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Transcript of Marketing Notes for Term-1
8/8/2019 Marketing Notes for Term-1
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MODULE 1
CORE
MARKETING
ISSUES
Marketing: the delivery of customer value at a profit
Marketing Vs Selling:
Selling occurs only after a product is produced.
Marketing starts long before a company has a product.
Core Marketing Activities
Product development R & D
Communication
Distribution
Pricing
Service
TRANSACTION MARKETING: trading of values between parties (either monetary or
barter transaction)
RELATIONSHIP MARKETING: the process of creating, maintaining and enhancing
strong value-laden relationships with customers and other stakeholders
Marketing Management: The analysis, planning, implementation and control of
programmes designed to help marketing.
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MARKETING MANAGEMENT CONCEPTS
The production concept
The product concept
The selling concept
The Marketing concept
The societal marketing concept
The production concept
It holds that management should focus on improving production and distributionefficiency because customers favour products that are available and highly affordable (it
is behind selling). This concept works better when demand exceeds supply.
The product concept
Consumers favour goods that offer quality, performance and features. In that respect we
should devote our energy in improving products (companies that have good research and
development and technology follow this concept). It can lead to “marketing myopia”.
The selling concept
Consumers will not buy enough of a product unless we undertake a large-scale selling
and promotion effort (i.e. unsought goods: encyclopedias, insurance). It aims on creating
sales transactions in the short-term – not building relationships.
The Marketing concept
Adding value to the customer more efficiently and more effectively than competitors.
The focus is on customer needs, and creating long term relationships (i.e. Toyota). It
works better when there is a clear need and when customers know what they want.
The societal marketing concept
Balancing company profits, customer wants and society’s interests. (it questions whether
purer marketing is adequate in an age of environmental problems and shortages,
worldwide economic problems and neglected social services. It asks, what is best to do
for society in the long-term) (i.e., consumer and doctor complaints that hamburgers are
rich in fat and salt)
Marketing in the Business Sector:
1. Consumer-packaged goods and companies
2. Consumer durables
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3. Industrial equipment
4. Airline firms
5. Insurance and financial services
6. Business groups (lawyers, accountants, physicians, architects etc.) 7. Non-profit organizations (schools, churches, hospitals, museums, performing arts,
police departments)
Markets and geographical barriers:1. North & South America
2. Europe and Asia
3. Eastern Europe
4. Former Soviet Republics
Needs, Wants
Demands
Products
Value,Satisfaction,
Quality
Exchange,
Transactions,
relationships
Markets
CORE MARKETING CONCEPTS
NEEDS: Needs are states of felt deprivation. Abraham Maslow relates a hierarchy of
needs below:
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THE HIERARCHY OF NEEDS - MASLOW
Physiological needs
Security needs
Social needs
Esteem needs
Self-
Actualization
needs
WANTS: The form that a human need takes as shaped by culture and individual
personality. (A hungry person in Mauritius may want a mango and rice; a hungry person
in Hong Kong may want a bowl of noodles and jasmine tea; a hungry person in
Eindhoven may want a ham and cheese roll).
DEMANDS: human wants that are backed by buying power.
The relation between wants, resources and scarcity:
Wants are unlimited
Finite
(limited)
resources
Insatiable
(unlimited)
wants
Scarcity
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Marketing management and demand Marketing management is concerned with finding and increasing demand. It also is
connected with changing demand or reducing it.
Marketing Management and relationships:
Emphasis shifts towards retaining profitable customers and building lasting relationships
with them (example: a Ford customer might well exceed 350,000 euros).
Marketing management practices
1. Entrepreneurial marketing: visualizing an opportunity and doing what it tales to
gain attention (i.e., Virgin Atlantic, Harley-Davidson)
2. Formulated Marketing: spending more on advertising in selected markets and
establishing marketing departments and marketing research (i.e. McDonalds)3. Intrepreneurial Marketing: moving to the customer and re-establishing an
entrepreneurial spirit.
