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MKT 3350 Texas State Cavasos TEST 1
Terms in this set (63)
The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts these processes have on the consumer and society
4 Step Application of Consumer Behavior
1. Marketing Strategy
2. Regulatory Policy
3. Social Marketing
4. Creating Informed Individuals
Marketing decisions based on explicit consumer behavior theory, assumptions, and research are more likely to be successful than those based on hunches or intuition, and thus they create a competitive advantage.
Various regulatory body exist to develop, interpret, and/or implement policies designed to protect and aid consumers.
The application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.
Understanding of strategies and tactics being used creates more effective consumers; understanding of CB strategies helps us as consumers to set appropriate limits and establish a foundation of reasoned business ethics.
Marketing Strategy & Consumer Behavior
Application of CB involves the development, regulation, & effects of the marketing strategy.
Marketing Strategy & CB 5 levels
1. Market Analysis: a) Company, b) competitors, c) conditions, d) consumers
2. Market Segmentation: a) Identify product-related need sets; b) group customers w/ similar need sets; c) describe each group; d) select attractive segments to target
3.Marketing Strategy: a) Product, b) Price, c) Distribution, d) Promotion, e) Service
4. Consumer Decision Process: a) Problem recognition, b) Information search, c) Alternative evaluation, d) Purchase, e) Use, f) Evaluation
5. Outcomes: a) Individual, b) Firm, c) Society
The entire set of characteristics of the marketing mix.
The difference between all of the benefits derived from a total product and all the costs of acquiring those benefits; marketing strategy seeks to provide the customer with the most value, while still generating profit for the firm.
Market Analysis Components
Market analysis requires a thorough understanding of the consumption process of potential customers, the organization's own capabilities, the capabilities of current and future competitors, and the economic, social, physical, and technological environment of the market.
Discovering customers' needs can be accomplished through market research; knowing the consumer requires an understanding of the behavioral principles that guide consumption behaviors.
A firm must fully understand its on ability to meet customer needs; this involves evaluating all aspects of the firm (financial, managerial, production capabilities, R&D, technology, reputation, & marketing.)
Marketing skills include- new product development capabilities, channel strength, advertising abilities, service capabilities, marketing research abilities, & market and consumer knowledge.
Knowledge of competitors' capabilities;
1. Which firms would be hurt? (Lose sales)
2. Which have capability to respond? (Financial resources, marketing strengths)
3. How are they likely to respond? (Reduce prices, increase ads, new product)
4. Is our strategy solid enough to withstand response from competitors? (Need of contingency plan?)
The state of the economy, the physical environment, government regulations, & technological development that affect consumer needs and expectations as well as company and competitor capabilities; a firm cannot develop a sound marketing strategy without anticipating the conditions.
The most important decision a firm makes is selecting the segment in which to target; a market segment is a portion of a larger market whose needs differ from the larger market.
4 Steps of Market Segmentation
1. Identifying product-related need sets
2. Grouping customers with similar need sets
3. Describing each group
4. Selecting an attractive segment
Product-Related Need Sets
Need set is a term used to reflect the fact that most products in developed economies satisfy more than one need; need sets associated with age, stage in household life-cycle, gender, social class, ethnic group, & lifestyle; found through consumer research primarily through focus groups.
Customers w/ Similar Need Sets
Firms aim to group consumers with similar need sets; involves consumer research through focus groups and interviews, surveys, & product concept tests; could also involve an analysis of current consumption patterns.
Description of Each Group
Once consumers with similar needs are grouped, they should be described in terms of their demographics, lifestyles, and media usage; understand how product is purchased by consumer, how it is thought about, and the language they use to describe it.
Attractive Segments to Serve (Target Market)
The segment of the larger market on which the marketing effort is focused; size and growth of the segment, intensity of competition, and cost of providing superior value should be considered.
