Introduction to Marketing

#5 Customer Markets and Business Markets

2014 Fall
!"#$%&'( *+(,'-$
GoPro: Be a HERO!
http://www.youtube.com/watch?v=S2oymHHyV1M
http://www.youtube.com/watch?v=9mGzoG0CA5M
More than 14 million views
TV commercial
1argeung aL nlche markeL,
sporLs aLhleLes
GoPro: Be a HERO!
! Less Lhan $200
! Pu-quallLy vldeo
! WaLerproof Lo depLhs of 180 feeL
! urop-proof from 3,000 feeL
! CusLomer engagemenL and
enLhuslasm
! undersLandlng cusLomer needs and
mouvauons
Model of Consumer Behavior
./&%0%$ 1'$2"#$' *"3'0
Markeung and oLher sumull enLer Lhe buyer's black box" and
produce cerLaln cholce/purchase responses.
MarkeLers musL gure ouL whaL ls lnslde of Lhe buyer's black
box" and how sumull are changed Lo responses.
1v commerclals,
Acuvlues
Sales
MarkeLers would llke Lo undersLand
Lhe black box"
Model of Consumer Behavior: Stimulus Response Model


Marketing and
Other Stimuli





Buyers Black Box




Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Buyers
Characteristics
Buyers Decision
Process
Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount

Buyer responses

MacroenvlronmenL
Cholce
Characteristics Affecting Consumer Behavior
!"#$"%&#
"#$%&'
()*+#,&'
(+-$.#'#/%$&'
CulLure
SubculLure
Plspanlc consumers
Afrlcan Amerlcans
Aslan Amerlcans
MaLure consumers
Soclal Class
Key Factors
Characteristics Affecting Consumer Behavior: Cultural Factors
45$2+#56 7&'(56+# !"#$%&'($
30 mllllon consumers
8uylng power of $1.3 Lrllllon by 2013
Spanlsh medla makes group easy Lo reach
8rand loyal group
Characteristics Affecting Consumer Behavior: Cultural Factors
8+(9'/#9 45$2+#56 7&'(56+#$: 8urger klng sponsoredan annual
famlly-orlenLed luLbol klngdom nauonal soccer Lour ln elghL ma[or
Plspanlc markeLs across Lhe unlLed SLaLes.
7:(56+# 7&'(56+# !"#$%&'($
40 mllllon consumers
8uylng power of $1.2 Lrllllon
Crowlng more aMuenL / sophlsucaLed.
rlce and brand name consclous, quallLy and selecuon are
lmporLanL.
Characteristics Affecting Consumer Behavior: Cultural Factors
rlce sensluve: noL loyal, always nd Lhe besL deal,
hlgh malnLenance"
Characteristics Affecting Consumer Behavior: Cultural Factors
&C's rooLs run deep ln -+(9'/#9 7:(56+# 7&'(56+# 6"#$%&'($.
Hallmark offers an Afrocentric* line of greeting cards called Mahogany.
Characteristics Affecting Consumer Behavior: Cultural Factors
*Afrocentrism can be seen as an African-American inspired ideology
7$5+# 7&'(56+# !"#$%&'($
16 mllllon consumers
8uylng power of $773 bllllon by 2013
lasLesL growlng, mosL aMuenL subculLure.
Many nauonallues comprlse Lhls group.
Consumer packaged goods companles now LargeL Lhls group
more heavlly.
Characteristics Affecting Consumer Behavior: Cultural Factors
Characteristics Affecting Consumer Behavior: Cultural Factors
Characteristics Affecting Consumer Behavior: Cultural Factors
P&G Philippines 75th year anniversary commercial - YouTube
Characteristics Affecting Consumer Behavior: Cultural Factors
*+-%(' !"#$%&'($
73 mllllon consumers aged 30
+
wlll grow Lo 113 mllllon wlLhln
23 years.
MaLure consumers conLrol 30 of all dlscreuonary lncome.
Auracuve markeL for Lravel, resLauranL, and cosmeucs
producLs, among oLhers.
Characteristics Affecting Consumer Behavior: Cultural Factors
LeasL prlce sensluve?
Characteristics Affecting Consumer Behavior: Cultural Factors
8+(9'/#9 &+-%(' 6"#$%&'($: Pome depoL now LargeLs older
consumers who are less enLhuslasuc abouL do-lL-yourself chores Lhan
wlLh do-lL-for-me" handyman servlces.
The most successful advertising campaigns targeted at mature consumers focus on
active and healthy lifestyles and introduce positive role models. In 2001 LOral
recruited 57-year-old French actress Catherine Deneuve to promote its hair care
products, and Este Lauder looked to 54-year-old Karen Graham, its star model of
the 1970s, as the face for a new cream for the mature market.
Characteristics Affecting Consumer Behavior: Cultural Factors
A similar approach was adapted by Japanese telecom company NTT DoCoMo. Once
it had identified the older population as a promising growth market, the company
launched a new mobile phone dubbed the Raku-Raku, or easy-easy, which has a
panel with larger buttons and easier to read figures. In the two months following its
launch, 200,000 units were sold.
Characteristics Affecting Consumer Behavior: Cultural Factors
Speclal phones wlLh slmpler funcuons,
LargeLed aL senlor cusLomers
Cross-Cultural marketing
P&G Brand Identity Diversity
Characteristics Affecting Consumer Behavior: Cultural Factors
Lmbrace varlous culLures
Characteristics Affecting Consumer Behavior
01'21*&'
()*+&#
()*+#,&'
(+-$.#'#/%$&'
Croups and Soclal neLworks
Word-of-MouLh lnuences
8uzz Markeung
Cnllne Soclal neLworks
lamlly
8oles and SLaLus
Key Factors
1he lnLerneL
Characteristics Affecting Consumer Behavior: Social Factors
."65+0 60+$$'$ are socleLy's relauvely permanenL and ordered
dlvlslons whose members share slmllar values, lnLeresLs, and
behavlors
Measured by a comblnauon of occupauon, lncome, educauon,
wealLh, and oLher varlables
;"(3<":<&"%-= 5#>%'#6' +#3 ?%@@ &+(,'/#9
A25#5"# 0'+3'($ are people wlLhln a reference group who
because of speclal skllls, knowledge, personallLy, or oLher
characLerlsucs, exerL soclal lnuence on oLhers
Also called %,31),4&'+ or ')&5%,/ &5#62)*+
MarkeLers ldenufy Lhem Lo use as brand ambassadors
Characteristics Affecting Consumer Behavior: Social Factors
Spread of words ln Lhe soclal neLwork
Cplnlon leaders:
Pave power Lo spread words,
blgger soclal neLwork, good
credlblllLy
Characteristics Affecting Consumer Behavior: Social Factors
What's YOUR Social Media Marketing Strategy - YouTube
B%@@ *+(,'/#9: 1he 8lalr WlLch ro[ecL was released on !uly 14, 1999. 1he lm cosL a abouL
$330,000 Lo produce and wenL on Lo gross nearly $230 mllllon worldwlde, glvlng lL Lhe
hlghesL proL-Lo-cosL rauo of any lm ln hlsLory. 1he lncredlble success of Lhe lm could be
aurlbuLed Lo lLs unlque webslLe LhaL eecuvely blurred Lhe llnes beLween facL and cuon.
Characteristics Affecting Consumer Behavior: Social Factors
hup://www.youLube.com/waLch?v=a_Pw4bAu[8A
lrom Lhe observers' perspecuves
B%@@ *+(,'/#9C x8ox's shocklng and provocauve 2002 ad ralsed eyebrows across Lurope
when lL appeared on Lhe web. 1he ad has been descrlbed as graphlc," dlsLurblng," and
even morbld" by some, lnLeresung" and lnnovauve" by oLhers. WhaLever Lhe proper
descrlpuon, Mlcroso conunues Lo generaLe buzz around Lhe world for Lhls plLhy ad.
Characteristics Affecting Consumer Behavior: Social Factors
hup://www.youLube.com/waLch?v=brsl6z13Su8
Characteristics Affecting Consumer Behavior: Social Factors
B%@@ *+(,'/#9C uurlng Lhe 2002 World Cup, a docLored phoLo appeared on Lhe cover of Lhe
8rlush newspaper 1he Mlrror." 1he phoLo deplcLed members of Lhe Argenunlan defense wlLh
women's handbags ln fronL of a goal. 1he phoLo lnsLanLly made Lhe rounds on Lhe lnLerneL,
ulumaLely becomlng one of Lhe mosL shared phoLos of all ume. 1hough Lhe sLunL was noL a
dlrecL markeung ploy of Lhe lllA World Cup esLabllshmenL, Lhe shared phoLo helped Lo
furLher helghLen Lhe already global presuge of Lhe evenL.
D+&50E ls Lhe mosL lmporLanL consumer-buylng organlzauon ln
socleLy

