MARK 3321 1st EditionExam # 2 Study Guide Lectures: 5-8Lectures 5 – 8 (Tuesday February 17 – Tuesday March 3)CH 6 – Consumer Decision Making- Consumer behavioro Processes a consumer uses to make purchase decisions, as well as, to use and dispose of purchases goods or serviceso Also includes factors that influence purchase decisions and the product use- Consumer decision making processo Step 1. Need recognitiono Step 2. Information search Internal info search- Recall info in memory External info search- Seek info in outside environmento Non-marketing controlledo Marketing controlled Evoked set (consideration set) - Group of brands, resulting from an info search, from which a buyer can chooseo Step 3. Evaluation of alternatives Analyze product attributes Use cutoff criteria Rank attributes by importance- Compensatory decision making exampleo 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 The consumer purchase can be derailed due to…- 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 purchaseo Step 5. Post-purchase behavior 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 purchaseo Avoiding info that contradicts the purchase decisiono Revoking the original decision by returning the product- Continuum of consumer buying decisions- Factors determining the level of consumer involvemento Previous experience Generally decreases customer involvemento Interest Generally increases involvemento Perceived risk of negative consequences Increases involvemento Social visibility- Marketing implications of involvemento High involvement purchases Extensive and informative promotion to target marketo Low involvement purchases In-store promotion, eye-catching package design, and good displays- Factors influencing Buying Decisionso Cultural 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 variableso Social factors Reference groups- Directo Primaryo Secondary- Indirecto Aspirationalo Non-aspirational Opinion leaders Family memberso Individual factors Gender Age (life cycle stage) Personality, self-concept, lifestyleo Psychological factors Perception- Selective exposureo Consumer notices certain stimuli and ignores others- Selective distortiono Consumer changes or distorts info that conflicts with feelings or beliefs- Selective retentiono Consumer remembers only that info that supports personal beliefs Motivation- Maslow’s Hierarchy of Needs Learning- Learning theoryo Experiential vs. conceptual learning Experiential works well with food, such as sampling, or free trial Conceptual are mainly explainingo Stimulus generalization vs. discrimination Stimulus generalization- Associating characteristics of the same brand fornew products  Stimulus discrimination- Being able to see the difference from other brands Beliefs and attitudes- Changing target consumers’ attitudeso Changing beliefs about attributeso Changing the importance of beliefso Adding new beliefsCH 8 – Segmenting and Targeting Markets- Market segmentationo Market People or organizations with needs or wants and the ability and willingness to buyo Market segment A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needso Market segmentation The process of dividing a market into meaningful, relatively similar, identifiable segments or groups- Criteria for successful segmentationo Substantiality  Segment must be large enough to warrant a special marketing mixo Identifiability and measurability Segments must be identifiable and their size measurableo Accessibility  Members of targeted segments must be reachable with marketing mixo Responsiveness Unless segment responds to a marketing mix differently, no separate treatment is needed- Segmentation bases (variables)o Characteristics of individuals, groups, or organizations used to divide a total market into segments- Bases for Segmenting Consumer Marketso Geographic segmentation (base) Region of the country or world Market size Market density Climate ^^All of these are variables^^o Demographic segmentation (base) Age Gender Income Ethnic Family life cycleo Psychographic segmentation Personality Motives (broad and general)- Self-expression- Conveying status- Stay consistent with their religious or moral beliefs Lifestyles Geo-demographics - Combination of geographic, demographic, and lifestyle variableso 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 bicycleso Exercise, off-road adventure, transportation, socialization, environmentalo 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 Marketso 1. Select a market for studyo 2. Choose bases for segmentationo 3. Select descriptors (specific segmentation variables)o 4. Profile and analyze segmento 5. Select target markets Part of marketing strategyo 6. Design, implement, and maintain marketing mix Part of marketing strategyo Market segmentation is a natural part of the market strategy- Undifferentiated Targeting strategyo Creating one marketing mix and apply it to all the different baseso Advantages Potential