MKGT 311 Part 2

The simple format permits direct interpretation and an easy means of communicating data to management. Cross tabs offer great flexibility and can be used to summarize questionnaire, observational, and experimental data.
What’re the advantages of cross tabulations?
marketing mix
The marketing manager’s controllable factors—product, price, promotion, and place—that can be used to solve a marketing problem.
Product
A good, service, or idea to satisfy the consumer’s needs
Price
What is exchanged for the product.
Promotion
A means of communication between the seller and buyer.
Place
A means of getting the product to the consumer.
environmental forces
that affect a marketing decision, which consist of social, economic, technological, competitive, and regulatory forces.
SWOT analysis,
an acronym describing an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats.
What are the four areas of study SWOT covers?
Identify trends in the organization’s industry.
Analyze the organization’s competitors.
Assess the organization itself.
Research the organization’s present and prospective customers.
market segmentation
Involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.
Set marketing and product goals
Chances of new-product success are increased by specifying both market and product goals. Based on their market research, Medtronic executives set the following goal: Market the Chinese-produced Champion pacemaker to Asian markets within three years.
Select target markets
he Champion pacemaker will be targeted at cardiologists and heart surgery clinics in India, China, and other Asian countries.
Find points of difference
Points of difference are those characteristics of a product that make it superior to competitive substitutes. Just as a competitive advantage is a unique strength of an entire organization compared to its competitors, points of difference are unique characteristics of one of its products that make it superior to competitive products it faces in the marketplace. For the Champion pacemaker, the key points of difference are its high quality, long life, reliability, ease of use, and low cost.
Position the product
The pacemaker will be “positioned” in cardiologists’ and patients’ minds as a medical device that is high quality and reliable with a long, nine-year life. The name Champion was selected after testing acceptable names among doctors in India, China, Pakistan, Singapore, and Malaysia.
Build on a strength
Find specific efficiencies in distribution with parent-company Unilever’s existing ice cream brands.
Correct a weakness
Recruit experienced managers from other consumer product firms to help stimulate growth.
Exploit an opportunity
Develop new product lines of low-fat, low-carb frozen Greek-style yogurt flavors to respond to changes in consumer tastes.
Avoid a disaster-laden threat
Focus on less risky international markets, such as Brazil and Argentina.
Product strategy
Offer a Champion brand heart pacemaker with only those features needed by Asian patients.
Price strategy
Manufacture the Champion to control costs so that it can be priced below $1,000 (in U.S. dollars)—an affordable price for Asian markets.
Promotion strategy
Introduce the Champion at medical conventions across Asia to demonstrate its many beneficial features.
Place (distribution) strategy
Search out, utilize, and train reputable medical device distributors across Asia to call on cardiologists and medical clinics.
business portfolio analysis
It is a technique that managers use to quantify performance measures and growth targets to analyze their firms’ strategic business units (SBUs) as though they were a collection of separate investments.
market growth rate
vertical axis
relative market share
horizontal axis
Cash cows
are SBUs that generate large amounts of cash, far more than they can use. They have dominant shares of slow-growth markets and provide cash to cover the organization’s overhead and to invest in other SBUs.
Stars
with a high share of high-growth markets that may need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows.
Question marks
SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management’s dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest.
Dogs
SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they may not become real winners for the organization. Dropping SBUs that are dogs may be required if they consume more cash than they generate, except when relationships with other SBUs, competitive considerations, or potential strategic alliances exist.
diversification analysis
A technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products
Market penetration
is a marketing strategy to increase sales of current products in current markets, such as selling more Ben & Jerry’s Bonnaroo Buzz Fair Trade-sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Increased sales are generated by selling either more ice cream (through better promotion or distribution) or the same amount of ice cream at a higher price to its current customers.
Market development
is a marketing strategy to sell current products to new markets. For Ben & Jerry’s, Brazil is an attractive new market. There is good news and bad news for this strategy: As household incomes of Brazilians increase, consumers can buy more ice cream; however, the Ben & Jerry’s brand may be unknown to Brazilian consumers.
Product development
is a marketing strategy of selling new products to current markets. Ben & Jerry’s could leverage its brand by selling children’s clothing in the United States. This strategy is risky because Americans may not see the company’s expertise in ice cream as extending to children’s clothing.
Diversification
is a marketing strategy of developing new products and selling them in new markets. This is a potentially high-risk strategy for Ben & Jerry’s if it decides to try to sell Ben & Jerry’s branded clothing in Brazil. Why? Because the firm has neither previous production nor marketing experience from which to draw in marketing clothing to Brazilian consumers.
environmental scanning
The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.
social forces
The demographic characteristics of the population and its culture.
Demographics
Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation
316 million people
The U.S. Census Bureau estimates that the current population of the United States is
358 million people
If current trends in life expectancy, birthrates, and immigration continue, by 2030 the U.S. population will exceed
baby boomers
Includes the generation of 76 million children born between 1946 and 1964.
Generation X
Includes the 50 million people born between 1965 and 1976.
Generation Y
Includes the 72 million Americans born between 1977 and 1994.
blended family
formed by merging two previously separated units into a single household.
metropolitan statistical area
has at least one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration.
micropolitan statistical area
has at least one urban cluster of at least 10,000 but less than 50,000 people and adjacent territory that has a high degree of social and economic integration.
combined statistical areas
adjacent metropolitan statistical areas and micropolitan statistical areas may be grouped
multicultural marketing
Combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races.
culture
The set of values, ideas, and attitudes that are learned and shared among the members of a group.
value consciousness
The concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior.
competition
The alternative firms that could provide a product to satisfy a specific market’s needs.
pure competition
in which there are many sellers and they each have a similar product. Companies that deal in commodities common to agribusiness (for example, wheat, rice, and grain) often are in a pure competition position in which distribution (in the sense of shipping products) is important but other elements of marketing have little impact.
monopolistic competition
many sellers compete with substitutable products within a price range. For example, if the price of coffee rises too much, consumers may switch to tea. Coupons or sales are frequently used marketing tactics.
Oligopoly
a common industry structure, occurs when a few companies control the majority of industry sales. The wireless telephone industry, for example, is dominated by four carriers that serve more than 90 percent of the U.S. market. Verizon, AT&T, Sprint, and T-Mobile have 117, 107, 55, and 34 million subscribers, respectively.
pure monopoly
occurs when only one firm sells the product. Monopolies are common for producers of products and services considered essential to a community: water, electricity, and cable service.
barriers to entry
Business practices or conditions that make it difficult for new firms to enter the market.
Power of Buyers and Suppliers
