Consumers and Competition

THE BIG IDEA! The Marketing Concept is the idea that a business must consider both its potential consumers and its competitors in every important business decision.

The Consumer Profiles, Segments, and Targeting

What Do You Need to Survive? Do you need a Tim Horton’s coffee every morning? Do you need the latest PlayStation game? Do you need the latest smartphone?

Consumers Everyone has unique physical features, personality, beliefs, and geographic location This allows marketers to create consumer profiles of the people most likely to purchase a specific product.

Consumer Segments Consumers are then grouped according to similar characteristics. These segments may be based on age (ie. Youth, baby boomers, seniors), interests (music, sports) as well as many other factors.

Target Market The segment that the marketer most wants to attract. Usually has the most potential for success

Elements of a Consumer Profile 1) Demographics – is the study of human populations and includes obvious characteristics that categorize people. Examples include age, income, gender, occupation, ethnicity, education, and family life cycle

Consumer Profile E-Activity Visit Click on Student Centre, then E-Activities. Then choose under Chapter 2 Consumer Profiles, Demographics Follow the instructions to complete a statistical profile for the community of Ottawa.

Elements of a Consumer Profile 2) Psychographics – is a system for measuring consumers’ beliefs, opinions, interests, and lifestyles. It profiles consumers according to religious beliefs, tastes in music, lifestyle, attitudes towards health, and other psychological factors.

Elements of a Consumer Profile 3) Geographics – looks at where consumers live Marketers are interested in three main categories: urban, suburban, and rural

Elements of a Consumer Profile 4) Product Use Stats – Marketers attempt to identify heavy users of specific products.

Consumer Profiles

Consumer Profile Activity Time! Create your own Consumer Profile Use Emily and John’s consumer profile as examples and create your own consumer profile. What are your demographic characteristics? What psychographics define you? What are your interests, hobbies, lifestyle? Where do you live (geographics)? What types of products do you use often (product use stats)?

Consumer Motivation and the Buying Process

Consumer Motivation Why do we buy? Think of the last purchase you made. Why did you buy that product, service, or event? What did it satisfy (a need, a want)? How did it make you feel?

We All Buy For Different Reasons Motivations that affect consumer buying behaviour include: 1. Biological (ie. food, shelter, safety) 2. Emotional (ie. love, sympathy, fear) 3. Rational (ie. safety, value, quality) 4. Social (ie. peer pressure, celebrity Endorsements)

Apply Your Knowledge Watch the following advertisements. What motivations are used to influence consumers to buy these products?

Mac Ads

Nike Rhythm Ad

Globe and Mail Ad

Psychological Test 1. I would prefer to win: a) a $5000 scholarship to the University of my choice b) $5000 to be spent at the retail stores of my choice c) $5000 to throw an awesome party for all my friends 2. I would prefer to have: a) a laptop computer and colour laser printer b) a superb sound system c) a wardrobe from Le Chateau, Mexx, Tristan and America or Banana Republic

Psychological Test 3. I would select a job: a) in an automotive assembly plant at a starting salary of $35000 and guaranteed wage increases of at least 4% per year. b) As a marketing representative with I.B.M. at a starting salary of $25000 where increases would range from 0% to 30% depending on how well I performed my job.

Psychological Test 4. If I had the chance to go to a party which all my friends would be at but the party was the night before a major exam, I would: a) go to the party and risk getting a lower grade ; even though I know I could still pass b) stay home and study

Psychological Test 5. Assume you have to prepare a Christmas wish list today. Select the list containing the item(s) that would be at the top of your list. List AList BList CList DList E Food, warm clothing Money ( for living expenses or for savings) Brand name clothes, watches, used car, video games, jewellery, etc. Designer clothes, designer brand perfume, iPod, etc. Laptop computer, educational books, fitness equipment, lessons or courses, etc.

Rating Chart To calculate your score on this test, determine the number of points received for each question based on the table below. QuestionResponsePoint 1ABCABC ABCABC ABAB ABAB ABCDEABCDE Total

What Needs Are Important To You? Points Category Physiological/Biological Safety 16-19Social/Belonging Self - Esteem Self - Fulfillment

Motivation Theory- Maslow’s Hierarchy of Needs

Retail Therapy Retail Therapy is a term that refers to shopping for enjoyment, to improve one’s mood or boost one’s ego Marketers of stores and brands attempt to build positive associations with the shopping experience and are as much about selling a lifestyle or attitude as they are about the actual product

The Buying Process These various motivations, influences, and needs & wants lead consumers through the buying process.

Information Technology’s Affect on the Buying Process Buying Process Need Recognition and Problem Awareness Information Search Evaluation of Alternatives Purchase Post-Purchase Evaluation Buying Process You see a banner ad for XBOX 360 while surfing the net which invokes a need for entertainment. You search the www for product reviews, games, etc. You also check out other video game consoles (Playstation 3, Wii) In an enewsletter From Sony you learn that the a new system from Sony will be available by Christmas time. Decision criteria are set (must be one of the newest consoles, must have many games, must be available now) The XBOX 360 best meets all of your criteria. You Purchase online at Bestbuy.ca Your gaming experience is enjoyable.

Online Consumers In 2003, Canadians spent $3 billion shopping on the internet. 3.2 million households took part in some form of e-commerce. 78% of Canadian surveyed have made an online purchase. Most common purchases include books, DVD’s/games, software.

IT’s Influence on Consumers E- commerce has become a convenient, safe, and enjoyable way to make purchases. Corporate websites allow marketers to better focus their efforts to a target market of one by collecting personal data and maintaining purchase records.

IT’s Influence on Consumers Banner and pop ads are a growing advertising medium. Corporate and online newsletters keep consumers informed of new products and innovations. WWW provides a wealth of information that can be used for comparison shopping.

Competition

Knowledge Check What is the Marketing Concept? According to Philip Simborg, of the business advisory firm Grubb & Ellis, “The two common reasons for losing are not knowing you’re competing and not knowing with whom you are competing.”

Benefits of Competition Contributes to the Canadian economy by encouraging creation of new businesses. Wide selection of goods and services. Better service.

Market Categories Broad product description. Often referred to as an industry. Example: Beverages, automobiles, computers.

Market Segments Marketers break these broad categories into Market Segments. Example: juice is a segment of the beverage category, and ready-to-drink fruit juice is a segment of the juice category. This allows marketers to compare themselves to their direct competition (the competition that most concerns them).

Market Share Market share is the percentage that one company’s product takes of the total dollars spent by consumers on products within a specific market category. Ie. Minute Maid has a 9.7% market share of the Ready-to-Drink Fruit Juice segment

The Ready-to-Drink Fruit Juice Market Segment Rank in 2001Brand2001 Market Share 1Tropicana (Pepsi)57.9 % 2Private Label17.5 % 3Minute-Maid ( Coca- Cola) 9.7 % 4Oasis (Lassonde)5.2 % 5Beatrice ( Parmalat)5.2 % Others4.5 %

Sustainable Competitive Advantage Methods by which a business holds on to its customers, in spite of competition.

Sustainable Competitive Advantages Lowering Production Costs Serving a Niche Market Creating Customer Loyalty Unique Selling Proposition (USP) – a product attribute that can not be matched by the competition (ie. Patented design, licensed rights).