
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social class
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an open aggregate of people with similar social rank
-result of social stratification open- people can move in and out of it role of income overemphasized people most influenced by own social class "trickle-down" effect: lower classes attempt to emulate members of higher social classes |
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culture
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the accumulation of values, knowledge, beliefs, customs, objects, and concepts that a society uses to cope with its environment and passes on to future generations
-core values and acceptability of wide range of behaviors -influences buying because permeates daily lives -cultural changes affect product development (eating with family vs. today with 75% of women work outside home/higher income) |
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subculture
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a group of individuals whose characteristics, values, and behavioral patterns are similar within the group and different from those people of surrounding culture
-based on geographic and demographic characteristics ex: college students, Asian American, etc. *a person can be a member of more than one subculture |
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African American subculture
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12.4% of population
-spend more money on utilities, shoes, homes than white people -putting AAmericans in advertising Target with Dream in Color + 365BLACK with McDonalds |
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Hispanic subculture
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15% of U.S. population
composed of 2 dozen nationalities Hispanic/Latino refer to an ethnic category not race spend more on appliances, spend less than average on health care, entertainment and education ex: Walmart participating in Three Kings Day, American Airlines campaign |
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Asian American subculture
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people from more than 15 ethnic groups (Filipinos, Chinese, Japanese,,,)
4.4% of population ex: Kraft--didn't want asian items from Kraft but wanted to know how to use Kraft brands in making healthy Western-style dishes, campaign; JCPenney |
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Upper Americans
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Upper-Upper
-5% -aristocratic, inherited $ -kids in private prep schools Lower-Upper -3.8% -newer social elite -professional with high income -earned position -purchase material symbols Upper-Middle - 13.8% -career oriented, professional degree -educational attainment of kids |
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Middle American
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Middle Class
-32.8% -typical -avg pay white collar -attend church -involved in school sports -family oriented activites -price sensitive Working class -32.3% - avg. pay blue collar -routine life -manual labor -union members -seek best bargains -leisure activities |
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Lower Americans
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Upper-Lower
- 9.5% -low income -reject middle class morality -just above poverty Lower-Lower - 7.3% - wellfare or homeless strong religious beliefs -unemployed -spend on products needed for survival |
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Market
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indiv/group who have needs for products and have:
1. ability 2. willingness 3. authority 4. desire ex: underage kids and liquor falls into two categories: consumer and business |
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consumer market (B2C market- business to consumer)
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consists of purchasers and household members who intend to consume or benefit from the purchased products and do not buy products for the main purpose of making a profit
-belong to numerous |
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business market (B2B, industrial or organizational)
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consists of individuals or groups that purchase a specific kind of product for one of three purposes:
1. resale 2. direct use in producing other products 3. in general daily operations ex: dust mops and wire for lightbulb company |
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Steps in the Target Market Selection Process
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1. Identify appropriate targeting strategy
-undifferentiated targeting strategy -concentrated targeting strategy through market segmentation -differentiated targeting strategy through market segmentation 2. Determine which segmentation variables to use 3. Develop market segment profiles 4. Evaluate relevant market segments 5. Select specific target markets |
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undifferentiated targeting strategy
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a strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product
-assumes all customers in target market have similar needs and so can satisfy with one marketing mix -mix of one type of product with little or no variation, one price, one promotional program, one distribution system successful--commodities and staple food effective when 1. homogeneous market 2. must maintain marketing mix |
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homogeneous market
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a market in which a large proportion of customers have similar needs for a product
ex: "universal car" would not suit everyone's needs |
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heterogeneous market
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a market made up of individuals or organizations with diverse needs for products in a specific product class
-market segmentation is needed |
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market segmentation
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for heterogeneous markets
the process of dividing a total market into groups with relatively similar product needs to design marketing mix that matches those needs enables a marketer to design a marketing mix that more precisely matches the needs of customers ex: Toyota |
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market segment
