1. Chapter 12: Understanding
Marketing Processes and Consumer Behavior
Chapter 12: Understanding

2. Explain the concept of marketing.
L E A R N I N G O B J E C T I V E S
Explain the concept of marketing.
Explain the purpose of a marketing plan and identify the four components of the marketing mix.
Explain market segmentation and show how it is used in target marketing.
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3. Explain the purpose and value of marketing research.
L E A R N I N G O B J E C T I V E S
Explain the purpose and value of marketing research.
Describe the key factors that Influence the consumer buying process.
Describe the international and small-business marketing
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4. © 2009 Pearson Education, Inc.
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
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5. Discussion
What is marketing? Can you see marketing elements around you? Give example.

6. Marketing What Is 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 with a new product or service.
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7. What Is Marketing?
“Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. .
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8. Providing Value and Satisfaction
What Is Marketing?
Providing Value and Satisfaction
Limited financial resources force us to be selective.
Consumers buy products that offer the best value when it comes to meeting their needs and wants.
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9. 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 = Benefits/Costs
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10. Value and Utility Form utility: Designing products customers want.
Time utility: Creating sales contracts that specify when the product will be delivered.
Place utility: Creating contracts that specify where the products will be delivered to the consumer.
Ownership utility: Arranging to transfer product ownership to customers by providing and setting sales prices, setting payment terms and providing ownership documents.

11. Discussion
What is the difference between needs and wants? A need, if we refer back to Maslow’s Hierarchy of Needs, is something the consumer needs in order to live or function in his life or career. This could mean food, shelter, clothing, transportation, shoes, etc. What separates consumer need from want is money. Here is an example: I need a coat because it is cold outside. I want a fake fur coat that will look trendy in the clubs.

12. Goods, Services, and Ideas
Consumer goods: Tangible goods that consumers may buy for personal use
Consumer marketing is used to inform people about these goods.
Industrial goods: Physical items used by companies to produce other products
Industrial marketing: used to inform companies about these goods.
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13. Goods, Services, and Ideas
Services: Products with intangible (nonphysical) features
Service marketing is used to inform the public about these intangibles.
Relationship Marketing
Emphasizes building lasting relationships with customers and suppliers: results, customer satisfaction and retention.
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14. Relationship Marketing
It is important to record any information you can obtain about your customers’ purchasing habits.
Data Warehousing and Data Mining are used for Building Customer Relationships
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15. Relationship Marketing
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
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16. The Marketing Environment
Marketing strategies are not determined unilaterally by any business- they are influenced by powerful forces. They include:
Political-legal environment
Sociocultural environment
Technological environment
Economic environment
Competitive environment
Substitute products
Brand competition
International competition
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17. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Marketing Plan
A detailed strategy for focusing marketing efforts on consumer needs and wants
In planning business develops the Marketing Mix: 4 Ps
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18. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product: Marketing begins with a product -a good, a service, or an idea designed to fill a consumer need or want. Meeting consumer needs is a constant challenge,
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19. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product differentiation is the creation of a feature or image that makes a product differ enough from competitive products to attract consumers.
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20. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty. Developing a product is a challenge, why?
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21. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Price: Selecting the best pricing strategy at which to sell a product.
Price include: cost + profit margin.
Price has to be convenient to customer. Price should be competitive.
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22. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Marketing Mix: 4 Ps
Place: Distributing a product through the proper channels.
Inventory and warehousing control and use of transportation are part of distribution.
Many manufacturers sell goods to other companies , which in turn distribute them to retailers. Others sell directly to major retailers or direct to final consumer.
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23. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Marketing Mix: 4 Ps
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, personal selling, etc.
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24. Four Cs:
The sellers' four Ps are a mirror image of the buyers' four Cs: customer solution (product), customer cost (price), customer convenience (place), and customer communication (promotion).
Together, these elements are known as the marketing mix.

25. Discussion
Give examples about Advertising, sales promotion

26. Group work
I need to buy Toyota car , I prefer silver color. The problem I don’t have enough money to pay. I may borrow from bank, it will cost me 20000$. In addition, I am unsure where to buy from, though I heard about the product from radio. Question: identify the marketing mix .

27. Target Marketing and Market Segmentation
Target Markets: Groups of people with similar wants and needs who can be expected to show interest in the same products.
Selecting the target group is first step in marketing strategies. Why?
The target marketing requires market segmentation.
e.g., Hyundai offers automobiles with various features at various prices.
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28. Target Marketing and Market Segmentation
Dividing a market into categories of customer types or “segments”.
Market segment must share common traits that affect their purchasing decisions.
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29. Segmentation variables:
Geographic: Areas of a country or region where buyers are located. E.g., Urban areas do not need agricultural equipments. Also Sailboats sell better along coasts.
Demographic: Statistical information about age, income, sex, race, education, etc.
Psychographic: Values, attitudes and lifestyles of a consumer or group of consumers, e.g., family size affect size and type of purchasing.
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30. PRODUCT POSITIONING
PRODUCT POSITIONING : The establishment of an easily identifiable image of a product in the minds of consumers.
Product positioning is based on the important attributes that consumers use to assess the product. For example, a low-priced car like a Ford Focus tends to be positioned on the basis of economy,
while a Porsche is positioned in terms of high performance.