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MODULE 2:STRATEGIC
MARKETING
PLANNING
1. Technologies
a. The internet
b. Cell phones
c. Fax
d. CD Roms
2. Customers
a. Selecting customersb. Lifetime connections
c. Connect directly by use of IS
1. Marketing partnersa. Internal marketing
b. Supply chain management
c. Strategic alliances
2. Global connections
a. Global alliances
b. Connections with value & social responsibility (i.e., Mc Donald inBeijing)
c. Broadening connections (i.e. the EURO)
Strategic planning
Planning to meet changing needs for the organization. It is the first stage of marketing
planning.
Marketing planning
It provides information and other inputs about the market to prepare the strategic plan.
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The annual planA short-term plan describing the company’s current situation, its objectives, the strategy,
action programme and budgets for the year ahead, and controls
The long-range planA plan describing the factors and forces affecting the organization during the next several
years (objectives and marketing strategies)
The strategic plan
A plan describing how a firm will adapt to take advantage of future opportunities and fit
them with company capabilities.
THE PLANNING PROCESS 1. Analysis: a complete analysis of the company’s situation. Analyze opportunities
and threats in the environment and strengths and weaknesses within the company.
2. Planning: this involves finding strategies that meet objectives (marketing,
product or brand plans).
3. Implementation: turning strategic plans into actions
4. Control: measuring and evaluating the results of plans and activities and taking
corrective action.
THE STRATEGIC PLAN
1. The mission
2. Strategic objectives
3. Strategic audit (external (PEST), internal – (value chain, balance sheet and profit
and loss account)
4. SWOT analysis5. Portfolio analysis (Boston Consulting Group Martix)
6. Objectives and strategies (Generic Strategies matrix)
PEST Analysis
The Economic Environment
The factors that affect consumer buying power and spending patterns. Nations varygreatly in their level of distribution of income (subsistence or agricultural Vs industrial
economies).
Purchasing power: when consumers' purchasing power is reduced (i.e., during
recession) they tend to spend more carefully and seek greater value in the products and
services they buy.
Income Distribution: how income is distributed among the population (middle class,
working class, upper class etc.) In general middle income groups are more careful
about their spending.
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Changing consumer spending habits: people shift their spending as income rises
(Ernst Engel). For example as income rises people spend less for food and more for
investments.
The Natural Environment
Natural resources that are needed as inputs by marketers or that are affected by marketing
activities. These resources are:
Shortages of raw materials: (forests, water, food, etc)
Increased cost of energy: As oil reserves will become lesser companies are searching
for other forms of energy like solar energy, electricity, natural gas, nuclear energy,
wind etc. This also affects products and consumption patterns (i.e., from big cars to
small and economical cars)
Increased pollution: the green movement makes companies think more about disposal
of chemicals, nuclear waste, mercury spills in seas, chemical pollutants and loitering
the environment. This enforces a trend toward “green marketing” in cosmetics,
detergents, catalysts, unleaded petrol etc.
Government intervention in natural resources: governments enforce environmental
sustainability and environmental control (i.e., on pollution, global warming etc.)
Technological Environment
Forces that create new technologies, creating new product and market opportunities (i.e.,
the Internet creates opportunities for teleworking and e-commerce). These forces are:
Fast pace of technological change: technology life-cycles are getting shorter (i.e., the
Pentium microprocessors). Companies that fail to anticipate and keep up with
technological change soon find their products outdated.
Fast Research & Development budgets: Technology and innovations require moreinvestments in R&D (i.e., pharmaceutical firms spend 450 EURO to develop a new
drug)
Concentration on minor improvements: as a result of the high cost of developing and
introducing new technologies companies make minor product improvements instead
of major innovations.
Increased regulations: government agencies investigate and ban unsafe products (i.e.,
in testing new drugs)
The Political EnvironmentLaws, government agencies and pressure groups that influence and limit various
organizations and individuals in a given society. Such issues are
Legislation regulating businesses: well conceived regulation can encourage
competition and ensure fair markets for goods and services. This governments develop
public policies to guide commerce (laws, regulations etc.) Examples are: packaging
&labeling, pricing, truth in advertising, product standards, fair trade.
Growth of public interest groups: growth of environmental, feminist groups, ethic
minorities, senior citizens and handicapped people.