3 Consumer Decision Outcomes
1. Firm Outcomes
2. Individual Outcomes
3. Society Outcomes
3 Firm Outcomes
1. Product position: an image of the product or brand in the consumer's mind relative to competing products or brands.
2. Sales & Profits: needed for firm's continuation
3. Customer Satisfaction: more profitable to retain existing customers rather than seeking new customers
2 Individual Outcomes
1. Need Satisfaction: actual vs perceived need fulfillment
2. Injurious Consumption: when individuals pr groups make consumption decisions that have negative consequences for their long-run well-being; this includes overspending, consumption of unhealthy products, & engaging in activities such as gambling
3 Societal Outcomes
1. Economic Outcomes: Consumers' decisions to buy or save affect growth, the availability and cost of capital, & employment levels
2. Physical Environmental Outcomes: Air pollution and consumption of non-renewable resources have indirect effect on environment
3. Social Welfare: Consumer decisions affect the general welfare of society (private vs public spending)
The Concept of Culture
Culture is the complex whole that indicates knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society; influences preferences, how we make decisions, and how we perceive the world around us; evolve and change slowly with time.
3 Variations in Cultural Values
Cultural values are widely held beliefs that affirm what is desirable;
1. Other-oriented values: reflect society's view of the appropriate relationships between individuals and society; major influence on marketing practice
2. Environment-oriented values: society's relationship to its economic, technical, and physical environment
3. Self-oriented values: reflect objectives and approaches to life that individuals find desirable; strong implications for marketing management
5 Other-Oriented Values
2. Extended/Limited Family
6 Environment-Oriented Values
2. Performance/Status (Power Distance)
4. Risk Taking/Security
5. Problem Solving/ Fatalistic
6 Self-Oriented Values
2. Sensual Gratification/Abstinence
3. Material/Non-material (Instrumental vs Terminal materialism)
4. Hard Work/Leisure
5. Postponed Gratification/ Immediate Gratification
Non-Verbal Communications Systems
The arbitrary meanings a culture assigns actions, events, and things other than words.
7 Cultural Variations in Non-Verbal Communications
1. Time (Time perspective: monochronic vs polychronic; Meanings in the use of time)
2. Space (Personal space)
4. Relationships (guanxi)
An important issue facing marketers is the extent to which one or more global consumer cultures or segments are emerging; global culture has a shared set of consumption-related symbols with common meaning and desirability across all cultures; global culture views themselves as cosmopolitan, knowledgeable, and modern.
Cross-Cultural Marketing Strategy
Glocalization: global localization in which firms adapt marketing strategies to cultural differences such as demographics and values. (Standardized vs Customized strategies)
Standardized strategies result in cost savings, while attitude toward international brands can influence the need to customize.
7 Considerations in Approaching a Foreign Market
1. Is the geographic area homogenous or heterogenous with respect to culture? (Geographic vs Cultural Boundaries; are there cultural differences within the country?)
2. What needs can this product fill in this culture?
3. Can the people who need the product afford it?
4. Which values or patterns of values are relevant to the purchase and use of this product
5. What is the distribution, political , and legal structures for the product?
6. How can we communicate about the product?
7. What are the ethical implications of marketing the product?
Changes in American Cultural Values
Observable shifts in behavior, including consumption behavior, often reflect shifts in cultural values, which are widely held beliefs that affirm what is desirable; changes tend to occur slowly and unevenly across groups.
Describe a population in terms of its size, distribution, and structure; demographics influence consumption behaviors both directly and by affecting other attributes of individuals, such as their personal values and decision styles.
Population Size and Distribution
U.S. population growth is expected to remain steady over the next several decades, but the increasing number of deaths due to the aging of the population is expected to reduce the growth rate by 20% over the next five decades; population will continue to grow, but at a slower rate over time.
Occupation is strongly associated with education and income; one's occupation provides status and income as well as influencing one's values, lifestyle, and all aspects if the consumption process.
87% of Americans have a high school degree; 30% have completed college; education influences what one can purchase by partially determining income and occupation; also influences how one thinks, makes decisions, and relates to others.
A household's income level combined with its accumulated wealth determines its purchasing power; Economic expansion results in higher incomes and spending power; class to mass: companies expanding opportunities for less affluent customers to afford luxury; income enables purchases but does not cause or explain them.
Subjective Discretionary Income (SDI): an estimate by the consumer of how much he or she has available to spend on non-essentials.
Carries culturally defined behavioral and attitudinal norms; affects self-concept and lifestyle; influences the consumption of products; shapes which media we use, where we shop, how we use products, & how we think and feel about marketing activities; largest growth area is in 60+ groups
Cognitive Age: one's perceived age as part of one's self-concept; measured by asking people what age they would associate with how they look, feel, and behave; often 10-15 yrs less than actual age.
