Exam 2 Marketing Notes

Styling, Speed, Safety, Experience
Difference between men and women (consumer behavior)
Consumer Behavior
The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions
A representation of a Real Life System
E=MC^2 or Diagram or Map are examples of a:
Black Box Model
To explain peoples behavior:
Black box- individual (you) (named bc we can’t see in it)
Stimulus- IN to the black box
Response- OUT of the black box
Inference- based on response (we infer what took place)

Example: Hitting students in class (different responses and stimuli)

Example: Highway -BigMac (same stimuli, different responses)

Individuals like you and I who consume the goods
Consumer Decision Making Model
Behind the visible act of making a purchase lies an important decision process and consumer experience that must be investigated
Purchase Decision Process
The stages a buyer passes through in making choices about which product and services to buy

Five stages: Problem recognition, Information search, Alternative evaluation, Purchase Decision, Post purchase behavior

Problem Recognition
Perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision (perceiving a need)

Example: going to fridge, no milk, trigger action when you go to store next time, purchase milk

Marketing: *Felt need and what brought need up. Need to fulfill need more efficiently than other guy. (example: needed hole in wall for painting)

Example: Charles Redson (founder of Redlong) “Now don’t get mad at me young ladies. In the factory we make cosmetics and in the drug store we sell hope.” You don’t want cosmetics. You want what they do for you

Information Search
After recognizing a problem, a consumer begins to search for information (internal or external)
A person sees a Cadillac, one person sees a Cadillac as a mark of achievement, another see it as ostentatious right?

Process where an individual selects, organizes, and interprets information to create a meaningful picture of the world

Sense: Select – Organize
Example: 3000-5000 messages a day
Example: Murder (jury)
Marketers want you to select their messgae

Selective Perception
Filtering of exposure, comprehension, and retention

Example: You notice things when you need it
Example: 19 year old seeks info about her bf from other 19 year old gf
Example: Enroll from next semester, seek info about classes and instructors (Jackson)

Ethics of subliminal messages, Subliminal (below-limit)
Subliminal perception you see or hear messages without being aware of them. Below limit of your capacity.

Movie theater example: Screen flashes “Eat popcorn, drink coke”

Evaluation of Alternatives
1)Problem (hunger)

2)Where to eat?
Awareness (you know where you can go to eat)

3) Unawareness
Inert Set (you know but you can’t go there)
Unacceptable Set (you refuse to go there)
Evoked Set (considered)

Example: To wife: McDonalds? No. Wendy’s? No

Evaluative Criteria
These factors represent both the objective attributes of a brand, such as display and the objective attributes of a brand (such as display) and the subjective ones (such as prestige) you can compare different products and brands.

How do student choose which university to go to? One criteria may be more important than other

Example: Early 1980s a lot of banks went under. banks under in Norman were taken over by banks in OKC, Fidelity Banks, new signs put up. Number one question: “Ru still gonna give away the popcorn?” They assumed their money was safe.

Example: Young couple with two small children. 3 different cars to choose from but the criteria that is most important would not be considered. They assume all cars are equally safe.

Perceived Risk
1) The amount at stake.

Example: Is it risker to purchase a new car or a new candy bar? How much is at stake? There’s more at stake so its riskier.

Social Risk: New brand but my friends might not like it Not young enough to wear it.

2) Uncertainty or certainty that you will do well

Example: Buy an iPhone. Those who know what it does you have more certainty. Those who don’t know have uncertainty.

Marketing: Lower the risk. Reduce the amount at stake.

Product Choice
1) Customer Satisfaction:

Satisfied customers build long term relationships.

2) Latent Opportunities

Latent means hidden.
Founded by studying post purchase behavior (how they use the product)

Example: when is orange juice consumed

Example: Cigarettes
Cigarette company said if cigarette is geared towards women then maybe it will be more successful (Marlboro) started as a cigarette geared towards women.

Consumer Involvement
How involved the decision is

1) Extended problems solving
2)Limited problem solving
3) Routine problem solving

Consumer Behavior Models
1) Economic Model
2) Learning Model
3) Psychoanalytic Model
4) Social-psycological Model
Economic Model
Economic tries to explain consumption (social science not business)

Are 2 professors from different colleges of a university paid the same? No bc supply and demand. (purdue example).