."65+0 ("0'$ +#3 $-+-%$ are Lhe groups, famlly, clubs, and
organlzauons LhaL a person belongs Lo LhaL can dene role and
soclal sLaLus
Characteristics Affecting Consumer Behavior: Social Factors
Characteristics Affecting Consumer Behavior: Social Factors
Pelplng women who do Lhe shopplng cope wlLh slgnlcanL oLhers
who haLe Lo come along, lkLA AusLrallan sLores creaLed an ln-sLore
area where reLall phoblc husbands and boyfrlends can hang ouL
whlle Lhe women shop.
Characteristics Affecting Consumer Behavior
01'21*&'
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,-%.)/&#
(+-$.#'#/%$&'
Age and Llfe-Cycle SLage
Cccupauon
Lconomlc SlLuauon
LlfesLyle
ersonallLy and Self-ConcepL
Key Factors
Characteristics Affecting Consumer Behavior: Personal Factors
Pumanlsauon
Characteristics Affecting Consumer Behavior
01'21*&'
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()*+#,&'
,.0*1)#)2+*&#
Mouvauon
needs provlde mouves for
consumer behavlor
Mouvauon research
Maslow's hlerarchy of needs
ercepuon
Selecuve auenuon, selecuve
dlsLoruon, selecuve reLenuon
Learnlng
8ellefs and AmLudes
Key Factors
Characteristics Affecting Consumer Behavior: Psychological Factors
Maslows hierarchy of needs
* The maintenance of metabolic equilibrium within an animal by a tendency to compensate for disrupting changes
*
need Lo remember Lhe
names
Characteristics Affecting Consumer Behavior: Psychological Factors
F'(6'2/"# ls Lhe process by whlch people selecL, organlze, and
lnLerpreL lnformauon Lo form a meanlngful plcLure of Lhe world from
Lhree percepLual processes
Perception can be colored by our mind!
We see whaL we wanL Lo see.
Cver-condence, general Lendency
.'0'6/G' +H'#/"# ls Lhe Lendency for people Lo screen ouL
mosL of Lhe lnformauon Lo whlch Lhey are exposed
.'0'6/G' 35$-"(/"# ls Lhe Lendency for people Lo lnLerpreL
lnformauon ln a way LhaL wlll supporL whaL Lhey already belleve
.'0'6/G' ('-'#/"# ls Lhe Lendency Lo remember good polnLs
made abouL a brand Lhey favor and forgeL good polnLs abouL
compeung brands
Characteristics Affecting Consumer Behavior: Psychological Factors
A loL of blases
lnLerpreLauon
Selecuve memory:
MarkeLers would llke Lhe
cusLomers Lo remember good polnLs
Characteristics Affecting Consumer Behavior: Psychological Factors
Perception of information
Information might have been!
Encoded but participants failed to retrieve
Recall task might not work but recognition task might.
" Use multiple choice tests instead of open-ended questions
Encoded but not as it actually is
Not encoded in the first place so there is nothing to retrieve
Peoples attention span is limited
Attentional blindness
http://www.youtube.com/watch?v=IGQmdoK_ZfY
Consumers are beuer aL recognluon LesLs
Cues in the environment affect Judgment and retrieval.
Unrelated-to-survey context

