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Fourth Edition

PART 4 . . . . . . . . . . . . . . . . . . . . . . . .

Understanding Principles of Marketing

Copyright 2003 Prentice Hall, Inc.

Chapter 10

Understanding Marketing Processes and Consumer Behavior


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In our factory, we make lipstick. In our advertising, we sell hope.


~ Charles Revson Revlon Cosmetics

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Key Topics
Definition of marketing The external marketing environment Segmentation and target marketing The consumer buying process Organizational markets and buying behavior Consumer and industrial products Branding and packaging
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What Is Marketing?
Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

OR Finding a need and filling it!


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The Influence of Marketing Permeates Everyday Life


Goods
Consumer Industrial

Services
Ideas
Relationship marketing emphasizes lasting relationships with customers and suppliers
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The External Environment Shapes Marketing Programs

Competitive Environment

Political & Legal Environment

The Firm & It's Marketing Plan Plans Strategies Social & Economic Cultural Decisions Environment

Environment

Technological Environment
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The Competitive Environment Drives Marketing Decisions


Substitute product competition
Brand competition

International competition

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Marketing Mix
The Four Ps

roduct ricing

lace
(Distribution)
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romotion
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The Promotional Mix


Personal Selling

Advertising

Sales Promotions

Public Relations

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Market Segmentation & Target Marketing


Market Segmentation
Dividing a market into customer categories

Target Marketing
Selecting a category of customers with similar wants and needs who are likely to respond to the same products
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Identifying Market Segments

Geographic Demographic Variables Variables

Psychographic Variables
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Consumer Behavior

Why do consumers purchase and consume products?

Psychological Influences Personal Influences Social Influences Cultural Influences

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The Consumer Buying Process


Personal & Environmental Factors Psychological Personal Social Cultural

Problem Recognition

Information Seeking

Evaluation of Alternatives

Purchase Decision

Postpurchase Evaluation

Marketing Factors Product


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Pricing

Promotion

Place
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Organizational Markets

Industrial Market
Reseller Market Government & Institutional Market
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Organizational Buying Behavior


Differences in buyers
Professionals Specialists Experts

Differences in buyer/seller relationships


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Product Features and Benefits


Features
Tangible and intangible qualities that a company builds into its products

Benefits
The results of using those products
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Classifying Products
Consumer
Convenience Goods

Industrial
Expense Items

Shopping Goods
Specialty Goods

Capital Items

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Product Offerings
Product Line
A group of similar products, intended for similar buyers, who will use them in similar ways.

Product Mix
The total group of products that a company offers for sale.

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Developing New Products


The New Product Development Process Product Mortality Rates

Strategy of introducing new products to respond quickly to customer or market changes


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Creating Product Brands


Branding
Using symbols to communicate the qualities of a given product to create loyal consumers

Types of Brands:
National Brands Licensed Brands Private Brands
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The Worlds 10 Most Valuable Brands


1. Coca Cola
2. Microsoft

6. Intel
7. Disney

3. IBM
4. GE

8. Ford
9. McDonalds

5. Nokia

10.AT&T

Source: The Best Global Brands, BusinessWeek, August 6, 2001


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The Future of Top Brands


Gaining Value
Starbucks +32%

Losing Value
Xerox -38%

Samsung

+22%

Amazon.com -31%
Yahoo! Duracell Ford -31% -30% -17%

Financial Times +14% GE Guinness +11% +11%

Source: The Best Global Brands, BusinessWeek, August 6, 2001


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Product Packaging
Attracts consumers Displays brand name Protects contents

Supplies information
Communicates features and benefits Provides features and benefits (e.g. easy pour spout)
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The International Marketing Mix


PRODUCTS
PRICING

PROMOTION DISTRIBUTION
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Small Business and the Marketing Mix

Products

Pricing
Promotion Distribution
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Chapter Review
Define marketing Describe the forces of the external marketing environment Explain market segmentation and target marketing

Describe the consumer buying process


Discuss the organizational market categories
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Chapter Review
Define product and distinguish between consumer and industrial products Explain the importance of branding and packaging

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