1) Man(kind) is a rational animal: you make decisions rationally
Example: Full-time student can eat in ($4) or out ($8).
Mon – Thurs eat in but Friday eat out. (It is now worth twice as much to eat out then eat in, but it wasn’t worth it before)

2) True by definition: Being rational.

3) Always operate: Rationality is always there.
Example: Guy developed camera (Polaroid). Fantastic but not expensive 39.95, not many sold. So put leather on it at 139.95, sold many.

Learning Model
Consumers learn which information sources to consult for information about products and services, which evaluate criteria to use when assessing alternatives, and more generally how to make purchase decisions.

Learning refers to those behaviors that result from (1) repeated experience and (2) reasoning.

Behavioral learning is the p

1) Classical Conditioning:
Example: Ivan Pavlov (dogs-ring bell-feed dog),

2) Stimulus generalization: Response by one stimulus is generalized to another stimulus. Using same brand name for different products.
Examples: Some dogs responded to sounds that sounded like the bell
Example: Proctor Gamble

3) Stimulus discrimination: Ability to perceive differences in stimuli.
Example: Some dogs only responded to that one particular bell

4) Cognitive learning: Consumers also learn through thinking, reasoning, and mental problem solving
Example: A cat that jumps on a hot stove will never jump on a stove again (hot or cold),

Psychoanalytic Model
1) Subconscious
Based upon freudian psychology, idea that we purchase things not only for conscious reasons but for subconscious reasons.

2) Image
Buy things for functionality (usefulness) and symbolism.

Example: Neighbors nice car who lived similar lifestyle compared to Manzer’s rusty one. Functionality of car was same.

3) Personality

Social-Pyschological Model
Study of individuals in groups and influence they have on consumption
Psychology: Study of individuals
Social: Study of groups

1) Culture
2) Subculture
3) Social Class
4) Reference Groups
5) Family

Set of values, ideas, and attitudes that are learned and shared among members of a group. As it changes, it affects the way we do things.

Example: Saving society to spending society.
(US is one of the least saving society)

Example: Hard life to an easy life.
(Y generation doesn’t want to do hard labor)

Example: Parent centered home to a child centered home.
(Children have more influence on behavior, how we consume) (Ball games, fast-food)

Example: Religion dominated society to secular dominated society. (Story: Asked mother what she did for entertainment when she was young? Community dance, church)

Example: Self-reliant society to government reliant society. (more safety nets for debts, etc)

Subgroups within the larger, or national, culture with unique values, ideas, and attributes. (not only ethnic or racial)

Religious: children
Ethnic: Buying patterns

Social Class
Relatively permanent homogeneous divisions in a society of people who share similar values, interests, and behavior can be grouped.

Not a caste system. Based on values and attitudes. Can be changed through education, marriage. Not income level

Example: “A rich man is not just a poor man with money” if you give a poor man a money, he doesn’t change his values

Story: 6 or 7 families in Texas put money in lottery and won, tracked for two years, majority went back to living how they did.

Middle class: First thing they purchase when they have money, car. West Texas? Church.

Consumption: Affects shopping patterns (feeling uncomfortable in a place)

Story: NYC, Cartier jewelry.

Psychological differences. Lower and upper classes to describe an ideal man.

Working class: Most important room is the kitchen
Upper classes: Most important room is where you entertain

Reference Groups
Most important group. More studies done on this.

People whom an individual looks as a basis for self-appraisal or as a source of personal standards.

Affect consumer purchases bc they influence the info, attitudes, and aspiration levels that help set a consumer’s standards.

First question when attending social event: “What are you going to wear?”

Influence purchase of luxury products but not necessities. Strong influence on brand chosen when use and consumption is highly visible to others.

Story: David Reisman (book: The Lonely Crowd) take societies and put in 3 groups.
1) Tradition- Directed: source of reference for us, low physical and social mobility

Jones and lawful steel man (whole family worked there) Furin ru from around here? (whole family lived on same street except one brother who moved away to one street over)

2) Inner-Directed: Taught by your parents, society.

3) Other-Directed: Not by tradition or inner. Very high physical and social mobility.

Example: Every family member lives in different state and have different occupations. People at work, gym, social.

These personality characteristics are often revealed in a person’s self concept, which is the way people see themselves and the way they believe others see them.

Idea of self-concept and ideal self-concept. Actual self refers to how people see themselves. Ideal self describes how people would like to see themselves. These 2 self images are reflected in products and brands a person buys, including cars, etc.

You behave how they see you. “birds of feather flock together”.

