Transcript Business Essentials 6e - Ebert and Griffin

4
Principles of Marketing
Business
Essentials
6e
Ronald J. Ebert
Ricky W. Griffin
11
MARKETING PROCESSES AND
CONSUMER BEHAVIOR
© 2007 Prentice Hall, Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
1. Explain the concept of marketing and identify the five
forces that constitute the external marketing
environment.
2. Explain the purpose of a marketing plan and identify
the four components of the marketing mix.
3. Explain market segmentation and how it is used in
target marketing.
4. Describe the key factors that influence the consumer
buying process.
5. Discuss the three categories of organizational
markets.
© 2007 Prentice Hall, Inc. All rights reserved.
11–2
L E A R N I N G O B J E C T I V E S (cont’d)
After reading this chapter, you should be able to:
6. Explain the definition of a product as a value package
and classify goods and services.
7. Describe the key considerations in the new product
development process.
8. Explain the importance of branding and packaging.
9. Discuss the challenges that arise in adopting an
international marketing mix.
10. Identify the ways that small businesses can benefit
from an understanding of the marketing mix.
© 2007 Prentice Hall, Inc. All rights reserved.
11–3
What’s in It for Me?
Why does marketing matter to you?
 By grasping this chapter’s presentation of marketing
methods and ideas, you’ll benefit in two ways:
You’ll be better prepared to use marketing in your career as
both employee and manager
 You’ll be a more informed consumer with greater awareness
of how businesses use marketing to gain your purchases

© 2007 Prentice Hall, Inc. All rights reserved.
11–4
What Is Marketing?
Marketing
 “A set of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders” (AMA)

Finding a need and fulfilling it
Providing Value and Satisfaction
 Consumers buy products that offer the best value
when it comes to meeting their needs and wants
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11–5
What Is Marketing? (cont’d)
Value and Benefits
 Value compares a product’s benefits with its costs.
 Benefits include not only the functions of the product
but also the emotional satisfaction associated with
owning, experiencing, or possessing it.
Value and Utility
 Form utility
 Time utility
 Place utility
 Ownership utility
© 2007 Prentice Hall, Inc. All rights reserved.
11–6
What Is Marketing? (cont’d)
Goods, Services, and Ideas
 Consumer goods: Tangible goods that consumers
may buy for personal use

Consumer marketing
 Industrial goods: Physical items used by
companies to produce other products

Industrial marketing
 Services: Products with intangible (nonphysical)
features

Service marketing
Relationship Marketing
 Emphasizes building lasting relationships with
customers and suppliers
© 2007 Prentice Hall, Inc. All rights reserved.
11–7
What Is Marketing? (cont’d)
Data Warehousing and Data Mining for Building
Customer Relationships
 Data warehousing: The compiling and storage of
consumer data
 Data mining: Automating the massive analysis of
data by using computers to sift, sort, and search for
previously undiscovered clues about what customers
look at, react to, and how they might be influenced
© 2007 Prentice Hall, Inc. All rights reserved.
11–8
What Is Marketing? (cont’d)
The Marketing Environment
 Political-legal environment
 Sociocultural environment
 Technological environment
 Economic environment
 Competitive environment

Substitute products

Brand competition

International competition
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11–9
What Is Marketing? (cont’d)
Strategy: The Marketing Mix
 Marketing Plan

A detailed strategy for focusing marketing efforts on
consumer needs and wants
 Marketing Mix
Product
– Differentiating a product: pricing, place, and promotion
 Pricing
– Selecting the best price at which to sell a product
 Place
– Distributing a product through the proper channels
 Promotion
– Communicating information about a product

© 2007 Prentice Hall, Inc. All rights reserved.
11–10
Target Marketing and
Market Segmentation
Target Markets
 Groups of people with similar wants and needs and
who can be expected to show interest in the same
products
Market Segmentation
 Dividing a market into categories of customer types
or “segments”

Geographic

Demographic

Psychographic
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11–11
Target Marketing and Market
Segmentation (cont’d)
Identifying Market
Segments
Geographic Demographic
Variables
Variables
Psychographic
Variables
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11–12
Demographic Variables
Age
Under 5, 5–11, 12–19, 20–34, 35–49, 50–64, 65+
Education
Grade school or less, some high school, graduated high school,
some college, college degree, advanced degree
Family life
cycle
Young single, young married without children, young married with
children, older married with children under 18, older married without
children under 18, older single, other
Family size
1, 2–3, 4–5, 6+
Income
Under $9,000, $9,000–$14,999, $15,000–$24,999, $25,000–
$34,999, $35,000–$45,000, over $45,000
Nationality
African, American, Asian, British, Eastern European, French,
German, Irish, Italian, Latin American, Middle Eastern,
Scandinavian
Race
Native American, Asian, African American, Caucasian
Religion
Buddhist, Catholic, Hindu, Jewish, Muslim, Protestant
Sex
Male, female
© 2007 Prentice Hall, Inc. All rights reserved.
11–13
Understanding Consumer Behavior
Influences on Consumer Behavior
 Psychological influences
 Personal influences
 Social influence
 Cultural influence
Brand Loyalty
 Consumers who regularly purchase products
because they are satisfied with their performance
© 2007 Prentice Hall, Inc. All rights reserved.
11–14
Organizational Marketing
and Buying Behavior
Organizational Markets
 Industrial Markets

Businesses that buy goods to be converted into other
products or that are used up during production
 Reseller Markets

Intermediaries, including wholesalers and retailers, that buy
and resell finished goods
 Government and Institutional markets
Federal and state governments
 Nongovernmental organizations

© 2007 Prentice Hall, Inc. All rights reserved.
11–15
Organizational Marketing and
Buying Behavior (cont’d)
Organizational Buying Behavior
 Differences in Buyers

