Midterm: text, notes and in-class material fro the consumer behavior sessions from weeks
1-6, 80 multiple choice.
Chapter 1 – Marketing Fundamentals
Creating Customer Value
Developing customer loyalty is prompting many firms to focus on customer value
by providing customers with products and services that have added value.
This is often achieved by delivering outstanding value through a combination of:
pricing strategies, product design, and service elements.
Customer Value – the unique combination of benefits received by targeted
buyers that include quality, price, convenience, on-time delivery and both before
and after sale service.
Appealing to Target Markets
Companies cannot satisfy everyone’s needs with one single product, so they
design their products to appeal to a specific target market.
Better to put money towards a target market, where you know the consumers will
have interest rather than spread your money around a larger market where you
Target Market – the specific group of existing and potential consumers to which
a marketer targets in marketing efforts (ME – geared to appeal to a products
specific target market, ensuring that each element of the marketing mix appeals to
the characteristics of the target group)
Marketing Mix – Product, Price, Place and Promotion - need to be carefully managed
by marketers to ensure that they are well coordinated and that each appeals to the distinct
characteristics of the target market for the product.
Product – all the attributes that make up a good, a service or an idea,
including product design, features, colour, packaging, warrantee, and
Price – the expected retail shelf price and sale price of the product.
Place – the distribution channels and retailers requires to sell the product.
Promotion – the communication tools needed to inform consumers about
the product including advertising, sales promotion, public relations, direct
marketing and personal selling.
The Marketing Process – is a continuous ne that requires marketers to pay attention to
detail and apply their strategic, analytical and creative thinking skills.
Marketing Process – in short, involves
1. Identifying consumer needs,
2. Managing the marketing mix to meet these needs,
3. Realizing profits
Throughout the process marketers constantly evaluate the level of their success and make
changes that can make their products more competitive and alluring to their customers.
Marketers are ultimately responsible for the profit and revenue. Marketing – the process of planning goods, services or ideas to meet consumer needs
and organizational objectives. It includes the conception of these products and the
pricing, promotion and distribution programs designed to make a profit.
Exchange – the trade of things of value between buyers and sellers so that each benefits.
Typically, the trade is money for a product but can be volunteering or a referall.
Good – a product you can touch and own. Exp. shoes.
Service – an intangible product you cannot touch. It does not result in something you can
take home. Exp. massage, movie.
Idea - a concept that typically looks for your support. Exp. earth hour.
What is a Market?
Market – used in marketing to describe the potential consumers who have both the
willingness and ability to buy a product. Exp. Fisher price bike although children have
the willingness to pay they don’t have the ability; therefore their parents are the market.
Evolution of the business process:
Up until 1930’s – Production Orientation – stage focused on manufacturing, which
until the industrial revolution was not a widespread phenomenon. Manufactured goods
tended to sell regardless of their quality because they were in short supply. Consumer
needs were not a priority.
1930’s – 1960’s – Sales Orientation Stage - focused on selling as many products as
possible. Market had become more competitive, production became more efficient and
products were in abundance. Consumer needs were not a major consideration.
1960’s – Marketing Orientation – focuses on the idea that an organization should strive
to satisfy the needs of consumers while also trying to achieve the organizations goals.
Follows the Marketing Concept - is the idea that an organization should strive to satisfy
the needs of consumers while also trying to achieve organizational goals.
1990’s Last Decade – Relationship Marketing – sees organizations considering the
lifetime value of its customers as they strive for better services, deliver consistent product
quality and develop long term relationships. Transition from short-term transactions to
one that now focuses on building long-term customer relationships.
Customer Relationship Management (CRM)
Focuses on identifying a firm’s most valued customers and building programs to appeal
to their needs while fostering long-term customer relationships and loyalty. When used
successfully permeates an organization which then implements policies, processes, and
strategies to maximize customer satisfaction by tracking customer information and using
this data to anticipate and meet customer needs.
An approach where marketers create opportunities for their consumers to interact directly
with the brand. Exp. Alcohol brand in Australia promoted with no media just rented out
nightclubs for free trials.
Corporate Social Responsibility (CSR) Concept where organizations voluntarily consider the well being of society by taking
responsibility for how their businesses impact consumers, customers, suppliers,
employees, shareholders, communities, the environment and society in general.
Social Marketing Concept – focusing on the consumer and the well being of society.
Exp. Maxwell house and “Brew Some Good” awareness program for habitat for
Chapter 2 – The Marketing Environment
Marketing Fundamental Scan - process of continually acquiring information on events
occurring outside the organization to identify trends, opportunities, and threats to
business. Marketers use this knowledge to ensure that their products, services and ideas
are relevant and meaningful. When managed properly, this knowledge translates into
competitive marketing programs that meet consumer needs and bring revenues into the
company. Looks at the forces identified in “the core” image (opposite), namely:
1) Demographic Forces
Demographics - the statistical data on a population according to characteristics such as
age, gender, ethnicity, income and occupation.
