Bmgt 411 week4

BMGT 411: Week #4

Kottler: Chapters 5 - Consumer MarketsChapter 6 - Business MarketsChapter 7 - Marketing Segments and Targets

Wood:Chapter 3 - Markets and ConsumersChapter 4 - Segmenting, Targeting and Positioning

1

BMGT 411: Chapter 5

Analyzing Consumer Markets

2

Chapter Questions

• How do consumer characteristics influence buying behavior?

• What major psychological processes influence consumer responses to marketing?

• How do marketers analyze consumer decision making?

3

What Influences Consumer Behavior?• Consumer behavior—the study of how individuals, groups, and organizations

select, buy, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires.

• Influences:

• Cultural factors

• Social factors

• Personal factors

4

Cultural Factors

• Culture is the most fundamental determinant of a person’s wants and behavior.

• Consists of subcultures that provide more specific identification and socialization for their members.

• Social class—relatively homogeneous and enduring divisions in a society.

5

Social Classes• Upper uppers

• Lower uppers

• Upper middles

• Middle class

• Working class

• Upper lowers

• Lower lowers

6

Income Gap in the US

7

Citi Hourglass Theory

8

P&G High/Low 9

Social Factors

• Reference groups—consist of all of the groups that have a direct or indirect influence on a person’s attitudes or behavior.

• Membership groups (primary and secondary)—groups having direct influence: family, friends, co-workers, neighbors

• Aspirational groups—those a person hopes to join

• Dissociative groups—those whose values or behavior an individual rejects

• Opinion leader—the person who offers informal advice or information about a specific product or product category.

10

Social Media Opinion Leaders

11

Personal Factors

• Age

• Life cycle stage

• Occupation

• Economic circumstances

• Personality

• Self-concept

• Lifestyles

• Values

12

Key Psychological Processes

• Motivation

• Perception

• Learning

• Memory

13

Key Psychological Processes

• Freud’s Theory

• Behavior is guided by subconscious motivations.

• Maslow’s Hierarchy of Needs Theory

• Human needs are arranged in a hierarchy from most to least pressing—physiological, safety, social, esteem, and self-actualization.

• Behavior is driven by lowest unmet need.

• Herzberg’s Two-Factor Theory

• The absence of dis-satisfiers is not enough to motivate a purchase;satisfiers must be present.

14

Figure 5.1 Model of Consumer Behavior

15

Perception

•Perception—the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world.

•Selective attention: Consumers can only absorb so much information, that is why targeted marketing is so key for ROI

•Selective distortion: Customers may interpret information that fits preconceptions

16

Learning

• Learning induces changes in our behavior arising from experience

• A first positive experience with a brand is key to companies

• Drive—a strong internal stimulus that impels action.

• Cues—minor stimuli that determine when, where, and how a person responds.

17

Five Stage Model of Consumer Buying

18

• Use the above matrix to make a buying decision for the following items:

• Gas

• A new PC

• Graduate School

• A New Car

19

Basic Concepts Underlying the Consumer Evaluation Process

• Consumer is trying to satisfy a need.

• Consumer is looking for certain benefits.

• Consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits to satisfy this need.

• Belief—a descriptive thought a person holds about something.

• Attitude—enduring favorable or unfavorable evaluations, feelings, and action tendencies toward some object or idea.

• Expectancy-value model—consumers evaluate products and services by combining their brand beliefs according to importance.

20

BGMT 411: Chapter 6

Analyzing Business Markets

21

Boeing 787 Dreamliner, 3 Million Parts, 500 Suppliers

22

Chapter Questions

• What is the business market, and how does it differ from the consumer market?

• What buying situations do organizational buyers face?

• Who participates in the business-to-business buying process?

23

Chapter Questions

• How do business buyers make their decisions?

• How can companies build strong relationships with business customers?

• How do institutional buyers and government agencies do their buying?

24

Local Examples

• While these businesses all operate in the B2C Space, many B2B suppliers call on these businesses and need to market to them as well

• Can you think of any examples of vendors that would market to these companies?

25

Local Examples

• IT Solutions

• Supplies

• Product

• Text Books

26

What is Organizational Buying?

• Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.

27

Characteristics of Business Markets (Page 86)• Fewer, larger buyers

• Close supplier-customer relationships

• Professional purchasing

• Many buying influences

• Multiple sales calls

• Derived demand

• Inelastic demand

• Fluctuating demand

• Geographically concentrated buyers

• Direct purchasing

28

Buying Situation

• Straight rebuy

• Reordering of supplies on a routine basis, usually with current suppliers and automatic reorders

• Modified rebuy

• The buyer wants to change the product specs, prices, delivery, etc. This usually opens the door to out suppliers

• New task

• Buys a new product or service for the first time

29

Buygrid Framework

30

The Buying Center• Initiators: Those who request that something be purchased.