A competitive analysis must consider the power of buyers and suppliers. Powerful buyers exist when they are few in number, there are low switching costs, or the product represents a significant share of the buyer’s total costs. This last factor leads the buyer to exert significant pressure for price competition. A supplier gains power when the product is critical to the buyer and when it has built up the switching costs.
Existing Competitors and Substitutes
Competitive pressures among existing firms depend on the rate of industry growth. In slow-growth settings, competition is more heated for any possible gains in market share. High fixed costs also create competitive pressures for firms to fill production capacity. For example, airlines offer discounts for making early reservations and charge penalties for changes or cancellations in an effort to fill seats, which represent a high fixed cost.
Regulation
Restrictions state and federal laws place on a business with regard to the conduct of its activities.
Marketing Research
Is the process of defining a market problem and opportunity, systematically collecting and analyzing information and recommending actions.
Define the problem
Set Research objectives.
Identify possible marketing actions
Developing the Research Plan
Specify constraints
Identify Data needed for marketing actions.
Determine how to collect data.
Collect relevant infomation
Obtain secondary data
Obtain Primary Data
Develop finding
Analyze the data
Present the findings
Take marketing actions
Make action recommendations
Implement actions recommendations
Evaluate Results
Exploratory Research
Provides ideas about a vague problem.
Descriptive Research
Generally involves trying to find the frequency with which something occurs or the extent of a relationship between two factors.
Casual Research
tries to determine the extent to which the change in one factor changes another one.
Measure of Success
Criteria or standards used in evaluation proposed solutions to the problems
Constratints
In a Decision are the restrictions placed on potential solution to a problem.
Concepts and Methods
How to determine collected data
Methods
Approaches that can be used to collect data to solve all or part of the problem.
Sampling and Statistical inference
What’re the special methods used for marketing?
Sampling
selecting a group of distributors,customers,or prospects, asking them questions, treating their answers as typical of all those in whom they are interested.
Statistical inference
to generalize the results from the sample to much lager groups of distributors, customers, or propects to help decide on marketing actions
Data
the facts and figures related to the project, are divided into two main parts: secondary data and primary data.
Secondary data
are facts and figures that have already been recorded prior to the project at hand.
Primary data
are facts and figures that are newly collected for the project.
internal records
a company generally offer the most easily accessible marketing information. These internal sources of secondary data may be divided into two related parts: (1) marketing inputs and (2) marketing outcomes.
Marketing input data
relate to the effort expended to make sales. These range from sales and advertising budgets and expenditures to salespeople’s call reports, which describe the number of sales calls per day, who was visited, and what was discussed
Marketing outcome data
relate to the results of the marketing efforts. These involve accounting records on shipments and include sales and repeat sales, often broken down by sales representative, industry, and geographic region. In addition, e-mails, phone calls, and letters from customers can reveal both complaints and what is working well.
Secondary Data: External
U.S. Census Bureau publishes a variety of useful reports. Best known is the Census 2010, which is the most recent count of the U.S. population that occurs every 10 years. Recently, the Census Bureau began collecting data annually from a smaller number of people through the American Community Survey.
trade associations, universities, and business periodicals provide detailed data of value to market researchers and planners.
the tremendous time savings because the data have already been collected and published or exist internally and (2) the low cost, such as free or inexpensive Census reports. Furthermore, a greater level of detail is often available through secondary data, especially U.S. Census Bureau data.
Advantages of Secondary Data
First, the secondary data may be out of date, especially if they are U.S. Census data collected only every 5 or 10 years. Second, the definitions or categories might not be quite right for a researcher’s project. For example, the age groupings or product categories might be wrong for the project. Also, because the data have been collected for another purpose, they may not be specific enough for the project. In such cases, it may be necessary to collect primary data.
Disadvantages of Secondary Data
Watching People
Primary Data:
observational data
Facts and figures obtained by watching, either mechanically or in person, how people actually behave is the way marketing researchers
Mechanical Methods
observational data collected by a “people meter.” The device measures what channel and program is tuned in and who is watching. The people meter (1) is a box that is attached to TV sets, VCRs, DVRs (digital video recorders), cable boxes, and satellite dishes in about 20,000 households across the country;12 (2) has a remote that operates the meter when a viewer begins and finishes watching a TV program; and (3) stores and then transmits the viewing information each night to Nielsen. Data are also collected on TV viewing using less sophisticated meters or TV diaries (a paper-pencil measurement system).
Personal Methods
mystery shopper is an example of this.
mystery shopper
Companies pay mystery shoppers to check on the quality and pricing of their products and the integrity of and customer service provided by their employees. Jennifer gets paid to travel to exotic hotels, eat at restaurants, play golf, test-drive new cars, shop for clothes, and play arcade games. But her role posing as a customer gives her client unique marketing research information that can be obtained in no other way.
Ethnographic research
is a specialized observational approach in which trained observers seek to discover subtle behavioral and emotional reactions as consumers encounter products in their “natural use environment,” such as in their home or car.
Neuromarketing Methods
Global brand expert Martin Lindstrom believes that most traditional marketing research—like focus groups and surveys—is wasted because consumers’ feelings toward products and brands reside deep within the subconscious part of their brains.
Primary Data: Asking People
How many dozens of times have you filled out some kind of a questionnaire? Maybe a short survey at school or a telephone or e-mail survey to see if you are pleased with the service you received. Asking consumers questions and recording their answers is the second principal way of gathering information.
questionnaire data
which are facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors.
(1) idea generation methods and (2) idea evaluation methods, although they sometimes overlap and each has a number of special techniques.
We can divide this primary data collection task into
Individual interview
involves a single researcher asking questions of one respondent. This approach has many advantages, such as being able to probe for additional ideas using follow-up questions to a respondent’s initial answers. However, this method is very expensive.
depth interview
which researchers ask lengthy, free-flowing kinds of questions to probe for underlying ideas and feelings. These depth interviews showed consumers (1) didn’t think it contained enough meat and (2) didn’t want the hassle of cooking in two different pots.
Focus groups
are informal sessions of 6 to 10 past, present, or prospective customers in which a discussion leader, or moderator, asks for opinions about the firm’s products and those of its competitors, including how they use these products and special needs they have that these products don’t address.
Personal interview surveys
enable the interviewer to be flexible in asking probing questions or getting reactions to visual materials but are very costly.
Mail surveys
usually biased because those most likely to respond have had especially positive or negative experiences with the product or brand.
telephone interviews
allow flexibility, unhappy respondents may hang up on the interviewer, even with the efficiency of computer-assisted telephone interviewing (CATI).
online surveys
to collect primary data. The reason: Most consumers have an Internet connection and an e-mail account. Marketers can embed a survey in an e-mail sent to targeted respondents. When they open the e-mail, consumers can either see the survey or click on a link to access it from a website. Marketers can also ask consumers to complete a “pop up” survey in a separate browser window when they access an organization’s website.