Symbol (product, brand, store)

Story: Hideaway pizza

Products/ brands: influence on purchase decision and brands

Influence only on brand: Clothing.

Influence only on product: Air Conditioning. Would want but not a particular brand. (not on reff group) (necessity)

None/ Neither: Canned Peaches? (not on reff group) (necessity)

3) Images of products/ brands: Coke, Pepsi, Lexus. Once image is set, Its difficult to change (reputation.

Example: Tea sold in US have problems. More sales in summer than winter bc we drink more iced tea. Increase sales in colder weather (sell hot tea) sales didn’t increase. Who drinks hot tea? Old, Female, Rich, Elitist, Sick. Sales didn’t change when promoted differently.

Example: Killer nickname. Lady killer bc couldn’t get a lady. Dean of pharmacy school at OU. Difficult to change Killer.

Example: Save gasoline. Change thug image. Motorcycles. Honda. Tag line “You meet the nicest people on a Honda” true for all except Harley Davidson (product differentiation)

1) Importance: Influences us. What you eat, what you buy.

2) Changing Roles

If a person is in all categories they will still behave differently. Brother or sister?

Organizational Buying
Purchasing paper for JCPMedia
Business Marketing
Is the marketing of goods and services to companies, govs, or not-for-proft organizations for use in the creation of goods and services that they can produce and market to others. (deff)

“Bc over half of all U.S. business school graduates take jobs in firms that engage in business marketing”

Understanding organizational markets and buying behavior is a necessary prerequisite for effective business marketing.

Organization Markets
1) Industrial markets: (800 million) reprocess a product or service they buy before selling again to another buyer

2) Reseller markets: (400 thousands and 1.5 million) wholesalers or retailers who buy and resale without reprocessing

3) Government markets: (900 thousand) gov units fed, state, and local buy goods for constituents they serve

Organizational Characteristics
Distinguish organization from consumer.

“Who bought it?”
“Why did they buy it?”

Organizational Demand
Consumer demand for products and services is affected by their price and availability and by consumers’ personal tastes and discretionary income. By comparison, industrial demand is derived.

1) Derived demand: Demand for industrial products and services is driven by, or derived from, demand for consumer products and services.

Story: Deriving (where it came from) a formula (math class)

Story: Latex, Need to increase sales, You go to your family. – Go to close friend and ask for help? he says no but he preorders it. (Dennis – tip wasn’t big enough. marked off tip and gave it back.)

2) Inelastic demand: Raise the price wont affect how much is taken.

3) Fluctuating demand: Gigantic order comes in… demand fluctuates and the no gigantic order for a while

Organizational Market Characteristics
1) Number of customers:

2) Size of purchases: The size of the purchase involved in organization buying is typically much larger than that in consumer buying.
Example: Tires

3) Potential Buyers: Firms selling consumer products or services often try to reach thousands or millions of individuals or households

4) Supplier-buyer relationship: They buy things from you and you buy things from them
Example: Bill-Manzer relationship, DOW

5) Supplier-buyer relationship
Example: Steel Industry concentrated- Pittsburg, Carpet Industry-Dalton, Georgia, Silicone valley: northern California,
Example: 50% manufacturing in these 7 states (Rust Belt states: California, Michigan, New York, Pennsylvania, Illinois, Ohio, New Jersey)
Example: Bill Bradley #1 bball recruit: At a banquet: got butter from a guy and asked for more butter and was refused. You know who I am? Tells him. Thats impressive but you know who I am? Guy who gives out the pat of butter.

6) Professional buying: You buy for a living
Example: boeing, buy hand tools for boeing across united states

7) Direct buying

8) Purchasing expertise

Buying Center
For routine purchases with a small dollar value, a single buyer or purchasing manager often makes the purchase decision alone. Individuals in this group (buying center) share common goals, risks, and knowledge important to a purchase decision.

The group of people in an org who participate in a purchasing decision

Buying center roles
1) User: Actually use product (Bill Schaffer)

2) Gatekeeper: Controls flow of information (Kept ppl from getting into building)
Example: Small child loves Santa. Can’t get Ralph to parade but you won’t tell him about santa being around.

3) Influencer: Affect buying decision (research and development)

4) Decider: One that’s going to decide **Hardest to find

5) Buyer: Cuts the check (purchasing agent)

Story: Marketing Book
User: Instructors
Gatekeeper: Administrative Assistant
Buyer: Bookstores
Influencer: Steve Millers
Decider:Department Head, 8 Instructors, Committee?? In this case, Manzer.

