2. Chapter 2
Consumer Behaviors and Marketing Strategies

3. Learning Objectives
After completing this chapter you should be able to:
Explain why effective marketing strategy depends on understanding consumer behavior.
Identify the keys to adopting a market orientation and a customer focus.
Understand the importance of marketing imagination to business success and know some keys to begin an imaginative company.

4. Learning Objectives (continued)
Describe marketing segmentation and identify a process for segmenting markets.
Identify useful segmentation variables and criteria for effective market segmentation.
Describe different kinds of market segmentation strategies and when they are appropriate.
Understand the relationship between positioning and targeting.
Describe different product positioning strategies.

5. Marketing Strategies Prospectors Defenders Analyzers Reactors
have a changing product market, a focus on innovation and change, and a flexible organizational structure headed by younger managers
Defenders
firms with a narrow product market, a stable customer group, and an established organization structure typically managed by older executives
Analyzers
follow a price leadership strategy, also called a low cost/low price strategy
Reactors
do not really have a consistent strategy

6. Marketing Concept
a market-focused, customer-oriented, coordinated marketing effort aimed at generating customer satisfaction as the key to satisfying organizational needs
a business philosophy, an ideal and a policy statement
most critical element is customer focus

7. Differentiation
Offer customers something they value that the competition doesn’t have
Achieved by analysis

8. Analyzing Consumer Experience
What are customers doing at each phase of the circle of consumption?
Where are customers at each stage of the consumption chain?
When are consumers engaged with an element of the consumption circle?
Who else is with the customer points in the cycle of consumption?
How are consumers' needs and desires being addressed at each stage of consumption?

9. Marketing Orientation
Don’t confuse information about customers with knowledge about customers
Customer focus goes beyond customer research; includes market intelligence
Coordinated marketing throughout the organization is needed
Environmental conditions may affect importance
Degree of industry competition affects importance
Profitability is a consequence of market orientation

10. Market Orientation
The organization-wide generation of market intelligence, pertaining to current and future consumer needs, dissemination of the intelligence across departments and organization-wide responsiveness to it.
Mass customization
Learning relationships

11. A Few Rules for Becoming Market Focused
Recognize that ‘customer’ means more than the next step in the distribution chain. An important corollary: do not think of your marketplace offering as a commodity.
Count on your customers for information, not for insight.
Don’t expect brilliant insights each time you study a customer. Small operational shifts made from a market-focused perspective can also add up to significant improvements.
Involve all levels of the organization in the drive to become market focused.

12. Marketing Strategy
Marketing strategies are actions undertaken by an organization to increase the likelihood of positive exchanges occurring between the organization and its target market(s).

13. Exhibit 2.1 Marketing Strategy and Consumers

14. Marketing Strategies Avoid a narrow focus
Global firms must adjust products to variations in cultures around the world
consumer tastes/preferences
infrastructure/customary marketing practices
distribution channels
host government rules/regulations

15. Exhibit 2.2 Strategic Analysis of Consumers

16. Strategic Analysis of Consumers
Better satisfy existing customers
Develop differentiated products that appeal to under-served portions of the market
Pinpoint segments that are not worth trying to develop

17. The Imaginative Company
Escapes the tyranny of the served marketing
Searches for innovative product concepts
Overturns traditional price-performance assumptions
Gets out in front of customers
Rollerblades, Benetton, AOL, Grameen Bank, Kodak, Cisco Systems
Others?

18. Marketing Segmentation and Mass Customization
Market segmentation
Not everyone wants the same thing
20th century -- market to the ‘average’ customer
Mass customization
cost-effectively manufacture a product tailored to particular customers
Saturn, Toyota

19. Exhibit 2.3 The Market Segmentation Process

20. Investing Consumer-Product Relationships
What kind of environmental factors are involved in the purchase/consumption process for the product?
Macro-economic factors
Economic downturn

21. Exhibit 2.4 Major Segmentation Bases

22. Industry Insights 2.4 Kellogg Cereals for Health and Nutritional Needs

23. Good Practice 2.5 Effective Segmentation Criteria

24. Choosing Market Segments to Target
2-23
Choosing Market Segments to Target
Undifferentiated Segmentation
Differentiated Segmentation or
Multi-Segment Marketing
Concentrated Segmentation
or Niche Marketing

25. Choosing a Segmentation Strategy
Assess skills and resources available
Assess market variability
Ask “Just how variable is the product?”
Assess stage of product life cycle
Be aware of competitor’s strategies

26. Product Positioning
Product positioning involves deciding how the organization would like its company and brands to be perceived and evaluated by target markets.
Product positioning requires organizations to differentiate or distinguish their market offering in ways that are meaningful to their target market segments.

27. Steps in Product Positioning
Who are our competitors?
How are our competitors perceived and evaluated by consumers?
How do consumers’ preferences compare with competitor positions?
How should we position ourselves in consumers’ minds?

28. Exhibit 2.5 Perceptual Map for Processed Meats

29. Characteristics Used for Processed Meat Perceptual Mapping
Perceived quality
not exclusive vs. exclusive
cheap vs. expensive
pure meat vs. not pure meat
fat vs. lean
not bad for figure vs. bad for figure
unwholesome vs. wholesome
Sensory perception
bad taste vs. good taste
tough vs. tender
fit for guests vs. not fit for guests

30. Targeting: Designing a Market Mix Strategy
Once a company knows how it wants to be perceived and evaluated by consumers the next problem is to design a market mix strategy that will help them get there or stay there. This includes developing a program for communicating the position of the product to target consumers.

31. Chapter Summary
Customer-oriented marketing strategies improve the value customers derive from products.
A customer focus is central to a market orientation.
Marketing intelligence and imagination, market segmentation, targeting and positioning are key elements of marketing strategies

32. Key Terms analyzer behavioral segmentation benefit segmentation
brand alliance
brand communities
brand-loyal consumers
buyer readiness
concentrated or niche marketing
coordinated marketing
customer focus
defender
demographic segmentation
differentiation
geographic segmentation
learning relationships
lifestyle
marketing concept
marketspace
marketing strategy
mass customization
occasion segmentation
perceptual mapping

33. Key Terms (continued) product positioning prospector
psychographic segmentation
reactor
segmentation bases
sense the market
strategy
Triad Nations
undifferentiated segmentation
usage rate segmentation