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Increased stress on ethics and socially responsible actions: Beyond government
regulations companies are also governed by social codes and ethical rules (i.e. adult
oriented material to the Internet should not go to small children)
The Social Environment
Institutions and other forces that affect society’s basic values, perceptions, preferences
and behaviors. Here we have core beliefs against secondary beliefs that are open to
change.
Example: PEST Analysis for the global airline industry
Political: DeregulationWar and Terrorist Attack
Socio-Cultural: People Perception of Airline Safety
Economic: Global Economic Slowdown
Technological: Internet
Internal Analysis
Evaluation of company position
The Value Chain
MARKETING
FINANCE
PERSONNEL
R & DOPERATIONS
Internal
analysis
FINANCE
Does the firm has sufficient financial resources to fund its strategy? Is the mix of funding flexible?
What is the cost of capital?
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Can the firm raise new capital?
How effective is financial planning and control?
PERSONNEL
Is the recruitment policy developing the number and quality of people required to
implement the strategy? Is the training policy developing the necessary new skills and improving existing
competencies?
Is the management development programme providing the quality of management
necessary to implement the corporate strategy?
MARKETING How efficient and effective are the component parts of the marketing mix? How strong (in terms of market share) is the firm in the market served?
How effective is product development?
How good is the firm at market research and at identifying trends or gaps in the
market?
What is the relationship between turnover and profits?
What is the relationship between profits and the customer base?
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Strategic advantage profile(+ indicates a strength, - a weakness, and 0 indicates the null position)
+
+
-
Company size good for industry
Good strategic ability
Strategies reviewed less often
Corporate Resources
+Good motivation, superior trainingHR
+Market research oriented R&DR&D
+
+
+
Modern technology
Good operations management capabilities
Good Inventory management
Production
+
-
0
Excellent New Product Development with
international distribution.
Some problems in segmenting foreign markets
Limited insight about brand image
Marketing
+High profitability, good cash flow, good budgeting
system
Finance
EvaluationCompetitive Strength/Weakness Internal Area
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
M a r g i n
M a r g
i n
Inbound
Logistics
Operations Outbound
Logistics
marketing
and sales
Service
Primary Activities
Support
Activities
THE VALUE CHAIN (PORTER)
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THE COMPANY MICROENVIRONMENT
Suppliers
Company
Competition
Marketing
intermediariesBuyers
The public
The Forces of Competition
According to Porter, the fight for market share competition is not manifested only in the
other players.....it is rooted in its underlying economics, and competitive forces exist that
go well beyond the established combatants in a particular industry. Customers, suppliers,
potential entrants, and substitute products are all competitors. Porter’s 5 forces (buyers,
suppliers, new entrants, substitute products and services and rivalry – see table below)
help us determine the nature and level of competition in any industry, and hence the basic
attractiveness of that industry in its terms of its profit-making potential. Awareness of the
five forces may help the company stake out a position in that industry that is less
vulnerable to attack and which could serve to gain more power in the future.
]
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New entrants
Buyers
Substitute
products/services
Suppliers Rivalry
Bargaining power of buyers
Jockeying
for position
Bargaining power of suppliers
Threat of new
entrants
Threat of substitute
products and services
THE 5 COMPETITIVE FORCES – M. PORTER
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How the competitive forces influence strategy
Sole partnerships
Use IT
Switching costs
Price cutting
Product differentiation
Mergers/acquisitions
R&D
Supplier/customer
alliances
Switching costs
takeovers
Raising prices
Reducing quality of
goods/services
Forward integration
Price competition
New products
Advertising
Suppliers
Rivalry
Product differentiation
Improved quality of
products and services
Price reductions
Advertising, IT
Lock customers in
(switching costs)
Buy better products
Force down prices
Increase competition
Customers
Differentiation
(marketing)
Product quality
Avoiding ceiling on
prices
Limited return
Placing ceiling on pricesSubstitutes
Economies of scale
Product differentiation
Government regulation
Entry barriersNew capacity
Reduces pricesNew entrants
MEANS
HOW TO
CONTROL?
