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MKT 201 Study Guide - Test Market, Kfc, Pizza Hut

16 Pages
162 Views
Fall 2011

Department
Marketing
Course Code
MKT 201
Professor
Smita Kulkarni

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CHAPTER 5
CONSUMER DECISION PROCESS
1. Need Recognition
The greater the discrepancy between the actual needy state and the desired state, the
greater the need recognition
Functional Needs - Related to the performance of a product or service.
Psychological Needs - Pertain to the personal gratification consumers associate with a
product or service
2. Search for Info
Internal Search The buyer examines his or her own memory and knowledge about the
product or service, gathered through past experiences
External Search The buyer seeks info outside his or her personal knowledge base to
help make the buying decision
Factors Affecting Consumers’ Search Process
Perceived benefits versus Perceived Costs of Search
Locus of Control
Internal Locus of Control Believe having control over the outcomes of
their actions engage in more search activity
External Locus of Control Believe fate or other external factors control
all outcomes Wise decision, not their credits but poor decision, not
their fault
Actual or Perceived Risk
Performance Involves the perceived danger inherent in a poorly
performing product or service
Financial Associated with a monetary outlay and includes the initial cost
of the purchase & of using the item or service
Social Involves the fears that consumers suffer when they worry others
might not regard their purchases positively
Physiological = Safety Risk Refers to the fear of an actual harm should
the product not perform properly
Psychological Associated with the way people will feel if the product or
service does not convey the right image
3. Evaluation of Alternatives
Attribute Sets
Universal Sets Include all possible choices for a product category
Retrieval Sets Brands or stores that can be readily brought forth from memory
Evoked Set Comprises the alternative brands or stores that the consumer states
he or she would probably consider when making a purchase decision
Evaluative Criteria Consists of important attributes about a particular product
Determinant Attributes Product or service features that are important to the
buyer and on which competing brands or stores are perceived to differ
Consumer Decision Rules
The set of criteria that consumer use consciously or subconsciously to quickly and
efficiently select from among several alternatives
Compensatory Decision Rule Assume that the consumer, when evaluating
alternatives, trades off 1 characteristics against another
Multi-attribute model
Non-compensatory Consumers choose product or service on the basis of 1
characteristic or 1 subset of a characteristic, regardless of the values of its other
attributes
Decision Heuristics Mental shortcuts that help a consumer narrow down choices
(Price, Brand, Product Presentation)
4. Purchase & Consumption
Conversion Rate Retailers use to measure how well they convert purchase intentions
into actual purchases
Post-purchase Outcomes
Customer Satisfaction
Post purchase Cognitive Dissonance An internal conflict that arises from an
inconsistency between 2 beliefs, or between belief & behavior
Customer Loyalty
Undesirable Consumer Behavior (Negative word of mouth)
Firm’s attempt to reduce dissonance by reinforcing the decision
Thank you letters, congratulations letters, quality ratings build customer
confidence
INVOLVEMENT & CONSUMER NUYING DECISIONS
1. Involvement = The consumer’s degree of interest in or concern about the product or
service
2. Extended Problem Solving
Common when the consumer perceives that the purchase decision entails a lot of risk
3. Limited Problem Solving
Occurs during a purchase decision that calls for a moderate amount of effort & time
Usually relies on past experience more than on external search
Impulse Buying A buying decision made by customers on the spot when they see the
merchandise
Habitual Decision Making A purchase decision process in which consumers engage in
little conscious effort
CHAPTER 8
SEGMENTATION, TARGETING & POSITIONING PROCESS
Step 1: Establish Overall Strategy or Objectives
Derived from mission, objectives & current situation (SWOT)
Step 2: Segmentation Methods
Geographic Segmentation Organizes customers into groups on the basis of where they
live
Demographic Groups consumers according to easily measured, objective characteristics
(age, gender, income, education)
Psychographic Delves into how consumers actually describe themselves
Self-value Goals for life, overrides desire
Self-concept Self-image
Lifestyle The way we live, how we live to achieve goals
Geodemographic Combination of geographic, demographic & lifestyle characteristics
to classify customers

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Description
