Buyer Behavior Professor S.J. Grant Spring 2007 BUYER BEHAVIOR, MARKETING 3250

Outline Introduction Goals of the course Requirements Grading Honor code My obligations About me

Introduction This course is an overview of concepts of consumer behavior Drawing from psychology, our study of behavior will emphasize an understanding of consumer learning, memory, preference, choice and attitudes

Goals of the Course Introduce you to key concepts and theories underlying consumer behavior Demonstrate how an understanding of consumer behavior drives marketing strategy

Requirements Readings REQUIRED TEXT: Wayne D. Hoyer & Deborah J. MacInnis, Consumer Behavior, 4th ed., Houghton Mifflin, Arbinger Institute, Leadership and Self-Deception; Getting Out of the Box, Berrett-Koehler, OPTIONAL TEXTS: Dawn Iacobucci, ed., Kellogg on Marketing, John Wiley & Sons, 2001.

Requirements Group work Students select groups Peer evaluation is component of overall grade (5%) Collaborative work has pedagogical purpose

Grading Grading will be based on evaluations of individual effort and team work Positioning analysis # 10 % Case analysis # 10 % Quantitative analysis*10 % Exam I * 15 % Exam II * 15 % Team project # 20 % Team dynamics # 5 % Class participation ^ 15 % # Team work * Individual effort ^Preparation for class discussion may be done in teams

Grading Assignments Positioning analysis Case analysis Pricing analysis Team project Readings Exercises Class discussion Exams Midterm I Midterm II Final

Honor Code Team work Duty to the team Conflict in the team Peer evaluation Infractions and suspected violations are taken seriously Applies to attendance, course requirements, preparation of assignments, exams

My Obligations I will return assignments within one week of submission I am available during office hours MW 2-3 pm and by appointment I will return all student phone calls and s within 24 hours Phone:

About Me Education University of Pennsylvania, BA Kellogg School of Management, Northwestern University, MBA, PhD Experience Northwestern University, lecturer Price Waterhouse Coopers LLP, consultant Philadelphia Inquirer, editor Boston Globe, reporter, editor

Professor S.J. Grant Spring 2007 BUYER BEHAVIOR, MARKETING 3250 Review of Marketing Concepts

Outline What is marketing? Review of marketing management Analyzing the marketing environment & marketing opportunities Aspects of strategy

Paradigm Shift “Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.” (Theodore Levitt)

Historic Overview Selling concept has been historically dominant Whatever was produced (crops, livestock, goods) had to be sold at market Industrial Revolution shifted production from home to factory, prompting focus to be on the marketing concept

Selling versus Marketing Selling Concept Selling & Promoting Products Profits through sales volume Customer needs Profits through customer satisfaction Marketing Concept Integrated Marketing

Selling versus Marketing Selling concept Focuses on selling what you can make Marketing concept Focuses on making what you can sell

Marketing Concept Analyze Marketing Opportunities - Environmental Analysis - Competitive Analysis - Consumer Analysis Implementation & Control Marketing Research Select Target Markets - Segmentation - Targeting - Positioning Formulate the Marketing Mix - Product - Promotion - Pricing - Distribution/Place

Marketing Management Management of change, a necessary focus in a dynamic marketplace Sensitivity to external changes is key in identifying opportunity Competitors Consumers Sensitivity to internal changes is key in formulating a strategy

Marketing Management How is marketing management distinct from plain old management? Customer focus Customer focus  “Customer is always right” Customer focus implies scrutinizing how strategic motivations are relevant to the customer Involves keeping a disciplined vision of how to create the kind of value the customer is willing to pay for

Marketing Management In essence, marketing management is about value creation and value delivery Choose the value Provide the value Communicate the value

Value Creation & Delivery Choose the value Provide the value Communicate the value Segmentation Targeting Positioning Product Pricing Sourcing Distribution Sales force Sales promotion Advertising

Marketing Strategy A coherent strategy informs every aspect of the marketing process Aligns a firm’s strengths with what is needed in marketplace – strategic fit Given consumer demand Given competition Guides vision, direction Drives tactics

Core Competencies 3 dimensions of core competencies Operational excellence Product leadership Customer intimacy

Company Traits Disciplines Operational Excellence Sharpen distribution system and provide no-hassle service Has strong, central authority and a finite level of empowerment Maintain standard operating procedures Acts predictably and believes “one size fits all” Product Leadership Nurture ideas, translate them into products, and market them skillfully Acts in an ad hoc, organic, loosely knit, and ever-changing way Reward individuals’ innovative capacity and new product success Experiments and thinks “out-of-the-box” Customer Intimacy Provides solutions and help customers run their businesses Pushes empowerment close to customer contact Measure the cost of service, maintaining customer loyalty Is flexible and thinks “have it your way” Core business processes that... Structure that... Management systems that... Culture that... Source: M. Treacy and F. Wiersema The Discipline of Market Leaders Addison-Wesley: Reading MA, 1995 Which Discipline to Choose?

Operational Excellence When practicing the operational excellence discipline, it is necessary to balance the need to respond to consumer and competitor changes in the marketplace A company must tradeoff consumer heterogeneity, slowing demand and product proliferation if the core discipline is to be maintained Economies of scale, efficiency are crucial Mass market is competitive space

Product Leadership When practicing the product leadership discipline, the firm must be willing to cannibalize existing products, but the focus should be on providing consumers with a reason to “trade up” to the product innovation rather than “trade down” Product innovation must be constant Continual investment is necessary Requires partners’ cooperation

Customer Intimacy When practicing the customer intimacy discipline, the firm aims to serve a small segment who pay a high premium Customer intimacy cannot be achieved on a large scale The smaller the segment, the higher the price charged, the higher the quality of the product or service

Choosing a Discipline Operational Excellence Product Leadership Customer Intimacy BICGillette British Airways Wal-MartApple American Express ToyotaBMWLexus