Nature of Business Buying
1) Straight Rebuy (look up deffs)
2) Modified Rebuy
3) New task buy
Organizational Buying Process
1) Problem recognition
2) Information search
3) Alternative evaluation
4) Purchase decision
5) Post purchase behavior

Same process but steps vary.

Online Buying
Organizational markets. Prominent for three reasons.
1) Org buyers depend heavily on timely supplier info that describes availability, tech specs, applications uses, process, and delivery schedule.Info conveyed quickly via internet

2) Tech shown to substantially reduce buyer order processing costs

3) Business markets have found the internet technology can reduce marketing costs

Dynamics of World Trade
The dollar value of world trade has more than doubled in the past decade and will exceed $25 trillion in 2015. Manufactured goods and commodities account for 75% of world trade.
1) Scope: Gigantic

2) Balance of Trade : Difference between the monetary values of a nation’s exports and imports. When a country’s exports exceed its imports, it incurs a surplus in its balance of trade

US Largest Trading Partners: Canada, Mexico, China, Japan (in order) 2/3 of all exports.

Largest Exporters to US: China, Canada, Mexico, Japan (in order) Buying

Global Environmental Scan
1) Cultural Diversity
2) Economic Consideration
3) Political – regulatory climate
Cultural Diversity
1) Values: Personally or socially preferable modes
Example: Mcdonalds, No beef in India

2) Customs: What is considered normal and expected about the way ppl do things in a specific country
Example: 3M company

3) Cultural Symbols: Ideas or things that are represented
Example: Japan

4) Language: Native tongue of marketed products
Example: Advertising company

5) Cultural Ethnocentricity: Cultures believe they are superior to other cultures
Example: French Culture

Economic Consideration
1) Stage of economic development

2) Economic infrastructure (may change)
Example: Soviet Union, Blackhawk down
Example: Bob Patterson went to work at Hallmark. Got a mentor. Moved to Hong Kong for 12-15 years. 1st person in far east who went into People’s Purchase of China. (Major car sold in china? Buick) – Told story: establish relationship with manufacturers. Negotiating price in Taiwan. “I will make these for you and sell them for 0.12 cents each” we will pay “0.15 cents each” Buyer negotiating price up. He knew company was on the verge of collapsing so company would still survive. (Supplier Development)
3) Consumer income and purchasing power

Microfinance: Efforts to raise household incomes in developing countries is evident in the popularity. Offering small, collateral-free loans to individuals who otherwise would not have access to the capital necessary to begin small businesses or other income generating activities.
Example: Company could not sell Lever products to poor
4) Currency exchange rates

Political- Regulatory Climate
1) Political Stability

2) Trade Regulation

Global Market Entry Strategies
1) Exporting: producing in one country but selling elsewhere. Least # of changes.

2) Licensing: Company offers trademark, patent in turn for royalty.
Example: Yoplait

3) Joint ventures: When foreign and local merge. Share ownership and profits

4) Direct investment: Biggest commitment. Entails domestic firm owning foreign subsidy or division.
Examples: Nissans Symerta TN plant

more Profit Potential going down and more Risk going down

Three Areas of Information Need
1) Customers
2) Own Activities (four P’s): What your companies capable of doing
3) External Environment:
Why is Information Need so Great?
Changing Complexity examples:

1) National markets to International Markets

2) Buyer Needs to Buyer Wants

3) Price Competition to Non-price Competition

Marketing Information System (MIS)
Arrangements to tap the flow of information that influences marketing management
MIS Components
1) Data-based system: (Internal or External)
(Too much data) Data Mining: The extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions.

Example (data mining): Since many consumers buy peanut butter and grape jelly together, why not run a joint promotion? Diapers and Beer and Potato Chips?

Example (data mining): Who they would hold a flight for

2) Marketing Intelligence: (Intel) Gathering Information,

Examples: CIA Central Intelligence Agency, KGB, MI6

Sales people: (Intelligence agents) Sell their wares and gather their information (customers, competition, etc.) but majority are not good at bring back info. Why?

Story: Tough exam next friday, No questions from Chapter 5 so how many will study? None bc no immediate reward.