Understanding American Generations
A generation or age cohort is a group of persons who have experienced a common social, political, historical, and economic environment.
Cohort Analysis: the process of describing and explaining the attitudes, values, and behaviors of an age group as well as predicting its future attitudes, values, & behaviors.
1944-1964; 80 million Americans; influenced by Kennedy assassination, the Vietnam War, drugs, sex, the energy crisis, a rise in the divorce rate, the Cold War, & The Beatles; self-centered, individualistic, economically optimistic, skeptical, suspicious of authority, and focused on the present; characterized by high education levels, high incomes, and dual-career households; more tech savvy than previous generations w/ 80% internet usage; target for toys, vacations, gift cards, school supplies, plastic surgery, baldness treatments, health clubs, cosmetics, hair coloring, & health foods; important for advertisers to avoid over-reliance on themes and models that are too young.
1965-1976; 45 million Americans; smaller generation than boomers and gen y; 1st generation to be raised in dual-career households; 40% in single-parent household; reduced expectations based on the reality of limited job opportunity until the boom in the 1990's; AIDS epidemic; don't believe in sacrificing time, energy, & relations for the sake of career or economic advancement; more entrepreneurial, less corporate in job approach; highly educated, especially women; cynical and sophisticated about products, ads, and shopping; materialistic and impatient; open to diversity and more likely to accept alternative lifestyle choices; more tech savvy with 86% internet usage; 2/3 watch online videos.
1977-1994; 79 million Americans; Hispanic segment is larger than ever; "echo boom."; 1st gen to grow up in full-employment opportunities for women; dual-income households is standard; ethnic and cultural diversity with wide-array of family types; computers in homes and schools; divorce is the norm; AIDS, homelessness, drug abuse, gang violence, and economic uncertainty; sense of independence and autonomy; assertive, self-reliant, emotionally and intellectually expressive, innovative, & curious; unlikely to respond to marketing hype; prefer ads with humor & irony; like the customization of products to unique needs; brand names are important to them; unique factors include technology use, music & pop culture, tolerance, intelligence, & clothes; embrace diversity; technologically immersed 95% online; ads need to portray multiple-ethnic groups.
1995-2009; 69 million Americans; "Digital Natives," "Generation @," &"Net Generation"; deals with global unrest, economic uncertainty, terrorism, VT massacre, cyber-bullying, and global warming; high ethnic diversity w/ African Americans higher than ever; declining divorce rates; two parent households; values personal responsibility, civic engagement, and diversity; avoid risk, act responsibly; expectations high on this gen; higher levels of education; highest purchasing power; honesty, humor, diversity, and information important to teens; social media advertising is crucial.
The Nature of Subcultures
A subculture is a segment of a larger culture whose members share distinguishing values and patterns of behavior based on the social history of the group as well as its current situation; today America is a "salad" and salad dressing represents the core American culture and blends the diverse groups into a cohesive society; ethnic groups, religions, & geographic regions; attitudes toward products influenced by different subcultures; we are all members of several subcultures; large variations exist within each subculture.
Those whose members' unique shared behaviors are based on a common racial, language, or national background; the influx of immigrants increase the size of subcultures and reinforce the unique behaviors and attitudes derived from the group's home culture; ethnicity is only one factor that influences an individual's behavior.
13% of population concentrated in the south; younger on average than whites; less education and lower household income levels; represent $910 billion of purchasing power which is expected to grow by 25% by 2014; firms have moved toward targeting blacks through music and comedy.
African American Consumer Segments
Recent study of 3400 blacks between ages 13-74 identifies with 11 different segments in terms of demographics, lifestyle, and technology use; advertising aims to not only target one segment.
African American Media Usage
African Americans make greater use of mass media than whites, have different preferences, and report more influence by mass media ads than do whites; desire media specifically targeted to Black Culture (Jet, Ebony, Sports Illustrated, Vibe); same with TV shows; 71% of adults are online; more likely to use mobile devices and firms advertise accordingly.
Marketing to African Americans
Same as any other group; adaptation to target certain segments sometimes needed; avoid stereotypes.
