Sales and Marketing ManagementMBA-General ManagementPart III: Analyzing Marketing Part III: Analyzing Marketing Opportunities Opportunities Session 1: Consumer Analysis, A Basis for SegmentationWatch the Video:Who are consumers?Learning Objectives•To show the importance and scope of consumer analysis•To show why consumer demographic analysis is not sufficient in planning marketing programs•To define and describe consumer lifestyles and their characteristics, examine selected lifestyles, and consider the limitations of consumer lifestyle analysis•To define and describe the final consumer’s decision process and consider the limitations of consumer decision-making analysisConsumer Analysis Consumer Analysis includes the study of:Who buys? Who buys? What do they buy?What do they buy?Why do they buy? Why do they buy? How do they make decisions to buy?How do they make decisions to buy?When do they buy?When do they buy?Where do they buy? Where do they buy? How often do they buy?How often do they buy?What is Consumer Behavior?•study of processes•when individuals or groups–Select–Purchase–use or dispose•Products•Services•Ideas•experiences •to satisfy needs and desires.Tapping into Consumer Lifestyles•Relationship marketing•Database marketingThree Types of Consumers:1. Final ConsumersFinal consumersFinal consumersbuy for personal, family, or household use.•They make purchases as individuals.•They use both disposable and discretionary income. Three Types of Consumers:2. Organizational ConsumersOrganizational Organizational consumers consumers buy for:Use in operationsFurther production, and/orResale to other consumersBen & Jerry’s Ice CreamThree Types of Consumers3.Global ConsumersGlobal Consumer CulturePeople united by common devotion to:Brand name consumer goodsMovie starsCelebritiesLeisure activitiesWhat Affects Consumers and their Behaviors??Sensation and Perception•Sensation immediate response of our sensory receptors (eyes, ears, nose, mouth, and fingers) to basic stimuli.•Perceptionis the process by which sensations are selected, organized, and interpreted.But How does the human But How does the human brain function? brain function? Conscious and SubconsciousThe Process of PerceptionFigure 2.1We receive external stimuli through our five sensesImagination•Multi-sensory•Fantasy•Emotional interactions with productsVision: ColorVertical-Horizontal Illusion•Which line is longer: horizontal or vertical?Watch the Video:Visual CommunicationsSmellOdors create mood and promote memoriesHearingSound affects people’s feelings and behaviors, sound and music to create mood–High tempo = more stimulation–Slower tempo = more relaxingTouch“touch”—is the most basic of senses; we learn this before vision and smellTouch affects product experience and judgmentMarketers that use touch: perfume companies, car makersSensory Marketing: Using TouchTable 2.1MaleFemaleHigh classLow classPerceptionWoolSilkDenimCottonFineCoarseHeavyLightTasteCultural changes determine desirable tastesExample: heat of peppers is measured in units called ScovillesStimulus Selection Factors•We are more likely to notice stimuli that differ from others around them•So, marketers can create “contrast”through:SizeColorPositionNoveltyCONSUMER DEMOGRAPHICSConsumer Demographic ProfileBy examining various demographic factors:•Form a consumer demographic profile•Pinpoint both attractive and declining opportunities. Factors Determining a Consumer’s Demographic Profile AgeGenderLocationHousingMobilityIncomeOccupationEducationMarital StatusEthnicity/RaceExpendituresConsumerConsumer’’s s Demographic Demographic ProfileProfileEthnicity/RaceDemographically, ethnicity/raceis one measure of a nation’s diversity with regard to language, country of origin, or race.Limitations of DemographicsInformation may be old. Data may be unavailable in some nations.Summary data may be too broad.Single demographics may not be useful. A demographic profile may be needed.The psychological or social factors influencing people are not considered.Consumer LifestylesAlifestylelifestylerepresents how people spend timeand moneyA number of social and psychological characteristics help form a final consumer’s lifestyle. They are critical for marketing decision making. Segmenting Consumers: PsychographicsPsychographics•The way we feel about ourselves•The things we value•The things we do in our spare timeFactors Determining a Consumer’s Social ProfileConsumerConsumer’’s s Social ProfileSocial ProfileSocial PerformanceSocial ClassReference GroupsOpinion LeadersFamily Life CycleTime ExpendituresCultureSocial Characteristics Are Shaped By:CultureSocial ClassReference GroupsFactors Determining a Consumer’s Psychological CharacteristicsConsumerConsumer’’s s Psychological Psychological ProfileProfilePersonalityAttitudes