cost is relatively minimal and the turnaround time from data collection to report presentation is much quicker than the traditional methods discussed earlier.
advantages of online surveys
Some consumers may view e-mail surveys as “junk” or “spam” and may either choose to not receive them (if they have a “spam blocker”) or purposely or inadvertently delete them, unopened. For Internet surveys, some consumers have a “pop-up blocker” that prohibits a browser from opening a separate window that contains the survey; thus, they may not be able to participate in the research. For both e-mail and Internet surveys, consumers can complete the survey multiple times, creating a significant bias in the results.
online surveys have serious drawbacks
open-ended question
which allows respondents to express opinions, ideas, or behaviors in their own words without being forced to choose among alternatives that have been predetermined by a marketing researcher. This information is invaluable to marketers because it captures the “voice” of respondents, which is useful in understanding consumer behavior, identifying product benefits, or developing advertising messages.
closed-end or fixed alternative questions
require respondents to select one or more response options from a set of predetermined choices.
dichotomous question
the simplest form of a fixed alternative question that allows only a “yes” or “no” response.
scale
A fixed alternative question with three or more choices
semantic differential scale
a five-point scale in which the opposite ends have one- or two-word adjectives that have opposite meanings.
Likert scale
in which the respondent indicates the extent to which he or she agrees or disagrees with a statement.
mall intercept interviews
The high cost of using personal interviews in homes,which are personal interviews of consumers visiting shopping centers. These face-to-face interviews reduce the cost of personal visits to consumers in their homes while providing the flexibility to show respondents visual cues such as ads or actual product samples.
interviews is that the people interviewed may not be representative of the consumers targeted, giving a biased result.
disadvantage of mall intercept
(1) social media, (2) panels and experiments, (3) information technology, and (4) data mining.
Primary Data: Other Sources
Social Media
Facebook, Twitter, and other social media are revolutionizing the way today’s marketing research is done. In developing a new potato chip flavor, Frito-Lay substituted Facebook research for its usual focus groups. Visitors to its Facebook Page were polled, allowing them to suggest new flavors, three of which appeared in 2013. All they had to do was click an “I’d Eat That” button to show their preferences. And Estée Lauder asked social media users to vote on which discontinued shades to bring back.
panel
is a sample of consumers or stores from which researchers take a series of measurements.
experiment
involves obtaining data by manipulating factors under tightly controlled conditions to test cause and effect. The interest is in whether changing one of the independent variables (a cause) will change the behavior of the dependent variable that is studied (the result).
marketing drivers
are often one or more of the marketing mix elements, such as a product’s features, price, or promotion (like advertising messages or coupons). The ideal dependent variable usually is a change in the purchases (incremental unit or dollar sales) of individuals, households, or organizations.
Information technology
involves operating computer networks that can store and process data. Today, information technology can extract hidden information from large databases, such as those containing retail sales collected through barcode scanners at checkout counters and households’ product purchases and TV viewing behavior.
sensitivity analysis
ask “what if” questions to determine how hypothetical changes in product
product or brand drivers
the factors that influence the buying decisions of a household or organization—can affect sales.
data mining
is the extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions.
of being more flexible and more specific to the problem being studied.
What are the advantages of primary data?
are usually far more costly and time-consuming to collect than secondary data.
What are the main disadvantages of primary data?
cross tabulation, or cross tab
is a method of presenting and analyzing data involving two or more variables to discover relationships in the data.
The simple format permits direct interpretation and an easy means of communicating data to management. Cross tabs offer great flexibility and can be used to summarize questionnaire, observational, and experimental data.
What’re the advantages of cross tabulations?
they can be misleading if the percentages are based on too few observations. Also, cross tabulations can hide some relationships because each cross tab typically shows only two or three variables
What’re the Disadvantages of Cross Tabulations?
Analyze the Data
Schwan Food Company produces 3 million frozen pizzas a day under brand names that include Tony’s and Red Baron. Let’s see how Teré Carral, the marketing manager for the Tony’s brand, might address a market segment question in early 2013. We will use hypothetical data to protect Tony’s proprietary information.
Present the Findings
Findings should be clear and understandable from the way the data are presented. Managers are responsible for actions. Often it means delivering the results in clear pictures and, if possible, in a single page.
Annual Sales
This shows the annual growth
Evaluating the decision itself
This involves monitoring the marketplace to determine if action is necessary in the future.
Evaluating the decision process used
Was the marketing research and analysis used to develop the recommendations effective? Was it flawed? Could it be improved for similar situations in the future?
purchase decision process
(1) problem recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, and (5) postpurchase behavior.
Problem recognition
the initial step in the purchase decision, is perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision.2 This can be as simple as finding an empty milk carton in the refrigerator; noting, as a first-year college student, that your high school clothes are not in the style that other students are wearing; or realizing that your notebook computer may not be working properly.
internal search
First, you may scan your memory for previous experiences with products or brands.
external search
This is needed when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and the cost of gathering information is low.
(1) personal sources, such as relatives and friends whom the consumer trusts; (2) public sources, including various product-rating organizations such as Consumer Reports, government agencies, and TV “consumer programs”; and (3) marketer-dominated sources, such as information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores.
primary sources of external information
personal sources
relatives and friends whom the consumer trusts
public sources
including various product-rating organizations such as Consumer Reports, government agencies, and TV “consumer programs”
marketer-dominated sources
such as information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores.
(1) suggesting criteria to use for the purchase, (2) yielding brand names that might meet the criteria, and (3) developing consumer value perceptions.
Alternative Evaluation: Assessing Value
evaluative criteria
which represent both the objective attributes of a brand (such as display) and the subjective ones (such as prestige) you use to compare different products and brands.6 Firms try to identify and capitalize on both types of criteria to create the best value for the money paid by you and other consumers. These criteria are often displayed in advertisements.
consideration set
the group of brands a consumer would consider acceptable from among all the brands in the product class of which he or she is aware.
Having examined the alternatives in the consideration set, you are almost ready to make a purchase decision. Two choices remain: (1) from whom to buy and (2) when to buy. For a product like a smartphone, the information search process probably involved visiting retail stores, seeing different brands advertised on television and newspapers, and viewing a smartphone on a seller’s website.
Purchase Decision: Buying Value
After buying a product, the consumer compares it with his or her expectations and is either satisfied or dissatisfied. If the consumer is dissatisfied, marketers must determine whether the product was deficient or consumer expectations were too high. Product deficiency may require a design change. If expectations are too high, a company’s advertising or the salesperson may have oversold the product’s features and benefits.
