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Chapter 5

Chap 5.docx

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MKTG 1021
Bridget Akinc

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Chap 5 01/28/2014 Porters 5 Forces Review Supplier Power (costs up) More concentration fewer (#) High switching costs No substitutes Buyer Power (prices down) Few buyers/buying in large quantity (more power to dictate price) Substitutes Regulations protecting the consumers Big investment, buyers take more time to shop around No switching costs The stronger and more competitive an industry is, the more the profits go down to affectively compete.  Profitability goes down. 5 Things that drive a business: Profitability ▯ Revenue Cash Growth Other (Market Share/position) Evaluating customer segments Not all customers are equally profitable Buying decisions are not binary EVC to customer (economic value to the customer) CLV to Company (Customer Lifetime value to the company) Customer Buying Process: Need recognition Functional need ▯ pertaining to the performance of the product r service Psychological need ▯ pertaining to the personal gratification consumers associate with a product or service Info search Length and intensity of search based in perceived risk Internal search ▯ buyer examines memory v external search 5 type or risks associated with purchase ▯ > the risk more chance of extended search Performance, financial social, physiological, safety, psychological Alternative evaluation Universal sets ▯ all possible choices for a product category, but cant recall all things for every purchase  decision Retrieval sets ▯ brands or stores the buyer can readily recall  Evoked set ▯ what the consumer would consider when making a purchase Evaluative criteria ▯ consistent set of salient r important attributes about a particular product Determinant attributes ▯ prod or service features that are important to the buyer and on which competing  brands or stores perceive to differ Consumer decision rules ▯ the set of criteria that consumers use consciously or sub consciously to quickly  and efficiently select from among several alternatives: compensatory, non compensatory, or decision  hueristics Compensatory decision rules ▯ when the consumer is evaluating tradeoffs one characteristic against  another (good characteristics compensate for bad ones) Multi–attribute model▯ a compensatory model of customer decision making based on the notion that  customers see a prod as a collection of attributes or characteristics. The model uses a weighted avg score  based on the imp of various attributes and performance on those issues.  Non compensatory decision rule ▯ when consumers choose a prod or service on the basis of a subset of its   characteristics regardless of the values of its other attributes Decision heuristics ▯ mental short cutes that help consumers narrow down choices: ex prices bra
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