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Consumer
CONSUMER An individual who buys products or services for personal use and not for manufacture or resale. A consumer is someone who can make the decision whether or not to purchase an item at the store, and someone who can be influenced by marketing and advertisements. Any time someone goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decisions a consumer
Customer
someone who pays for goods or services A customer: One that buys goods or services. A customer can in turn resell to a consumer.
Concepts of Marketing
Production Concept Product Concept Selling Concept Marketing Concept
Production Concept
One of the oldest Concept Prevailed from the time of industrial revolution till 1920s. Firms mostly concentrating on producing low cost products Consumers too interested in purchasing low cost & which is readily available. Consumers not specific/particular about product features. Consumers used to buy what is available rather then what they want.
Product Concept
Consumers will Favor those products which are of good Quality & have innovative features. Products should be better packed, better designed, & should have attractive prices. Product Concept with respect to Marketing Product marketing in a business addresses four important strategic questions:[1] What products will be offered (i.e., the breadth and depth of the product line)?
Product Concept
Who will be the target customers (i.e., the boundaries of the market segments to be served)? How will the products reach those customers (i.e., the distribution channels to be used)? Why will customers prefer our products to those of competitors (i.e., the distinctive attributes and value to be provided)?
Selling Concept
By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling.
Selling Concept
Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization's products unless it undertakes a large scale selling and promotion effort. The concept is typically practiced with unsought goods, those that buyers do not normally think of buying such as encyclopedias or insurance. These industries must excel at tracking down prospects and selling them on product benefits.
Selling Concept
Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. Such marketing carriers high risks. It focuses on creating sales transactions rather than on building long-term, profitable relationships with customers.
Marketing Concept
Concept focus on achieving Organizational Goals depends on Knowing the needs & wants of Market. Instead of focusing on Product Centered ( Make & sell philosophy & concentrate on Customer Centered ( Sense & respond philosophy ) Focus not on finding right customers to your products but to find right products for your customers.
Market Segmentation
Segmentation : Division of Markets . Companies divide large heterogeneous market into smaller segments Types of Markets Consumer Goods and Services
Services $
POP
ATM
Goods
Market Segmentation
With a large country Many different types of people
- it is too difficult to create a product that will satisfy everybody, that is why we focus on a segment of the total market
Market Segmentation
Characteristics
age gender geographic location income spending patterns cultural background demographics marital status education language mobility
Market Segmentation
4 commonly used bases for Segmentation
Descriptive
psychographic benefits
Slide 3-7
Market Segmentation
geographic location - based upon where people
live (historically a popular way of dividing markets)
Market Segmentation
Psychographic / lifestyles - based on peoples
opinions, interests, lifestyles eg, people who like hard rock music probably prefer beer to wine
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation Variables are: age gender (male/female) income occupation education
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
gender (male/female) gender is an obvious way to divide the market into segments since so many products are gender-specific
clothing
medical products sports products/services entertainment
Examples ??
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
age age is another obvious way to divide the market into segments since so many products are based upon time of life
Examples ??
Demographic Segmentation
age also, people have different consumption patterns at different ages
Examples ??
Demographic Segmentation
household (family - style) size BUYING PATTERNS 0-5 20-34 young children 6-19 school children young adults
35-49
50-64
younger middle-aged
older middle-aged
Demographic Segmentation
household (family - style) size THE CHANGING HOUSEHOLD half of the households in Canada are only one, or two people number of married couples forming a household is decreasing many unmarried people, and old widowed people, live by themselves
Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 1. Young Single 2. Young Married with no Children (DINKS) 3. Young - married with children
Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 4. Middle Aged a. married without children b. divorced without children
Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 5. Older a. older married b. older unmarried (divorced, widowed)
6. other
Demographic Segmentation
household (family - style) size
SSWDs
single separated widowed divorced in Canada, 1.6 million people live alone - they buy different sizes of products eg. Single serving soup, etc.
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
age gender (male/female)
income
occupation education household (family - style) size
Psychographic Segmentation The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers
Psychographic Segmentation
Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions
Benefit Segmentation
It is based on the Attributes (characteristics) of products, as seen by the customers example, people buy something because it causes a benefit
ie. Diet coke - less sugar, lose weight ie. Extra white toothpaste, whiter teeth, better smile
Target Matket
Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments.
The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities.
So if, for instance, I open a catering business offering catering services in the clients home, instead of advertising with a newspaper insert that goes out to everyone, I could target my market with a direct mail campaign that went only to particular residents.
As individuals, we continually position ourselves. The responsible older sibling, the class clown, a number cruncher, a super genius are all examples of positioning. These identifiers help us define ourselves and distinguish our abilities as unique and different from other people.
Price
Price
Pricing Strategy Importance of:
knowing the market elasticity keeping an eye on rivals
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Product
Product
Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. Extension strategies Specialised versions New editions Improvements real or otherwise! Changed packaging Technology, etc.
Promotion
Promotion
Strategies to make the consumer aware of the existence of a product or service NOT just advertising
Place
Place
The means by which products and services get from producer to consumer and where they can be accessed by the consumer
The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?)
People
People
People represent the business
The image they present can be important First contact often human what is the lasting image they provide to the customer? Extent of training and knowledge of the product/service concerned Mission statement how relevant? Do staff represent the desired culture of the business?
Process
Process
How do people consume services? What processes do they have to go through to acquire the services? Where do they find the availability of the service?
Contact Reminders Registration Subscription Form filling Degree of technology
Physical Environment
Physical Environment
The ambience, mood or physical presentation of the environment
Smart/shabby? Trendy/retro/modern/old fashioned? Light/dark/bright/subdued? Romantic/chic/loud? Clean/dirty/unkempt/neat? Music? Smell?
misleading information, advertising, labeling, or other practices, and to be given the facts to make an informed choice.
3) The right to choose To be assured, wherever possible, access to a variety of products and
services at competitive prices and in those industries in which competition is not workable and government regulation is substituted, to be assured satisfactory quality and service at fair prices.
4) The right to be heard To be assured that consumer interests will receive full and sympathetic
consideration in the formulation of government policy, and fair and expeditious treatment in its administrative tribunals.
Hazardous home appliances must carry a warning label. Home products must carry a label detailing contents. Autos must carry a label showing detailed breakdown of price and all related costs.
Figure 15-1b
Safety standards for motor vehicles are required. National and state speed limits are specified. Hazardous, defective, and ineffective products can be recalled under pressure from EPA, CPSC, NHTSA, and FDA Pesticide residue in food is allowed only if it poses a negligible risk.
Pricing protections
Unfair pricing, monopolistic practices, and noncompetitive acts are regulated by FTC and Justice Department and by states.
Liability protections When injured by a product, consumers can seek legal redress. Other protections No discrimination in the extension of credit.
2) To protect consumers against possible hazards from products they may purchase.
3) To promote competitive pricing and consumer choice.
4) To protect privacy.
Internet users should use technologies that enable them to protect their own privacy.
Industry self-regulation
Businesses should adopt voluntary policies and technical standards that protect the privacy of their customers.
Privacy legislation
The government should pass laws that establish minimum privacy standards for collecting information online.
Marketing Ethics
Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media ethics.
Ethics in Marketing
Ethics are a collection of principles of right conduct that shape the decisions people or organizations make. Practicing ethics in marketing means deliberately applying standards of fairness, or moral rights and wrongs, to marketing decision making, behavior, and practice in the organization.