Copy and paste the notes before beginning Chapter. Be sure to fill in the YELLOW blanks.

You
will need these to study for test.
Consumer

Person who uses the product

Customer

Person who buys the product

Gatekkeeper

Person who oversees care of another

Think of 3 Examples:
1. Babysitter
2.

CEO

3.

Parents

Consumer demand Is

constantly changing based on the economic shifts in a country, city or

region and on the availability of new products in the marketplace.

During poor economic

times the demand for
wants will:

Fall

Why? People are spending wisely, mostly on needs.

Glut

An oversupply of goods sometimes due to an over estimation of demand

As a product category
becomes popular

More retailers enter the market (tattoo parlors)

Gauging fluctuations in Essential to marketing.

consumer demands is

2.2
Product Life
Cycles

Describe the changes in consumer

demand over time.

Profitability

Stages of PLC

Target Market

Pricing Strategy

1.

Introduction

Innovators

Skim-High

Stars

2.

Growth stage

Early adopters

Penetrate-med high

Cash Cows

3.

Maturity Stage

Early Majority

Penetrate-med

Cash Cows

4.

Decline Stage

Late Majority

Lower

Dogs

5.

Decision Point Stage

Laggards

liquidate

Identify at least 1 product for each of the 5 stages of the PLC: Examples:

Think of one
example for each
stage

Consignment

1.
2.
3.
4.
5.

Iggy Azalea
bruno marz
smartphones
digital cameras
traditional film cameras

1.
2.
3.
4.
5.

3D TV
Blu-ray Disc
DVD
Ipods
Pet Rock

Allows retailer to return unsold product to the manufacturer after displaying

them for a period of time.

Shelf Allowance Money paid to the retailer to provide space for a product
Bust

When a product is pulled before it has recaptured the costs of production

Most Important
Stage

Growth stage

Benefit of being No competition initially

first
Market Share

A companies sales as a percentage of total sales for that market

Barriers to entry Factors that prevent companies from realizing a profit in a given market

Examples

1.

small market

2.

cost of research and development/know how

3.

design costs

4.

lack of distribution channels

5.

cost of raw material

Companies that
use a push
strategy

Are often very successful during the middle portion of the growth stage using
low prices

Maturity Stage

Period during which sales of a product increase more slowly, if at all.

Profits during
this stage are
usually

High

Profits obtained Develop new products

during this stage
are often used to
Decline Stage

When a company is unable to find new customers for a new product

Strategies to
Redesign, reformulate, repackage
boost sales in the
decline stage
Decision Point
Stage

End of the road

Strategies for this New uses, new market

stage
Niche Market

A small section of a market, which has little competition

Target Market

Innovators

Early Adopters

Introduction

Growth

Question Mark/
Dog

Question Mark

Majority
Product Life Cycle
Maturity
Profitability
Star

Skim

Penetrate

Pricing Strategy
Penetrate

Late Majority

Laggards

Decline

Decision Point

Cash Cow

Dog

Lower

Liquidate

2.3
Cohorts

Groups that share common characteristics and buying habits.

Consumer Segment

Identified group of consumers with common characteristics

and buying habits

Consumer Segment can also be

called a

Target Market

Primary Market

Most likely consumers

Secondary Market

Other Occasional consumers

Demographics
Includes:

Obvious characteristics that categorize people

Age
Gender
Family life cycle
Income level
Ethnicity
Culture

Consumer profiles are built demographics

using
Pre Customers

0-9: children influence gatekeepers who make the decisionMarketers try to appeal to both

Allowance Customers

10-15-Gatekeepers still responsible for most decisions, not all

Youth Market

16-19-Rely on gatekeepers for financial support-needs. Use their

income to purchase wants

Post Secondary Market

20-25-Start up products: cheap cars, furniture, kitchen stuff

Family Formation

Nesters 25-40-career, marriage, home, children. Major purchases

Establishment

40-55- Earning maximum salaries, disposable income increasing.

Quality, luxury, trips, investments

Mature Market

55+:Fastest growing market today. High disposable income. Many

retiring early.

Baby Boomers

Huge group, born between 1946-1963

Many of the major trends in were started by the baby boomers.

the last 50 years
Gender: More products are
exclusively marketed to:

Women

Products that were formerly Are now being marketed to both genders
targeted to women or men
Family Life Cycle

Determines many of the consumers wants, needs and purchasing

patterns.

A business can sell its

products or services to
various family life-cycle
groups but

It will tailor its marketing efforts to match the needs of each one.

Income level

Consumers can be grouped by how much money they have or earn.

Businesses research the

following indicators to
determine the income of
specific groups of
consumers

Ethnicity and culture

Postal codes
Employment
Number of children
Education
Property Ownership

Businesses that do not understand the culture of their consumers risk

offending them.

When marketing in another It is essential to research the culture of the target market.

country
Psychographics
Examples

Is a system for measuring consumers beliefs, opinions and interests

Religious beliefs
Tastes in music
Lifestyle
Attitudes toward health
Personality traits
Attitude towards the Environment

Psychographic traits are less Than demographics and much more difficult to measure, but they are
obvious
equally important to businesses
Geographics: Consumers Living in different geographic locations have different wants and
needs.
3 main geographic
categories

Urban
Suburban
Rural

Urban consumer

1.
2.

lives within: an: apartment, condo or house with small yard

Spends on: cultural, restaurants, parking, transportation

Suburban Consumer

Spends money on: cars, gardens, barbecues, household stuff

Rural consumers are often

Farmers or people who have large pieces of land

Rural consumers often need Trucks, riding mowers, tractors

Product Use Statistics

4 Types of product use

consumers

Categorize consumers by how frequently they use a specific type of

product
1.
2.
3.

Heavy User
medium user
light user

4.

Pareto Principle

non-user

Few rules are more widely quoted in marketing today than the 80/20
Rule (the Paretos Principle), which states that 80% of your sales
come from just 20% of your customer base.
In this age of relationship marketing, this rule has become an oftenheard battle cry to focus our efforts on maintaining the loyalty of
customers belonging to the golden 20% that drive most of our
business, while spending less effort on the trivial other 80%.

Point of Entry Target

Those who will enter a category

True non user

Individuals who do not plan to use products in a category

Marketers must change a

non-users

Value equation

Almost all consumers are

non users

In the introductory stage

2.4- Consumer Motivation

Motivation is

Biological, emotional, rational or social force that activates and

directs behaviour.

Biological needs are

Dominant because they have their roots in the basic need for
survival.

Emotional needs:

The value equation places: pleasure on the plus side and the
pain involved in earning the money to afford it on the negative.

Marketers use the following to

make people want products:

Thorndikes Law of Effect:

Maslows Hierarchy of Needs

Peer Pressure
Celebrity Endorsement

Consumers are motivated to buy products that produce positive

events and to avoid products that produce negative events
1.
2.

Physiological
Safety

3.
4.
5.

Affiliation: Friends, relationships

Esteem: success
Self Actualization

Cannot worry about higher level Lower level needs are met.
needs until:
Destination Locations

Large ticket item buying process

Stores that consumers will visit and will travel to get to. Usually
for large ticket items or specialty items.
1.
2.
3.
4.
5.
6.

Want is created
Criteria is set-Features needed
Search begins
Decision is made
Purchase is made
Purchase is evaluated

Shopping Good

Categories of products instead of brands

If the consumer has not decided

on the brand

The store display, selection, price, and packaging will influence

the decision

Impulse items

Goods that are purchased with no forethought. candy bar at

checkout
Push strategy
Pull Strategy
Combo Strategy

Impulse
Shopping
Big Ticket/Specialty