Aging Population - the percentage of the population over the age of 55 continues to
increase due to low birth rates and better health care.
Baby Boomers – generation of people born between 1946 and 1964
Generation X - people born between 1965 and 1976
Generation Y - people born between 1975 and 1995
2) Socio-Cultural Forces - referring to cultural values, ideas, and attitudes that are
learned and shared among a group of people.
3) Economic Forces
Economy - collective income, expenditures, and resources that affect the cost of running
Macroeconomics – the state of a country’s economy as a whole
Inflation - period when the cost to produce and buy products and services gets higher as
prices rise Recession – time of slow economic activity with two consecutive periods of negative
Microeconomic Forces - the supply and demand of goods and services and how this is
impacted by individual, household, and company decisions to purchase.
Gross Income – total amount of money made in one year by a person, household,
or family unit, including taxes.
Disposable Income – balance of income left after paying taxes; income that is
used for spending and savings.
Discretionary Income – money that consumers have left after paying taxes and
4) Technological Forces - inventions from applied science or engineering resources.
5) Competitive Forces - alternative products that can satisfy a specific market’s needs.
Direct Competitive - similar products sold in the same category
Indirect Competitors - products competing for the same buying dollar in a
slightly different but related category.
Perfect Competition – type of competition where there are many sellers with
nearly identical products and little differentiation.
Monopolistic Competition – type of competition where a large number of sellers
compete with each other, offering customers similar or substitute products.
Oligopoly - type of competition that occurs when a few companies control a
Monopoly – when only one company sells in a particular market.
6) Regulatory Forces
Regulations – restrictions places on marketing practices by government and
Chapter 3 – Consumer Behavior
Effective marketers keep an eye on their target market, and work to understand them and
satisfy consumer’s wants and needs.
Purchase Decision Process
The stages that a buyer passes through when making choices about which products and
services to buy. This process has 5 stages:
Problem Information Evaluation of Purchase Post-purchase
Recognition: Search: Seeking Alternatives: Decision: Behavior:
Perceiving a Value Assessing Buying Value Value in
need Value consumption or use
Problem Recognition: Perceiving a Need
Occurs when a person realizes that the difference between what he or she has and what he
or she needs is big enough to actually do something about it. The process may be
triggered by a certain situation, i.e. finding an empty milk container. Advertisements or
sales people can trigger this recognition.
Information Search: Seeking Value
After realizing they need the product the consumer begins to search for information that
might satisfy their newly discovered need.
Internal Search: search in memory for knowledge on previous experiences
with products or brands, popular with past experience purchases, i.e.
External Search: when one does not have much past experience, the risk of
making a bad decision is high and cost of gathering information is low. Can
Personal Sources: friends or family who the consumer trusts.
Public Sources: Internet, consumer reports or marketer-dominated
sources (sellers, company websites, salespeople, in store displays)
Evaluation of Alternatives: Assessing Value
What selection criteria would us you when buying your product? Price, ease of use, or
some other type? These factors are the evaluation criteria, which represent both the
objective attributes of a brand (such as quality) and subjective ones (such as prestige)
Purchase Decision: Buying Value
Now you are almost ready to make your purchase decision. Three choices remain: the
chosen brand, whom to buy from and when to buy. Many factors may influence these
choices. I.e. sales that are occurring, atmosphere of store, etc.
Post-purchase Behavior: Value in consumption or use
After purchasing the product, the consumer compares it with his or her expectations and
is either satisfied or dissatisfied. Satisfaction and Dissatisfaction of the product will
influence the consumer’s communications and repeat purchase behavior. **Satisfied
people tell 3 people, dissatisfied people complain to 9 people.
The level of involvement that a consumer has in a particular purchase depends on the
personal, social and economic consequences of the purchase to the consumer.
Low Level of Involvement: toothpaste or soft drinks.
High Involvement: car or computer.
Typically have at least one of three characteristics: the item to be
purchased is expensive, it can have serious personal consequences or it could reflect on ones social image. For these occasions the
consumers engage in the information.
Researches have determined three general variations of in the consumer purchase process
based on consumer involvement and product knowledge.
1) Routine Problem Solving: Consumers recognize problem and spend little effort
seeking external information, and evaluating alternatives. (table salt and milk)
2) Limited Problem Solving: Consumers typically seek some information or rely on a
friend to help them evaluate alternatives. (restaurant, pair of jeans)
3) Extended Problem Solving: Each of the 5 stages of the purchase decision is used in
the purchase, including considerable time and effort on external information search and
in identifying and evaluating alternatives. (houses, automobiles and financial
Often the purchase situation will affect the purchase decision process. Five situation
influences have an impact on the process:
1) Purchase Task: Information searching and evaluating alternatives may differ
depending on whether the purchase is a gift, which often involves social visibility, or for
the buyers own use.
