Understand the Consumer Market Chapter 5-8 Summary Review

Chapter 5 5-1 Understand the consumer market and the major factors that influence consumer buyer behavior. The consumer market consists of all the individuals and households that buy or acquire goods and services for personal consumption. A simple model o consumer behavior suggests that marketing stimuli and other major forces enter the consumer’s “black box.” This black box has two parts: buyer characteristics and the buyer’s decision process. Once in the black box, the inputs result in buyer responses, such as buying attitudes and preferences an purchase behavior. Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural, social, personal, and psychological. Understanding these factors can help marketers to identify interested buyers and to shape products and appeals to serve consumer needs better. Culture most basic determinant of a person’s wants and behavior. People in different cultural, subcultural, and social class groups have different product and bra preferences. Social factors—such as small group, social network, and family influences—strongly affect product and brand choices, as do personal characteristics, such as age, life stage, occupation, economic circumstances, lifestyle, and personality. Finally, consumer buying behavior is influenced b four major sets of psychological factors—motivation, perception, learning, and beliefs and attitudes. Each factor provides a different perspective for understanding the buyer’s black box. A simple model of consumer behavior suggests that marketing stimuli and other major forces enter the consumer's "black box." This black box has two parts: ________ and ________. - the buyer's characteristics and the buyer's decision process ___ refers to the set of values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions.. - Culture 5-2 Identify and discuss the stages in the buyer decision process. The buyer goes through a decision process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpur behavior. During need recognition, the consumer recognizes a problem or need that could be satisfied by a product or service. Once the need is recogni the consumer moves into the information search stage. With information in hand, the consumer proceeds to alternative evaluation and assesses brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the final stage of the buyer decision process, postpurchase behavior, the consumer takes action based on satisfaction or dissatisfaction. The marketer’s job is to understand the buyer’s behavior at ea stage & influences that are operating. Consumers go through a distinct process in making a purchase. Of the following, which is the final step in that process? - Post Purchase Evaluation When making a purchase, the buyer goes through a decision process consisting of all of the following: ________. - need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior The second step in the buyer decision process might include seeking more information. Sources of information vary. Commercial sources normally ________ the buyer, but personal sources ________ products for the buyer. - inform; legitimatize or evaluate Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. These two factors are ________. - attitudes of others and unexpected situational factors 5-3 Describe the adoption and diffusion process for new products. The product adoption process is made up of five stages: (1) awareness, (2) interest, (3) evaluation, (4) trial, and (5) adoption. New product marketers must think about how to help consumers move through these stages. Regarding the diffusion process for new products, consumers respond at different depending on consumer and product characteristics. Consumers may be innovators, early adopters, early mainstream, late mainstream, or lagging adopters. Each group requires different marketing approaches. Marketers try to bring new products to the attention of potential early adopters, especiall opinion leaders. We define the ________ process as the mental process through which an individual passes from first learning about an innovation to final adoption. - Adoption People can be classified into the adopter categories, with each category having different values and rates of adoption. The adopter categories include ____, ____, _____, _____, and _____. - innovators, early adopters, early mainstream adopters, late mainstream adopters, and lagging adopters What are the five characteristics that are especially important in influencing an innovation's rate of adoption? - Relative advantage, complexity, compatibility, divisibility, and communicability 5-4 Define the business market and identify the major factors that influence business buyer behavior. The business market is composed of all organizations that buy goods and services for use in the production of other products and services or for the purp reselling or renting them to others at a profit. Business markets usually have fewer, larger buyers who are more geographically concentrated. Business demand is derived demand, and involves more professional buyers. Business buyers make decisions that vary with the three types of buying situations: straight rebuys, modified rebuys, and new tasks. The decision-making unit of a buying organization—the buying center—can consist of many different people playing many different roles. The business marketer needs to know the following: Who are the major buying center participants? In wh decisions do they exercise influence and to what degree? What evaluation criteria does each decision participant use? They also need to understand the environmental, organizational, interpersonal, and individual influences on the buying process. Which of the following statements regarding the business market is correct? - Many sets of business purchases are made for one set of consumer purchases. Marketers need to understand and know the answers to several key questions when dealing with buying centers. Of the following, which is NOT one of those key questions? - Is price a major factor or is the buying center price sensitive? Business markets differ in many ways from consumer markets. The main differences are in ________, _________, and __________. - market structure and demand, the nature of the buying unit, and the types of decisions and the decision process Which type of business buying situation offers marketers not only the greatest opportunity, but also the greatest challenge? - A new task situation The buying center and the buying decision process are influenced by ______, ______, and __________ factors, as well as ________ factor - internal organizational, interpersonal, and individual factors, as well as external environmental factors 5-5 List and define the steps in the business buyer decision process. The business buyer decision process has