MARK 3321 1st Edition Exam 2 Study Guide Lectures 5 8 Lectures 5 8 Tuesday February 17 Tuesday March 3 CH 6 Consumer Decision Making Consumer behavior o Processes a consumer uses to make purchase decisions as well as to use and dispose of purchases goods or services o Also includes factors that influence purchase decisions and the product use Consumer decision making process o Step 1 Need recognition o Step 2 Information search Internal info search External info search o Non marketing controlled o Marketing controlled Group of brands resulting from an info search from which a buyer can choose Step 3 Evaluation of alternatives Analyze product attributes Use cutoff criteria Rank attributes by importance o Seek info in outside environment Evoked set consideration set o Recall info in memory Compensatory decision making example Step 4 Purchase Transaction terms are arranged ownership title is transferred the product is paid for and the consumer takes possession of the product from the seller o Preferred brand may be out of stock New in store info may reopen the evaluation process Financing terms may render a purchase infeasible Unexpected situations may lead to postponement of the purchase Step 5 Post purchase behavior The consumer purchase can be derailed due to Cognitive dissonance Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions Consumers reduce dissonance by o Seeking info that reinforces positive ideas about the purchase o Avoiding info that contradicts the purchase decision o Revoking the original decision by returning the product Continuum of consumer buying decisions Factors determining the level of consumer involvement o Previous experience o Interest o Increases involvement Social visibility Marketing implications of involvement o High involvement purchases o Extensive and informative promotion to target market Low involvement purchases Generally increases involvement Perceived risk of negative consequences o Generally decreases customer involvement In store promotion eye catching package design and good displays Factors influencing Buying Decisions o Cultural o Subculture A homogenous group of people who share elements of the overall culture as well as unique elements of their own group Commonly divided on the basis of geographic regions national and ethnic background and religious beliefs Social class A group of people in society who are considered nearly equal in status or community esteem who regularly socialize among themselves both formally and informally and who share behavioral norms Measured as a combination of occupation income education wealth and other variables Social factors Reference groups o o Direct o Primary o Secondary Indirect o Aspirational o Non aspirational Opinion leaders Family members Individual factors Gender Age life cycle stage Personality self concept lifestyle Psychological factors Perception Selective exposure o Consumer notices certain stimuli and ignores others Selective distortion o Selective retention o Consumer remembers only that info that supports personal beliefs Motivation Consumer changes or distorts info that conflicts with feelings or beliefs Maslow s Hierarchy of Needs Learning Learning theory o o Experiential vs conceptual learning Experiential works well with food such as sampling or free trial Conceptual are mainly explaining Stimulus generalization vs discrimination Stimulus generalization Stimulus discrimination Associating characteristics of the same brand for new products Being able to see the difference from other brands Beliefs and attitudes Changing target consumers attitudes o Changing beliefs about attributes o Changing the importance of beliefs o Adding new beliefs CH 8 Segmenting and Targeting Markets Market segmentation o Market o Market segment o A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs Market segmentation People or organizations with needs or wants and the ability and willingness to buy The process of dividing a market into meaningful relatively similar identifiable segments or groups Criteria for successful segmentation o Substantiality o Identifiability and measurability o Segments must be identifiable and their size measurable Accessibility o Segment must be large enough to warrant a special marketing mix Members of targeted segments must be reachable with marketing mix Responsiveness Segmentation bases variables o Unless segment responds to a marketing mix differently no separate treatment is needed Characteristics of individuals groups or organizations used to divide a total market into segments Bases for Segmenting Consumer Markets o o o Geographic segmentation base Region of the country or world Market size Market density Climate All of these are variables Demographic segmentation base Age Gender Income Ethnic Family life cycle Psychographic segmentation Personality Motives broad and general Self expression Conveying status Stay consistent with their religious or moral beliefs Lifestyles Geo demographics o Combination of geographic demographic and lifestyle variables Benefit segmentation The process of grouping customers into market segments according to the benefits they seek from the product Product specific Ex common benefits sought by people who ride bicycles o o Exercise off road adventure transportation socialization environmental Usage rate segmentation Dividing a market by the amount of product bought or consumed 80 20 principle A principle holding that 20 of all customers generate 80 of the demand More useful for services than products Ex restaurants can look at number of visits sales etc Steps in Segmenting Markets o 1 Select a market for study o 2 Choose bases for segmentation o 3 Select descriptors specific segmentation variables o 4 Profile and analyze segment o 5 Select target markets o 6 Design implement and maintain marketing mix o Part of marketing strategy Part of marketing strategy Market segmentation is a natural part of the market strategy Undifferentiated Targeting strategy o Creating one marketing mix and apply it to all the different bases o Advantages o Unimaginative product offerings Company more susceptible to competition o Pick one segment to focus on o Advantages Concentration of resources Can better meet the needs of a narrowly defined segment Allows some small firms to better compete with larger ones Strong positioning