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consists of individuals, groups, or organizations that share one or more similar characteristics that cause them to have relatively similar product needs
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5 criteria for market segmentation
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1. needs for the product must be heterogeneous or there is little reason to segment
2. segments must be identifiable and divisible--people with uniform needs 3. total market should be divided so segments can be compared with estimate sales, costs, and profits 4. >1 must have enough profit potential to justify the developing and maintaining a special marketing mix for that segment 5. company must be able to reach the chosen segment with marketing mix (ex: Cuban rum and cigars in U.S.) |
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concentrated targeting strategy
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a market segmentation strategy in which an organization targets a single market segment using one marketing mix
ex: Porsche--luxury sports car segment; Captrust Financial directs toward athletes, former football players turned financial advisors specialization: all eggs in one basket |
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differentiated targeting strategy
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an organization directs its marketing efforts at two or more segments by developing a marketing mix for each segment
-after success in one market, firm expands to include additional segments - more sales = aimed at more people -could absorb excess production capacity but demands more production, materials, people so costs are higher ex: Fruit of the Loom, Neiman Marcus and Cusp boutique |
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segmentation variables
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the characteristics of individuals, groups, or organizations used to divide a market into segments
-location, age, gender, etc. -should relate to consumer's needs, use for and behavior toward product -must be measurable (age, gender, location through observation vs. intelligence) -no best way to determine segments ex: Haggar clothing |
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Variables for segmenting CONSUMER markets
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Demographic Variables
Geographic Variables |
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demographic variables
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for segmenting CONSUMER markets:
-characteristics-- age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, social class -can be readily measured ex: SCI, funeral service company locates areas with high death rates - age: big factor, must be area of age distribution changing (2025- decrease in 55 under, 1970- avg. age 27.9, now 36.2) ex: Abercrombie, AE outfitters, Aeropostale -targeting children- influence $500 billion of parental spending, houses with two working parents have kids helping out and buying household products ex: Kimberly Clark with Cottonelle Kids -gender: cigarettes, soft drinks, clothing, etc.; food greatly influenced by women ex: Soft & Dri vs. Degree/Mitchum -race and ethnicity: cosmetics, bank, insurance, etc.; especially Hispanic Population (growing 5x faster than other population) ex: Campbell Soup, Proctor and Gamble, Kmart with multicultural dolls in all stores and in weekly circulars -income: high and low income (cellphone and debit cards) family life cycle: marital status, presence and age of children education level: dictionary and insurance companies rise in single-parent families- 12 to 26% since 1970 median marriage age increase- 20.8 to 25.3 for women, 23.3 to 27.1 for men; proportion of women not married has doubled/trippled # people living alone increase # of unmarried couples living together increase ex: MicroMarketing--Lifestage marketing, direct mail |
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geographic variables
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climate, terrain, city size, population density, urban/rural areas
-by counties, cities, zip codes ex: people in South don't need snow tires city size: ex: restaurant chain not franchise in city with < 50,000 or Walmart seek small towns political boundaries: U.S. census bureau MSA metropolitan statistical area- urban area encircled by nonmetro counties &neither socially nor economically dependent on other metro area PMSA primary metropolitan stat area- complex of atleast 1 mill inhabitants CMSA consolidated metro stat area- at least 1 mill with 2 or more PMSAs, 20 (NY, LA, Chicago, San Fran, Philladelphia account for 20% US pop) -market density -geodemographic segmentation -micromarketing |
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market density
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the number of potential customers within a unit of land area, such as square miles
-not exactly population density ex: in two markets of same size one may be more geared toward office supplies |
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geodemographic segmentation
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clusters people in zip code areas and even smaller neighborhood units based on lifestyle information and especially demographic data such as income, education, occupation, type of housing, ethnicity, family life cycle, level of urbanization
ex: Donnelley Marketing Info services, Claritas, CACI Inc.- Prospect Zone, Prizm, and Acorn |
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Micromarketing
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the focusing of precise marketing efforts on very small geographic markets, such as community and even neighborhood markets
-retail site location, special pricing, promotions -to determine marketing mix ex: Walmart and affluent stores climate: a/c, clothing, fireplace, gardening, etc. |
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psychographic variables
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personality characteristics, motives, and lifestyles
personality- good for many competing products, but risky because can't be measured; almost always a positive characteristic, assume sizable proportion of people motives: divided according to consumer's reason for purchase (appearance, status, safety, etc.), health and fitness ex: Taco Bell, Jack in the Box, Starbucks target at beginning of year lifestyle: group according to how people spend their time, importance of surroundings, beliefs about themselves, income and education, gives broad view VALS- classifies based on psychological characteristics that are correlated with purchase behavior |
