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MKT 3411 (7)
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Chapter 1

MKT 3411 Chapter 1: Chapter 1 Textbook Notes (Andrew Kuo 2017)
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Marketing
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MKT 3411
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Kuo

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MKT 3411 Chapter 1 Textbook Notes Chapter 1: Buying, Having, and Being • Consumer Behavior: People in the Marketplace o Marketers find it useful to categorize in terms of her age, gender, income, or occupation ▪ These are description characteristics of a population, or demographics o Or Gail’s interests in clothing, music, or the way she spends her leisure time. ▪ This sort of information falls under the category of psychographics, which refers to aspects of a person’s lifestyle and personality ▪ Knowledge of consumer characteristics plays important role in many marketing applications, such as defining the market for a product or deciding on the appropriate technique to employ when a company targets a certain group of consumers o Gail’s sorority sisters strongly influence her purchase decisions ▪ The conversations we have with others transmit a lot of product information, as well as recommendations to use or avoid particular brands • This content is often more influential than what we see on tv commercials, magazines, billboards, or myspace o Growth of web has created thousands of online consumption communities, where members share opinions and recommendations about anything from Barbie dolls to iPhone apps ▪ Gail bonds with fellow group members because they use the same products ▪ There is also a pressure on each group member to buy things that will meet with the group’s approval ▪ A consumer may pay a steep price in form of group rejection or embarrassment when she doesn’t conform to others’ conceptions of what is good or bad, “in” or “out” o The use of market segmentation strategies means targeting a brand only to specific groups of consumers rather than to everybody- even if it means that other consumers who don’t belong to this target market aren’t attracted to that product ▪ When a product or service succeeds in satisfying our specific needs or desires, we may reward it with many years of brand loyalty, a bond between product and consumer that is very difficult for competitors to break o Our judgments (evaluations of products) are affected by- and often reflect- how a society feels people should define themselves at that point in time • Objective 1 o We use products to help us define our identities in different settings • What is Consumer Behavior? o The field of consumer behavior is the study of the processes involved when individuals or groups select, purchase, or use, or dispose of products, services, ideas, or experiences to satisfy needs and desires ▪ The expanded view of consumer behavior embraces much more than the study of what and why we buy; it also focuses on how marketers influence consumers and how consumers use the products and services marketers sell • Objective 2 o Consumer behavior is a process • Consumer Behavior Is A Process o In it’s early stages of development, researchers referred to the field as buyer behavior; this reflected an emphasis on the interaction between consumers and producers at the time of purchase ▪ Most marketers now recognize that consumer behavior is in fact an ongoing process, not merely what happens at the moment a consumer hands over money or credit card and in turns receives some good or service o The exchange, a transaction in which two or more organizations or people give and receive something of value, is an integral part of marketing ▪ Although exchange theory remains an important part of consumer behavior, the expanded view emphasizes the entire consumption process, which includes the issues that influence the consumer before, during, and after a purchase o A consumer is a person who identifies a need or desire, makes a purchase, and then disposes of the product during the three stages of the consumption process ▪ In many cases, however, different people play different role in this sequence of events • The purchaser and user of a product may not be the same person o Parent picks out clothes for a teenager • In other cases, another person may act as an influencer, providing recommendations for or against certain products without actually buying or using them ▪ Finally, consumers may take the form of organizations of groups • One or several persons may make the decisions involved in purchasing products that many will use, as when a purchasing agent orders the company’s office supplies o In other organizational situations, a large group of people may make purchase decisions ▪ For example, company accountants, designers, engineers, sales personnel • One important type of organization is the family, where different family members play pivotal roles in making decisions regarding products and services that we all will use • Figure 1.1 Stages in the Consumption Process o Pre-Purchase Issues ▪ Consumer’s perspective • How does a consumer decide that he/she needs a product? • What are the best sources of information to learn