or OpinionsClass ConsciousnessMotivationPerceived RiskInnovativenessImportance of PurchaseGeographic Demographics•Thesedescribe basic identifiable characteristics of town, cities, states, regions, and countries•Size•Location•Density•Climate•transportation network•Media•Competition•cost of livingMotivation and ValuesThe Motivation Process•Motivation: process that leads people to behave as they do•The ad shows desired state and suggests solution (purchase of equipment)Click image forwww.soloflex.comConsumer MotivationThe forces that drive us to buy/use productsGoal: consumer’s desired end stateDrive: degree of consumer arousalWant: manifestation of consumer needFactors Affecting Decision MakingSUBCULTURESSUBCULTURESSUBCULTURESMEDIAMEDIAMEDIANEWSMAGAZINESRADIOTELEVISIONDIRECT MEDIANEWSNEWSMAGAZINESMAGAZINESRADIORADIOTELEVISIONTELEVISIONDIRECT MEDIADIRECT MEDIAPRICEPACKAGINGADVERTISINGPROMOTIONPERSONAL SELLINGPRICEPRICEPACKAGINGPACKAGINGADVERTISINGADVERTISINGPROMOTIONPROMOTIONPERSONAL SELLINGPERSONAL SELLINGMARKETER-CONTROLLEDSTIMULIMARKETERMARKETER--CONTROLLEDCONTROLLEDSTIMULISTIMULINEEDSNEEDSNEEDSEDUCATIONEDUCATIONEDUCATIONVALUES/ATTITUDESVALUESVALUES//ATTITUDESATTITUDESPASTEXPERIENCEPASTPASTEXPERIENCEEXPERIENCEPERSONALITYPERSONALITYPERSONALITYPLEASUREPLEASUREPLEASUREGENDERGENDRGENDERCULTURECULTURECULTURELIFE-STYLELIFELIFE--STYLESTYLESOCIALCLASSSOCIALSOCIALCLASSCLASSREFERENCEGROUPSREFERENCEREFERENCEGROUPSGROUPSFAMILYFAMILYFAMILYSITUATIONALFACTORSSITATIONALSITUATIONALFACTORSFACTORSCONSUMERDECISIONSCONSUMERCONSUMERDECISIONSDECISIONSMaslow’s Hierarchy of NeedsPhysiological Needs (food, water, shelter, clothes, sleep)Safety Needs (avoid harm, economic safety and security,...)Esteem Needs (respect, strength, achievement,...)Social Needs (love, affection, belonging,...)The desire to grow and to fulfilone’s capabilities and to become all what one is capable of becomingSelf-actualization NB: A need is a feeling which if left unsatisfied, produces anxiety or tension.. Yet if satisfied, imparts a sensation of well-beingThe SelfPerspectives on the Self•We buy products to highlight/hide aspects of the self•Eastern cultures focus on:The collective self (person’s identity comes from group)The interdependent self (person’s identity defined from relationships with others)•Western cultures focus on:IndividualityIndividual appearancePrentice-Hall, cr20095-44Self-Concept•Self-concept: the beliefs a person holds about his/her own attributes, and how he/she evaluates these qualitiesSelf-Esteem•Self-esteem: the positivity of a person’s self-conceptLow self-esteem: think they will not perform wellHigh self-esteem: think they will be successful and will take risksClick photo for Hotornot.comMultiple Selves•Each of us has many selves and roles•Marketers pitch products needed to facilitate an active role identitiesWomanMotherSisterPro athleteFriendWifeSpokespersonAmerican citizenLooking-Glass Self•Looking-glass self: taking the role of the other•We take readings of our own identity by “bouncing”signals off others and trying to project what impression they have of usYou Are What You Consume•Social identity as individual consumption behaviorsQuestion: Who am I now?Answer: To some extent, your possessions!Self/Product Congruence•Consumers demonstrate their values through their purchase behavior•We choose products when attributes matches the selfProduct UsageSelf-Image=The Extended Self•Extended self: external objects that we consider a part of usThe Extended Self•Levels of extended self:Individual: personal possessions (cars, clothing)Family:residence and furnishingsCommunity:neighborhood or town where you liveGroup:social or other groupsMale Sex Roles•Masculinism: study of male image and the complex cultural meanings of masculinityBody Image•Body image:a consumer’s subjective evaluation of his/her physical selfPersonality and LifestylesPersonality•Personality: a person’s unique psychological makeup and how it consistently influences the way a person responds to his/her environmentLifestyles•Lifestyle: patterns of consumption reflecting a person’s choices of how one spends time and moneyLifestyles•Lifestyle marketing perspective: people sort themselves into groups on the basis of:–What they like to do–How they spend leisure time–How they spend disposable income•Example: Magazines targeting specific lifestyles:WWF Magazine, 4 Wheel & Off Road, Reader’s DigestBuilding Blocks of Lifestyles•Product usage in desirable social settings•Consumption style•Patterns of behavior–Co-branding strategies: brands team up with other companies to promote their products understand this –Product complementarity: symbolic meanings of different products relate to one another –Consumption constellations: define, communicate, and perform