Postpurchase Behavior: Realizing Value
cognitive dissonance
The feeling of postpurchase psychological tension or anxiety consumers may experience when faced with two or more highly attractive alternatives.
involvement
The personal, social, and economic significance of the purchase to the consumer.
The item to be purchased (1) is expensive, (2) can have serious personal consequences, or (3) could reflect on one’s social image.
High-involvement purchase occasions typically have at least one of three characteristics:
Extended Problem Solving
each of the five stages of the consumer purchase decision process is used and considerable time and effort are devoted to the search for external information and the identification and evaluation of alternatives. Several brands are in the consideration set, and these are evaluated on many attributes.
Limited Problem Solving
consumers typically seek some information or rely on a friend to help them evaluate alternatives. Several brands might be evaluated using a moderate number of attributes. Limited problem solving is appropriate for purchase situations that do not merit a great deal of time or effort, such as choosing a toaster or a restaurant for lunch.
Routine Problem Solving
For products such as table salt and milk, consumers recognize a problem, make a decision, and spend little effort seeking external information and evaluating alternatives. The purchase process for such items is virtually a habit and typifies low-involvement decision making.
typically the case for low-priced, frequently purchased products.
Consumer Involvement and Marketing Strategy
Low and high consumer involvement have important implications for marketing strategy.
(1) maintaining product quality, (2) avoiding stockout situations so that buyers don’t substitute a competing brand, and (3) repetitive advertising messages that reinforce a consumer’s knowledge or assure buyers they made the right choice.
company markets a low-involvement product and its brand is a market leader
have an impact on the purchase decision process:(1) the purchase task, (2) social surroundings, (3) physical surroundings, (4) temporal effects, and (5) antecedent states.
situational influences
Motivation
is the energizing force that stimulates behavior to satisfy a need.
Physiological needs
are basic to survival and must be satisfied first.
Safety needs
involve self-preservation as well as physical and financial well-being.
Social needs
are concerned with love and friendship
Personal needs
include the need for achievement, status, prestige, and self-respect.
Self-actualization
involve personal fulfillment
Personality
refers to a person’s consistent behaviors or responses to recurring situations.
self-concept
which is the way people see themselves and the way they believe others see them.
perception
the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world.
selective perception
Because the average consumer operates in a complex environment, the human brain attempts to organize and interpret information with a process a filtering of exposure, comprehension, and retention
Selective exposure
occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent with them.
Selective comprehension
involves interpreting information so that it is consistent with your attitudes and beliefs. A marketer’s failure to understand this can have disastrous results.For example, Toro introduced a small, lightweight snowblower called the Snow Pup. Even though the product worked, sales failed to meet expectations. Why? Toro later found out that consumers perceived the name to mean that Snow Pup was a toy or too light to do any serious snow removal. When the product was renamed Snow Master, sales increased sharply.18
Selective retention
that consumers do not remember all the information they see, read, or hear, even minutes after exposure to it. This affects the internal and external information search stage of the purchase decision process. This is why furniture and automobile retailers often give consumers product brochures to take home with them when they leave the showroom.
Subliminal perception
means that you see or hear messages without being aware of them. The presence and effect of subliminal perception on behavior is a hotly debated issue, with more popular appeal than scientific support.
Perceived Risk
The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences.
Learning
refers to those behaviors that result from (1) repeated experience and (2) reasoning.
Behavioral learning
is the process of developing automatic responses to a situation built up through repeated exposure to it.
A drive
s a need that moves an individual to action. Drives, such as hunger, might be represented by motives.
response
is the action taken by a consumer to satisfy the drive.
Reinforcement
is the reward
cue
is a stimulus or symbol perceived by consumers.
drive, cue, response, and reinforcement
What’re the 4 types of Variables
Stimulus generalization
occurs when a response elicited by one stimulus (cue) is generalized to another stimulus. Using the same brand name for different products is an application of this concept, such as Tylenol Cold & Flu and Tylenol P.M.
Stimulus discrimination
refers to a person’s ability to perceive differences in stimuli. Consumers’ tendency to perceive all light beers as being alike led to Budweiser Light commercials that distinguished between many types of “light beers” and Bud Light.
cognitive learning
Consumers also learn through thinking, reasoning, and mental problem solving without direct experience. involves making connections between two or more ideas or simply observing the outcomes of others’ behaviors and adjusting your own accordingly. Firms also influence this type of learning. Through repetition in advertising, messages such as “Feel Better, Tylenol 8-Hour” link a brand (Tylenol 8-Hour) and an idea (pain reliever) by showing someone using the brand and finding relief.
brand loyalty
which is a favorable attitude toward and consistent purchase of a single brand over time. Brand loyalty results from the positive reinforcement of previous actions. A consumer reduces risk and saves time by consistently purchasing the same brand of shampoo and has favorable results—healthy, shining hair. There is evidence of brand loyalty in many commonly purchased products in the United States and the global marketplace. However, the incidence of brand loyalty appears to be declining in North America, Western Europe, and Japan.
attitude
“learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way,are shaped by our values and beliefs, which are learned. Values vary by level of specificity.
Beliefs
A consumer’s subjective perception of how a product or brand performs on different attributes based on personal experience, advertising, and discussions with other people
1)Changing beliefs about the extent to which a brand has certain attributes.
2)Changing the perceived importance of attributes.
3)Adding new attributes to the product.
Attitude Change
lifestyle
A mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them.
psychographics
provides insights into consumer needs and wants. Lifestyle analysis has proven useful in segmenting and targeting consumers for new and existing products and services
VALS
(1) their primary motivation for buying and having certain products and services and (2) their resources.
Ideals-motivated groups
Consumers motivated by ideals are guided by knowledge and principles.(Thinkers and Believers)
Thinkers
are mature, reflective, and well-educated people who value order, knowledge, and responsibility.They are practical consumers and deliberate information-seekers who value durability and functionality in products over styling and newness.
Believers
with fewer resources, are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. They choose familiar products and brands, favor American-made products, and are generally brand loyal.
Achievement-motivated groups.
Consumers motivated by achievement look for products and services that demonstrate success to their peers or to a peer group they aspire to. Achievers Strivers
Achievers
have a busy, goal-directed lifestyle and a deep commitment to career and family. Image is important to them. They favor established, prestige products and services and are interested in time-saving devices given their hectic schedules.
Strivers
are trendy, fun-loving, and less self-confident than Achievers. They also have lower levels of education and household income. Money defines success for them. They favor stylish products and are as impulsive as their financial circumstances permit.
Self-expression-motivated groups
Consumers motivated by self-expression desire social or physical activity, variety, and risk.