eight basic stages: (1) problem recognition, (2)general need description, (3) product specification,(4) supplier search, (5)proposal solicitation, (6)supplier selection , (7) order-routine specification, and (8) performance review. Companies must manage the overall customer relationship. Which stage of the business buying decision process involves ranking the importance of reliability, durability, and price? - general need description In which step of the buying decision process is the final order with the chosen supplier developed? - Order-routine specification 5-6 Discuss how online, mobile, and social media have changed business-to-business marketing. Recent advances in information and digital technology have given birth to “e-procurement,” by which business buyers are purchasing all kinds of products and services online. Business marketers are increasingly connecting with customers online and through digital, mobile, and social media to engage customers , share marketing information, sell products and services, provide customer support services, and maintain ongoing customer relationships. Instead of the old model of sales reps calling on business customers at work or maybe meeting up with them at trade shows, the new digi approaches facilitate anytime, anywhere connections between a wide range of people in the selling and customer organizations. What is the mistaken assumption that business-to-business companies often make about digital and social media? - That digital and social media are useful primarily to consumer products and services companies One concern about the expanding use of e-procurement for B-to-B purchasing is that ________. - it can erode decades-old customer-supplier relationships Companies can do e-procurement in several ways, including _______, ________, ________, and __________. - reverse auctions, trading exchanges, company buying sites, and extranet links Chapter 6 The major elements of a customer value-driven marketing strategy: segmentation, targeting, differentiation, and positioning. Marketers cannot appeal to buyers- at least not all in the same way. Most companies practice target marketing—identifying market segments, selecting one or more of them, and developing products & marketing mixes tailored to each. 1. 6-1 Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. A customer value-driven marketing strategy begins with selecting which customers to serve and determining a value proposition that best serves the targeted customers. It consists of four steps.(1) Market segmentation is the act of dividing a market into distinct groups of buyers who have different ne characteristics, or behaviors and who might require separate marketing strategies or mixes. Once the groups have been identified, (2) market targeting evaluates each market segment’s attractiveness and selects one or more segments to serve. (3) Differentiation involves actually differentiating the mark offering to create superior customer value. (4) Positioning consists of positioning the market offering in the minds of target customers. A C.V-driven marketing strategy seeks to build the right relationships with the right customers. In addition to segmentation and targeting, there are two other major steps in designing a customer value-driven market strategy: ________ seeks to create superior customer value in the mind of the consumer, and ________ seeks to firmly place the market offering in the minds of target customers. - Differentiation; positioning 1. 6-2 List and discuss the major bases for segmenting consumer and business markets. There is no single way to segment a market. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, a behavioral. (1)geographic segmentation , the market is divided into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. (2)demographic segmentation, the market is divided into groups based on demographic variables, including age, life-cycle stage, gende income, occupation, education, religion, ethnicity, and generation. (3)psychographic segmentation, the market is divided into different groups based on class, lifestyle, or personality characteristics. (4)behavioral segmentation, the market is divided into groups based on consumers’ knowledge, attitudes, u responses concerning a product. Business markets also can be segmented by business demographics (industry, company size), operating characteristics, purchasing approaches, situational factors, and personal characteristics. The effectiveness of the segmentation analysis depends on finding segments that are (1)measurable, (2)accessible, (3) substantial, (4) differentiable, and (5) actionable . Like consumer markets, business markets are segmented. Which of the following describes the variables that marketers use to segment business markets? - Business demographics, operating characteristics, purchasing approaches, situational factors, and personal characteristics Segmentation provides a powerful tool for marketers of all kinds. It can help companies identify and better understand key customer segments, ________________ to their specific needs. - reach them more efficiently, and tailor market offerings and messages Although business marketers use many of the same variables to segment their markets, they also use some additional variables, such as ________, ____________. _________, and personal characteristics. - customer operating characteristics, purchasing approaches, situational factors When effective programs can be designed for attracting and serving market segments, these segments are ________. - actionable 1. 6-3 Explain how companies identify attractive market segments and choose a market-targeting strategy. To target best market segments, the company (1) evaluates each segment’s size and growth characteristics, structural attractiveness, and compatibility w company objectives and resources. It then (2) chooses 1/4 market-targeting strategies—ranging from very broad to very narrow targeting. The seller can segment differences and target broadly using undifferentiated (or mass) marketing. This involves mass producing, mass distributing, and mass promotin same product in about the same way to all consumers. Or the seller can adopt differentiated marketing—developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on one or a few market segments only. Finally, micromarketing is the practic tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes (1) local marketing and (2)individual marketing. Targeting strategy depends on company resources, product variability, product life-cycle stage, market variability, and competit marketing strategies. To target the best market segments, the company first evaluates various factors related to market attractiveness. Of the following, which is NOT one of those factors? - Compatibility with company mission and vision In which targeting strategy does a firm go after a large share of one or a few smaller segments? - Concentrated marketing One important consideration in using a differentiated targeting strategy is that _______. - it can increase costs Firms with limited resources often target a market niche that is either ignored or unimportant to larger firms. This represents a(n) _______ strategy. concentrated marketing Companies need to consider many factors when choosing a market-targeting strategy. However, which targeting strategy is best depends on company resources, product variability, product life-cycle stage, as well as ________________________. - market variability and competitive marketing strategies 1. 