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behavioralistic variables
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consumer behavior toward a product
ex: divided into light, middle, heavy, and nonusers -per capita consumption (ex. electricity) -benefit segmentation |
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benefit segmentation
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the division of a market according to benefits that consumers want from the product
-differs from other market segmentation in that the benefit customers seek are their product needs ex: Dannon with Light & Fit Crave control yogurt targeting people who want to lose weight success depends on three conditions: 1. the benefits sought must be identifiable 2. using these benefits, marketers must be able to divide people into recognizable segments 3. one or more of the segments must be accessible to firm's marketing efforts ex: Timberland and Avia |
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Variable for segmenting BUSINESS markets
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Geographic locations: differences in climate, terrain, customer preferences (ex: timber or lumber, textile and furniture in Southeast)
Type of Organization: different types require different product features, distribution systems, price structures, selling strategies; either concentration or differentiated targeting strategy ex: carpet producer- automobile makers and commercial carpet contractors Customer Size: needs of large and small buyers tend to be distinct so marketers use different practices to reach various customer groups Product Use: basic raw materials are used in numerous ways, how used affects the amount purchased and purchasing method ex: different uses for computer |
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Step 3: Develop Market Segment Profiles
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describes the similarities among potential customers within a segment and explains the differences among people and organizations in different segments
-may cover such aspects as demographic characteristics, geographic factors, product benefits sought, lifestyles, brand preferences, and usage rates within segments should be relatively similar and differ considerably in other segments -help marketers understand how a business can use its capabilities to serve potential customer groups, which segments are most attractive to firm's strengths |
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Step 4: evaluate relevant market segments
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Sales estimates:
market potential company sales potential breakdown approach buildup approach Competitive Assessment |
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Sales Estimates
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measured along several dimensions:
product level, geographic area, time, level of competition time- sales for a short range, medium, or long competitive level- for a single firm or entire industry ex: sales for product or product line |
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market potential
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the total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity
-terms of dollars or units -sum of all firms marketing activities = industrywide marketing efforts |
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company sales potential
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the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product
what can influence: 1. market potential absolute limits on the size of the company's sales potential 2. the magnitude of industrywide marketing activities has an indirect but definite impact on company's sales potential ex: Domino's Pizza commercial indirectly markets pizza in general 3. the intensity and effectiveness of a company's marketing activities relative to competitors' affect the size of the company's sales potential two general approaches to measure company sales potential 1. breakdown 2. buildup |
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breakdown approach
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measuring company sales potential based on a general economic forecast for a specific period and the market potential derived from it
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buildup approach
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measuring the company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period, multiplying the estimate by the number of potential buyers, and adding the totals of all the geographic areas considered
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good
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a tangible physical entity
ex: iPod nano, Subway sandwich |
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service
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an intangible result of the application of human and mechanical efforts to people or objects
ex: performance by Alicia Keyes, online travel agency bookings, medical examinations, child day care, real estate |
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idea
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concept, philosophy, image, or issue
-psychological stimulation that aids in solving problems or adjusting to the environment ex: MADD (Mothers Against Drunk Driving) |
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total product offering
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1. the core product- fundamental utility or main benefit
ex: water, internet access, Target and Walmart, Hotels Clarion and Hampton Inn 2. supplemental features- added value or attributes, not required for product to function properly ex: installation, delivery, training, financing (Hotel features) 3. symbolic or experiential value- simple act of shopping gives symbolic value and improves attitudes, store environment ex: Build-a-Bear, Hotel Monaco with fish **when buying product, really buying benefits and satisfaction they think the product will provide ex: Rolex watch and Starbucks, Allstate Insurance Company and symbol of hands ex: tires- basic (Sears's Guardsman), safety (Michelin), and brand name (Pirelli) |
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consumer products
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products that are purchased to satisfy personal and family needs
