Copyright © 2006 Pearson Education Canada Inc Chapter 12 Understanding Marketing Processes and Consumer Behaviour
Copyright © 2006 Pearson Education Canada Inc Learning Objectives 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 Explain the purpose and value of market research
Copyright © 2006 Pearson Education Canada Inc Learning Objectives Describe the key factors that influence the consumer buying process. Describe the international and small business marketing mixes.
Copyright © 2006 Pearson Education Canada Inc Marketing Planning and executing the development, pricing, promotion, and distribution of ideas, goods, and services Value Relative comparison of a product’s benefits versus its costs Utility Ability of a product to satisfy a human want or need
Copyright © 2006 Pearson Education Canada Inc Goods, Services, and Ideas Consumer goods Products purchased by individuals for their personal use Industrial goods Products purchased by companies to use directly or indirectly to produce other products Services Intangible products, such as time, expertise, or an activity that can be purchased
Copyright © 2006 Pearson Education Canada Inc Relationship Marketing A type of marketing that emphasizes lasting relationships with customers and suppliers Stronger relationships can result in greater long-term customer satisfaction and client retention
Copyright © 2006 Pearson Education Canada Inc The Marketing Mix Marketing mix The combination of product, pricing, promotion, and place (distribution) strategies used in marketing a product Also known as the four P’s of marketing Marketing plan A detailed strategy for gearing the marketing mix to meet consumer needs and wants
Copyright © 2006 Pearson Education Canada Inc Choosing the Marketing Mix + = Product Promotion Price Place The basic design of the product How much consumer pays Where and when the product is Product image and visibility CustomerSatisfaction BusinessProfitability
Copyright © 2006 Pearson Education Canada Inc Product A good, service, or idea that satisfies the buyers’ needs and demands Product differentiation The creation of a product or product image that differs enough from existing products on the market to attract consumers Mass customization Providing thousands of customers with exactly the products they want Dell Computers
Copyright © 2006 Pearson Education Canada Inc Price Choosing the right price to meet the firm’s profit objectives and buyers’ purchasing objectives May be low price strategy (salt) or high price strategy (mink coat) Price must consider all costs operation and administration marketing research advertising
Copyright © 2006 Pearson Education Canada Inc Promotion Choosing the right method of selling the product to the consumer Promotional tools Advertising Personal selling Sales promotions Publicity Public relations
Copyright © 2006 Pearson Education Canada Inc Place (Distribution) The part of the marketing mix concerned with getting products from producer to buyer Physical transportation Choice of sales outlets
Copyright © 2006 Pearson Education Canada Inc Target Market and Segmentation Target market A group of potential customers who have similar wants and needs Segmentation Dividing a consumer market into categories Selecting specific market segment(s) to pursue
Copyright © 2006 Pearson Education Canada Inc Identifying Market Segments Search for common traits or behaviours that will affect the purchasing decision Search for common traits or behaviours that will affect the purchasing decision Geographic variablesGeographic variables Country, region, neighbourhoodCountry, region, neighbourhood Demographic variablesDemographic variables Age, income, gender, ethnic background, maritalAge, income, gender, ethnic background, marital Psychographic variablesPsychographic variables Psychological traits that a group has in common (motives, attitudes, activities, opinions)Psychological traits that a group has in common (motives, attitudes, activities, opinions) Product-use variablesProduct-use variables How a group member uses a good (athletic, casual)How a group member uses a good (athletic, casual)
Copyright © 2006 Pearson Education Canada Inc Geographic Variables Area of residence affects product consumption Rainfall and umbrellas Snowfall and snowmobiles or snow blowers Hot summers and backyard pools
Copyright © 2006 Pearson Education Canada Inc Demographic Variables Age Income Occupations Education Gender Family Size Marital Status Ethnicity Religion Language
Copyright © 2006 Pearson Education Canada Inc Psychographic Variables Psychological traits: Attitudes Interests and hobbies OpinionsMotivationsActivities
Copyright © 2006 Pearson Education Canada Inc Behavioural Variables Occasion for use Benefits sought Reasons for purchasing Loyalty level
Copyright © 2006 Pearson Education Canada Inc Market Research The systematic study of what buyers need and how best to meet those needs Focuses on the marketing mix elements Leads to more effective marketing Increases the accuracy and effectiveness of market segmentation
Copyright © 2006 Pearson Education Canada Inc The Research Process
Copyright © 2006 Pearson Education Canada Inc Observation Viewing or monitoring human behaviour Useful for cases where actions occur automatically without thinking Grocery shopping May be human observation or technological Supermarket scanners
Copyright © 2006 Pearson Education Canada Inc Survey Administration of a questionnaire, a list of questions, to prospective buyers Relies on a reliable random sample Administered in person, via phone, mail, or the internet Key issues include choosing appropriate questions and ensuring honest answers
Copyright © 2006 Pearson Education Canada Inc Focus Group A small discussion group of prospective customers or product users Allows in-depth discussion of complex or subjective issues regarding products or services Usually a blind research study where participants do not know who the sponsor of the group is Researchers analyze the results by searching for common themes in participants’ feedback
Copyright © 2006 Pearson Education Canada Inc Experimentation A controlled research design allows the determination of how consumers react to specific situations or appeals The situations can be manipulated to compare responses to such things as shelf placement of products, package colours and design, advertising strategy Very costly
Copyright © 2006 Pearson Education Canada Inc Consumer Behaviour The study of the processes by which customers come to purchase and consume a product or service Influenced by Psychological factors Personal factors Social factors Cultural factors
Copyright © 2006 Pearson Education Canada Inc The Consumer Purchase Process Marketing Factors Product Price Place Promotion Purchase Process Personal & Environmental Factors Psychological Cultural Social Personal
Copyright © 2006 Pearson Education Canada Inc The Consumer Buying Process Problem/need recognition Consumer becomes aware of a problem or need May be automatic (the need for food or sleep) Due to a lifestyle change (new parents, retirement) Information seeking The information search may be long and detailed, or short and limited Buying a car versus buying a candy bar
Copyright © 2006 Pearson Education Canada Inc The Consumer Buying Process Evaluation of Alternatives Products are compared to identify the best choice Purchase Decision choice may be made based upon rational or emotional motivations Rational motives include cost, quality, usefulness Emotional motives include fear, sociability, aesthetics, imitation of others
Copyright © 2006 Pearson Education Canada Inc Post-Purchase Evaluation Marketers must market after the sale to ensure satisfaction & reduce purchase anxiety Purchase anxiety (buyer’s remorse) is fear on the part of purchasers that they have purchased the wrong product (especially crucial for expensive purchases)
Copyright © 2006 Pearson Education Canada Inc International Marketing Mix Products may require substantial change before they can be marketed to different countries Pricing requires consideration of product manufacturing costs, transportation and delivery Promotion must accommodate cultural differences and social traditions Distribution may involve cooperation with other international firms and adherence to foreign packaging and labelling legislation
Copyright © 2006 Pearson Education Canada Inc Small Business Marketing Mix Care must be taken to: Offer products to markets substantial enough to support the organization Do a complete analysis of costs prior to setting prices Develop a comprehensive promotional program using more than personal selling Choose a location that will attract and retain customers