Experiencers, Makers

Makers
with fewer resources, express themselves and experience the world by working on it—raising children or fixing a car. They are practical people who have constructive skills, value self-sufficiency, and are unimpressed by material possessions except those with a practical or functional purpose.
Experiencers
are young, enthusiastic, and impulsive consumers who become excited about new possibilities but are equally quick to cool. They savor the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Much of their income is spent on fashion items, entertainment, and socializing and particularly on looking good and having the latest things.
High- and low-resource groups
Innovators, Survivors
Innovators
are successful, sophisticated, take-charge people with high self-esteem and abundant resources of all kinds.Image is important to them, not as evidence of power or status, but as an expression of cultivated tastes, independence, and character. They are receptive to new ideas and technologies. Their lives are characterized by variety.
Survivors
with the least resources of any segment, focus on meeting basic needs (safety and security) rather than fulfilling desires. They represent a modest market for most products and services and are loyal to favorite brands, especially if they can be purchased at a discount.
Personal Influence
A consumer’s purchases are often influenced by the views, opinions, or behaviors of others. Two aspects of personal influence are very important to marketing: opinion leadership and word-of-mouth activity.
Opinion leaders
Individuals who exert direct or indirect social influence over others

are considered to be knowledgeable about or users of particular products and services, so their opinions influence others’ choices.25 Opinion leadership is widespread in the purchase of cars and trucks, entertainment, clothing and accessories, club membership, consumer electronics, vacation destinations, food, and financial investments. A study by Popular Mechanics magazine identified 18 million opinion leaders who influence the purchases of some 85 million consumers for do-it-yourself products.

word of mouth
The influencing of people during conversations

is the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy. About 75 percent of all consumer conversations about brands happen face-to-face, 15 percent happen over the phone, and 10 percent happen online.26 According to a recent study, 67 percent of U.S. consumer product sales are directly based on word-of-mouth activity among friends, family, and colleagues.