-classified based on characteristics of consumer buying behavior four categories 1. convenience 2. shopping 3. specialty 4. unsought **buyers don't behave in some way so product can fit into several categories -generally -must consider firm's target market |
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convenience products
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relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort, usually buy at closest location, will choose substitute
ex: bread, soft drinks, chewing gum, gasoline -normally marketed through many retail outlets -high-inventory turnover, per-unit gross margins are low -promotions at retail level -packaging is important of marketing mix because of self-service |
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shopping products
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items for which buyers are willing to expend considerable effort in planning and making purchases, compare stores and brands
-expected to last a long time so purchased less frequently than convenience items -few buyers are brand loyal or would be unwilling to shop and compare to other brands -buying guides: Consumer Reports, eopinions.com -require fewer retail outlets -inventory turnover is lower, higher gross margins -money in personal selling -parts and repair services ex: HEB Plus ex: appliances, bicycles, furniture, stereos, cameras, shoes |
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specialty products
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items with unique characteristics that buyers are willing to expend considerable effort to obtain
-plan purchase -will not accept substitute -do not compare products, want outlet that has the preselected product -issued through a limited number of retail outlets -low inventory turnover, high profit margins ex: Mont Blanc pen, baseball memorabilia, Tag Heuer Indy 500 watch ex: Mercedes |
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unsought products
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products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think of buying
ex: emergency medical services, auto repairs, antivirus software |
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product item
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a specific version of a product that can be designated as a distinct offering among a firm's products
ex: L.L. Bean flannel shirt |
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product line
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a group of closely related product items viewed as a unit because of marketing, technical, or end use considerations
ex: Reebok with fruity aroma of Kool-Aid shoes line -exact boundaries indicated by using descriptive terms ("frozen dessert" product line) -firms with high market share, high prices, or limited product lines--expand product lines aggressively |
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product mix
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the composite, or total, group of products that an organization makes available to customers
ex: Proctor and Gamble's food, paper, cosmetic, and fragrance |
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width of product mix
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number of product lines a company offers
ex: Robert Bosch GmbH automotive technology, brakes and stability systems, etc. |
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depth of product mix
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the average number of different products offered in each product line
ex: Proctor and Gamble detergents share same distribution channel but each promoted as a distinctive production line and manufacturing facilities but promoted as a distinctive product |
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product life cycle
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the progression of a product through four stages: introduction, growth, maturity, and decline
-strategies must be periodically evaluated and possibly changed -maintain profitable products vs. unprofitable products -various product at different stage of life cycle: prolonging lives of existing products and introducing new products |
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introduction stage
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the initial stage of the product life cycle its first appearance in the marketplace when sales start at zero and profits are negative
-profits low- initial revenues are low and company must cover large expenses for promotion and distribution -outlay of $100 mill or more ex: Trident Splash -risk of new product failure is high -rarely new product innovation just ex: Leap Frog 1. seller lack resources to launch effectively 2. initial product price high to recoup expensive marketing research or development costs repackaging, new model seldom immediate profits be alert for product weaknesses |
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growth stage
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the product life cycle stage when sales rise rapidly, profits reach a peak, and then they start to decline
-critical to product's survival--will affect product's life expectancy ex: Splenda -profits begin to decline late as more competitors enter the market, driving prices down and creating the need for heavy promotional expenses >>typical marketing strategy- strong brand loyalty and competes with aggressive emulators of the product, tries to strengthen its market share by creating competitive niche and emphasizing product's benefits -aggressive price cuts as profits increase: adjust marketing strategy >>fortify product's market position by encouraging brand loyalty; segmentation, developing product variations, position relative to own brands ex: Apple and more variations of iPod -achieve greater market penetration, fill in "gaps," make sure distribution is running efficiently -less promotion expenditure = increase profits -after recovering development costs, can lower prices (economies of scale) |
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maturity stage
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the stage of a product's life cycle when the sales curve peaks and starts to decline, and profits continue to fall