HOW THEY
INFLUENCE
THREAT/FORCE
SWOT Analysis
A final and necessary step of the strategic analysis involves bringing together the critical
strengths, Weaknesses, Opportunities and Threats in such a way that strategy options are
immediately obvious. To discover strengths and weaknesses we look at the internal
analysis. Similarly we can obtain a good indication of opportunities and threats by
looking at PEST analysis. The SWOT is a valuable tool in visualizing strategic options
and searching possible alternative strategies for the company.
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Example of a SWOT analysis (Value Shops – Hellenic Duty Free Shops)
S O
W T
Strong financial position
good financial managementGood product line/variety
Good trading abilityy
Good management team
Good marketing capabilities
Good distribution channels
Low price capability]
Company is growing
Satisfactory market share
Exclusivity at points of sale
Costs are rising
Need to see various futuresThe Share is falling
Delays in privitisation
Conflict amon g different actors
Difficulty to forecast sales
Avoiding to reach decisions
Short-termism
Failure to attract investors
Inexperience with taxed goods
Inexperience with wholesaling
Customers becoming selective
Global market expandsDemand for Duty Free
Electronic commerce
New products/growing brands
Industry is growing
Industry growth profitability
Duty Free market stability
Duty Free as adventure shoping
Duty Free as sources of profit
Rise in tourism
Pressure to reduce prices
Increased competition
Threat of new entrants
Wholesalers’ growing power
Need to adjust quickly to change
Unpredictability of the future
Duty Free Abolition
Delay in EU integration
Delays in Fiscal Harmonisation
Instability of Money markets
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Tows Analysis (Example of ETA/SWATCH)
Formulating Strategy at ETA- Swatch
STRENGTHS1) Strong financial position
2) Good financial management
3) Good trading ability4) Improved productivity5) Good management team
6) Improved communication7) Good R&D capabilities8)Improvements in quality/productio9) Unique product
10) Marketing capabilities good11) Good distribution channels12) Low price capability
WEAKNESSES1) Costs are rising
2) Doubts about brand name
(fashion product)3) Difficulties with segmentation4) Need to see the various futures
OPPORTUNITIES1) Demand for standard watches2) Demand for unfinished products
3) Demand for luxury watches
4) Opportunities in electronics5) Global market expands6) New Technologies and materials
7) Need for improved products8)Need for quality accuracy andstyle
9)Industrial buyers
10) Demand for individualisedwatch11) Product is growing
SO STRATEGIES1) Expand into more markets(Q4Q5Q9Q11S1S2,S3,S4,S5,S9S10,S11
)
2) Diversify in standard andunfinished products(Q1,Q2,Q9,S7,S8,S11,S12) 3)Emphasize quality/develop watch(Q7,Q6,Q11,S4,S7,S8,S9,S10,S12)
4) Enter electronics market(Q4,Q5,Q6,Q7,Q9,S1,S2,S4,S7,S11,S12)
5) Create a total Swatch
environment(Q10,Q5,Q6,Q7,Q9,S1,S2,S3,S5,S6,S9)
WO STRATEGIES1) Develop/produce cheaper watches(Q1,Q5,Q6,Q9,W1,W2,W3)
2) Invest only in profitable markets
(Q4,Q5,Q6,Q7,Q8,Q9,Q11,W3,W4)3) Make alliance with industrialbuyers (Q9,Q11,S4)
THREATS1) Barriers to foreign competition
2) Slackening demand3) Pressure to reduce prices
4) Increased competition5) Value added shifts to distribution
6) Threat of New entrants7) Retailer's growing power8) Need to adjust quickly to changes
9) Capacity is augmented
10) Substitutes to time delivery11)Unpredictability of the future
ST STRATEGIES1) Differentiate on product(T8,T9,T4,T6,T8,T10,T12,S1,S2,S4,S5,S
7,S8,S9,S10,S12)
2)Sell cheaper(T1,T2,T3,T4,T6,T8,T9,T10,S7,S8,S9,S1
0,S12) 3) Consider alternative timedeliveries - make alliance in relatedindustries(T11,T12,T2,T8,T9,S4,S5,S6,S7,S8,S12)
WT STRATEGIES1) Withdraw(T1,T2,T3,T4,T6,T7,T9,T10,W1,W2,W3
,W4)
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Generic Strategies Martix
GENERIC STRATEGIES MATRIX (PORTER)
Cost
Leadership Differentiation
Focus
Cost
Leader
Focus
Differentiation
Competitive Advantage
Competitive
Scope
Narrow
Target
Broad
Target
THE MARKETING PROCESS
1. PEST (Political, Economic, Social, Technological forces)
2. Demand measurement and forecasting (marketing research)