CHAPTER 5 CONSUMER DECISION PROCESS 1. Need Recognition  The greater the discrepancy between the actual needy state and the desired state, the greater the need recognition  Functional Needs - Related to the performance of a product or service.  Psychological Needs - Pertain to the personal gratification consumers associate with a product or service 2. Search for Info  Internal Search – The buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences  External Search – The buyer seeks info outside his or her personal knowledge base to help make the buying decision  Factors Affecting Consumers’ Search Process  Perceived benefits versus Perceived Costs of Search  Locus of Control  Internal Locus of Control – Believe having control over the outcomes of their actions  engage in more search activity  External Locus of Control – Believe fate or other external factors control all outcomes  Wise decision, not their credits but poor decision, not their fault  Actual or Perceived Risk  Performance – Involves the perceived danger inherent in a poorly performing product or service  Financial – Associated with a monetary outlay and includes the initial cost of the purchase & of using the item or service  Social – Involves the fears that consumers suffer when they worry others might not regard their purchases positively  Physiological = Safety Risk – Refers to the fear of an actual harm should the product not perform properly  Psychological – Associated with the way people will feel if the product or service does not convey the right image 3. Evaluation of Alternatives  Attribute Sets  Universal Sets – Include all possible choices for a product category  Retrieval Sets – Brands or stores that can be readily brought forth from memory  Evoked Set – Comprises the alternative brands or stores that the consumer states he or she would probably consider when making a purchase decision  Evaluative Criteria – Consists of important attributes about a particular product  Determinant Attributes – Product or service features that are important to the buyer and on which competing brands or stores are perceived to differ  Consumer Decision Rules  The set of criteria that consumer use consciously or subconsciously to quickly and efficiently select from among several alternatives  Compensatory Decision Rule – Assume that the consumer, when evaluating alternatives, trades off 1 characteristics against another  Multi-attribute model  Non-compensatory – Consumers choose product or service on the basis of 1 characteristic or 1 subset of a characteristic, regardless of the values of its other attributes  Decision Heuristics – Mental shortcuts that help a consumer narrow down choices (Price, Brand, Product Presentation) 4. Purchase & Consumption  Conversion Rate – Retailers use to measure how well they convert purchase intentions into actual purchases Post-purchase Outcomes  Customer Satisfaction  Post purchase Cognitive Dissonance – An internal conflict that arises from an inconsistency between 2 beliefs, or between belief & behavior  Customer Loyalty  Undesirable Consumer Behavior (Negative word of mouth)  Firm’s attempt to reduce dissonance by reinforcing the decision  Thank you letters, congratulations letters, quality ratings build customer confidence INVOLVEMENT & CONSUMER NUYING DECISIONS 1. Involvement = The consumer’s degree of interest in or concern about the product or service 2. Extended Problem Solving  Common when the consumer perceives that the purchase decision entails a lot of risk 3. Limited Problem Solving  Occurs during a purchase decision that calls for a moderate amount of effort & time  Usually relies on past experience more than on external search  Impulse Buying – A buying decision made by customers on the spot when they see the merchandise  Habitual Decision Making – A purchase decision process in which consumers engage in little conscious effort CHAPTER 8 SEGMENTATION, TARGETING & POSITIONING PROCESS Step 1: Establish Overall Strategy or Objectives  Derived from mission, objectives & current situation (SWOT) Step 2: Segmentation Methods  Geographic Segmentation – Organizes customers into groups on the basis of where they live  Demographic – Groups consumers according to easily measured, objective characteristics (age, gender, income, education)  Psychographic – Delves into how consumers actually describe themselves  Self-value – Goals for life, overrides desire  Self-concept – Self-image  Lifestyle – The way we live, how we live to achieve goals  Geodemographic – Combination of geographic, demographic & lifestyle characteristics to classify customers  Benefit – Groups consumers on the basis of the benefits they derive from products or services  Behavioral – Divides customers into groups based on how they use the product or service  Occasion – When product or service is purchased  Loyalty – Feel strongly that the firm can meet their relevant needs best, most profitable customers  Multiple Segmentation Methods Step 3: Evaluate Segment Attractiveness  Identifiable  Who is within the market to design products or services to meet their needs  Substantial  The size of customers’ population  Reachable  Accessible through pervasive communication & product distribution  Responsive  React similarly & positively to the firm’s offering  Profitable  Marketers must focus on potential profitability of each segment, both current and future. Some key factors are market growth, market competitiveness, and market access Step 4: Select Target Market  Undifferentiated Targeting Strategy (Mass Strategy) – Focuses on the similarities in needs of the customers  Differentiated – Target several market segments with a different offering for each  Concentrated – Selects a single, primary target market & focuses all its energies on providing a product to fit that market’s needs  Micromarketing (one-to-one) – Tailors a product or service to suit an individual customer’s wants or needs Step 5: Develop Positioning Strategy  Positioning Methods  Value Proposition – The unique value that a product or service provides to its customers & how it is better and different from competitors’  Salient Product Attributes  Symbol  Competition  Positioning Using Perceptual Mapping  Perceptual Map – Displays, in 2 or more dimensions, the position of products or brand in consumer’s mind  Ideal Points – Where a particular segment’s ideal product would lie on the map  Determine consumers’ perceptions and evaluations in relation to competitors’.  