-tense competition -weaker competitors squeezed out change in promotional and distribution efforts: >>>advertising and dealer-oriented promotions, buyers now are experienced specialists, expand distribution into global markets >>new marketing strategies -suggest new uses (Arm and Hammer, "crossover" vehicles instead of traditional SUVs) three objectives 1. Generate cash flow- recoup initial investment 2. Maintain share of market- maintain position or drop out 3. increase share of customer- percentage of each customer's needs that the firm is meeting (banks adding services, supermarkets including movie rentals) --marketers actively encourage dealers to support the product maintaining market share: focus on differentiating product -price wars, product quality and service increase, markdowns, price incentives |
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decline stage
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the stage of the product's life cycle when sales fall rapidly
-marketer considers pruning items that no longer earn profit; cut promotion, eliminate marginal distributors, and phase out product ex: Cole Blak, Kodak Advantix system -marketers must determine whether to eliminate the product or try to reposition it to extend life -declining product due to increased substitution and brand switching ex: incandescent bulbs -outlets with strong sales maintained and unprofitable outlets weeded out; use factory outlets or internet retailer -sales promotions-coupons and premiums two options: attempt to postpone decline or accept inevitability |
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when firms lack resources to renew a product's demand have two choices:
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1. harvesting- a gradual reduction in marketing expenditures and a less resource-intensive marketing mix
2. divesting- withdraws all marketing support from the declining product or SBU (strategic business unit) may sell product to another firm ex: Proctor and Gamble's Sure deoderant and Pert shampoo to Innovative Brands LLC |
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product adoption process
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1. Awareness
2. Interest- buyer seeks info and receptive 3. Evaluation- considers benefits and decides to try 4. Trial- to see if meets needs (small quantity, free samples, borrowing) 5. Adoption- purchases product and can be expected to use again, does not mean person will adopt the new product **rejection can occur at any stage -people do not begin process at same time or same speed, if begin at all -fall into one of five adopter categories |
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innovators
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first adopters of new products (2.5%)
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early adopters
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choose new products carefully and are viewed as "the people to check with" by later adopters (13.5%)
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early majority
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adopt a new product just prior to the average person; are deliberate and cautious in trying new products (34%)
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late majority
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quite skeptical of new products but eventually adopt them because of economic necessity or social pressure (34%)
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laggards
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the last to adopt a new product, are oriented toward the past
-suspicious of new products -may already have been replaced |
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fad
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high arch in production stage
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marketers job is to
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speed up adoption process
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opinion leaders in early adopters
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have high influence on early adopters
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factors influencing adoption and diffusion
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Relative advantage– really better than what’s already on the market, speed up and be diffused and will spread across market quickly
Compatibility– moderates relative advantage, how consistent is this product with prior ways of doing things (ex: atm machines, been in market for 40 years; King Gillette, people used to straight razors) must be compatible with peoples existing lifestyles, if people have to change existing lifestyles it will take longer Complexity- the more complex, the more it is going to slow down Divisibility- can you divide it ? (can’t give samples of cars, but can give samples of grocery items) why apple store is so important Communicability- how noticeable is the product, how likely people are to talk about it Reversibility- how much risk is involved, how long are you stuck with it, what happens if it’s bad? (ex: messed-up hair cut; tattoo would be very low in reversibility) |
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diffusion
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sociological process– describes how a new product idea spreads across the population rather than an individual will adopt, how long will it take it to go across the population
important– want to speed this up, want as many as possible to buy as much as possible |
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line extensions
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the development of a product that is closely related to one or more products in the existing product line but specifically designed to meet customer needs
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new product
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1. innovative benefits
ex: Envigo 2. firm not marketed previously, but exists 3. market to new market ex: Saturn VUE to Japan |
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new-product development process
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1. idea generation
2. screening 3. concept testing 4. business analysis 5. product development 6. test marketing 7. commercialization **idea can be rejected at any stage |
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idea generation
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seeking product ideas to meet organizational objectives
-more market info gathered, more idea -comes from internal and external (customers, competitors, etc.) ex. Post-It Notes |
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screening