3. Market segmentation (dividing into market segments)
4. Market targeting (evaluation of segment attractiveness)
5. Positioning (the marketing-mix – 4Ps)
The marketing mix (4Ps)
1. Product (it includes both products and services)
2. Price (how much we charge for the product or service)
3. Place (All the company activities that make a product available to customers)
4. Promotion (Activities that communicate the product or service)
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The marketing plan
1. Executive summary ( a quick overview of the plan)
2. Current marketing situation (the marketing audit that presents background data
on the market, product, competition and distribution – see Textbook, p. 100 –
Table 3.2)
3. SWOT analysis (identifying opportunities, threats, strengths and weaknesses)
4. Objectives (define the company’s objectives in Sales, Market share, profits, etc.)
5. Marketing strategy (the broad marketing approach that will be used to achieve
objectives)
6. Action programs (what will be done? Who will do it? When?)
7. Budgets (profit and loss)
8. Controls (monitor the progress of the plan)
The Global Market: Global challenges for firms today
As international trade becomes more liberalized, firms are facing tougher foreign
competition in the domestic market (i.e., Indian banks trying to stop HSBC from
spreading to the Indian market). They must develop the ability to fight off competition in
their own country or to exploit business opportunities in foreign markets.
A global industry
Where the strategic positions of competitors in given geographic or national markets are
affected by their overall global positions.
The global firm
A firm that, by operating in more than one country, gains R&D, production, marketing
and financial advantages that are not available to purely domestic competitors (seeing the
world as one market)
Global Marketing
Global marketing is concerned with integrating or standardizing marketing actions across
a number of geographic markets.
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The global environment
The international trade system:
Tariff : the tax levied by a foreign government against certain important products.
Tariffs are designed to raise revenue or to protect domestic firms.
Quota: a limit in the amount of goods that an importing country will accept in
certain product categories. A Quota is designed to conserve on foreign exchange
and to protect local industry and employment.
Embargo: a ban on the import of a certain product. (i.e., The Arab countries oil
embargo in 1973).
Exchange controls: government limits on the amount of its country’s foreign
exchange with the countries and on its exchange rate against other currencies.
Non tariff trade barriers: (i.e. bias against a foreign company’s product
standards).
The General Agreement on Tariffs and Trade (GATT)
A 50 year old treaty designed to promote world trade by reducing tariffs and other trade
barriers.
Regional free trade zones
EU and the EURO NAFTA (North American Free Trade Association)
MERCOSUR (Brazil, Argentina, Paraguay, Uruguay)
EFTA (European Free Trade Association – Norway, Switzerland, Iceland,
Liechtenstein, FYROM, Ukraine, Croatia)
AFTA (Asian Free trade Association – Philippines, Malaysia, Indonesia,
Singapore, Thailand, Vietnam, Cambodia, Laos, Myanmar)
The economic environment factors
Industrial structure (agriculture economies, raw materials economies, exportingeconomies)
Income distribution
Political, Legal, and Environmental factors
Attitudes towards international buying (India toward US firms)
Government bureaucracy (is the system efficient for helping foreign companies?)
Political stability (democracy? dictatorship?)
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Monetary regulations (how much local money government lets go away?)
Countertrade: paying with other items instead of cash (Boeing 747 with Rolls
Royce engines exchanged with Saudi oil).
The Cultural environment
Different cultures: a culture is a set of basic values, perceptions, wants and behavior
learned by a member of society from family and other important institutions.
Class system in the UK
Caste system in India
Religion in Islam
Social welfare in Sweden
In Belgium baby girls wear blue and baby boys wear pink!
Basic questions in going global
Should we go international?
