Business Copyright 2005 Prentice- Hall, Inc. 10-1.

Copyright 2005 Prentice- Hall, Inc. 10-1

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Part Three: Part Three: Understanding Principles Understanding Principles

of Marketingof Marketing10.10. Understanding Market Understanding Market

Processes And Consumer Processes And Consumer BehaviorBehavior

11.11. Developing And Pricing Developing And Pricing ProductsProducts

12.12. Distributing ProductsDistributing Products13.13. Promoting ProductsPromoting Products

10-3

ChapteChapte

rr 1010Understanding Marketing Understanding Marketing

Processes and Consumer Processes and Consumer BehaviorBehavior


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ess Chapter OutlineChapter Outline

What Is Marketing?What Is Marketing?Target Marketing/SegmentationTarget Marketing/SegmentationMarketing ResearchMarketing ResearchUnderstanding Consumer Understanding Consumer

BehaviorBehaviorOrganizational Marketing & Organizational Marketing &

Buying BehaviorBuying BehaviorInternational Marketing MixInternational Marketing MixSmall Business & The Small Business & The

Marketing MixMarketing Mix


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Marketing Mix Marketing Mix Of Goods & ServicesOf Goods & Services

• DevelopingDeveloping

• PricingPricing

• PlacingPlacing

• PromotingPromoting


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ess Value & SatisfactionValue & Satisfaction

• Benefits- Functions Of Product Benefits- Functions Of Product & Emotional Satisfaction& Emotional Satisfaction

• Benefits Must Exceed Costs To Benefits Must Exceed Costs To Be Of Value To The ConsumerBe Of Value To The Consumer

Value = Value = BenefitsBenefits CostsCosts


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Utility = Satisfy Utility = Satisfy Need/WantNeed/Want

• TimeTime

• PlacePlace

• Ownership/PossessionOwnership/Possession

• FormForm


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ess Goods, Services, IdeasGoods, Services, Ideas

• Consumer GoodsConsumer Goods

• Industrial GoodsIndustrial Goods

• Services- IntangibleServices- Intangible

TangibleTangible


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ess Relationship MarketingRelationship Marketing

• Emphasizes Economic/Social Emphasizes Economic/Social Ties Between Buyer & SellerTies Between Buyer & Seller

• NetworkingNetworking


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ess Marketing EnvironmentMarketing Environment


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ess Marketing EnvironmentMarketing Environment

• Political/Legal- Foreign Political/Legal- Foreign & Domestic& Domestic

• Social/Culture- Changing Social/Culture- Changing Values In Today’s Dynamic Values In Today’s Dynamic MarketMarket

• Technological- ObsolescenceTechnological- Obsolescence• Economic- Patterns/Levels Of Economic- Patterns/Levels Of

Spending Spending


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Crude Oil Prices-Crude Oil Prices-Yearly AverageYearly Average

0

5

10

15

20

25

30

35

40

45

1945 1955 1965 1975 1985 1995 2004

Source: “History if Illinois Basin Posted Crude Oil Prices”, http://www.ioga.com/Special/crudeoil_Hist.htm

OPEC OPEC FormedFormed

Yom Yom Kippur Kippur

WarWar

US Emphasis US Emphasis On Energy On Energy EfficiencyEfficiency

Iraq/Iran WarIraq/Iran War

Saudi Arabia Increases Saudi Arabia Increases ProductionProduction

Gulf Gulf WarWar

Import Import CutbacksCutbacks


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ess Competitive EnvironmentCompetitive Environment

• Substitute ProductsSubstitute Products

• Brand CompetitionBrand Competition

• International CompetitionInternational Competition


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ess Marketing Mix (4 P’s)Marketing Mix (4 P’s)

ProductProduct

PlacePlace

PricePrice

PromotionPromotion


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ess ProductProduct

• Good, Service, Idea To Fill Need Good, Service, Idea To Fill Need Or WantOr Want

• Product DifferentiationProduct Differentiation


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ess VHS Vs. DVD RentalVHS Vs. DVD Rental

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

2000 2001 2002 2003

DVD

VHS

Source: Video Software Dealers Association


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ess PricePrice

• Price Must Create Profit By:Price Must Create Profit By:–Covering CostsCovering Costs

–Attract CustomersAttract Customers

• High-Low StrategyHigh-Low Strategy– Low = Large Sales VolumeLow = Large Sales Volume

–High = Greater Profit Per Unit High = Greater Profit Per Unit SoldSold


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ess PlacePlace

• Getting Product From Producer Getting Product From Producer To ConsumerTo Consumer

• Decisions Include:Decisions Include:–StorageStorage

–Mode Of TransportationMode Of Transportation


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ess Channels Of DistributionChannels Of Distribution

ProducerProducer ProducerProducer ProducerProducer

ConsumerConsumer ConsumerConsumer ConsumerConsumer

RetailerRetailerWholesalerWholesaler

RetailerRetailer


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ess PromotionPromotion

• Communicate InformationCommunicate Information

• Tools:Tools:–AdvertisingAdvertising

–Personal SellingPersonal Selling

–Sales PromotionSales Promotion

–Public RelationsPublic Relations


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Web Effect OnWeb Effect OnMedia ShoppingMedia Shopping

36%

18%11%

5%

30%Comparison Shop

Get More Obscure Titles

Buy More Stuff

Use Online Suggestions

No Change

What’s the biggest way the What’s the biggest way the Web has changed how you Web has changed how you

shop for media?shop for media?