Organizational buyers are professionals who negotiate the
buyer-seller agreement (purchase terms)
– Specialists in purchasing a line of items
– Experts about the products purchased
 Differences in the Buyer-Seller Relationship
Frequent purchases
 Enduring long-term relationships
 Buyers and sellers may work closely
 Emphasis is on personal selling

© 2007 Prentice Hall, Inc. All rights reserved.
11–16
What Is a Product?
Product Defined
 A value package that provides a bundle of benefits
and features to satisfy the needs and wants of
customers
Product Features
 Tangible and intangible qualities built into a product
Benefits
 The tangible and intangible outcomes associated
with acquisition or use of a product
© 2007 Prentice Hall, Inc. All rights reserved.
11–17
Classifying Goods and Services
Classifying Consumer Products
 Convenience goods and services

Frequent purchase, inexpensive, immediate consumption,
and little search and consideration
 Shopping goods and services

Less frequent purchase, more expensive, and more search
and comparison of products
 Specialty goods and services

Infrequent (or one-time) purchase, most expensive, and an
extensive search effort for specific product
© 2007 Prentice Hall, Inc. All rights reserved.
11–18
Classifying Goods and Services (cont’d)
Classifying Industrial Products
 Expense items

Goods or services that are consumed within a year by firms
producing other goods or supplying other services
 Capital items

Permanent (expensive and long-lasting) goods and services
that have expected lives of more than a year and, typically,
of several years
– Capital goods
– Capital services
© 2007 Prentice Hall, Inc. All rights reserved.
11–19
The Product Mix
Product Mix
 The group of products (consumer, industrial, or both)
that a company makes available for sale
Product Line
 A group of products that are closely related because
they function in a similar manner or are sold to the
same customer group who will use them in similar
ways
Multiple (or Diversified) Product Lines
 Allow a company to grow rapidly and can help to
offset the consequences of slow sales in any one
product line
© 2007 Prentice Hall, Inc. All rights reserved.
11–20
Developing New Products
The New Product Development Process
 Research and Development (R&D)

Departments for exploring new product possibilities
 Product mortality rates

Few product ideas (1 in 50) actually reach the market
 Speed to market

Responding to customer demand or market changes by
introducing new products to the market ahead of competitors
© 2007 Prentice Hall, Inc. All rights reserved.
11–21
Developing New Products (cont’d)
Product Life Cycle
 Introduction
 Growth
 Maturity
 Decline
© 2007 Prentice Hall, Inc. All rights reserved.
11–22
Identifying Products
Branding Products
 Branding

A process of using symbols to communicate the qualities of
a particular product made by a particular producer
– Signals uniform quality and stimulates consumer recall
 Brand loyalty

Consumer preference for a particular product
 Brand awareness

The brand name that comes first to mind when consumers
consider a particular product category
© 2007 Prentice Hall, Inc. All rights reserved.
11–23
Identifying Products (cont’d)
Gaining Brand Awareness
 Product placement

A promotional tactic for brand exposure in which characters
in television, film, music, magazines, or video games use a
real product that is visible to viewers
 Viral marketing

Relying on word-of-mouth and the Internet to spread
information like a “virus” from person-to-person about
products and ideas
© 2007 Prentice Hall, Inc. All rights reserved.
11–24
Identifying Products (cont’d)
Types of Brand Names
 National brands

Products that are produced by, widely distributed by, and
carry the name of the manufacturer
 Licensed brands

Companies (and even personalities) license (sell the rights
to) other companies to put their names on products
 Private (or private label) brands

Carry the brand name that a wholesaler or retailer develops
and has a manufacturer put it on a product
© 2007 Prentice Hall, Inc. All rights reserved.
11–25
Identifying Products (cont’d)
Packaging Products
 Purposes of packaging

Reduce the risk of damage, breakage, or spoilage

Increase the difficulty of stealing small products

Serves as an in-store advertisement that makes the
product attractive

Displays the brand name

Identifies features and benefits

Enhances the utility of the product features and benefits
© 2007 Prentice Hall, Inc. All rights reserved.
11–26
The International Marketing Mix
International Products
 Need to adapt product to foreign markets
International Pricing
 Higher transportation and selling costs abroad
International Distribution
 Distribution network access in foreign markets
International Promotion
 Cultural sensitivity requires adjustments to the
marketing mix
© 2007 Prentice Hall, Inc. All rights reserved.
11–27
Small Business and the Marketing Mix
Small-Business Products
 Product failures due to lack of market potential for
products or marketing to the wrong target market
segments
Small-Business Pricing
 Losses due to pricing errors resulting from
underestimating operating expenses
Small Business Distribution
 Poor location choice fails to attract customers
Small-Business Promotion
 Careful promotion can reduce expenses
© 2007 Prentice Hall, Inc. All rights reserved.
11–28
KEY TERMS
brand awareness
brand competition
brand loyalty
branding
capital item
consumer behavior
consumer goods
convenience good/convenience
service
demographic variables
distribution
emotional motives
expense item
geographic variables
© 2007 Prentice Hall, Inc. All rights reserved.
industrial goods
industrial market
institutional market
international competition
licensed brand
market segmentation
marketing
marketing manager
marketing mix
marketing plan
national brand
packaging
private brand (or private label)
product
11–29
K E Y T E R M S (cont’d)
product differentiation
product feature
product life cycle (PLC)
product line
product mix
product placement
psychographic variables
rational motives
relationship marketing
reseller market
services
shopping good/shopping service
specialty good/specialty service
© 2007 Prentice Hall, Inc. All rights reserved.
speed to market
substitute product
target market
utility
value
value package
viral marketing
11–30