Reference groups
are people to whom an individual looks as a basis for self-appraisal or as a source of personal standards. Reference groups affect consumer purchases because they influence the information, attitudes, and aspiration levels that help set a consumer’s standards
brand community
a specialized group of consumers with a structured set of relationships involving a particular brand, fellow customers of that brand, and the product in use. A consumer who is a member of a brand community thinks about brand names (e.g., Harley-Davidson), the product category (e.g., motorcycles), other customers who use the brand (e.g., HOG members), and the marketer that makes and promotes the brand.
associative group
is one to which a person actually belongs, including fraternities and sororities and alumni associations. Such groups are easily identifiable and are targeted by firms selling insurance, insignia products, and charter vacations
aspiration group
is one that a person wishes to be a member of or wishes to be identified with, such as a professional society or sports team. Firms frequently rely on spokespeople or settings associated with their target market’s aspiration group in their advertising.
dissociative group
is one that a person wishes to maintain a distance from because of differences in values or behaviors. Firms often avoid dissociative reference groups in their marketing. For example, retailer Abercrombie & Fitch offered to pay cast members of the controversial TV reality show Jersey Shore to not wear its clothing. “We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans,” the retailer stated.
consumer socialization
The process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers
family life cycle
concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors
Social class
may be defined as the relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be grouped. A person’s occupation, source of income (not level of income), and education determine his or her social class. Generally speaking, three major social class categories exist—upper, middle, and lower—with subcategories within each. This structure has been observed in the United States, Great Britain, Western Europe, and Latin America
subcultures
Subgroups within the larger, or national, culture with unique values, ideas, and attitudes
Hispanic Buying Patterns
Hispanics represent the largest racial/ethnic subculture in the United States in terms of population and spending power. About 50 percent of Hispanics in the United States are immigrants, and the majority are under the age of 29. One-third of Hispanics are younger than 18.
Research on Hispanic buying practices has uncovered several consistent patterns:37
Hispanics are quality and brand conscious. They are willing to pay a premium price for premium quality and are often brand loyal
Hispanics prefer buying American-made products, especially those offered by firms that cater to Hispanic needs.
Hispanic buying preferences are strongly influenced by family and peers.
Hispanics consider advertising a credible product information source, and U.S. firms spend about $8 billion annually on advertising to Hispanics.
Convenience is not an important product attribute to Hispanic homemakers with respect to food preparation or consumption, nor is low caffeine in coffee and soft drinks, low fat in dairy products, or low cholesterol in packaged foods
they can be misleading if the percentages are based on too few observations. Also, cross tabulations can hide some relationships because each cross tab typically shows only two or three variables
What’re the Disadvantages of Cross Tabulations?
Analyze the Data
Schwan Food Company produces 3 million frozen pizzas a day under brand names that include Tony’s and Red Baron. Let’s see how Teré Carral, the marketing manager for the Tony’s brand, might address a market segment question in early 2013. We will use hypothetical data to protect Tony’s proprietary information.
Present the Findings
Findings should be clear and understandable from the way the data are presented. Managers are responsible for actions. Often it means delivering the results in clear pictures and, if possible, in a single page.
Annual Sales
This shows the annual growth
Evaluating the decision itself
This involves monitoring the marketplace to determine if action is necessary in the future.
Evaluating the decision process used
Was the marketing research and analysis used to develop the recommendations effective? Was it flawed? Could it be improved for similar situations in the future?
purchase decision process
(1) problem recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, and (5) postpurchase behavior.
Problem recognition
the initial step in the purchase decision, is perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision.2 This can be as simple as finding an empty milk carton in the refrigerator; noting, as a first-year college student, that your high school clothes are not in the style that other students are wearing; or realizing that your notebook computer may not be working properly.
internal search
First, you may scan your memory for previous experiences with products or brands.
external search
This is needed when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and the cost of gathering information is low.
(1) personal sources, such as relatives and friends whom the consumer trusts; (2) public sources, including various product-rating organizations such as Consumer Reports, government agencies, and TV “consumer programs”; and (3) marketer-dominated sources, such as information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores.
primary sources of external information
personal sources
relatives and friends whom the consumer trusts
public sources
including various product-rating organizations such as Consumer Reports, government agencies, and TV “consumer programs”
marketer-dominated sources
such as information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores.
(1) suggesting criteria to use for the purchase, (2) yielding brand names that might meet the criteria, and (3) developing consumer value perceptions.
Alternative Evaluation: Assessing Value
evaluative criteria
which represent both the objective attributes of a brand (such as display) and the subjective ones (such as prestige) you use to compare different products and brands.6 Firms try to identify and capitalize on both types of criteria to create the best value for the money paid by you and other consumers. These criteria are often displayed in advertisements.
consideration set
the group of brands a consumer would consider acceptable from among all the brands in the product class of which he or she is aware.
Having examined the alternatives in the consideration set, you are almost ready to make a purchase decision. Two choices remain: (1) from whom to buy and (2) when to buy. For a product like a smartphone, the information search process probably involved visiting retail stores, seeing different brands advertised on television and newspapers, and viewing a smartphone on a seller’s website.
Purchase Decision: Buying Value
After buying a product, the consumer compares it with his or her expectations and is either satisfied or dissatisfied. If the consumer is dissatisfied, marketers must determine whether the product was deficient or consumer expectations were too high. Product deficiency may require a design change. If expectations are too high, a company’s advertising or the salesperson may have oversold the product’s features and benefits.
Postpurchase Behavior: Realizing Value
cognitive dissonance
The feeling of postpurchase psychological tension or anxiety consumers may experience when faced with two or more highly attractive alternatives.
involvement
The personal, social, and economic significance of the purchase to the consumer.
The item to be purchased (1) is expensive, (2) can have serious personal consequences, or (3) could reflect on one’s social image.
High-involvement purchase occasions typically have at least one of three characteristics:
Extended Problem Solving
each of the five stages of the consumer purchase decision process is used and considerable time and effort are devoted to the search for external information and the identification and evaluation of alternatives. Several brands are in the consideration set, and these are evaluated on many attributes.
Limited Problem Solving
consumers typically seek some information or rely on a friend to help them evaluate alternatives. Several brands might be evaluated using a moderate number of attributes. Limited problem solving is appropriate for purchase situations that do not merit a great deal of time or effort, such as choosing a toaster or a restaurant for lunch.
Routine Problem Solving
For products such as table salt and milk, consumers recognize a problem, make a decision, and spend little effort seeking external information and evaluating alternatives. The purchase process for such items is virtually a habit and typifies low-involvement decision making.
typically the case for low-priced, frequently purchased products.
Consumer Involvement and Marketing Strategy
Low and high consumer involvement have important implications for marketing strategy.
(1) maintaining product quality, (2) avoiding stockout situations so that buyers don’t substitute a competing brand, and (3) repetitive advertising messages that reinforce a consumer’s knowledge or assure buyers they made the right choice.
company markets a low-involvement product and its brand is a market leader
have an impact on the purchase decision process:(1) the purchase task, (2) social surroundings, (3) physical surroundings, (4) temporal effects, and (5) antecedent states.
situational influences
Motivation
is the energizing force that stimulates behavior to satisfy a need.
Physiological needs
are basic to survival and must be satisfied first.
Safety needs
involve self-preservation as well as physical and financial well-being.
Social needs
are concerned with love and friendship
Personal needs
include the need for achievement, status, prestige, and self-respect.
Self-actualization
involve personal fulfillment
Personality
refers to a person’s consistent behaviors or responses to recurring situations.
self-concept
which is the way people see themselves and the way they believe others see them.
perception
the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world.
selective perception
Because the average consumer operates in a complex environment, the human brain attempts to organize and interpret information with a process a filtering of exposure, comprehension, and retention
Selective exposure
occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent with them.
Selective comprehension
involves interpreting information so that it is consistent with your attitudes and beliefs. A marketer’s failure to understand this can have disastrous results.For example, Toro introduced a small, lightweight snowblower called the Snow Pup. Even though the product worked, sales failed to meet expectations. Why? Toro later found out that consumers perceived the name to mean that Snow Pup was a toy or too light to do any serious snow removal. When the product was renamed Snow Master, sales increased sharply.18
Selective retention
that consumers do not remember all the information they see, read, or hear, even minutes after exposure to it. This affects the internal and external information search stage of the purchase decision process. This is why furniture and automobile retailers often give consumers product brochures to take home with them when they leave the showroom.
Subliminal perception
means that you see or hear messages without being aware of them. The presence and effect of subliminal perception on behavior is a hotly debated issue, with more popular appeal than scientific support.
Perceived Risk
The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences.
Learning
refers to those behaviors that result from (1) repeated experience and (2) reasoning.
Behavioral learning
is the process of developing automatic responses to a situation built up through repeated exposure to it.
A drive
s a need that moves an individual to action. Drives, such as hunger, might be represented by motives.
response
is the action taken by a consumer to satisfy the drive.
Reinforcement
is the reward
cue
is a stimulus or symbol perceived by consumers.
drive, cue, response, and reinforcement
What’re the 4 types of Variables
Stimulus generalization
occurs when a response elicited by one stimulus (cue) is generalized to another stimulus. Using the same brand name for different products is an application of this concept, such as Tylenol Cold & Flu and Tylenol P.M.
Stimulus discrimination
refers to a person’s ability to perceive differences in stimuli. Consumers’ tendency to perceive all light beers as being alike led to Budweiser Light commercials that distinguished between many types of “light beers” and Bud Light.
cognitive learning
Consumers also learn through thinking, reasoning, and mental problem solving without direct experience. involves making connections between two or more ideas or simply observing the outcomes of others’ behaviors and adjusting your own accordingly. Firms also influence this type of learning. Through repetition in advertising, messages such as “Feel Better, Tylenol 8-Hour” link a brand (Tylenol 8-Hour) and an idea (pain reliever) by showing someone using the brand and finding relief.
brand loyalty
which is a favorable attitude toward and consistent purchase of a single brand over time. Brand loyalty results from the positive reinforcement of previous actions. A consumer reduces risk and saves time by consistently purchasing the same brand of shampoo and has favorable results—healthy, shining hair. There is evidence of brand loyalty in many commonly purchased products in the United States and the global marketplace. However, the incidence of brand loyalty appears to be declining in North America, Western Europe, and Japan.
attitude
“learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way,are shaped by our values and beliefs, which are learned. Values vary by level of specificity.
Beliefs
A consumer’s subjective perception of how a product or brand performs on different attributes based on personal experience, advertising, and discussions with other people
1)Changing beliefs about the extent to which a brand has certain attributes.
2)Changing the perceived importance of attributes.
3)Adding new attributes to the product.
Attitude Change
lifestyle
A mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them.
psychographics
provides insights into consumer needs and wants. Lifestyle analysis has proven useful in segmenting and targeting consumers for new and existing products and services
VALS
(1) their primary motivation for buying and having certain products and services and (2) their resources.
Ideals-motivated groups
Consumers motivated by ideals are guided by knowledge and principles.(Thinkers and Believers)
Thinkers
are mature, reflective, and well-educated people who value order, knowledge, and responsibility.They are practical consumers and deliberate information-seekers who value durability and functionality in products over styling and newness.
Believers
with fewer resources, are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. They choose familiar products and brands, favor American-made products, and are generally brand loyal.
Achievement-motivated groups.
Consumers motivated by achievement look for products and services that demonstrate success to their peers or to a peer group they aspire to. Achievers Strivers
Achievers
have a busy, goal-directed lifestyle and a deep commitment to career and family. Image is important to them. They favor established, prestige products and services and are interested in time-saving devices given their hectic schedules.
Strivers
are trendy, fun-loving, and less self-confident than Achievers. They also have lower levels of education and household income. Money defines success for them. They favor stylish products and are as impulsive as their financial circumstances permit.
Self-expression-motivated groups
Consumers motivated by self-expression desire social or physical activity, variety, and risk.

