MKTG 311 1st EditionExam # 2 Study Guide Lectures: 7 - 13Lecture 7 (Feb 9)Chapter 5: The Consumer Decision- Making Process:What are the steps in the Consumer Decision Making Process?1. Problem Recognition- Consumer recognizes they have an unmet need or want. “Differencebetween where you are and where you want to be.”2. Information search- Look at all the information sources and pull together the choice possibilities. Personal sources (friends and family) Public sources: Consumer reports, online, andsocial sources.3. Evaluation of Alternatives- Take the choice possibilities and narrow them down to a choiceset of 3-6 options, by weighing the pros and cons4. Purchase Decision- Purchase Choice, consumers use decision guidelines known as heuristics to determine purchase choice: Price= quality, Brand loyalty, Country of origin- assumptions consumers make based on whose product is originated.5. Postpurchase Behavior-What are the types of buying decision behavior?I. 3 Types of Buying Decision Behavior1. Extended Problem SolvingComplex Buying Behavior Dissonance Reducing Buying BehaviorHigh level of consumer involvement High level of consumer involvementProducts that are expensive, some element of risk, purchased infrequently, reflect one’s social image.Products that are expensive, some element of risk, purchased infrequently, reflect one’s social image.Significant Brand Differences Few Brand DifferencesGoods: can Service: Printing One’s home2. Limited Problem Solving3. Routine Problem SolvingHabitual Buying Behavior Variety Seeking Buying BehaviorLow consumer involvement Low consumer involvementFew perceived brand differences Significant brand differencesConsumers select the same brands due to familiarity NOT loyaltyConsumers switch brands to try something newStaple Good: Bread, Milk, Tylenol Snack FoodsName the 2 influences (Socio-cultural & psychological) on the consumer decision making process & sub factors within each.1. Socio-Cultural FactorsInfluences on Consumer Purchases: Socio-Cultural Influences- Culture: Values, beliefs, preferences, behaviors of larger group.- Subculture: Smaller groups that exist within the culture: Ethnic groups, Regional groups, Religious groups.- Social class: One’s rank in society, it is a function of 4 factors: Income, Occupation, Education and Wealth. As these 4 factors, so does one’s social class. *7 US social class segments *#1 Working class- 38% US- Membership groups: Clubs, Athletic groups, Sororities, Fraternities all influence our purchase process- Reference groups: Individuals we look up to, want to be like: Athletes, Celebrities, Business people- Opinion leaders: People who we respect their knowledge in a certain area, seek advice.- FamilyPersonal Factors- Age- Children: toys; Teens: entertainment; Young adults: technology, cars, clothing; Middle aged adults: family, insurance needs; Old adults: retirement and traveling- Family Life Cycle- Stages that consumers pass through as they grow older, not just their age. Example: Graduating from college- Occupation- How to dress at work2. Psychological FactorsInfluences on Consumer Purchases: Psychological Influences- Motivation: An internal state that drives us to satisfy our needs.o Primary theories: Maslow’s Hierarchy of Needso Basic Needs: Physiological needs. Food and Watero Fulfill lower level needs first, followed by higher level needs- Perception: Process by which consumers select, organize, and interpret information from the outside world.o Selective Attention: Lots of messages, which ones do we pay attention to, it must be important to US.o Selective Comprehension: Tendency to interpret information that is consistent with your attitudes and beliefs. Example- Toro snow pup- Show Mastero Selective Retention: How much information do we remember after we see, read, or hear the advertisement? Critical to leave information with the consumer.- Learning: As we become more familiar with brand, lifelong loyalty and attachment to the brands.- Beliefs and Attitudeso Beliefs- Knowledge or opinion about a product or a company. Easily changed.o Attitudes- Deep ceded beliefs, not so easily changed.- Lifestyle- Goes beyond age and income, looks at consumer’s activities, interest, and opinions.o Tool- VALS (Values and Lifestyle Segmentation)- Uses psychology to segment consumers in 1 of 8 consumer segments. Horizontal axis deals with primary motivation. Ideals (knowledge and principles) Achievement (social status prestige) Self-Expression: Physical and social activity, creativity Vertical Axis- Level of Resources: High, Average, Low*Strategic Business InsightsLecture 8 (Feb 11) Chapter 6 HighlightsCharacteristics of the B2B market - what makes it more complex? III. Business Market Characteristics (Comparison of the Consumer Market)1. Fewer customers, but size of the purchases is larger (US consumer households approximately 132 million compared to 10 million businesses)2. More geographic concentration- Businesses tend to be concentrated: Certain parts of the country, cities.3. Derived Demand- Business demand for goods and services is directly or indirectly related to consumer demand for goods and services.- Consumer Demand- Price, availability of the good, changing consumer tastes, discretionary income.- Business Demand for pulp and paper products: Examples: Pizza to go boxes, textbooks, FedEx packages, etc.4. Inelastic Demand- It doesn’t matter whether the price of the product goes up or down, businesses will still purchase about the same amount.5. Fluctuating Demand- Business Market is subject to greater fluctuations than the consumermarket. Small changes in the consumer market can result in large increases or decreases in business market, Infrequency with which certain products are bought. Example: School bus6. Multiple Buyers- The product has to satisfy multiple needs. Example: Printer7. More professional purchasing effort. (Multiple people involved in the purchasing decision)8. Buying process is more formalized (Specifications that are developed, bids, contracts)9. Buyer and seller relationship is different (A working partnership vs. a transaction)What are the types of buying situations? Explain each. - Straight rebuy, modified rebuy and new task buyThe Buying Situation- Examines the degree of time and effort to make a business decision.1. Straight Rebuy- Requires the least amount of time and effort. Routine purchase of goods and service, low on item reorder.2.