Source: “Add To Cart” Wired, 10/04, p. 70.


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ess Target MarketTarget Market

• Target Market- Group With Target Market- Group With Similar Needs/WantsSimilar Needs/Wants

• Product Positioning- Product Positioning- According To Consumers’ According To Consumers’

PerceptionPerception


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Market Market Segmentation VariablesSegmentation Variables• GeographicGeographic

• DemographicDemographic

• PsychographicPsychographic

• BehavioralBehavioral


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ess Geographic VariablesGeographic Variables

• Places Consumers ResidePlaces Consumers Reside

• Countries > NeighborhoodsCountries > Neighborhoods

• Water = BoatsWater = Boats

• Mountains/Rural = Four-Wheel Mountains/Rural = Four-Wheel Drive VehiclesDrive Vehicles

• Urban Area = Designer ClothingUrban Area = Designer Clothing


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ess Demographic VariablesDemographic Variables

• AgeAge

• IncomeIncome

• GenderGender

• Ethnic Ethnic BackgroundBackground

• Marital StatusMarital Status

• RaceRace

• ReligionReligion

• Social ClassSocial Class

• Others?Others?


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ess Psychographic VariablesPsychographic Variables

• LifestyleLifestyle

• InterestsInterests

• AttitudesAttitudes

• Can Be Changed By Can Be Changed By Marketing EffortsMarketing Efforts


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ess Behavioral VariablesBehavioral Variables

• Ways In Which Product/Service Ways In Which Product/Service Is UsedIs Used

• Benefits ExpectedBenefits Expected

• Reasons For PurchaseReasons For Purchase

• Brand Loyalty vs. SwitcherBrand Loyalty vs. Switcher


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ess Marketing ResearchMarketing Research

• Study Consumer Study Consumer Needs/WantsNeeds/Wants

• Determine Ways Determine Ways Sellers Can Satisfy Sellers Can Satisfy Needs/WantsNeeds/Wants


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Marketing ResearchMarketing Research& Process& Process


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ess Research ProcessResearch Process

Study SituationStudy Situation

Select MethodSelect Method

Collect DataCollect Data

Analyze DataAnalyze Data

Prepare ReportPrepare Report


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ess Research MethodsResearch Methods

ObservationObservation

Focus GroupFocus GroupExperimentationExperimentation

SurveysSurveys


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Influences OnInfluences OnConsumer BehaviorConsumer Behavior

• PsychologicalPsychological

• PersonalPersonal

• SocialSocial

• CulturalCultural


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ess Buying ProcessBuying Process


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ess DataData

• Warehousing- Collecting, Warehousing- Collecting, Storing, & Retrieving Storing, & Retrieving DataData

• Mining- Searching, Mining- Searching, Sifting, & Reorganizing Sifting, & Reorganizing DataData


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ess Organizational MarketsOrganizational Markets

• IndustrialIndustrial

• ResellerReseller

• Government/InstitutionalGovernment/Institutional


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Buying Behavior- Buying Behavior- OrganizationalOrganizational

• Buyer DifferencesBuyer Differences–ProfessionalProfessional

–SpecialistSpecialist

–ExpertsExperts

• Buyer-Seller RelationshipBuyer-Seller Relationship


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Marketing Mix- Marketing Mix- InternationalInternational

• Products- Redesign For Foreign Products- Redesign For Foreign BuyerBuyer

• Pricing- Cover Increased Cost Of Pricing- Cover Increased Cost Of Transport/SellingTransport/Selling

• Distribution- Delays In Distribution- Delays In Establishing Network For StartupEstablishing Network For Startup

• Promotion- Cultural DifferencesPromotion- Cultural Differences


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Marketing Mix-Marketing Mix-Small BusinessSmall Business

• Products- Limited Buying Products- Limited Buying MarketMarket

• Pricing- Incorrect Cost Pricing- Incorrect Cost EstimationEstimation

• Distribution- Location Is CriticalDistribution- Location Is Critical• Promotion- Local Which Is Promotion- Local Which Is

CheaperCheaper

Business Copyright 2005 Prentice- Hall, Inc. 10-1.

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