Transcript Kent Summer Showcase Program College of Business Administration

Kent State University
College of Business Administration
K-31
Introduction to Consumer Behavior and
Product
Lecture 2
Dr. Lawrence J. Marks
I. Introduction of Consumer
Behavior
“Setting up” an understanding of the topic
 “Demonstrating” how it is important to
Marketing
 Showing its complexities

II. Consumers in the Context of:
A.
B.
C.
D.
The Marketing Environment
Marketing Strategy
The Marketing System
A “Simple” Example
A. The Marketing Environment
A. The Marketing Environment
Competitive
Lega
l
Technology
Economic
Political
Social
A. The Marketing Environment
Economic
Competitive
Promotion
Lega
l
Place
Product
Political
Price
Technology
Social
A. The Marketing Environment
Economic
Competitive
Promotion
Lega
l
Product
Consumer
Place
Political
Price
Technology
Social
B. Marketing Strategy
“THE MARKET”
B. Marketing Strategy
“THE MARKET”
B. Marketing Strategy
“THE MARKET”
Market Segmentation
&
Target Marketing
C. The Marketing System
II. Consumers in the Context of
D. A “SIMPLE” Example
A Model of Consumer Behavior (Engle, Blackwell, & Miniard)
Exposure
Stimuli
--Marketer
--Other
Problem/Need
Recognition
Internal
Search
Search
Attention
Comprehension
Acceptance
Retention
M
e
m
o
r
y
Alternative
Evaluation
Purchase
Outcomes
External
Search
Dissatisfaction
Satisfaction
Environmental
Influences
Culture
Subculture
Social Class
Family
Other People
Situation
Individual
Differences
Consumer
Resources
Motivation
Involvement
Knowledge
Attitudes
Personality,
Values, and
Lifestyle
A Model of Organizational Buying Behavior (adapted from J. Sheth)
Sources
of
Information
Salesperson
Trade Show
Direct Mail
Press
Journal Ad
Conference
Trade News
WOM
Internet
Others
Information
Search
Individual’s
Background
Expectations of
Buying Center Members
--Purchasing Agents
--Engineers
--Users
--Others
Industrial
Buying
Processes
Situational
Factors
Satisfaction
with
Purchase
Individual
Decisions
Choice of
Supplier or
Brand
Joint
Decisions
Product
Factors
Time
Pressure
Perceived
Risk
Firm
Factors
Type of
Purchase
Firm
Orientation
Firm
Size
Conflict
Resolution
Approaches
Degree of
Centralization
IIII. Product Development
A. The development of new products
B. The continuous improvement of existing
products
C. WHY bother?
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IV. The Product Life CycleInnovate,
Total Market
Sales
D
o
l
l
a
r
s
Stage:
Emphasis in
Marketing Mix
Redesign
Drop
Product
Introduction Growth Maturity
Promotion
Distribution
Price
Decline
Time
Cost
Reduction
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IV. Product Life Cycle
Note the
NEGATIVE
Must increase
profits. Sales
advertising & selling
are needed to
efforts & cut prices in
offset product
face of competition
development
costs
PLC and profit curves varies from product category to
another, but above is the basic shape that we often see.
Aggregate demand over an extended period of time for all
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Decidingbrands
when comprising
to enter a amarket
IMPACT
Profitability
genericcan
product
category.
IV. PLC Characteristics and
Implications
PLC STAGE
Characteristics




Customers
Competition
Sales
Profits
Introduction
Innovators
Profits
fall more
Little, if any
resources are needed
Low levels, rising
to attract customers
None from other
away
offers.
Marketing Implications






Overall Strategy
Costs
Product Strategy
Pricing Strategy
Distribution Strategy
Promotional Strategy
Growth
Mass Market
Increasing
Stimulate
Rapid
Growthdemand
for the entire
product category
rather than a
single brand
Strong then peak
Market Development
Market Penetration
High per unit
Declining
Undifferentiated
Improved Items
Most likely high
Lower over time
Scattered
Intensive
Category Awareness
Brand Preference
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PLC Characteristics and Implications
Pink Flamingo
Characteristics




PLC STAGE
Maturity
Customers
Mass market
Competition
Intense
Board Games
Sales
Slow/no annual growth
Most
Profits
Declining annually
competitors
abandon the
Marketing Implications market,
Defensive positioning
 Overall Strategy
Some
Stable or increasing
 Costs
develop
Differentiated
 Product Strategy
small
Lowest
 Pricing Strategy
successful
Intensive
 Distribution Strategy
niche!

