Fourth Edition

PART 4 . . . . . . . . . . . . . . . . . . . . . . . .
Understanding Principles of Marketing

Copyright ©2003 Prentice Hall, Inc.

Understanding Marketing Processes and Consumer Behavior

CHAPTER 10
“IN OUR FACTORY, WE
MAKE LIPSTICK. IN OUR
ADVERTISING, WE SELL
HOPE.”
~ CHARLES REVSON
REVLON COSMETICS
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
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!

THE INFLUENCE OF MARKETING
PERMEATES EVERYDAY LIFE

 Goods
 Consumer

 Industrial

 Services
 Ideas
Relationship marketing
emphasizes lasting
relationships with
customers and suppliers
THE EXTERNAL ENVIRONMENT
SHAPES MARKETING PROGRAMS

Political
Competitive & Legal
Environment Environment

The Firm & It's Marketing Plan

 Plans
 Strategies Social &
Economic
Environment  Decisions Cultural
Environment

Technological
Environment
THE COMPETITIVE ENVIRONMENT
DRIVES MARKETING DECISIONS

 Substitute product competition

 Brand competition
 International competition
MARKETING MIX
THE “FOUR P’S”

roduct
ricing

lace
(Distribution)
romotion
THE PROMOTIONAL MIX

Personal
Selling
Advertising

Public
Sales
Relations
Promotions
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
IDENTIFYING MARKET SEGMENTS

Geographic Demographic
Variables Variables

Psychographic
Variables
CONSUMER BEHAVIOR

Why do
consumers
purchase and Psychological Influences
consume Personal Influences
products? Social Influences
Cultural Influences
THE CONSUMER BUYING PROCESS

Personal & Environmental Factors

Psychological Personal Social Cultural

Problem Information Evaluation of Purchase Postpurchase

Recognition Seeking Alternatives Decision Evaluation

Marketing Factors
Product Pricing Promotion Place
ORGANIZATIONAL MARKETS

Industrial
Market
Reseller
Market
Government &
Institutional Market
ORGANIZATIONAL BUYING BEHAVIOR

 Differences in buyers
 Professionals

 Specialists

 Experts

 Differences in buyer/seller relationships

PRODUCT FEATURES AND BENEFITS

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

Benefits
The results of using
those products
CLASSIFYING PRODUCTS

Consumer Industrial
 Convenience Goods  Expense Items
 Shopping Goods  Capital Items

 Specialty Goods
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.
DEVELOPING NEW PRODUCTS

 The New Product Development Process

 Product Mortality Rates

Strategy of introducing new products to respond

quickly to customer or market changes
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
THE WORLD’S 10 MOST VALUABLE BRANDS

1. Coca Cola 6. Intel

2. Microsoft 7. Disney
3. IBM 8. Ford
4. GE 9. McDonald’s
5. Nokia 10.AT&T

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

THE FUTURE OF TOP BRANDS

Gaining Value… Losing Value…

 Starbucks +32%  Xerox -38%
 Samsung +22%  Amazon.com -31%
 Financial Times +14%  Yahoo! -31%
 GE +11%  Duracell -30%
 Guinness +11%  Ford -17%

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

PRODUCT PACKAGING

 Attracts consumers
 Displays brand name
 Protects contents
 Supplies information
 Communicates features
and benefits
 Provides features and
benefits (e.g. easy pour
spout)
THE INTERNATIONAL MARKETING MIX

PRODUCTS
PRICING

PROMOTION
DISTRIBUTION
SMALL BUSINESS AND THE MARKETING
MIX

Products

Pricing

Promotion

Distribution
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

CHAPTER REVIEW

 Define product and distinguish between

consumer and industrial products
 Explain the importance of branding and
packaging