6-4 Discuss how companies differentiate and position their products for maximum competitive advantage. target segment→ differentiation and positioning strategy. Consists of three steps: (1)identifying a set of possible differentiations that create competitive advantage, (2) choosing advantages on which to build a position, (3) selecting an overall positioning strategy. Value proposition—the full m benefits on which the brand is positioned. Companies choose from 1 of 5 winning value propositions: (1) more for more, (2) more for the same, (3)the for less, (4) less for much less, (5) more for less. Company and brand positioning are summarized in positioning statements that state the target segmen and need, the positioning concept, and specific points of difference. The company then effectively communicates and delivers the chosen position to the market. Once market segments have been selected, the company then must decide on _____________________________. - differentiation and positioning strategy The ________________________ is a brand's full positioning or the full mix of benefits on which the brand is positioned. - value proposition Chapter 7 Each product or service offered to customers can be viewed on (3) levels. The (1) core customer value consists of the core problem-solving benefits tha consumers seek when they buy a product. The (2) actual product exists around the core and includes the quality level, features, design, brand name, and packaging. The (3) augmented product is the actual product plus the various services and benefits offered with it, such as a warranty, free delivery, insta and maintenance. 1. 7-1 Define product and describe the major classifications of products and services. A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include physical objects but also services, events, persons, places, organizations, ideas, or mixtures of these entities. Services are products that consist of activit benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax preparation, and home-repair services.Consumer pro those bought by final consumers—are usually classified according to consumer shopping habits (convenience products, shopping products, specialty products, and unsought products). Industrial products—those purchased for further processing or for use in conducting a business—include materials a parts, capital items, and supplies and services. Other marketable entities—such as organizations, persons, places, and ideas—can also be thought of as products. The distinction between a consumer product and an industrial product is based on the ________ for which the product is purchased. - Purpose 1. 7-2 Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Individual product decisions involve (1) product attributes, (2) branding, (3) packaging, (4) labeling, and (5) product support services. Product attribute decisions involve product quality, features, and style and design. Branding decisions include selecting a brand name and developing a brand strategy. Packaging provides many key benefits, such as protection, economy, convenience, and promotion. Package decisions often include designing labels and which identify, describe, and possibly promote the product. Companies also develop product support services that enhance customer service and satisfa and safeguard against competitors. Most companies produce a product line rather than a single product. A product line is a group of products that are re in function, customer-purchase needs, or distribution channels. All product lines and items offered to customers by a particular seller make up the produ mix. The mix can be described by four dimensions: (1) width, (2) length, (3) depth, and (4) consistency. The totality of a company's product lines and items offered to customers is known as its _________________. - Product Mix Which of the following correctly identifies the levels for which marketers make product and service decisions? - individual product, product line, and product mix decisions Companies must make important decisions about their individual products and services. Individual product decisions involve _______, and product support services. - product attributes, branding, packaging, labeling The number of product lines a company manages is the product mix ______. The total number of items a company carries within its product line is the product mix _____. - width; length When a company lengthens a product line by adding more items within that line's current range, the company is ________. - filling the line 1. 7-3 Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Services are characterized by four key aspects: they are (1) intangible, (2) inseparable, (3) variable, and (4) perishable. Marketers work to find ways to m service more tangible, increase the productivity of providers who are inseparable from their products, standardize quality in the face of variability, and improve demand movements and supply capacities in the face of service perishability. Good service companies focus attention on both customers and employees. They understand the service profit chain, which links service firm profits with employee and customer satisfaction. Services marketing strat not only for external marketing but also for internal marketing to motivate employees and interactive marketing to create service delivery skills among s providers. Service marketers must create (1) competitive differentiation, offer high (2) service quality, and find ways to (3)increase service productivity Services marketing strategy calls not only for external marketing, but also for internal marketing to motivate ________ and interactive marketing to create service delivery skills among ________. - employees; service providers Service providers often face price competition. As a solution to this, service providers can further differentiate themselves based on which three characteristics? - The service offer, delivery, and image 1. 7-4 Discuss branding strategy—the decisions companies make in building and managing their brands. Some see brands as the major enduring asset of a company. Brands are more than just names and symbols; they embody everything that the product or service means to consumers. Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or the service. In building brands, companies need to make decisions about 4 things. The most powerful (1) brand positioning builds around strong consumer and values. (2) Brand name selection involves finding the best brand name based on a careful review of product benefits, the target market, and propose marketing strategies. (3) A manufacturer has four brand sponsorship options: It can launch a national brand (or manufacturer’s brand), sell to resellers th a private brand, market licensed brands, or join forces with another company to co-brand a product. A company also has four choices when it comes to developing brands. It can introduce (a) line extensions, (B) brand extensions, (c) multibrands, or (4)new brands.The brand’s positioning must be continu communicated to consumers. Brands are not maintained by advertising but by customers’ brand experiences. Customers come to know a brand through wide range of contacts and interactions. The company must put as much care into managing these touch points as it does into producing its ads. Compa must periodically audit their brands’ strengths and weaknesses. When a company builds a brand, it needs to make important decisions regarding the brand. Of the following, which is NOT one of those decisions? - Brand licensing opportunities The strongest brands are positioned on ______. beliefs and values Chapter 8 A company’s current products face limited life spans and must be replaced by newer products. But new products can fail—the risks of innovation are as as the rewards. The key to successful innovation lies in a customer-focused, holistic, total-company effort; strong planning; and a systematic new produ development process. 1. 8-1 Explain how companies find and develop new product ideas. Companies find and develop new product ideas from a variety of sources. Many new product ideas stem from internal sources. Companies conduct (1) R&D, or they(2) pick the brains of their employees, (3) urging them to think up and develop new product ideas. Other ideas come from external source Companies (1) track competitors’ offerings and (2) obtain ideas from distributors and suppliers who are close to the market and (3) can pass along information about consumer problems and new product possibilities. Perhaps the most important sources of new product ideas are customers themselve Companies observe customers, invite them to submit their ideas and suggestions, or even involve customers in the new product development process. Many companies are now developing crowdsourcing or open-innovation new product idea programs, which invite broad communities of peopl customers, employees, independent scientists and researchers, and even the general public—into the new product innovation process. ___________________ are the two ways firms can obtain new products. - Acquisitions and new product development Companies find and develop new product ideas from a variety of sources. Which of these is an internal source for new product ideas? - R&D 1. 8-2 List and define the steps in the new product development process and the major considerations in managing this process. The new product development process consists of eight sequential stages. (1) idea generation. (2)idea screening, which reduces the number of ideas based on the company’s own criteria. (3) product concept development , in which a detailed version of the new product idea is stated in meaningful consumer terms. This stage includes concept testing, in which new product concepts are tested with a group of target consumers to determine whether the concepts have strong consumer appeal.(4) marketing strategy development, in which an initial marketing strategy for the new product is developed from the product concept.(5)business-analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to det whether the new product is likely to satisfy the company’s objectives. (6) Product development and (7) test marketing and finally are launched during ( commercialization. Companies must take a systematic, holistic approach to managing this process. Successful new product development requires a cust centered, team-based, systematic effort. Many companies are now developing ________ programs to generate new product ideas. - crowdsourcing or open-innovation The first part of a marketing strategy statement describes the ________ of a new product. - target market 1. 8-3 Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. Each product has a life cycle marked by a changing set of problems and opportunities . The sales of the typical product follow an S-shaped curve made of 5 stages. First Step: product development stage in which the company finds and develops a new product idea. Second Step: introduction stage is ma slow growth and low profits as the product is distributed to the market. Third Step: growth stage , which offers rapid sales growth and increasing profit Fourth Step: maturity stage in which the product’s sales growth slows down and profits stabilize. Fifth Step: decline stage in which sales and profits dw The company’s task is to recognize the decline and decide whether it should maintain, harvest, or drop the product. Which stage of the product life cycle normally lasts longer than the previous stages and poses strong challenges to marketing management? - Maturity Which of the following would be an appropriate strategy in the maturity stage of the product life cycle? - Modify the market, product offering, and marketing mix. Marketers can apply the ________ as a useful framework for describing how products and markets work and help develop good marketing strategies for the different life-cycle stages. - product life-cycle concept 1. 8-4 Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Marketers must consider 2 additional product issues. (1) social responsibility- includes public policy issues and regulations involving acquiring or dropp products, patent protection, product quality and safety, and product warranties. (2) special challenges facing international product and services marketers.International marketers must decide how much to standardize or adapt their offerings for world markets. Marketers must consider potential product issues related to social responsibility. Of the following, which is NOT one of the product issues associated with social responsibility? - Product differentiation and positioning The advantages of standardizing products and services for international markets include _______________, lower manufacturing costs, and lower marketing costs. - consistent global image, lower product design costs Because markets and consumers worldwide differ widely, companies usually respond to these differences by ________. - adapting their product offerings