Promotional Strategy
Brand loyalty
Decline
Loyal customers
Why?
Decreasing
1.Declining
Better or less
Firms
attempt to
Low/none
expensive
product
differentiate
meets
same
themselves
need.
2.Efficiency
Need or
forexit
Lowproduct
Pruned
line
disappears
due to
Increasing
product
Selective
development. 19
Reinforcement
As the cycle turns…..
THE PRODUCT LIFE CYCLE AT WORK!!
February 13, 2008, Polaroid Ends
Instant Film Production
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V. Length of Product Life-Cycle
a)

The PLC diagram suggests that stages are of
EQUAL length (this may not be accurate)
BUT, certainly its overall length may vary!
i. Consider Fashion vs.
ii. The telephone
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V. Length of Product Life-Cycle
Product lifecycle variations
b. An Extended Introduction Stage: In 1947, the first commercial
microwave oven hit the market. These primitive units where gigantic and
enormously expensive, standing 5 1/2 feet tall, weighing over 750
pounds, and costing about $5000 each. The magnetron tube had to be
water-cooled, so plumbing installations were also required.
It was not until 1975 that sales of microwave ovens, for the first
time, exceeded that of gas ranges! 28 years after their
introduction.
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V. Length of Product Life-Cycle
Product lifecycle
variations
Product
lifecycle variations
c. Fad – Bungee Balls: March of 2003,
broke after 4 – 7 hours of play, concern
about…
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V. Length of Product Life-Cycle
Anime – 2000s
Beanie babies – 1990s
Product
Bungee
Balls –life2003
cycle
variations
Badger
Badger
Badger – 2003
Product
lifeCabbage
dolls – 1980s
cyclePatch
variations
Calculator wristwatches – 1980s
Cargo pants – late 1990s
Celebrity Air; 2005
Chia Pets – 1980s
Clackers – 1980s
Coonskin caps – 1950s
Crazy Frog
Designer jeans – 1980s
Devil sticks
Digimon
Disco – 1970's
Droodles – 1950s
Flash mobs – 2000s
Furby
Garbage Pail Kids
Hair Metal – 1980's
Homestar Runner
Hula hoop – 1950s
Hypercolor
Internet music downloading
– 2000s
JNCOs/ultra wide-leg jeans
– 1990s
Kirk's Khan scream from
Macarena – 1996
Machinima – 2003 present
Mood ring – 1970s
MP3 players – 2000s
Nerf; 1990s
Numa numa – 2005
Office olympics; 2004 -
Pacifiers for teens –
1990s
Pet rocks – 1970s
Pogo Balls – 1980s
Pogs
Pokemon – 1990s2000s
Puka Shell Necklace
– 1970s
Quiff
Razor (scooter)
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Rubik's Cube – 1980s
V. Length of Product Life-Cycle
Product lifecycle variations
Product lifecycle variations
d. And some products
seem to have an
Indefinitely Long
Maturity State
25
V. Length of Product Life-Cycle
e. The Product Life Cycle seems to be getting
shorter for most products. This is because
of:
i.
“Me-Too” Products, and
ii. Rapid Technological Advances
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VI. Product Life-Cycle Management
Marketing Success:
a)
Predicting the shape and the timing of the
PLC, and
b)
Stage Recognition & Adaptation
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VI. Product Life-Cycle Management
3) Issues:
A. When to Enter?
• To Realize a Pioneering Advantage?
Entry
Strategies
Introduction
Growth
Maturity
Decline
28
VI. Product Life-Cycle Management
3) Issues:
A. When to Enter?
• An Imitation Strategy may be better
Entry
Strategies
Introduction
Growth
Maturity
Decline
29
VI. Product Life-Cycle Management
Differentiation
Entry
Strategies
Introduction
Managing
on
the
Rise
Growth
-Technological
Leap Frog –
More video, audio
and graphics
capacity while
controlling prices
Maturity
Decline
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VI. Product Life-Cycle Management
Entry
Strategies
Introduction
Managing
on
the
Rise
Managing
during
Maturity
Growth
Maturity
Decline
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Managing During Maturity
Innovative
Packaging
Dutch Boy’s packaging
innovation offers paint
in plastic containers
with twist-off tops. The
paint container is easy
to carry, doesn’t need a
screwdriver to pry
open, doesn’t dribble
when poured, and
doesn’t take a hammer
to bang the lid shut.
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VI. Product Life-Cycle Management
Surviving the Decline
Might be the greatest PLC stage challenge!
Strategy:
Promoting
as a key
ingredient
During
the
declineitstage
firms
may: in making
various treats
easily and
through
out the year
Managing
1) Ensure
that marketing
and production
Managing
programs are efficient ason
possible, during
the
Maturity
Entry
2) Prune unprofitable sizes
and
models
which
Rise
Strategies
decreases
sales but increases profits,
3) Run out the product to squeeze out final
profits, or
Introduction
Growth
Maturity
4) Revitalize
it (best and
toughest route)
Civil War
Innovation!
Surviving
the
Decline
Decline
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VII. The “Total Product”
A. Defined:
Broad spectrum [bundle] of tangible and
intangible benefits
B. Primary Characteristics:
basic features of the core product
C. Auxiliary Dimensions:
supplementary benefits
34
Core and Augmented Product Example
Core
Product-Close Up
Toothpaste
35
Core and Augmented Product Example
Primary Characteristics: basic features of the core product
Core
Product-Close Up
Toothpaste
ESSENTIAL BENEFITS
•Clean Teeth
•Prevent Tooth Decay
36
Augmented Product -- Auxiliary Dimensions
Flip top
package
Brand
Name-Close Up
800 help
phone
line
Core
Product-Close Up
Toothpaste
Flavor
Tartar
Control
Fluoride
37
Benefits of the Augmented Product
Convenient Storage
Social
Confidence;
Romance;
White Teeth
Safety
Flip top
package
Brand
Name-Close Up
800 help
phone
line
Core
Product-Close Up
Toothpaste
Flavor
Good Taste
Fresh Breath
Tartar
Control
Cleaner Teeth
Fluoride
Lower Dental
Bills
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VIII. Classifying Products
A. End Use Market
1. Agricultural Products & Raw Materials
2. Organizational Goods
3. Consumer Goods
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Agricultural & Raw Materials

