Buyer Behavior

Professor S.J. Grant

Spring 2007

BUYER BEHAVIOR, MARKETING 3250

Outline

Introduction Goals of the course Requirements Grading Honor code My obligations About me

Introduction

This course is an overview of concepts of consumer behavior

Drawing from psychology, our study of behavior will emphasize an understanding of consumer learning, memory, preference, choice and attitudes

Goals of the Course

Introduce you to key concepts and theories underlying consumer behavior

Demonstrate how an understanding of consumer behavior drives marketing strategy

Requirements

Readings REQUIRED TEXT:

• Wayne D. Hoyer & Deborah J. MacInnis, Consumer Behavior, 4th ed., Houghton Mifflin, 2007.

• Arbinger Institute, Leadership and Self-Deception; Getting Out of the Box, Berrett-Koehler, 2002.

OPTIONAL TEXTS: • Dawn Iacobucci, ed., Kellogg on Marketing, John

Wiley & Sons, 2001.

Requirements

Group workStudents select groupsPeer evaluation is component of

overall grade (5%)Collaborative work has pedagogical

purpose

Grading

Grading will be based on evaluations of individual effort and team work

Positioning analysis# 10 %Case analysis# 10 %Quantitative analysis* 10 %Exam I* 15 %Exam II* 15 %Team project# 20 %Team dynamics# 5 %Class participation^ 15 %

# Team work * Individual effort^Preparation for class discussion may be done in teams

Grading

Assignments Positioning

analysis Case analysis Pricing analysis Team project

Readings Exercises Class discussion

Exams Midterm I Midterm II Final

Honor Code

Team work Duty to the team Conflict in the team Peer evaluation

Infractions and suspected violations are taken seriously Applies to attendance, course requirements,

preparation of assignments, exams

My Obligations

I will return assignments within one week of submission

I am available during office hours MW 2-3 pm and by appointment

I will return all student phone calls and emails within 24 hoursPhone: 303 492 5616Email:

susan.jung.grant@colorado.edu

About Me

Education University of Pennsylvania, BA Kellogg School of Management,

Northwestern University, MBA, PhD Experience

Northwestern University, lecturer Price Waterhouse Coopers LLP, consultant Philadelphia Inquirer, editor Boston Globe, reporter, editor

Professor S.J. Grant

Spring 2007

BUYER BEHAVIOR, MARKETING 3250

Review of Marketing Concepts

Outline

What is marketing? Review of marketing management

Analyzing the marketing environment & marketing opportunities

Aspects of strategy

Paradigm Shift

“Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.” (Theodore Levitt)

Historic Overview

Selling concept has been historically dominantWhatever was produced (crops,

livestock, goods) had to be sold at market

Industrial Revolution shifted production from home to factory, prompting focus to be on the marketing concept

Selling versus Marketing

Selling Concept

Selling & PromotingProducts

Profits through sales

volume

Customer needs

Profits through customer

satisfaction

Marketing Concept

Integrated Marketing

Selling versus Marketing

Selling conceptFocuses on selling what you can make

Marketing conceptFocuses on making what you can sell

Marketing Concept

Analyze Marketing Opportunities- Environmental Analysis- Competitive Analysis- Consumer Analysis

Implementation & Control

MarketingResearch

Select Target Markets- Segmentation - Targeting - Positioning

Formulate the Marketing Mix- Product - Promotion- Pricing - Distribution/Place

Marketing Management

Management of change, a necessary focus in a dynamic marketplaceSensitivity to external changes is key

in identifying opportunity• Competitors• Consumers

Sensitivity to internal changes is key in formulating a strategy

Marketing Management

How is marketing management distinct from plain old management? Customer focus

Customer focus “Customer is always right” Customer focus implies scrutinizing how

strategic motivations are relevant to the customer

Involves keeping a disciplined vision of how to create the kind of value the customer is willing to pay for

Marketing Management

In essence, marketing management is about value creation and value delivery

Choose the value

Provide the value

Communicate the value

Value Creation & Delivery

Choose the value

Provide the value

Communicate the value

Seg

men

tati

on

Targ

eti

ng

Posit

ion

ing

Pro

du

ct

Pri

cin

g

Sou

rcin

g

Dis

trib

uti

on

Sale

s f

orc

e

Sale

s p

rom

oti

on

Ad

vert

isin

g

Marketing Strategy

A coherent strategy informs every aspect of the marketing processAligns a firm’s strengths with what is

needed in marketplace – strategic fit• Given consumer demand• Given competition

Guides vision, directionDrives tactics

Core Competencies

3 dimensions of core competenciesOperational excellenceProduct leadershipCustomer intimacy

Co

mp

any

Tra

its

Disciplines

Operational Excellence

Sharpen distribution systemand provide no-hassleservice

Has strong, central authorityand a finite level ofempowerment

Maintain standard operatingprocedures

Acts predictably and believes“one size fits all”

Product Leadership

Nurture ideas, translatethem into products, andmarket them skillfully

Acts in an ad hoc, organic,loosely knit, andever-changing way

Reward individuals’innovative capacity andnew product success

Experiments and thinks “out-of-the-box”

Customer Intimacy

Provides solutionsand help customersrun their businesses

Pushes empowerment closeto customer contact

Measure the cost ofservice, maintainingcustomer loyalty

Is flexible and thinks“have it your way”

Core businessprocesses that...

Structure that...

Managementsystems that...

Culture that...

Source: M. Treacy and F. Wiersema The Discipline of Market Leaders Addison-Wesley: Reading MA, 1995

Which Discipline to Choose?

Operational Excellence

When practicing the operational excellence discipline, it is necessary to balance the need to respond to consumer and competitor changes in the marketplace A company must tradeoff consumer

heterogeneity, slowing demand and product proliferation if the core discipline is to be maintained

• Economies of scale, efficiency are crucial• Mass market is competitive space

Product Leadership

When practicing the product leadership discipline, the firm must be willing to cannibalize existing products, but the focus should be on providing consumers with a reason to “trade up” to the product innovation rather than “trade down” Product innovation must be constant Continual investment is necessary Requires partners’ cooperation

Customer Intimacy

When practicing the customer intimacy discipline, the firm aims to serve a small segment who pay a high premium Customer intimacy cannot be achieved on a

large scale The smaller the segment, the higher the

price charged, the higher the quality of the product or service

Choosing a Discipline

Operational Excellence

Product Leadership

Customer Intimacy

BIC GilletteBritish

Airways

Wal-Mart AppleAmerican Express

Toyota BMW Lexus