Story: Bud Viscor, Lee how you doing? how you like your job? They say you’ve been working like you’ve been here for 4 years not 4 months

Story: 10 people – 7 people never brought one thing back – 2 brought it back late and distorted – 1 brought back timely fashion but not 100% accurate.

Example (mystery shoppers), Observational Data, Jennifer paid to be one.

Story: Manzer, Hastings (movie), bad service, changed behavior when she knew who he was.

Example (rewarding): Rewarding A while expecting B. Professors research, teach, service component. Publish? Raise, Recognition, etc. Teaching? little reward. Rewarded to publish but expected to teach.

Example: Advising (service) Researcher get cash reward for 5,000. best teacher? 1,000. Adviser? A pen

3) Marketing research:

Marketing Research
The Process of defining a marketing problem and opportunity, systematically collecting, analyzing information, and recommending actions
Research Objective
1) Exploratory research: Provides idea of a relativity big problem (vague)

2) Descriptive Research: Trying to find frequency of something occurs

Example: general mills, wheaties

3) Casual Research: Most sophisticated, tries to determine extent of how one factor changes another

Example: changing design of how much child plays with toy

Example: Starbucks vs. Dunkin Donuts: DD paid dozens of faithful customers $100/ week to buy coffee at Starbucks instead. Starbucks did the same. When debriefed? Dd viewed Starbucks as pretentious and trendy . Starbucks viewed DD as plain and original. Loyal customers didn’t like either for environment. Different tribes.

Marketing Research Process
1) Define the problem: Eskimo Joes owners thinking about opening new restaurant in Lawrence, KS
2) Develop the research plan: How are we going to do this?
3) Collect relevant information:
4) Develop findings
5) Take marketing action
Data Collection
fig 8-2 shows how diff types of mark info fit together, data, facts, figs divided into two parts:

A. Secondary Data: facts and figures that have already been recorded prior to the project

1. Sources
– Internal:Inside the firm (Sales, Budgets, Expenses, etc)
-External: Outside the firm (U.S. census, reports, trade association studies, etc.)

2. Critical Evaluation
-Impartially: They are not impartial, they are bias.

Story: Assigned term paper, How long? 12 pages. Topic? Relevant to course. Due? April 15th. Paper over Paper Mill. Turns it in 2 weeks early. 19 pages. 38 citations. Citations all from same Magazine. Grade: C. Every citation from same source.

-Validity: True. Valid.

-Reliability: Can be reproduced

-Homogeneity: (Alike-Differ)

Story: DOW Chemical company,
Lee: Chem/finance degree, $700/ month
Now: Gen Business degree 2800/month (4×700)

Not worth more bc homogeneity. 700 then is not the same as 2800 now.

Data Collection
B. Primary Data: Facts and figures that are newly collected for the project.

1. Observation: Observing people and asking them questions. Mechanically or in person.

Example: Streets in Stillwater. Hall of Fame was made.

Example: Location of stores for drop-in traffic. Mall has drop in traffic.

2. Panel: Hire people and discuss panels (like focus groups)

3. Experimentation: Run an experiment when interested in one variable and hold another constant

Example: Experimental design class. Field trip. Greenhouse experiment on plants. Trying to measure effect light upon the plants. 3 tables of Mums. Table 1: NL UV Light, Table 2 NL, Table 3 UV Light

4. Focus groups: To help change marketing action

Examples: Ppl at banks asked about service focused on an aspect and potential.

Story: Student: What made a good instructor? Lee was asked to be moderator. 2-way mirror. 3 groups of 8 students. 1st group: Overachievers, 2nd group: Average, 3rd group: Struggling. Asked questions. What happened outside the classroom was just as important as what happened in.

5. Social Media: Great way to gather info and market. How ppl respond.

6. Survey:

Data Collection
C. Survey
1. Snail Mail: Postal Service
not expensive, slow, rigid

2. Telephone:

3. Internet:

4. Personal Interview:

5. Social Media:

6. Sources of Error:
-Sampling: Don’t survey whole population. Must be representative of whole population.
-Nonresponse: They don’t respond.
-Response: Respond incorrectly. Maybe survey is bias.
– Developed Finding: “Collecting data is like collecting garbage, You’ve got to know what you’re going to do with the stuff before you collect it?” – Mark Twain
– Present the Findings: Findings should be clear and understandable.