For example: Ingredients (zinc, pig iron, cotton)
– Rather Homogeneous
– Sold in bulk
– Low value per unit
40
Organizational Products
1. Manufactured materials and component parts:
(electrical resistors, screws, electric motors)
2. Process materials: used in production, not part of
finished product (chemicals)
3. Installations: primary production equipment and
major capital items (buildings, computer
hardware, assembly lines)
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Organizational Products
4. Accessory equipment: (word processors, trucks)
5. Operating Supplies: facilitate routine operations
(writing paper, hand tools)
6. Services: work provided by others (maintenance,
repairs)
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Consumer Goods
1. Based on Durability/Tangibility Classification
SHOVEL
GOOD
RESTAURANT
GOOD/SERVICE
EMPLOYMENT
AGENCY
SERVICE
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Consumer Goods
2. Based on CONSUMER’S Interest
LOW
Willingness to Expend Effort for Product
CONVENIENCE
PRODUCT
SHOPPING
PRODUCT
HIGH
SPECIALTY
PRODUCT
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CONVENIENCE PRODUCTS
CHARACTERISTICS:
1. Relatively Inexpensive
2. Purchase is regular and
recurring
3. Little Thinking Involved
4. Minimal Shopping Effort
5. Bought a most convenient
location
6. Bought on impulse
STRATEGY:
1. Make available in every
possible place
2. Must be visible inside the
store
3. Distribution is a major
marketing mix factor
4. Easy substitution by
similar brands
5. Extensive advertising is
used
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Shopping Products
CHARACTERISTICS:
1. Product comparisons occur
2. Consumer seek information
3. Decisions are based on
thought
4. Relatively higher prices
5. Often fashion oriented
6. Monetary & social risks
7. Brand loyalty may be found
STRATEGY:
1. Selective distribution
2. Consumers will seek
products in less visible
locations
3. Quality is important
4. Product differentiation
is possible
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Specialty Products
CHARACTERISTICS:
1. Substitutes are not accepted
2. Infrequently purchased
3. Extensive Search
4. Brand loyalty may be strong
5. Loyalty to retailer may be as
important as brand selection
6. May travel great distances to
acquire
STRATEGY:
1. Limited distribution
2. Consumers will seek
products regardless of
location
3. Extensive product and
price differentiation
4. Strong brand image
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IX. Does your product offer
Quality or Value?
QUALITY---degree of excellence or superiority your product
has (or service provides)
--CUSTOMER’S perception of quality is key
--TQM and ISO 9000
VALUE---what the customer gets in exchange for what the
customer gives.
--”Am I satisfied?” “How much did it cost?”
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Muller on Timken—Industries &
Focus
Growth for Timken
Focused on Heavy
Industries
Steel
Power Generation
Cement Production
Aggregate
Wind Energy
We can deliver value
AND they are
growing!
e.g., Iron Ore, Coal,
Oil
vs. Automotive!
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X. Product Mix Terminology
Product Mix
All of the products we offer for sale
Product Line
A group of closely related products
Width of Product Mix
The number of product lines carried
Depth of Product Mix
Average Number of Products in each line
Consistency of Product Mix
How similar are our product lines?
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Product Mix Example
Width (Number of Product Lines)
Hair Care
Depth
#
of
Items
Shampoo
Salty
Snacks
Chips
Dental
Soft
Care
Drinks
Toothbrush Colas
Conditioner Nuts
Toothpaste Ginger
Ale