Characteristics Affecting Consumer Behavior: Psychological Factors
Colours, weaLher, LemperaLure -> aecL [udgmenL
Slow muslc keeps Lhe cusLomers wanderlng
slowly Lo lncrease Lhe chance of cusLomers
spendlng
Bodily Sensation Influences Judgments
Lmbodled cognluon
Bodily Sensation Influences Judgments
Characteristics Affecting Consumer Behavior: Psychological Factors
owerless people
felL domlnaLed
Characteristics Affecting Consumer Behavior: Psychological Factors
7I-%3'$ descrlbe a person's relauvely conslsLenL evaluauons,
feellngs, and Lendencles Loward an ob[ecL or ldea
The milk moustache campaign changed
attitudes toward milk.
Types of Buying Behavior
E.g., Smart phones, ice-cream, carpets, salt, etc.
lmporLanL concepLs
Can appear ln open-ended quesuons
lnvolvemenL: eorL, e.g. Lo nd Lhe lnformauon
Lo declde on whaL Lo buy
When Lhere are opuons,
how dlerenL are Lhe cholces
from one and anoLher?
Types of Buying Behavior: Complex Buying Behavior
Types of Buying Behavior: Variety Seeking Buying Behavior
noL Loo much eorL would be spenL on Lhe cholce
Types of Buying Behavior: Dissonance Reducing Buying Behavior
Slmllar producLs, declslon-maklng was hard
ln order noL Lo feel regreuul, comforL oneself by saylng LhaL l dld a good [ob
Types of Buying Behavior: Habitual Buying Behavior
The Buyer Decision Process
3--4 %-*)2/+5)/
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(#+261*$.&+) <).&;%#*
needs can be Lrlggered by:
lnLernal sumull
Punger and LhlrsL
normal needs become
sLrong enough Lo drlve
behavlor
LxLernal sumull
AdverusemenLs
lrlends of frlends
1v ads, magazlne, eLc.
Stages
lrlends
AcqualnLance
The Buyer Decision Process
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6/7)%8&5)/ .-&%*1
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&'2)*,&4;)+
(1*$.&+) 5)$%+%#,
(#+261*$.&+) <).&;%#*
Consumers exhlblL helghLened
auenuon or acuvely search for
lnformauon.
Sources of lnformauon:
ersonal
Commerclal
ubllc
Lxperlenual
Word-of-mouLh
Stages
The Buyer Decision Process
Family, friends, neighbors
Most influential source of
information
Advertising, salespeople
Receives most information
from these sources
Mass Media
Consumer-rating groups
Handling the product
Examining the product
Using the product
Personal Sources
Commercial Sources
Public Sources
Experiential Sources