more about alternative choices ▪ Marketer’s perspective • How are consumer attitudes toward products formed and/or changed? • What cues do consumers use to infer which products are superior to others? o Purchase Issues ▪ Consumer’s perspective • Is acquiring a product a stressful or pleasant experience? • What does the purchase say about the consumer? ▪ Marketer’s perspective • How do situational factors, such as time pressure or store displays, affect the consumer’s purchase decision o Post-Purchase Issues ▪ Consumer’s perspective • Does the product provide pleasure or perform its intended function? • How is the product eventually disposed of, and what are the environmental consequences of this act ▪ Marketer’s perspective • What determines whether a company will be satisfied with a product and whether he/she will buy it again? • Does this person tell others about his/her experiences with the product and influence their purchase decision? • Consumer’s Impact on Marketing Strategy o Understanding consumer behavior is good business ▪ Basic marketing concept states that firms exist to satisfy needs ▪ Marketers can satisfy these needs only to the extent that they understand the people or organizations who will use the products and services they sell o Consumer’s response is the ultimate test of whether a marketing strategy will succeed ▪ Thus, a marketer should incorporate knowledge about consumers into every facet of a successful marketing plan ▪ Data about consumers help organizations to define the market and identify threats to and opportunities for a brand ▪ This knowledge also helps to ensure that the product continues to appeal to its core market • Objective 3 o Marketers need to understand the wants and needs of different consumer segments • Consumers Are Different! How We Divide Them Up o Our society is evolving from a mass culture in which many consumers share the same preferences to a diverse one in which we have almost an infinite number of choices ▪ This change makes it more important than ever to identify distinct market segments and to develop specialized messages and products for those groups o Alternate reality games (ARGs) integrates multiple media channels, ranging from TV, email, SMS, and even snail mail to engage a community of players who collaborate to solve a complex puzzle ▪ Unlike McDonald’s advertising, which makes it clear that you need to buy a burger, there was no mention of the company’s sponsorship in the campaign (this is known as “dark-play ARG”) o Building loyalty to a brand is a very smart marketing strategy, so sometimes companies define market segments when they identify their most faithful customers or heavy users ▪ As a rule of thumb, marketers use the 80/20 rule: 20 percent of users account for 80 percent of sales o Demographics are statistics that measure observable aspects of a population, such as birth rate, age distribution, and income ▪ The U.S. Census Bureau is a major source of demographic data on U.S. families, but many private firms gather additional data on specific populations as well ▪ The changes and trends that demographic studies reveal are of great interest to marketers, because they can use the data to locate and predict the size of markets for many products • Age o Consumers of different age groups have different needs and wants o Although people who belong to the same age group differ in many ways, they do tend to share a set of values and common cultural experiences that they carry throughout life ▪ In some cases, marketers initially develop a product to attract one age group and then try to broaden its appeal later on • Gender o Target either men or women • Family Structure o A person’s family/marital status is another important demographic variable, because this has a huge effect on consumers’ spending priorities ▪ Young bachelors and newlyweds are the most likely to exercise; go to bars, concerts, and movies; and consume alcohol ▪ Families with children are big purchasers of health foods and fruit juices, whereas single-parent households and those with older children buy more junk food ▪ Older couples and bachelors are most likely to use home maintenance services • Social Class and Income o People who belong to the same social class are approximately equal in terms of income and social standing in the community ▪ They work in roughly similar occupations, and tend to have similar tastes in music, clothing, leisure activities, and art ▪ They also tend to socialize with one another, and they share many ideas and values regarding the way life should be lived o The distribution of wealth is of great interest to marketers because it determines which groups have the greatest buying power and market potential • Race and Ethnicity o African Americans, Hispanic Americans, and Asian Americans are the three fastest growing ethnic group in the United States ▪ As our society becomes increasingly multi-cultural, new opportunities develop to deliver specialized products to racial and ethnic groups and to introduce other groups to these offerings • When Reebok introduced its RBK shoe line, it signed popular urban artists like 50 Cent to promote that line • Geography o Many national marketers tailor their offerings to appeal to consumers who live in