social roles Linking Products to LifestylesAttitudesThe Power of AttitudesAttitude: a lasting, general evaluation of people, objects, advertisements, or issues•Help to determine a number of preferences and actions“What Is Beautiful Is Good”•Halo effect:people who rank high on one dimension are assumed to excel at other dimensionsStar Power•Match-up hypothesis: celebrity’s image and that of product are similarVividness•Powerful description/graphics command attention and are strongly embedded in memory•Concrete discussion of product attributeEmotional versus Rational Appeals•Appeal to the head or to the heart?Sex Appeals•Sexual appeals vary by countryHumorous Appeals•Different cultures have different senses of humor•Humorous ads get attentionFear Appeals•Emphasize negative consequences that can occur unless consumer changes behavior/attitude•Fear is common in social marketingFAMILY LIFE CYCLE (FLC)Family Life Cycle•Family life cycle (FLC) concept combines trends in income and family composition with change in demands placed on incomeFamily Life Cycle•Factors that determine how couples spend money:–Whether they have children–Whether the woman worksFLC Models•priorities and demand for product categories:–Age–Marital status–Presence/absence of children in home–Ages of childrenTraditional Family Life CycleBachelorBachelorMarriedMarriedFull Nest: 1, 2, 3Full Nest: 1, 2, 3Empty Nest: 1, 2Empty Nest: 1, 2Sole Survivor: 1, 2Sole Survivor: 1, 2Life-Cycle Effects on Buying•Young bachelors and newlyweds: exercise, go to clubs and coffee shops/concerts/movies•Early 20s: apparel, electronics, gas•Families with young children: health foods•Single parents/older children: junk foods•Newlyweds: appliances•Older couples/bachelors: home maintenance servicesSandwich Generation•Sandwich generation:adults who care for their parents as well as their own childrenChildren as Decision MakersChildren make up three distinct markets:•Primary market:kids spend their own money•Influence market:parents buy what their kids tell them to buy (parental yielding)•Future market:kids “grow up”quickly and purchase items that normally adults purchase (e.g., photographic equipment, cell phones)Components of Social Class•Occupational prestige–Is stable over time and similar across cultures–Single best indicator of social class•Income–Wealth not distributed evenly across classes (top fifth controls 75% of all assets)–Income is not often a good indicator of social class; it’s howmoney is spentParody DisplayParody display: deliberately avoiding status symbolsExamples:•Ripped jeans•Sports utility vehicles•Red Wing bootsThe Impact of Religion on Consumption•Dietary and dress requirements create demand for certain products•Religious subcultures affect personality, attitudes toward sexuality, birthrates and household formation, income, and political attitudesThe Youth Market•Youth market often represents rebellion•Generation Y: people born between 1977 and 1994The Gray Market•Traditionally neglected by marketers•People are now living longer/healthier livesClick photo forSeniornet.orgTalking to Seniors•Key values of mature consumers–want to be self-sufficient–value bonds with friends and family–want to give something back to the worldMature Marketing MessagesBasic guidelines for effective advertising•Abundance of information•Simple language•Clear, bright pictures•Use action to attract attention•Speak clearly, and keep word count low•Single sales message, emphasize brand extensions (familiarity)•Avoid excessive picturesTypes of AdoptersAdopting Innovations•Adoption of innovations resembles consumer decision-making sequence–Innovators and early adopters–Laggards–Late adopters (mainstream)Individual Decision MakingTypes of Consumer Decisions•Extended problem solving•Limited problem solving•Habitual decision making:The Three Steps in a Typical Routine PurchaseStimulusStimulusProblem AwarenessProblem AwarenessPurchasePurchaseProblem Recognition: Shifts in Actual or Ideal StatesThe Buying ProcessMotive ArousalProblem RecognitionSearchAlternative evaluationChoiceMotive: the drive, urge, wish, or desire which initiate behaviorA problem: When there is a difference between the ideal state desired and the present stateSearch: Internal (memory) or External (media, friend…)Evaluation: Consumers compare purchase alternatives objectively or subjectivelyChoice: the final step is made. Here sales people are very influentialInternal versus External Search•Internal search–Scanning memory to assemble product alternative information•External search–Obtaining information from ads, retailers, catalogs, friends, family, people-watching, Web sitesCountry-of-Origin•Industrialized countries make better products than developing countriesChoosing Familiar Brand Names•Consumer inertia: the tendency to buy a brand out of habit merely because it requires less effort•Brand loyalty: repeat purchasing behavior that reflects a conscious decision to continue buying the same brandNormal Fashion Cycle•Fashions tend to flow in a predictable sequenceThe Shopping EnvironmentLocation merchandise suitability knowledge/congeniality of sales staffOrganizational ConsumersWhat Influences Organizational Buyers?