Product: numerous firms have found it worthwhile to alter products to target blacks. (Different hair and skin)
Communications: don't assume that the members are all the same; event marketing involves creating or sponsoring an event that has a specific appeal to a market segment.
Retailing: retailers adjust merchandising mix to fit black's needs; 3 store selection factors for blacks are that the store carries ethnic products, employs blacks, & treats all customers equally; blacks use shopping as a form of recreation, so stores should have a fun environment; more prone to buying national brands as a way to signal status.
A Hispanic is a person of Cuban, Mexican, Puerto Rican, South or Central American, or Spanish culture or origin regardless of race; Hispanics on average are younger than whites and have less education and household income; represent $978 billion of purchasing power which is expected to grow by 33% by 2014; Hispanic market is fastest growing ethnic subculture in the U.S.; the decision to treat Hispanics as a single ethnic subculture needs to consider acculturation, language, & generational influences.
Acculturation, Language, & Generational Influences
Acculturation: the degree to which an immigrant has adapted to his or her new culture; highly related to language use; 1st gen: born outside of U.S.; identifies as Hispanic; traditional values such as masculine view of family decision hierarchy; 2nd gen: higher income and education, identifies as American; bilingual; doesn't ascribe to traditional values; 3rd gen: highest education and income; Americans; English as primary language; less likely to ascribe to traditional values.
Marketing to Hispanics
Hispanics are highly brand loyal; less receptive to store brands;
Communications: Spanish-language media; Internet usage depends on language and acculturation; English-speaking Hispanics 82% usage; born outside of U.S. 50% usage; Online and social network marketing important.
Products: Few marketers have successfully developed adaptation
Retailing: Increase in # of bilingual salespeople; use of Spanish on signs, etc.; merchandise that reflects the primary needs of the Hispanic community.
America, as a whole, is a secular society; the educational system, government, and political process are not controlled by a religious group, and most people's daily behaviors are not guided by religious guidelines; but religion is important to many Americans.
American value system is derived from Christian, Protestant, beliefs from early settlers.
Roman Catholics: 21% of Americans; few restrictions on consumption; vary in conservative beliefs; large families; limited upwards mobility; marketers can reach through specialized magazines, radio programs, and community events.
Protestants: 45% of Americans; individual responsibility and control; small families; upward social mobility; middle-of-the-road conservatives.
Born-Again Christian Subculture: strong belief in the literal truth of the Bible, born again and encourage following of Jesus; lower education and income; traditional gender role orientation; oppose alcohol and drugs; don't consume movies or tv that is overly focused on sex; receptive to programs, books, and movies that depict traditional values.
Jewish: 2% of Americans; concentrated in northeast; higher income and education; conservative orthodox Jews have strict dietary rules; observe Jewish holidays.
Muslims: .6% of Americans; culturally diverse; lives are centered in work, family, school, and pursuit of happiness; conservative with drugs and alcohol and sex; oppose dating; emphasis on family; only interested in Arab American Subcultural marketing.
Buddhists: 6% of Americans; slightly above average income and education; variety of sects; marketers have ignored this market.
Arise as result of climatic conditions, the natural environment & resources, the characteristics of immigrant groups, and social & political events.
Household Influence on Consumption
The household is the basic purchasing and consuming unit, and is of great importance to marketing managers; family household consists of 2+ related persons; non-family households 1+ unrelated persons; family households are a primary mechanism whereby cultural and social-class values and behavior patterns are passed on to the next generation.
Household Life-Cycle's Stages and Implications
HLC is the classification of household into stages through which it passes over time based on the age and marital status of adults and presence and age of young children; HLC is a valuable marketing tool because members in each stage or category face similar consumption problems, thus they represent potential market segments; HLC/Occupational category matrix helps develop marketing strategy; one axis is stages in HLC, which determine problems the household will likely encounter; the other is a set of occupational categories, which provide a range of solutions; each cell represent a market segment.
Family Decision Process
Who buys, who decides, & who uses?; involves emotion, interpersonal relations, & acquisition; household member participation in process varies by involvement with specific product, role specialization, personal characteristics, and one's culture and subculture; participation also varies by stage in decision process; most decisions reached by consensus, if not, a variety of conflict resolution strategies may be employed; marketing managers must analyze the household decision process separately for each product category within each target market.
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