Consumer reporLs
1esLers, sample
The Buyer Decision Process
=))5 *)$#/,%4#,
7,8#*9&4#, +)&*$.
9:&#"&5)/ )7
&#$-%/&5:-.
(1*$.&+) 5)$%+%#,
(#+261*$.&+) <).&;%#*
Lvaluauon procedure depends
on Lhe consumer and Lhe
buylng slLuauon.
MosL buyers evaluaLe muluple
aurlbuLes, each of whlch ls
welghLed dlerenLly.
AL Lhe end of Lhe evaluauon
sLage, purchase lnLenuons are
formed.
Stages
Product Attributes
Evaluation of Quality, Price, & Features
Degree of Importance
Which attributes matter most to me?
Brand Beliefs
What do I believe about each available brand?
Total Product Satisfaction
Based on what Im looking for, how satisfied
would I be with each product?
Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
The Buyer Decision Process
The Buyer Decision Process
=))5 *)$#/,%4#,
7,8#*9&4#, +)&*$.
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&'2)*,&4;)+
,"%*1&.- 4-*+.+)/
(#+261*$.&+) <).&;%#*
1wo facLors lnLercede
beLween purchase
lnLenuons and Lhe acLual
declslon:
AmLudes of oLhers
unexpecLed slLuauonal
facLors
Stages
The Buyer Decision Process
=))5 *)$#/,%4#,
7,8#*9&4#, +)&*$.
:;&'1&4#, #8
&'2)*,&4;)+
(1*$.&+) 5)$%+%#,
,).$;"%*1&.- <-1&:+)%
Sausfacuon ls key:
uellghLed consumers
engage ln posluve word-of-
mouLh.
unhappy cusLomers Lell on
average 11 oLher people.
lL cosLs more Lo auracL a
new cusLomer Lhan lL does
Lo reLaln an exlsung
cusLomer.
Cognluve dlssonance
Stages
Lvaluauon
Consumers Expectations of
Products Performance is high
Dissatisfied
Customer
Satisfied
Customer!
Products Perceived
Performance?
Cognitive Dissonance!
=59=
J"K
The Buyer Decision Process
Change percepuon? ulssonance reducuon?
The Buyer Decision Process for New Products
Awareness
Interest
Evaluation
Trial
Adoption
B%$5#'$$ *+(,'-$
Business Markets
8=' &+L"( 5#3%$-(5'$ &+,5#9 %2 ?%$5#'$$ &+(,'-$ +('C
agrlculLure, LransporLauon, manufacLurlng, mlnlng,
consLrucuon, communlcauon, banklng, nance, lnsurance,
publlc uullues, dlsLrlbuuon and servlces

M5N'( :("& 6"#$%&'( &+(,'-$ 5#C
- MarkeL sLrucLure and demand
- naLure of Lhe buylng unlL
- 1ypes of declslons and Lhe declslon-maklng process
Business Markets: Market structure and demand
- D'K'( +#3 0+(9'( ?%E'($: buslness markeLs normally deal wlLh
far fewer buyers and a few large buyers do mosL of Lhe
purchaslng ln such lndusLrles as alrcra englnes and defense
weapons.
- O'"9(+2=56 6"#6'#-(+/"#: geographlcal concenLrauon of
producers helps Lo reduce selllng cosL.
CorporaLe buyers, as opposed Lo home buyers
- M'(5G'3 3'&+#3C Lhe demand for buslness goods ls ulumaLely
derlved from Lhe demand for consumer goods.
P#'0+$/6 3'&+#3 : Lhe LoLal demand for many buslness
producLs ls noL much aecLed by prlce changes, especlally ln
shorL-run.
D0%6-%+/#9 3'&+#3 : A small percenLage lncrease ln consumer
demand can cause large lncrease ln demand for planL and
equlpmenL necessary Lo produce Lhe addluonal ouLpuLs. lL ls
called Lhe &$$)')*&4#, )>)$2.
Business Markets: Market structure and demand
lnsensluve Lo prlce ucLuauons
1o whaL exLenL, wlll Lhe producers
be aecLed by changlng consumer
behavlour?
8uuery eecL?
M'(5G'3 M'&+#3: ?ou cannoL buy anyLhlng dlrecLly from
Core, buL Lo lncrease demand for Core-1ex fabrlcs, Lhe
company markeLs dlrecLly Lo Lhe buyers of ouLdoor apparel
and oLher brands made from Lhem. 8oLh Core and lLs
parLner brands wln.
Business Markets: Market structure and demand
.%2205'( 3'G'0"2&'#-: lkLA doesn'L [usL buy from lLs suppller. lL lnvolves Lhem
deeply ln Lhe process of deslgnlng and maklng sLyllsh buL aordable furnlLure LhaL
keeps cusLomers comlng back.
Business Markets: Supplier Development
Suppller chaln managemenL
Business Markets: Three Type of Buying Situations
8uylng SlLuauons

