Bmgt 411 week4
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Transcript of 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
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BMGT 411: Chapter 5
Analyzing Consumer Markets
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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?
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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
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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.
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Social Classes• Upper uppers
• Lower uppers
• Upper middles
• Middle class
• Working class
• Upper lowers
• Lower lowers
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Income Gap in the US
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Citi Hourglass Theory
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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.
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Social Media Opinion Leaders
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Personal Factors
• Age
• Life cycle stage
• Occupation
• Economic circumstances
• Personality
• Self-concept
• Lifestyles
• Values
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Key Psychological Processes
• Motivation
• Perception
• Learning
• Memory
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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.
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Figure 5.1 Model of Consumer Behavior
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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
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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.
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Five Stage Model of Consumer Buying
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• Use the above matrix to make a buying decision for the following items:
• Gas
• A new PC
• Graduate School
• A New Car
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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.
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BGMT 411: Chapter 6
Analyzing Business Markets
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Boeing 787 Dreamliner, 3 Million Parts, 500 Suppliers
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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?
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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?
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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?
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Local Examples
• IT Solutions
• Supplies
• Product
• Text Books
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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.
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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
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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
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Buygrid Framework
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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
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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?
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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
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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
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http://contracts.patreasury.gov/
search.aspx35
BMGT 411: Chapter 7
Identifying Market Segments and Targets
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http://www.youtube.com/watch?v=ioH2fAv_zes&feature=plcp
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http://www.youtube.com/watch?v=7UnPjNBZS50&feature=plcp
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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?
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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
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What is a Market Segment?A market segment consists of a group of customers who share a similar set of needs and wants.
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Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral
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Geographic Segmentation
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Demographic Segmentation
• Age and life cycle
• Life stage
• Gender
• Income
• Generation
• Social class
• Race and Culture
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AARP
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Lululemon
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Mercedes Benz
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Psychographic Segmentation
and The VALS Framework
http://www.strategicbusinessinsights.com/vals/ustypes.shtml
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Behavioral Segmentation Based on Needs and Benefits
Initiator
Influencer
Decider
Buyer
User
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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
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Behavioral Segmentation: Behavioral Variables
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
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Behavioral Segmentation: Behavioral Variables
•Hard Core Loyal Examples:
•Split Loyal's Example:
•Shifting Loyal Examples:
•Switchers Examples:
•Enthusiastic Brands
•Positive Brands
•Indifferent Brands
•Negative Brands
•Hostile Brands
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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
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Porter’s 5 Forces Model
Threat of Rivalry
Threat of SupplierBargaining Power
Threat of Buyer Bargaining Power
Threat of New Entrants
Threat of Substitutes
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Figure 7.3 Possible Levels of Segmentation
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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
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