•Internal stimuli–Buyer’s psychological characteristics•External stimuli–Nature of buyer’s organization, economic, and technological environment of industryWhat Influences Organizational Buyers?•Cultural factors–Different norms for doing business in different countries•Type of purchase–The more complex or risky the decision, the more evaluation is neededTypes of OrganizationalConsumers (1)Manufacturers RetailersOrganizational ConsumersWholesalers Nonprofit InstitutionsGovernmentOrganizational ConsumersOrganizational consumers operate differently in the marketplace than final consumers. They B2BAre fewer in number & geographically concentratedAre fewer in number & geographically concentratedDerive demand from final consumersDerive demand from final consumersHave shorter distribution channelsHave shorter distribution channelsEmploy buying specialistsEmploy buying specialistsHave cyclical demandHave cyclical demandKey Terms and Differences (2)Organizational consumers have different purchasing methods than final consumers. TheyB2BUse formal vendor & value analysis.Use formal vendor & value analysis.Commonly lease equipment.Commonly lease equipment.Use competitive bidding.Use competitive bidding.Use buying teams.Use buying teams.Buy based on specs.Buy based on specs.Goals of Organizational ConsumersProduct Availability Customer ServiceGood Price Level and TermsGeneral GoalsPrompt DeliverySeller Reliability Consistent Quality Global ConsumersDoes Global Marketing Work?•Consumers in different countries do not use products the same way•Significant cultural differences can show up within the same country•Coca-Cola has been successful in crafting a single, international imageDoes Global Marketing Work? (cont.)•Three dimensions of global brands:–Quality signal:if a company has global reach, it must excel on quality–Global myth: brands are symbols of cultural ideals–Social responsibility: companies are expected to address social problems where they operateConsumer SegmentationBasis for SegmentationDemographics are often used as segmentation basesGroups of people, or organizations with similar demographics often have similar needs & desires.Benefit segmentationgroups consumers based on their reasons for using products. It relates to different benefits sought from goods and services by various market niches.Basis for SegmentationThe Heavy-HalfA heavy-usage segmentis at times called the “heavy-half.”This is when a consumer group, or one market segment, accounts for a large proportion of a good’s or service’s sales relative to the size of the market.The Swiss drink 30 times more iced tea than do the French, Spanish, or Portuguese. The Steps in Planning a Target Market StrategyAnalyze Consumer DemandTarget the MarketDevelop the Marketing StrategyDEVELOPING A TARGET MARKET STRATEGYThe Steps in Planning a Target Market StrategyAnalyze Consumer Demand1. Determine demand patterns2. Establish possible bases of segmentation3. Identify potential market segmentsThe Steps in Planning a Target Market StrategyTarget the Market4. Choose a target market approach5. Select the target marketThe Steps in Planning a Target Market StrategyDevelop the Marketing Strategy6. Position the company’s offering in relation to competition7. Outline the appropriate marketing mix(es)Target Market ApproachUndifferentiated Marketing (Mass Marketing)—One product, one plan to one basic market.Concentrated Marketing—One product/plan to one group of consumers.Differentiated Marketing (Multiple Segmentation)—Appeals to two or more market segments with a different plan for each.Contrasting Target Market Approaches•Undifferentiated Marketing(Mass Marketing) •The firm tries to reach a wide range of consumers with one basic marketing plan. •These consumers are assumed to have a desire for similar goods and service attributes.•One product for everybody.•Example: Coca ColaContrasting Target Market ApproachesConcentrated Marketing•concentrates on one group of consumers with a distinct set of needs•tailor-mademarketing plan •One product to one market niche.•Example: Diet CokeContrasting Target Market ApproachesDifferentiated Marketing(Multiple Segmentation) •two or more different market segments, •each has a distinct set of needs•tailor-made marketing plan for each segment. •Two or moreproducts to two or more groups.•Example: Green Tea drink for Asia