Which markets we enter?
How we enter these markets?
How to enter?
ExportingIndirect (working through independent home-based international marketing
intermediaries
Direct: (the company itself handles its exports)
Joint-venturing (Entering foreign markets by joining with foreign companies
to produce or market a product or service.)
Licensing (the company enters into an agreement with a licensee in another
country (i.e., a trademark)
Contract manufacturing: (a joint venture in which a company contracts with
manufacturers in another country to produce the product.)
Management contracting (where the domestic firm supplies the management
know-how to a foreign company that supplies the capital)
Joint ownership (when a company joins investors in a foreign market to create a
local business in which the company shares ownership/control)
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Direct investment (entering a foreign market by developing foreign based
assembly or manufacturing facilities)
Which markets we enter?
Demographics
The study of human populations in terms of:
Size (a growing population means growing human needs to satisfy, offering marketers
an indication of demand for certain goods and services.
Chinese have reached 1.5 billion
Age (the changing age structure of the population)
Baby boomers in the USA grow older; the GenXers entered the picture; at the
same time Echo boomers grow. - this means there is movement from
consumerism to better quality of life or from food etc., to electronics and PCs.
The aging population (the older people become more)
Family
- There is a shift from the traditional family to the nuclear family with only one child
- fewer married couples
- growth of one person and non-family households
- more single parents
- adult-live-togethers of one or both sexes
- widowed, separated, divorced, single
Education
- the rising number of educated people
- the gap between the men and women that have a university degree has closed
especially in developed counties
Diversity
There is more economic integration both regional and national (EU, NAFTA, etc.). This
requires careful planning when standardizing marketing efforts.
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Demographic
Characteristics•Size
•Growth
•Urban/rural
•Density
•Age structure
Technological
Characteristics•Skills
•Production tech•Consumption
•Education
Geographic
Characteristics•Size’
•Topography
•climate
Economic
Factors•GDP
•Income distribution
•Rate of growth
•Investments
Socio/cultural
Characteristics•Values
•Lifestyles
•Ethnic groups
•Linguistic groups
National goals•Industry p riorities•Infrastructure
•Investment plans
Global Marketing Programs
Standardization: selling the same products and using the same marketing
approaches worldwide
Adaptation: we adjust the Marketing Mix elements (Product, Place, Price,
Promotion - to each market)
St ra igh t
ex tens ion
P r o d u c t
adap ta t ion
C o m m u n i c a t i o n
adap ta t ionD u a l
a d a p t a t i o n
P r o d u c t
inven t ion
P R O D U C T
P R O M O T I O N
Do n o t c h a n g e p ro d u c t Ad a p t p ro d u c t De ve lo p n e w p ro d u c t
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Straight extension: Marketing a product in a foreign market without any change
Product adaptation: adapting a product to meet local conditions
Price Issues
Dumping: pricing exports at levels less than their costs, or less than prices
charged in its home (i.e., Renault in France)
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MODULE 3:
CONSUMER
BUYING
BEHAVIOUR
The buying behaviour of final consumers that buy goods and services for personal
consumption.
Consumer marketAll the individuals and households who buy or acquire goods and services for personal
consumption.
Marketing
Stimuli
Product
Price
Place
Promotion
Other
Stimuli
Political
Economic
Social
Technological
Buyer’s
Buyer
Characte-
ristics
Black
bo x
Buyer
Decision
process
Buyer’s
Responses
-Product
Choice
-BrandChoice
-Dealer’s
Choice
-Purchase
Choice
-Purchase
ammount
MODEL OF BUY ING BEHAVIOUR
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Marketing Stimuli: The 4Ps (Product, Price, Place, Promotion)
Other Stimuli: the significant forces and events in the buyer’s environment, economic,
technological, political, cultural.
Buyer’s black box: where stimuli are changed into responses.
Buyer’s Responses: product choice, brand choice, etc.