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the ideas with the greatest potential are selected for further review
**most ideas are rejected at this stage |
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concept testing
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seeking a sample of potential buyers' response to a product idea
-written or oral -low cost before investment |
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business analysis
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evaluating the potential impact of a product idea on a firm's sales, costs, and profits
-market information -break even and payback analysis (not precise because an estimate) |
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product development
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phase in which the organization determines if it is technically feasible to produce the product and if it can be produced at costs low enough to make the final price reasonable
ex: Honda and growing pet owener population -prototype -overall functional testing - how much quality to build in the product--consistent with other products, competing products, price |
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test marketing
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a limited introduction of a product in geographic areas chosen to represent the intended market
ex: P&G with Align in NY before nationwide -not product development but a sample launching of entire marketing mix -lessen risk of product failure, undercutting existing products, ruined credibility -natural marketing environment, identify weaknesses -risk of competition hurting statistics -competitors could take idea and rush to introduce ("jamming") = must move quickly from test to commercialization -simulated test marketing = give sample and call later for results |
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commercialization
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plans for full scale manufacturing and marketing must be refined finalized and budgets for the project prepared
-any changes in marketing mix, distribution, prices -more changes, less valid information gathered is -types of warranty expensive to promote product -products not launched nationwide overnight but through rollout: a product introduced in stages, starting in one set of geographic areas and gradually expanding into adjacent areas -tales several years - can be groups or counties 1. less risk of money 2. a system of wholesalers and retailers to distribute the product cannot be established so quickly 3. if successful, cannot meet demand -competitors may see success and enter market |
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product positioning
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the decisions and activities intended to create and maintain a certain concept of the firm's product (relative to other brands) in customer's minds
-target market most desires ex: Pepsi Co and Fuelosphy -head-to-head competition (look for price and performance) or avoid competition repositioning: physically changing product, change image through promotional efforts, aiming it at a completely different market |
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perceptual maps
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asking sample of consumers about perception of products, demand, and organizations with respect to two or more dimensions
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product deletion
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the process of eliminating a product from the product mix, usually because it no longer satisfies a sufficient number of customers
-marginal product may require shorter production runs -negative feelings can transfer into other products -delete products only after huge financial burden -systematic review |
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ways to delete product
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1. phase out- allows the product to decline without a change in the marketing strategy; no attempt to give the product new life
2. run-out- exploits any strengths left in the product; eliminate marketing expenditures to create small jump in profits 3. an immediate drop- best strategy when losses are too great to prolong the product's life |
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consumer trends
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macro-trends likely to influence behavior
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cocooning
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consumers shielding themselves from the harsh realities of the outside world and retreating into safe, cozy "homelike" environments
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fantasy adventure
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escape through consumption
exotic fruits without the risks |
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small indulgences
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reward ourselves with quick hit gratification through affordable luxuries
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egonomics
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make me feel important
consumers drawn to customized, individualized products and services |
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cashing out
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stressed out consumers are searching for fulfillment in a simple way of living
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down-aging
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consumers seek symbols of carefree youth to counterbalance the intensity of their lives
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staying alive
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consumers embrace not only the concept of a longer life but a better overall quality of life
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vigilante consumer
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frustrated, angry consumers, manipulating the marketplace through pressure, protests, and politics
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99 Lives
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consumers are forced to assume multiple roles to cope with time pressures
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save our society
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consumers respond to marketers who exhibit a social conscience attuned to ethics, environment, and education
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