• Users: Those who will use the product or service. In many cases, the users initiate the buying proposal.

• Influences: People who influence the buying decision by defining specifications and providing information for evaluating alternatives. Technical personnel are particularly important influences.

• Decider: People who decide on product requirements and or on suppliers.

• Approvers: People who authorize the proposed actions of deciders or buyers.

• Buyers: People who have formal authority to select the supplier and arrange the purchase terms.

• Gatekeepers: People who have the power to prevent sellers or information from reaching to members of the buying center. e.g. purchasing agents, receptionists, and telephone operators may prevent sales

31

Concerns to Business Marketers

• Who are the major decision participants?

• What decisions do they influence?

• What is their level of influence?

• What evaluation criteria do they use?

32

Stages in the Buying Process: Buy phases

1.Problem recognition: Someone identifies that a problem can be solved by purchasing a new good or service

2.General need description: Buyer determines the items characteristics and quantities needed

3.Product specification: (PVA) Product Value Analysis, reducing the cost to make a product

4.Supplier search: The buyer reaches out to suppliers or auction sites

33

Stages in the Buying Process: Buy phases

5.Proposal solicitation: Not all buyers ask for an RFP (Request for Proposals) but government buyers must

6.Supplier selection: Final suppliers selected from the field and chosen by the buying process

7.Order-routine specification: The final order is placed with all details listed

• MRO: Maintenance, Repair, Operations

8.Performance review: Evaluating suppliers in a structured process, or less structured, depending on the business

34

http://contracts.patreasury.gov/

search.aspx35

BMGT 411: Chapter 7

Identifying Market Segments and Targets

36

http://www.youtube.com/watch?v=ioH2fAv_zes&feature=plcp

37

http://www.youtube.com/watch?v=7UnPjNBZS50&feature=plcp

38

Chapter Questions

• In what ways can a company divide a consumer or business market into segments?

• How should a company choose the most attractive target markets?

• What are the different levels of market segmentation?

39

Effective Targeting Requires…

• Identify and profile distinct groups of buyers who differ in their needs and preferences

• Select one or more market segments to enter

• Establish and communicate the distinctive benefits of the market offering

40

What is a Market Segment?A market segment consists of a group of customers who share a similar set of needs and wants.

41

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

42

Geographic Segmentation

43

Demographic Segmentation

• Age and life cycle

• Life stage

• Gender

• Income

• Generation

• Social class

• Race and Culture

44

AARP

45

Lululemon

46

Mercedes Benz

47

Psychographic Segmentation

and The VALS Framework

http://www.strategicbusinessinsights.com/vals/ustypes.shtml

48

Behavioral Segmentation Based on Needs and Benefits

Initiator

Influencer

Decider

Buyer

User

49

Behavioral Segmentation: Behavioral Variables

1.Occasions: Time of day, week, month, year, or other defined time in a consumers life

• Ex: Sheetz Breakfast

2.User Status: Non users, ex users, potential users, first time users, regular users

50


3.Usage Rate: Light, Medium, and Heavy Product Users

4.Buyer Readiness Stage: Unaware, aware, informed, interested, desire, and intention to buy

5.Loyalty:

• Hard Core Loyal's: Always buy one brand

• Split Loyal's: Loyal to two or three brands

• Shifting Loyal's: Shift from one brand to another

• Switchers: Not loyal to any brand

51


•Hard Core Loyal Examples:

•Split Loyal's Example:

•Shifting Loyal Examples:

•Switchers Examples:

•Enthusiastic Brands

•Positive Brands

•Indifferent Brands

•Negative Brands

•Hostile Brands

52

Effective Segmentation Criteria

• Measurable: The size, purchasing power, and characteristics of the segment can be measured

• Substantial: A segment is large and profitable enough to serve

• Accessible: The segments can be effectively reached and served

• Differentiable: Distinguishable and respond differently to different marketing mix elements

• Actionable: Affective programs can be developed for attracting and serving these segments

53

Porter’s 5 Forces Model

Threat of Rivalry

Threat of SupplierBargaining Power

Threat of Buyer Bargaining Power

Threat of New Entrants

Threat of Substitutes

54

Figure 7.3 Possible Levels of Segmentation

55

BMGT 411: Prep for Week 5

• Take the VAL’s Survey and Post your Results to the Blog: http://www.strategicbusinessinsights.com/vals/presurvey.shtml

• Read Chapters:

• Kottler:

• Chapters 8 - Creating Brand Equity

• Chapter 9 - Brand Positioning

• Wood: Chapters: 4 (Continued) and 5

56

Bmgt 411 week4

Technology

Transcript of Bmgt 411 week4