Experiencers, Makers

Makers
with fewer resources, express themselves and experience the world by working on it—raising children or fixing a car. They are practical people who have constructive skills, value self-sufficiency, and are unimpressed by material possessions except those with a practical or functional purpose.
Experiencers
are young, enthusiastic, and impulsive consumers who become excited about new possibilities but are equally quick to cool. They savor the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Much of their income is spent on fashion items, entertainment, and socializing and particularly on looking good and having the latest things.
High- and low-resource groups
Innovators, Survivors
Innovators
are successful, sophisticated, take-charge people with high self-esteem and abundant resources of all kinds.Image is important to them, not as evidence of power or status, but as an expression of cultivated tastes, independence, and character. They are receptive to new ideas and technologies. Their lives are characterized by variety.
Survivors
with the least resources of any segment, focus on meeting basic needs (safety and security) rather than fulfilling desires. They represent a modest market for most products and services and are loyal to favorite brands, especially if they can be purchased at a discount.
Personal Influence
A consumer’s purchases are often influenced by the views, opinions, or behaviors of others. Two aspects of personal influence are very important to marketing: opinion leadership and word-of-mouth activity.
Opinion leaders
Individuals who exert direct or indirect social influence over others

are considered to be knowledgeable about or users of particular products and services, so their opinions influence others’ choices.25 Opinion leadership is widespread in the purchase of cars and trucks, entertainment, clothing and accessories, club membership, consumer electronics, vacation destinations, food, and financial investments. A study by Popular Mechanics magazine identified 18 million opinion leaders who influence the purchases of some 85 million consumers for do-it-yourself products.

word of mouth
The influencing of people during conversations

is the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy. About 75 percent of all consumer conversations about brands happen face-to-face, 15 percent happen over the phone, and 10 percent happen online.26 According to a recent study, 67 percent of U.S. consumer product sales are directly based on word-of-mouth activity among friends, family, and colleagues.

Reference groups
are people to whom an individual looks as a basis for self-appraisal or as a source of personal standards. Reference groups affect consumer purchases because they influence the information, attitudes, and aspiration levels that help set a consumer’s standards
brand community
a specialized group of consumers with a structured set of relationships involving a particular brand, fellow customers of that brand, and the product in use. A consumer who is a member of a brand community thinks about brand names (e.g., Harley-Davidson), the product category (e.g., motorcycles), other customers who use the brand (e.g., HOG members), and the marketer that makes and promotes the brand.
associative group
is one to which a person actually belongs, including fraternities and sororities and alumni associations. Such groups are easily identifiable and are targeted by firms selling insurance, insignia products, and charter vacations
aspiration group
is one that a person wishes to be a member of or wishes to be identified with, such as a professional society or sports team. Firms frequently rely on spokespeople or settings associated with their target market’s aspiration group in their advertising.
dissociative group
is one that a person wishes to maintain a distance from because of differences in values or behaviors. Firms often avoid dissociative reference groups in their marketing. For example, retailer Abercrombie & Fitch offered to pay cast members of the controversial TV reality show Jersey Shore to not wear its clothing. “We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans,” the retailer stated.
consumer socialization
The process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers
family life cycle
concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors
Social class
may be defined as the relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be grouped. A person’s occupation, source of income (not level of income), and education determine his or her social class. Generally speaking, three major social class categories exist—upper, middle, and lower—with subcategories within each. This structure has been observed in the United States, Great Britain, Western Europe, and Latin America
subcultures
Subgroups within the larger, or national, culture with unique values, ideas, and attitudes
Hispanic Buying Patterns
Hispanics represent the largest racial/ethnic subculture in the United States in terms of population and spending power. About 50 percent of Hispanics in the United States are immigrants, and the majority are under the age of 29. One-third of Hispanics are younger than 18.
Research on Hispanic buying practices has uncovered several consistent patterns:37
Hispanics are quality and brand conscious. They are willing to pay a premium price for premium quality and are often brand loyal
Hispanics prefer buying American-made products, especially those offered by firms that cater to Hispanic needs.
Hispanic buying preferences are strongly influenced by family and peers.
Hispanics consider advertising a credible product information source, and U.S. firms spend about $8 billion annually on advertising to Hispanics.
Convenience is not an important product attribute to Hispanic homemakers with respect to food preparation or consumption, nor is low caffeine in coffee and soft drinks, low fat in dairy products, or low cholesterol in packaged foods
NAICS
Provides common industry definitions for Canada, Mexico, and the United States, which makes it easier to measure economic activity in the three member countries of the
What does NAICS mean?
North American Industry Classification System
What kind of Coding is used for NAICS
Six-Digit
Industry Sub-sector
Publishing Industries
Motion-Pictures and Sound Recording Industries
Broadcasting Except Internet
The Three Digits
Industry Group
Radio and Television Broadcasting
Cable and other subscription programming
Four Digits Represent
Industry
Radio Broadcasting
TV Broadcasting
Five Digit
U.S. National Industry
Radio Network
Radio Station
Six Digit
Segmentation
involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
Segmentation the Market
Geographic
Demographic
Psychographics
Behavioral
Segmenting by Geography
which is based on where prospective customers live or work region, city size, Statistical Area, Media-Television, Density
demographic segmentation
Based on a population’s statistical characteristics such as sex, age, ethnicity, education, birth era, occupation, income, or other quantifiable factors
Psychographic segmentation
Dividing a market into different segments based on social class, lifestyle, or personality characteristics
Behavioral segmentation: Product features
Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product
Behavioral segmentation: Usage rate
is the quantity consumed or patronage—store visits—during a specific period. It varies significantly among different customer groups. Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers.
Geographic segmentation: Statistical area
Firms located in a metropolitan statistical area might receive a personal sales call, whereas those in a micropolitan statistical area might be contacted by telephone.
Demographic segmentation: NAICS code
Firms categorized by the North American Industry Classification System code as manufacturers that deal with customers throughout the world might have different document printing needs than retailers or lawyers serving local customers.
Demographic segmentation: Number of employees
The size of the firm is related to the volume of digital documents produced, so firms with varying numbers of employees might be specific target markets for different Xerox MFPs.
Lower lowers
often out of work and some depend on public assistance, tend to live day-to-day existence 7 Per Cent
upper lowers
the working poor – although their living standard is just above poverty, they strive toward a higher class; they often lack education and are poorly baid for unskilled work 9 Per Cent
working class
38%. Who lead a “working-class lifestyle.” Depend heavily on relatives for economic and emotional support, advice on purchases and assistance in times of trouble.
middle class
A social class made up of skilled workers, professionals, business people, and wealthy farmers. 32 Per Cent
upper middle
is a social class that consists of high-income members of society who are well educated but do not belong to the elite membership of the super wealthy. 12 Per Cent
lower uppers
Those who have earned high income or wealth through exceptional ability, active in social and civic affairs (2%)
upper uppers
the social elite who live on inherited wealth; they give large sums to charity, own more than one home, and send their children to the finest schools 1 Per Cent
User status
is segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product.
Usage rate
the rate at which a product’s inventory is used or sold during a specific time.
Loyalty status
A form of segmentation where customers can show their allegiance to brands stores or companies.
Usage occasions
an indicator used in behavioral market segmentation based on when consumers use a product most
Geographic
Global region/country
Statistical area
Density
Demographic
NAICS code & sector
# of employees
Annual Sales
Behavioral
# of locations
Kind of product/service
Who buys it?
Type of buy – new buy, modified rebuy, straight rebuy
Undifferentiated Marketing
When a company treats the market as a whole, focusing on what is common to the needs of customers rather than on what is different.
Differentiated Marketing
a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each
Concentrated Marketing
A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches
Micromarketing
Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing.
Convenience products
are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.
Shopping products
are items for which the consumer compares several alternatives on criteria such as price, quality, or style.
Specialty products
are items that the consumer makes a special effort to search out and buy.
Unsought products
are items that the consumer does not know about or knows about but does not initially want.
product line
is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. Nike’s product lines include shoes and clothing, whereas the Mayo Clinic’s service lines consist of inpatient hospital care and outpatient physician services. Each product line has its own marketing strategy.
product mix
which consists of all of the product lines offered by an organization. For example, Cray Inc. has a small product mix of three product lines (supercomputers, storage systems, and a “data appliance”) that are sold mostly to governments and large businesses. Procter & Gamble, however, has a large product mix that includes product lines such as beauty and grooming (Crest toothpaste and Gillette razors) and household care (Downy fabric softener, Tide detergent, and Pampers diapers).
Intangibility
Services are intangible; that is, they can’t be held, touched, or seen before the purchase decision. In contrast, before purchasing a traditional product, a consumer can touch a box of laundry detergent, kick the tire of an automobile, or sample a new breakfast cereal. Because services tend to be a performance rather than an object, they are much more difficult for consumers to evaluate. To help consumers assess and compare services, marketers try to make them tangible or show the benefits of using the service.