Personal
•A ge
•Life-cycle
•Occupat ion
•Economic
circumstances
•Lifestyle
•Personality
•Self-consent
Buyer
Cultural
Culture
Subculture
Social
Class
Social
Reference
Groups
Family
Roles &
Status
Psychological
•Motivation
•Perception
•Learning
•Beliefs
•Attitudes
FA CTO RS I N FLU EN CI N G BEH A V I O U R
Cultural Factors
Culture: the set of values, perceptions, wants and behaviour learned by a member of
society from family and other important institutions (i.e., bringing green baseball capgifts to Taiwanese people when green is wore by men with unfaithful wives)
How culture helps us?Marketers are always trying to spot cultural shifts in order to imagine new products (i.e.
the concern about health and fitness)
Subculture: each culture contains smaller subcultures or groups of people with shared
values based on common life experiences and situations (i.e., nationalities, religion, racial
groups).
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How subculture helps us?
Subcultures make up important market segments and marketers often design products and
marketing programs tailored to their needs (i.e. Hispanics in USA)
Social Class: permanent and ordered divisions in a society whose members share similar
values, interests and behaviour. Examples are
Social classification in Britain
Pyramid – rich v poor in Latin America and Africa
Diamond shaped classification (few people at the top and bottom with many in the
middle in developed countries)
Caste system in India
How social class helps marketers: It tells us about customer income and buying power
UK National statistics classification
Routine occupations (semi-skilled, unskilled workers)7
Semi-routine occupations (assistants)6
Lower supervisory, craft, etc.5
Small employers and sole traders4
Intermediate occupations (secretaries, policemen, etc.)3
Lower managerial professional (middle managers)2
Higher professional (in law firms etc)1.2
Employers and managers in large firms (both private and
public)
1.1
Higher managerial and professional1
MEMBERSHIPCLASSIFICATION
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Social Factors
Membership groups: groups having a direct influence on a person’s behaviour and to
which a person belongs (primary {family) v secondary (religion) etc)
Reference groups: groups having a direct or indirect influence on the person’s attitude
and behaviour (i.e., a teenager following David Beckham – also called Aspiration
Groups)
Group Influence on Product/Brand Choice
P u b l i c L u x u r ie s
A y a c h t
P r i v a t e L u x u r i e s
T V v id e o g a m e s
P u b l i c N e c e s s it ie s
C a r s
D r e s s c l o t h e s
P r i v a t e N e c e s s i ti e s
R e f r i g e r a t o r
S tro n g W e a k
S t r o n g
W e a k
G r o u p
I n f l u e n c e
O n
P r o d u c t
c h o i c e
G r o u p i n f lu e n c e
O n b r a n d c h o i c e
Family
Family of orientation: the buyer’s parents providing with orientation toward religion,politics, economics, self-worth and love.
Family of procreation: the buyer’s spouse and children have a direct influence on
everyday buying behaviour.
Consumers’ buying roles
Initiator: the person who first thinks about buying a product.
Influencer: the one who influences buying behaviour.
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Decider: the person who decides to buy
Buyer: He who makes an actual purchase
User: he who uses the product.
Roles and Status
Role: the activities a person is expected to perform according to the people around him or
her.
Status: the general esteem given to a role in society.
Personal factors
Age and life cycle stage (family-life cycle)
The stages through which families might pass as they mature over time. An example
follows below:
Example: A family life cycle for financial services.
Stage in family life cycle
Life cycle stage
.
Buying or behavioural pattern
1. Bachelor stage - Young, single
people not living at home
Few financial burdens. Fashion opinion leaders. Recreation
oriented. Buy: basic kitchen equipment, basic furniture, cars,
equipment for the mating game, vacations.2. Newly married couples -
Young, no children
Better off financially than they will be in the near future. Highest
purchase rate and highest average purchase of durables. Buy: cars,
refrigerators, stoves, sensible and durable furniture, vacations.
3. Full nest I - Youngest child
under six
Home purchasing at peak. Liquid assets low. Dissatisfied with
financial position and amount of money saved. Interested in new
products. Buy: washers, dryers, TV, baby food, chest rubs and
cough medicines, vitamins, dolls, wagons, sleds, skates.
4. Full nest II - Youngest child
six and over
Financial position better. Some wives work. Less influenced by
advertising. Buy larger-sized packages, multiple unit deals, many
foods, cleaning materials, bicycles, music lessons, pianos.