Secondary Data
What data do you collect first?
Sales Forecasting
Total sales of a product that a firm expects to sell during a specified time period under specified environment conditions and its own marketing efforts
Example: After exam: How did you do?
Forecast: 80, 80 Actual: 90, 65
Forecasting sales: 1,000,000., 100,000,000
Actual: 600,000., 1,500,000 (could have sold)

1) Accuracy: Must be accurate.
2) Used for multiple decisions

General Forecasting Methods
1) What people say
-Survey of buyer intentions: Buying intention does not equal buying.

example: Advantage of buyer not to tell how much they will buy. Nickolete (absestos) needed new supplier (DOW) for latex. Thought 600,000 Needed 200,000. Wouldn’t have done it. Tony Boyle.

-Sales force composite:
Example: previous sorority/ frat pics

-Expert Opinion: within or outside make economic analysis or expert opinion

2) What people have done (may occur in the future)
-Classical time series: Pattern of some sort.
– Statistical demand analysis: Figure out relationship between two variables
Example: Manzer: I can make you go to sleep with one word (STAT) bc boring.
Example: Y=f(x) Y is a function of x. As X does something then Y does something.

3) What people do (new products)
-Test Market
Example: microwaves at first were not popular. Take product put out in new market in selective cities to see what happens on sales.

Market segmentation
“Is a gigantic big deal” – Lee Manzer

90 hours above bachelors
60 hours above master

Dissertation is most of the hours: 39+42

Qualifying exams (over everything you’ve ever learned in area) needed for Phd: 2 days in marketing only 8 questions 7 or 8 hours/ day of typing. Questions from faculty
Question Manzer submitted: You’ve taught the principles of Marketing course, What are the principles of Marketing? Defend your answer. Needed “Market Segmentation”

Market: People could potentially buy your product and have the willingness to do it, having satisfies needs

Take market and segment it (divide the market)

Graph of Price and Quanity
Demand curve: Relationship between the Price and the Quantity that the amount of purchase (is an aggregate curve)
Aggregate Curve: Everyone is purchasing the product is represented in the curve
Demand Curves
There are different types of these curves

Bended Curve: Lower the price then you really sell more (bargain seekers)

Back word Bending curve: Lower price, sell more, but when you really lower then you sell less (prestige quality)

Straight Line: Price has no affect on demand (Necessity)

Diagonal Line(aggregate curve): Everyone buying product is into the curve

Marketing Strategy
1) Target Market: People you wish to serve (bargain, prestige, etc seekers)

2) Develop a marketing mix to satisfy chose target
A price, product, placement, promotion that is geared towards target market

The process of dividing a larger market into smaller pieces based on one or more meaningful shared characteristics

Aggregating prospective buyer into groups that have common needs and will respond similarly to a marketing action

Relatively homogenous groups of prospective buyers that result from the market segmentation process

Taking a heterogeneous market an dividing it into more homogeneous subsets (different divided into more alike sets)

Example: Classroom, 3 Aisles, No differnces in 3 groups so doesn’t relate

Example: Shared characteristic was bargain seekers or prestige seekers.

Meaningful Segments
1) Simplicity/ Cost: Simple and effective costs

2) Substantial (profit): To increase profits

3) Need evaluation: Similarity of needs

4) Marketing Action: Reach the segments

Ways to Segment Consumer Markets
1) Geographic Segmentation: Where consumers live or work

Variables: Region, City Size, Statistical Area, Media-Televison, Density

Example: Campbell soup not spicy enough in certain region

Example: Guy form NJ moved and talked about his “sneakers” called “tennis shoes” in south.
“old man shoes”

2) Demographic Segmentation: Physical, Measurable, Classification attribute of customers

Variables: Gender, Age, Race/ethnicity, Life stage, Birth era, Household Size, Marital Status, Income, Education, Occupation

**Most popular way to segment bc good correlation (in these variables and consumption patterns), measurable data, available data.

3) Psychographic Segmentation: subjective mental or emotional attributes, aspirations, or needs of consumers

Variables: Personality, Values, Lifestyle, Needs

4) Behavior Segmentation: Observable actions or attitudes by customers
Variables: Retail Store Type, Direct Marketing, Product Features, Usage rate, User status, Awareness/ intentions

Benefit Segmentation (Behavioral): Buy for benefits
Example: Toothpaste buyers (decay prevention[crest], taste[bubble gum], fresh breath[close up], white teeth[rerub])

Usage Rate: quantity consumer or patronage -store visits during a specific period
Example: Beer (drinkers are heavy, moderate, light, non)

Geographic Segmentation
It’s hard to sell “pop” to people who drink “soda.”
Segmentation Strategies
1) Undifferentiated
2) Concentrated
3) Differntiated
Undifferentiated Strategy
(firm) -> (marketing mix)-> market

market is not divided. create one marketing mix to make one market. satisfy people in the market.