The American Airlines ad shows the airline’s new seats and emphasizes their size and other tangible benefits. American Express also provides tangible benefits by allowing cardmembers to earn points for redemption of airline tickets, electronics, and gift cards through its Membership Rewards program.

Inconsistency
Developing, pricing, promoting, and delivering services is challenging because the quality of a service is often inconsistent. Because services depend on the people who provide them, their quality varies with each person’s capabilities and day-to-day job performance. In contrast, the Philadelphia Phillies baseball team may have great hitting and pitching and look like a pennant winner one day—and the next day they may lose by 10 runs.
Inseparability
A third difference between services and products, and related to problems of consistency, is inseparability. In most cases, the consumer cannot (and does not) separate the deliverer of the service from the service itself. For example, Allstate’s reminder that “You’re in good hands” emphasizes the importance of its agents.
Inventory
services is different from that of products. Inventory problems exist with products because many items are perishable and because there are costs associated with handling inventory. With services, inventory carrying costs are more subjective and are related to idle production capacity, which is when the service provider is available but there is no demand for the service.
demand curve
is a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price.
demand factors
factors that determine consumers’ willingness and ability to pay for products and services.
price elasticity of demand
the percentage change in quantity demanded relative to a percentage change in price.
Elastic demand
exists when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded, thereby actually increasing total revenue. This results in a price elasticity that is greater than 1 with elastic demand.
inelastic demand
exists when a 1 percent decrease in price produces less than a 1 percent increase in quantity demanded, thereby actually decreasing total revenue.
demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches
Demand based pricing strategies
skimming pricing
setting the highest initial price that customers who really desire the product are willing to pay. These customers are not very price sensitive because they weigh the new product’s price, quality, and ability to satisfy their needs against the same characteristics of substitutes.
penetration pricing
Setting a low initial price on a new product to appeal immediately to the mass market
prestige pricing
Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.
price lining
selling not just a single product but a line of products may price them at a number of different specific pricing points
odd-even pricing
which involves setting prices a few dollars or cents under an even number.
target pricing
(1) estimating the price that ultimate consumers would be willing to pay for a product, (2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and then (3) deliberately adjusting the composition and features of the product to achieve the target price to consumers.
bundle pricing
the marketing of two or more products in a single package price. For example, Delta Air Lines offers vacation packages that include airfare, car rental, and lodging. Bundle pricing is based on the idea that consumers value the package more than the individual items.
yield management pricing
the charging of different prices to maximize revenue for a set amount of capacity at any given time.
Vertical marketing systems
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
corporate vertical marketing system
combination of successive stages of production and distribution under a single ownership
Contractual Systems
independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. most popular among the three types of vertical marketing systems.
Administered Systems
achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.
Horizontal conflict
occurs between intermediaries at the same level in a marketing channel, such as between two or more retailers (Target and Kmart) or two or more wholesalers that handle the same manufacturer’s brands. Two sources of horizontal conflict are common.
Conventional Marketing System
a multiple-level distribution channel in which channel members work independently of one another
depth of product line
The store carries a large assortment of each product item
Depth of Line
Stores that carry a considerable assortment (depth) of a related line of items are limited-line stores. Sports Authority sporting goods stores carry considerable depth in sports equipment ranging from weight-lifting accessories to running shoes. Stores that carry tremendous depth in one primary line of merchandise are single-line stores. Victoria’s Secret, a nationwide chain, carries great depth in women’s lingerie. Both limited- and single-line stores are often referred to as specialty outlets.
Breadth of Line
Stores that carry a broad product line, with limited depth, are referred to as general merchandise stores. For example, large department stores such as Dillard’s, Macy’s, and Neiman Marcus carry a wide range of different types of products but not unusual sizes. The breadth and depth of merchandise lines are important decisions for a retailer.
scrambled merchandising
Offering several unrelated product lines in a single store.
hypermarket
A form of scrambled merchandising, which consists of a large store (more than 200,000 square feet) that offers everything in a single outlet, eliminating the need for consumers to shop at more than one location.
Breadth of product line
refers to the variety of different items a store carries, such as appliances and books.