2) Social Surroundings: Including the other people present when a purchase decision is
made, may also effect what is purchased.
3) Physical Surrounding: Such as décor, music and crowding in store.
2) Temporal Effects: Such as time of day or the amount of time available, will influence
where consumers have breakfast, lunch or what is ordered.
3) Antecedent States: Which include the consumer’s mood or the amount of cash on
Motivation is the energizing force that stimulates behavior to satisfy a need. Because
consumer’s needs are the focus of the marketing concept, marketers try to arouse these
Types of needs:
1) Psychological Needs: basic to survival and must be satisfied first. (Burger king for
2) Safety Needs: involve self-preservation and physical well being. (Smoke detector and
burglar alarm companies)
3) Social Needs: concerned with love and friendship. (Dating service and fragrance
companies) 4) Personal Needs: by the need for achievement, status, prestige, and self-respect.
(American Express Gold Card)
5) Self-actualization: involve personal fulfillment. (Travel providers offer specialized
educational and exotic trips)
Personality is a person’s consistent behaviors or responses to recurring situations
Perception is the process by which someone selects, organizes and interprets information
to create a meaningful picture of the world.
Selective Exposure: occurs when people pay attention to messages that are
consistent with their attitudes and beliefs and ignore messages that are
inconsistent. I.e. not likely to “see” McDonalds ad after eaten a pizza.
Selective Comprehension: involves interpreting information so that it is
consistent with your attitudes and beliefs. I.e. Sales of Snow Toy increased
after changed name to Snow Master.
Selective Retention: means that consumers do not remember all the
information they see, read or hear, even minutes after being exposed to it.
I.e. give information booklets after leave the showroom.
Perceived Risk is anxiety felt when a consumer cannot anticipate possible negative
outcomes of a purchase.
Learning is behaviors that result from repeated experience or reasoning.
Brand Loyalty is favorable attitude toward and consistent purchase of a single brand
Beliefs are consumer’s perceptions of how a product or brand performs.
Attitude is the tendency to respond to something in a consistently favorable or
Opinion Leaders are individuals who have social influence over others.
Word of Mouth is people influencing each other in personal conversations.
Reference Groups people to whom an individual looks as a basis for self-appraisal or as
a source of personal standards.
Membership Group: one to which a person actually belongs, including
fraternities and sororities, social clubs and the family. Easily identifiable.
Aspiration Group: one that a person wishes to be a member of or wishes to
be identified with, such as a professional society.
Dissociative Group: one that a person wishes to maintain a distance from
because of differences in values or behaviors. Family Life Cycle is a progression from formation to retirement, with each phase brining
distinct needs and purchasing behavior.
Culture a set of values, ideas and attitudes that are learned and shared among the
members of a group.
Subcultures are subgroups within a larger culture that have unique values, ideas and
Cross-cultural Analysis involves the study of similarities and differences among
consumers in two or more nations or societies.
Values are socially preferable modes of conduct or states of existence that tend to
persist over time.
Customs are norms and expectations about the way people do things in a
specific country or culture.
Cultural Symbols are objects, ideas, or processes that represent a particular group of
people or society.
Back Translation is retranslating a word or phrase back into the original language by a
different interpreter to catch errors.
Chapter 4: Marketing Research
Many companies have…
Marketing Information System, which is a set of procedures and processes for
collecting, sorting, analyzing and summarizing information on an ongoing basis. May
collect information from various sources and analyze it to create an accurate market
assessment. However, some specific information may not be available through an MIS so
they turn to MR projects to help lead them to business decisions.
Market Research is the process of collecting and analyzing information in order to
recommend actions to improve marketing activities.
Research can be classified into three basic areas:
Preliminary research conducted to clarify the scope and nature of the marketing
problem. Usually conducted with the expectation that more conclusive research will
Research designed to describe basic characteristics of a given population or to
clarify their usage and attitude.
Research designed to identify cause and effect relationships among variables. The Six-Step Market Research Approach
Makes sure research is done thoroughly, all elements are considered and the results are
1. Define the problem/issue/opportunity – clearly define.
2. Design the research plan – how will you collect data?
3. Conduct exploratory research – primary data (information that is newly
collected for a project) vs. secondary data (facts and figures that have already
been recorded by a third party – lower in cost and readily available) Collect
secondary data first then primary data
4. Collect quantitative (designed to be statistically accurate and is more reliable
than exploratory) research information – more data can be conducted through
observational (watching how people behave) or questioning techniques (obtaining
information with questions via phone, email, etc.)
5. Compile, analyze and interpret data – information is summarized into
6. Generate r