1) where useful:

Example: You open a new restaurant in Stillwater. Reporter for Daily Newspaper calls you for new spread (publicity) You want everyone to come eat here (no one excluded) Problems “if you try to satisfy everybody there is a possibility you will satisfy nobody” works best where market is homogenous. End up trying to satisfy college students.

Hyper-competition in larger segments.
Under-satisfaction in smaller segments.

Example: Reality Shows, under-satisfaction in western shows

Examples: Cigs to everybody, automobiles, soft drinks (6 oz coke),

Example: In class where people are from? Small town 300 people. Grocery store? No. Convenient Store? Yes, one. This convenient store is using this strategy.

2) results:

Concentrated Strategy
Firm -> (marketing mix) -> one market segments
can’t satisfy with one, concentrate on a particular segment

Niche marketing: Choose one market

Niche markets:
Example: Dance school (social outlet)
Example: Whole foods (organic/natural)
Example: Southwest (Texas)

Story: Carpet mill for mobile homes (successful)

Differentiated Strategy
Firm -> 3 marketing mix -> 3 markets

Multiple marketing mixes for different segments

Example: Shoes

Most people that start off in concentrated and undifferentiated and are successful but still move to differentiated.

**Most Expensive

Which Strategy Do You Select?
1) Product Type: Some products you can’t differentiate

2) Market Type:

3) Competition: Do things that you don’t necessarily want to do.

Influence of competition on market segmentation strategy

Story: DOW (latex) also sold epoxy (adhesive glue) selling from on org to another. Shell chemical & DOW chemical company are biggest in epoxy. Divide in homogenous on usage (coating (shell focus), laminate(dow focus)), – Dow & Shell changed strategy from concentrated to differentiated so both moved back and protected their business “it’s easier to keep a customer then get a new customer”

Story: Guy has gf but see’s another girl he likes, and someone is moving in on old girl. What do majority do? go back to original.

Story: John V Mcnabb (millionaire) found niche market. 3 employees John, wife, guy who worked at plant. 1 truck of epoxy a month. Turf n Surf inn. Pennsylvania. (Industrial Sales)

Product Differentiation
The existence of different markets has caused firms to use a marketing strategy.

This strategy involves the firm using different marketing mix activities, such as product features and advertising, to help consumers perceive the products as being different and better than competing products.

The perceived differences may involve physical features, such as size or color, or non-physical ones, such as image or price.

Example: Volvo differentiates stress they are a safe automobile, Lexus-quality,

Example: Salt not differentiated, packaging, sea-salt

Example: Little purple stamp (sunkist orange), Camel (a blend of turkish tobacco)

How do products get their names?
Example: Image.

Ways to Segment Organizational Markets
Segment industrial markets 229 look at

1) Geographic: Area

2) Demographic: NAICS code

3) Demographic: Number of employees

4) Behavioral: Usage Rate

Positioning the Product
How prospective buyers view it:
1) Product Positioning: Place a product occupied in consumers’ minds on important attributes relative to competitive to competitive products

Once it’s fixed you can change it by:
2) Product Repositioning: Changing the place a product occupies in a consumer’s mind relative to competitive products

Example: car rentals, enterprise found niche and opened car rentals all over. named enterprise? guy was in navy and was a pilot on uss enterprise.

Example positioning: Chocolate milk “child” and “adult”

The remaining part of the course revolves around making decisions regarding regarding the four P’s: Product, Place, Promotion, and Price. Before we embark on this adventure, I wish to make a few comments about strategy and competition as it relates to the first part of the course and how it may relate to the later part.
Strategies for the Smaller Firm
(The key is differentiation)

1) Product: Differentiate
Example: laundry detergent, powder to liquid

2) Segmentation: Find niche

3) Distribution: how to get product out there
example: dell, avon

4) Promotion: Advertise smarter
Ex: Geiko, Geico

5) Legal: Sue large firms

Strategies for the Dominant Firm
1) Innovation: Research and development

2) Fortification: Fortify area they are in

3) Confrontation: Confront new competition

4) Persecution: Make situations difficult legally

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