31. TABLE 11.1 Demographic Variables
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32. Case study
I decided to buy a suit for my self. I wondered where to go. At the end I went to men’s wear shop. The shop specialized in selling suits for men only, specially matured of age over 20 years. Question: identify the segmentation categories in this case.

33. Market Research
Which is the study of what buyers need and how best to meet those needs, can address any element In the marketing mix.
Market research can greatly Improve the accuracy and effectiveness of market segmentation.

34. The Research Process
Study the current situation. What is the need and what Is currently being done to meet It.
Select a research method. In choosing a method, marketers must bear in mind the effectiveness and costs of different methods. The four basic types : observation, survey, focus groups, and experimentation.

35. The Research Process
Collect data. Secondary data are information already available as a result of previous research by the firm or other organizations. Primary data-new research by the firm or its agent&-must be obtained.
Analyze the data.
Prepare a report. This report normally includes a summary, methodology and findings, various alternative solutions (where appropriate), and recommendations.

36. Understanding Consumer Behavior
It is important that we understand how and why consumers behave the way they do when making purchases.
There are four influences on consumer behavior. These include:
Psychological influences: These influences can include a person’s values, attitudes ability to learn.
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37. Understanding Consumer Behavior
Personal influences: These influences can include personal preferences based on personality, life style, economic status.
Social influences: These influences can include social status, having the latest or greatest version of an item. E.g., influence of reference groups such as friends
Cultural influences: These influences can include behaviors or beliefs specific to one’s cultural heritage. E.g., the cultural ranking of groups according to criteria such as background, occupation, religion and income
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38. Understanding Consumer Behavior
Brand Loyalty
Consumers who regularly purchase products because they are satisfied with their performance
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39. FIGURE 11.1 The Consumer Buying Process
Problem\Need Recognition
Information Seeking
Evaluation of Alternatives
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40. Organizational Marketing and Buying Behavior
Organizational Markets 3 types:
Industrial Markets
Businesses that buy goods to be converted into other products or that are used up during production
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41. Organizational Marketing and Buying Behavior
Organizational Markets 3 types:
Reseller Markets
Intermediaries, including wholesalers and retailers, that buy and resell finished goods
Government and Institutional Markets
Federal and state governments
Nongovernmental organizations
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42. 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
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43. Group work
Draw example on Government and Institutional Markets in Gaza

44. Organizational Buying Behavior
The differences in buyer-seller relationships in organizational markets versus consumer markets include the following:
Organizational buyers usually make frequent purchases.
Organizational buyers form enduring long-term relationships.
Buyers and sellers in organizational markets may work closely.
Organizational marketing also puts a heavy emphasis on personal selling.
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45. Discussion
Who can describe the buying behavior of supermarket in relation with a wholesale.

46. What Is a Product? Product Defined Product Features Benefits
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
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47. TABLE 11.2 Categories of Consumer Products
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48. TABLE 11.3 Industrial Products
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49. The Product Mix Product Mix Product Line
The group of products (consumer, industrial, or both) that a company makes available for sale. E.g., IUG products.
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.
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50. Multiple (or Diversified) Product Lines
The Product Mix
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.
Please give an example of a product line for a consumer products company
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51. 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
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52. FIGURE 11.2 Products in the Life Cycle: Stages, Sales, Cost and Profit
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53. Identifying Products Branding Products
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. E.g., K cheeze, coca cola.
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54. Branding Products Consumer preference for a particular product
Identifying Products
Branding Products
Consumer preference for a particular product
Brand awareness
The brand name that comes first to mind when consumers consider a particular product category
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55. Identifying Products (cont’d)
Gaining Brand Awareness: Requires several methods of promotion including:
1 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. E.g., when people drinking coca cola during football game TV watching.
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56. Gaining Brand Awareness
Requires several methods of promotion including:
2 Buzz marketing
A form of word-of-mouth marketing. They give sample to people and ask them to tell friends about it.
3 Viral marketing
Form of Buzz marketing that relies on Internet to spread information like a “virus” from person-to-person about products and ideas
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57. 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
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58. Packaging Products Purposes of packaging Displays the brand name
Identifies features and benefits
Enhances the utility of the product features and benefits
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59. The International Marketing Mix
International products: Products sold internationally need to adapt to the needs of consumers in the foreign market.
International pricing: There will probably be higher transportation and selling costs abroad, but pricing cannot be raised just for this reason. A marketer needs to take into account the income of the consumers, currency exchange rates and competitive pricing.
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60. The International Marketing Mix
International distribution: access to a distribution network in foreign markets. For example, in many parts of the world the super or hyper market concept is new and only exists within major cities. How will the company distribute and sell its products in the outlying/remote areas of a country?
International promotion: Promotion requires cultural sensitivity and hence adjustments to the marketing mix.
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61. 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
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62. Small Business and the Marketing Mix
Small-Business Distribution
Poor location choice fails to attract customers
Small-Business Promotion
Careful promotion can reduce expenses. It requires budget.
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