different parts of the country • Lifestyles o Consumers also have very different lifestyles, even if they share other demographic characteristics such as gender or age ▪ The way we feel about ourselves, the things we value, the things we like to do in our spare time- all of these factors help to determine which products will push our buttons, or even those that make us feel better o Marketers carefully define customer segments and listen to people in their markets as never before. ▪ Many of them realize that a key to success is building relationships between brands and customers that will last a lifetime. • Marketers who believe in this philosophy, called relationship marketing, interact with customers on a regular basis and give them reasons to maintain a bond with the company over time o A focus on relationships is even more vital during tough economic conditions o When times are tough, people tend to rely on their good friends for support! o Database marketing involves tracking specific consumers’ buying habits very closely and crafting products and messages tailored precisely to people’s wants and needs based on this information ▪ Wal-Mart stores massive amounts of information on the 100 million people who visits its stores each week, and the company uses these data to fine-tune its offerings • Popular Culture o Marketing stimuli around us as advertisements, stores, and products compete for our attention and our dollars ▪ Marketers filter much of what we learn about the world, whether the affluence they depict in glamorous magazines or the roles actors play in commercials ▪ Ads show us how we should act with regard to recycling, alcohol consumption, the types of houses and cars we might wish to own- and even how to evaluate others based on the products they buy or don’t’ buy ▪ In many ways, we’re at the mercy of marketers, because we rely on them to sell us products that are safe and that perform as promised, to tell us about what they sell, and to price and distribute these products fairly o Popular culture, consisting of the music, movies, sports, books, celebrities, and other forms of entertainment that the mass market produces and consumes, is both a product and an inspiration for marketers ▪ It also affects our lives in more far-reaching ways, ranging from how we acknowledge cultural events such as marriage, death, or holidays to how we view social issues such as global warming, gambling, and addictions o Marketers play a significant role in our view of the world and how we live in it • What Does It Mean To Consume? o One fundamental premise of the modern field of consumer behavior: People often buy products not for what they do but for what they mean ▪ This principle does not imply that a product’s basic function is unimportant, but rather that the roles products play in our lives extends well beyond the task they perform • The deeper meanings of a product may help it to stand out from other similar goods and services ▪ All things being equal, we choose the brand that has an image (or even a personality!) consistent with our underlying needs o Archrivals like Nike and Reebok are largely marketed in terms of their images- meanings that have been carefully crafted with the help of legions of rock stars, athletes, slickly produced commercials, and many millions of dollars ▪ When you buy Nike, you are doing more than choosing shoes: you also make a lifestyle statement about the type of person you are or wish you were ▪ Our choices also help each of us to form bonds with others who share similar preferences o The sociological perspective of role theory takes the view that much of consumer behavior resembles actions in a play ▪ Because people act out many different roles, they sometimes alter their consumption decisions depending on the particular “play” they are in at the time ▪ The criteria they use to evaluate products and services in one of their roles may be quite different from those they use in other roles o One trademark of marketing strategies today is that many organizations try very hard to build relationships with customers ▪ The nature of these relationships can vary, but these bonds help us to understand some of the possible meanings products have for us ▪ Furthermore, researchers find that, like friendships and love affairs with other people, our relationships with brands over time o Some types of relationships a person might have with a product: ▪ Self-concept attachment- The product helps to establish the user’s identity ▪ Nostalgic attachment – The product serves as a link with a past self ▪ Interdependence- The product is part of the user’s daily routine ▪ Love- The product elicits emotional bonds of warmth, passion, or other strong emotion • The Global Consumer o The majority of people on Earth live in urban cities ▪ Analysts predict that the number of megacities, defined as urban cities of 10 million or more, will grow to 26 by 2015 o One by-product of sophisticated marketing strategies is the movement toward a global consumer culture, one that unites people around the world by their common devotion to brand-name consumer goods, movie stars, celebrities, and leisure activities ▪ The rise of global marketing means that
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