Identify competitors’ positions  Determine consumer preferences  Select the position  Monitor the positioning strategy CHAPTER 10 COMPLEXITY OF PRODUCTS & TYPES OF PRODUCTS Complexity of Products  Core Customer Value – The basic problem-solving benefits that consumers seek  Marketers convert Core Customer Value into Actual Product & important attributes (Brand name, packaging, features, design, quality level) depend on the product  Associated Services (Augmented Product) – Include nonphysical aspects of the product (product warranties, financing, product support) Types of Products  Specialty Products/Services – Customers show such a strong preference that they will expend considerable effort to search for the best suppliers  Shopping – Customers will spend a fair amount of time comparing alternatives  Convenience – Consumer is not willing to spend any effort to evaluate prior to purchase  Unsought – Consumers either do not normally think of buying or do not know about PRODUCT MIX & PRODUCT LINE DECISIONS  Product Mix – The complete set of all product offered by a firm  Product Lines – Groups of associated items that consumers tend to use together or think of as a part of similar products  Breadth – Number of product lines  Depth – Number of categories within a product line Change Product Mix Breadth  Increase Breadth – Add new product lines to capture new or evolving markets and increase sales  Decrease Breadth – Delete entire product lines to address changing market conditions or meet internal strategic priorities Change of Product Line Depth  Increase Depth – Add items to address changing consumer preferences or preempt competitors while boosting sales  Decrease Depth – Delete product within a product line to realign the firm’s resources BRANDING  Brand name, URLs, Logos and symbols, Characters, Slogans, Jingles/Sounds Value of Branding for the Customer and the Marketer  Brands Facilitate Purchase  Brand are easily recognized because they signify a certain quality level & familiar attributes  Quick Purchase Decision  Brands Establish Loyalty – Trust, affinity  Brands Protect from Competition  More established in the market and more loyal customer base  Brands can Reduce Marketing Costs – Brands sell itself  Brands are Assets  That can be legally protected through trademarks and copyrights  Constitute a unique form of ownership  Brands Impact Market Value Brand Equity  The set of assets and liabilities linked to a brand that add or subtract from the value provided by the product or service.  Brand Awareness: Measures how many consumer in a market are familiar with the brand and what it stands for and have an opinion about that brand  Perceived Value: The relationship between a product or service’s benefits and its cost  Green Product – Ecologically safer products  Cost more but willing to buy because of greater perceived value by consumers  Brand Associations: Reflect the mental link that consumers make between a brand and its key product attributes such as a logo, slogan or famous personality  Brand Personality – A set of human characteristics associated with a brand which has symbolic or self-expressive meanings for consumers  Brand Loyalty: Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category  Consumers are often less sensitive to price  Marketing costs are much lower because the firm does not have to spend money on advertising and promotion  Loyal Customers tend to praise the virtues of their favorite products/services to others  More potential consumers  Firm insulated from the competition because loyal customers do not switch to competitors’ brands BRANDING STRATEGIES Brand Ownership  Manufacturer brands or national brands – Owned and managed by the manufacturer  Private-label brands (Store Brands, House Brands, Own Brands) – developed by the retailers  Premium – Comparable or Superior to a manufacturer’s brand quality, sometimes with modest price savings (Kroger’s Private Selection, Loblaw’s President’s Choice (Canada), Tesco Finest (UK) )  Generic – Target a price-sensitive segment by offering a no-frills product at a discount price (milk, eggs in grocery stores)  Copycat – Imitate the manufacturer’s brand in appearance and packaging, generally are perceived as lower quality and are offered at lower prices (CVS, Walgreen)  Exclusive co-branded – A brand that is developed by a national brand manufacturer, often in conjunction with a retailer and is sold exclusively by the retailer (Macy’s Martha Stewart, Donald Trump, Tommy Hilfiger; Kohl’s Estee Lauder’s American Beauty, Flirt!, Good Skin) Naming Brands and Product Lines  Corporate or family brand – Use firm’s corporate name to brand all its product lines and products (Kellogg’s)  The individual brand benefits from the overall brand awareness associated with the family name  In
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