Hair Spray Crackers Dental
Root Beer
Floss
Comb
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XI. Brand Equity
A. Branding identifies and distinguishes
one marketer’s product from another's
– Customers use brand information as
important buying cues.
1. A BRAND is any name, term, symbol,
sign, design, or unifying combination of
these that identifies a product.
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XI. Brand Equity
a. A BRAND NAME is the verbal
part of the brand.
b. A BRAND MARK is a unique
symbol that is part of the brand.
c. A logo, or logotype, is a brand
name or company name written in a
distinctive style.
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XI. Brand Equity
2. Brand equity is the “value” of the brand
caused by goodwill and brand reputation.
– It is a valuable asset that must be
managed!
– Strong equity makes market position
easier to defend.
– Strong equity makes new products
easier to introduce.
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PROTECT your product!!
Polaroid was
awarded damages
of $909,457,567!!
Polaroid Square Shooter 2 Camera
Champ Kodamatic
56
Of course, the PLC STILL Holds
Polaroid may have defeated Kodak in the instant
camera business, but it can't beat a sagging
economy. Polaroid (or Polaroid Corp to be precise)
just filed for Chapter 11 bankruptcy protection for the
second time in 7 years.
“Impossible” to make Polaroid film (maybe)
http://www.the-impossible-project.com/
(or
http://blog.makezine.com/archive/2009/01/the_impossible_project_the_reinvent.html?CMP=OTC-0D6B48984890
Polaroid’s PoGo Instant Digital Camera
57
XII. Family Branding
A. Family branding is a strategy that uses
a single brand name for different items in
a product line
– e.g., Heinz, Del Monte, General
Electric
58
XIII. Individual Brands
A. Use of Separate Brand Names for each
product.
Example:
--Goodyear
--Dunlop
--Springfield
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Goodyear Target Markets
Goodyear
Cust.
Dunlop
Kelly
Euro-cool
Age
Family
Centered
Mirror of
Active
America
34-54
24-34
??
Price
High end
Mid-range
Lower end
Slogan
Serious
Point of
Technology. Departure
Freedom
from worry
Audience
Blue collar
On the way Taking Care
up
of Basics
Honest tires,
Honest
Prices
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Proctor & Gamble’s Portfolio
Brand
TIDE
CHEER
BOLD
GAIN
ERA
DASH
OXYDOL
SOLO
DREFT
IVORY
SNOW
ARIEL
Positioning
Share
Tough, powerful cleaning
31.1%
Tough cleaning, color safe
8.2
Detergent + Fabric Softener
2.9
Sunshine scent & odor protection 2.6
Stain removal
2.2
Value priced
1.8
Whitening
1.4
Liquid detergent & softener
1.2
For baby clothes & tender skin
1.0
Simple, basic, no frills soap
Safe for fine fabrics & babies
.7
Tough cleaner, Hispanic market
.1 61
XIV. Warranties
A. A product warranty provides a written
guarantee of a product’s integrity and the
manufacturer’s responsibility for repairing
or replacing defective parts.
B. Warranties reduce customers’ perceived
risk by suggesting product quality.
C. HONOR THY WARRANTY to create
customer satisfaction!
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XV. Packaging
A. Packaging contains the product and
protects it, aids in usage, identification,
promotion, and ecology.
B. Packaging involves decisions about
labeling, inserts, instructions, design, and
sizes.
C. Packages serve as cues to customers as
they purchase.
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XVII. The Product Audit
Think Product Portfolio Management, ala the
Boston Consulting Group Matrix:
--Review products to determine whether
they should be continued as is, improved,
modified, or deleted.
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