1. BMGT 411: Week #4
Kottler:
Chapters 5 - Consumer Markets
Chapter 6 - Business Markets
Chapter 7 - Marketing Segments and Targets
Wood:
Chapter 3 - Markets and Consumers
Chapter 4 - Segmenting, Targeting and Positioning
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2. BMGT 411: Chapter 5
Analyzing Consumer Markets
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3. 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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4. 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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5. 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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6. Social Classes
• Upper uppers
• Lower uppers
• Upper middles
• Middle class
• Working class
• Upper lowers
• Lower lowers
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7. Income Gap in the US
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8. Citi Hourglass Theory
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9. P&G High/Low
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10. 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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11. Social Media Opinion
Leaders
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12. Personal Factors
• Age
• Life cycle stage
• Occupation
• Economic circumstances
• Personality
• Self-concept
• Lifestyles
• Values
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13. Key Psychological Processes
• Motivation
• Perception
• Learning
• Memory
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14. 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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15. Figure 5.1 Model of
Consumer Behavior
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16. 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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17. 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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18. Five Stage Model of
Consumer Buying
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19. • 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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20. 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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21. BGMT 411: Chapter 6
Analyzing Business Markets
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22. Boeing 787 Dreamliner, 3 Million Parts,
500 Suppliers
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23. 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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24. 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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25. 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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26. Local Examples
• IT Solutions
• Supplies
• Product
• Text Books
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27. 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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28. 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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29. 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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30. Buygrid Framework
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31. 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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32. 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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33. 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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34. 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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35. http://
contracts.patreasury.gov/
search.aspx
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36. BMGT 411: Chapter 7
Identifying Market Segments and Targets
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37. http://www.youtube.com/watch?
v=ioH2fAv_zes&feature=plcp
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38. http://www.youtube.com/watch?
v=7UnPjNBZS50&feature=plcp
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39. 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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40. 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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41. 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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42. Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral
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43. Geographic
Segmentation
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44. Demographic Segmentation
• Age and life cycle
• Life stage
• Gender
• Income
• Generation
• Social class
• Race and Culture
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45. AARP
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46. Lululemon
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47. Mercedes Benz
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48. Psychographic
Segmentation
and The VALS Framework
http://
www.strategicbusinessinsights.c
om/vals/ustypes.shtml
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49. Behavioral Segmentation Based on Needs and
Benefits
Initiator
Influencer
Decider
Buyer
User
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50. 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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51. 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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52. 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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53. 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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54. Porter’s 5 Forces Model
Threat of Rivalry
Threat of Supplier
Bargaining Power
Threat of Buyer
Bargaining Power
Threat of
New Entrants
Threat of
Substitutes
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55. Figure 7.3 Possible Levels
of Segmentation
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56. 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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