5. Full nest III - Older married
couples with dependent children
Financial position still better. More wives work. Some children get
jobs. Hard to influence with advertising. High average purchase of
durables. Buy: new, more tasteful furniture, auto travel,unnecessary appliances, boats, dental services, magazines.
6. Empty nest I - Older married
couples, no children living with
them, head in labour force.
Home ownership at peak. Most satisfied with financial position and
money saved. Interested in travel, recreation, self-education. Make
gifts and contributions. Not interested in new products. Buy:
vacations, luxuries, home improvements.
7. Empty nest II - Older married,
no children at home, head retired
Drastic cut in income. Keep home. Buy: medical appliances,
medical-care products that aid health, sleep and digestion.
8. Solitary survivor - In labour
force
Income still good but likely to sell home.
9. Solitary survivor Retired Same medical and product needs as other retired group; drastic cut
in income. Special need for attention, affection and security.
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Psychological life cycles
Adults experience certain passages as they go through life (weddings, graduations,
having children). Marketers must take advantage of that and market products related to
them.
Occupation
People, profession particulars (i.e. floor workers buy more work clothes while managers
buy more smart clothes)
Economic circumstances
Market growth or recession influence buying habits
Lifestyle
A person’s pattern of living as expressed in his/her activities, interests and opinions.
Some examples of lifestyle are:
SINUS classification in Germany. It divides people according to the following
lifestyles:
o Traditional: to preserve
o Materialist: to have
o Hedonist: to indulge
o Postmaterialist: to beo Postmodernist: to have, to be and to indulge
Personality and self-concept
Personality: a person’s distinguishing psychological characteristics that lead to
responses to his/her environment.
Self-concept: self-image or the mental picture that one has of himself (we are
what we have)
Psychological factors
Motivation
A need that is sufficiently pressing to direct the person to seek satisfaction of the need.
Theories of motivation
Freud: people are largely unconscious of the real psychological forces shaping
behaviour (a person does not really understand his motivation)
Maslow: the hierarchy of needs
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PerceptionThe process by which people select, organize and interpret information to form a
meaningful picture of the world.
Selective attention: the tendency of people to screen out most of the information
to which they are exposed
Selective distortion: the tendency of people to adapt information to their personal
meanings
Selective retention: the tendency of people to retain only part of the information
to which they are exposed, usually information that supports their attitudes or
beliefs.
LearningChanges in individual’s behaviour arising from experience. Learning happens through the
interplay of:
Stimuli: a motive directing toward a particular thing
Cues: stimuli saying when, where and how we respond.
Responses: buying a product
Beliefs and attitudes
Belief: A descriptive thought that a person holds about something (Marketers are
interested in the beliefs that people formulate about specific products and services
because these beliefs make up product and brand images that affect buying
behaviour).
Attitudes: favourable or unfavourable evaluation, feelings and tendencies towardan object or idea.
The consumer decision process
Complex buying behaviour: consumer behaviour in situations characterized by
high consumer involvement in a purchase and significant perceived differences
among brands.
Dissonance-reducing behaviour: Consumer behaviour in situationscharacterized by high involvement but few perceived differences among brand
Habitual buying behaviour: Consumer buying behaviour characterized by low
consumer involvement and few significant perceived brand differences.
Variety seeking buying behaviour: Consumer buying behaviour in situation
characterized by low consumer involvement but significant perceived brand
differences.
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1 . N e e d
r e c o g n i t i o n2 . I n f o r m a t i o n
S e a r c h
3 . E v a l u a t i o n o f
a l t e rna t ives
4 . P u r c h a s e
d e c i s i o n
5 . P o s t - p u r c h a s e
b e h a v i o u r
T h e B u y e r d e c i s io n p r o c e s s
Need Recognition: the consumer recognizes a problem or need
Information search: the consumer searches for more information
Evaluation of alternatives: the consumer uses information to evaluate alternative brands
in the choice set.
Purchase decision: the buyer actually buys the product or service.
Post-purchase behaviour: when consumers take further action after the purchase based
on their satisfaction or dissatisfaction.