($%&+21$ %-<"0
?#5%@)5 *)<1-
=)A 2&+B

8ouune reorders
from approved
vendor llsL
Low lnvolvemenL,
mlnlmal ume
commlLmenL
:C&96')D copler
paper
nC1 ln CCnSuML8 MA8kL1S
8uylng SlLuauons

"2*&%/.2 *)<1-
=)4+>-4 %-<"0
=)A 2&+B

Speclcauons, prlces,
dellvery Lerms or
oLher aspecLs requlre
modlcauon
ModeraLe level of
lnvolvemenL and ume
commlLmenL
:C&96')D deskLop
compuLers
Business Markets: Three Type of Buying Situations
More ume Lo research
Business Markets: Three Type of Buying Situations
8uylng SlLuauons

"2*&%/.2 *)<1-
?#5%@)5 *)<1-
3-? $&.@

urchaslng a producL
or servlce for Lhe @*+2
ume
Plgh level of
lnvolvemenL and ume
commlLmenL, muluple
lnuences
:C&96')D selecung a
web slLe deslgn rm or
consulLanL
Business Markets
.E$-'&$ Q."0%/"#R $'005#9 ls buylng a packaged soluuon Lo a
problem from a slngle seller.
Pelplng manage LhoughLs of park asseLs across lLs 19 reglonal
Lheme park, l8M works wlLh Slx llags Lo provlde noL [usL soware
buL a compeLe soluuon.
aruclpanLs ln Lhe buslness buylng process:
! S$'($: Lhose who wlll use Lhe producL or servlce
! P#>%'#6'($: people ln Lhe organlzauon's buylng cenLer who
lnuence Lhe buylng declslons.
! B%E'($: people ln Lhe organlzauon's buylng cenLer who have
formal auLhorlLy Lo selecL Lhe suppller and arrange Lhe
purchase Lerms.
! M'653'($: people ln Lhe organlzauon's buylng cenLer who
declde on producL requlremenLs or on suppllers.
! O+-',''2'($: people ln Lhe organlzauon's buylng cenLer who
conLrol Lhe ow of lnformauon Lo oLhers.
Business Markets
Business Markets: Major Influences on Business Buyers
TUVP1AU*TU87J
1he economy
Supply condluons
1echnology
ollucs/regulauon
Compeuuon
CulLure and
cusLoms
A1O7UPW78PAU7J
Cb[ecuves
SLraLegles
SLrucLure
SysLems
rocedures
PU8T1FT1.AU7J
lnuence
Lxperuse
AuLhorlLy
uynamlcs
PUMPVPMS7J
Age/
educauon
!ob posluon
Mouves
ersonallLy
references
8uylng sLyles
B%E'($
*+L"( P#>%'#6'$ "# B%$5#'$$ B%E'($
Slmllar wlLh Lhe consumer markeL
Institutional Market and Government Market
- P#$/-%/"#+0 *+(,'-: Schools, hosplLals, nurslng homes,
prlsons, and oLher lnsuLuuons LhaL provlde goods and servlces
Lo people ln Lhelr care.
- O"G'(#&'#- *+(,'-: CovernmenLal unlLs - federal, sLaLe, and
local - LhaL purchase or renL goods and servlces for carrylng
ouL Lhe maln funcuons of governmenL.
MarkeLs oLher Lhan buslness and consumer markeLs
1. 8log for LargeL audlence, rlghL conLenL, conslsLency
2. Soclal medla for cusLomer servlce, verlzon
3. noL measure by money, buL Lo earn Lhe LrusL of Lhe publlc,
advocaLes of Lhe brand -> Cplnlon leaders? Word-of-mouLh?
4. Moblle phones/devlces