marketing strategy

O. C. Ferrell Michael D. Hartline

Customers, Segmentation, and Target Marketing

C H A P T E R

Buyer Behavior in Consumer Markets

Irrational and unpredictable Progresses through 5 stages (see next slide) May not always follow these stages in sequence May be characterized by loyalty

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The Consumer Buying Process

Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Evaluation

From Exhibit 6.1

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Need Recognition
Need
Occurs when the consumers current level of satisfaction does not equal their desired level of satisfaction.

Want
A consumers desire for a specific product that will satisfy the need.

Demand
When wants for specific products are backed up by the customers ability and willingness to pay for the product.

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Information Search
Time, effort, and expense dedicated to information search depends on:
Degree of risk involved in the purchase
Financial risk Social risk Emotional risk Personal risk

Amount of expertise with the product category Actual cost of the search

Evoked set
A narrowed down set of alternatives that the customer is considering
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Evaluation of Alternatives
Customers evaluate products as bundles of attributes
Brand attributes Product features Aesthetic attributes Price

Customers place different levels of importance on attributes Important considerations in the evaluation stage:
Consumers choice criteria must be understood Marketing programs must be designed to influence consumers opinions about product or brand image
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Purchase Decision
Purchase intention and the act of buying are distinct concepts Potential intervening factors between intention and buying:
Unforeseen circumstances Angered by the salesperson or sales manager Unable to obtain financing Customer changes mind

Key issues in the purchase decision stage:

For e.g., Product availability

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Postpurchase Evaluation
Four possible outcomes in the postpurchase stage:
Delight Satisfaction Dissatisfaction Cognitive Dissonance

Cognitive dissonance is more likely to occur when:

Currency value of the purchase increases Opportunity cost of rejected alternatives is high Purchase decision is very involving or emotional

Firms ability to manage dissatisfaction and cognitive dissonance is:

A key to creating customer satisfaction
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Understanding Business Buying Behavior

Four Types of Business Markets:
Producer markets (a.k.a. commercial markets) Reseller markets Government market Institutional markets

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The Business Buying Process

1. 2. 3. 4. 5. 6. 7. Problem Recognition Develop Product Specifications Vendor Identification and Qualification Solicitation of Proposals or Bids Vendor Selection Order Processing Vendor Performance Review

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Market Segmentation
The process of dividing the total market for a particular product or product category into relatively homogeneous segments or groups Should create groups where members are similar to each other but dissimilar to other groups Typically allows firms to be more successful

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Mass Marketing
Involves no segmentation whatsoever Is an undifferentiated approach Works best when the needs of an entire market are homogeneous Is efficient from a production standpoint Results in lower marketing costs Is inherently risky and vulnerable to competitors

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Differentiated Marketing
Involves dividing the total market into groups of customers having relatively common or homogenous needs and developing a strategy to pursue one or more of these groups May be necessary when customer needs are similar within groups but differ across groups

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Niche Marketing
Focuses marketing efforts on one small, well-defined market segment or niche that has a unique, specific set of needs Requires that firms understand and meet the needs of target customers so completely that the firms substantial share of the segment makes it highly profitable

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Individualized Segmentation Approaches

Are viable due to advances in technology Will become more important in the future Can be prohibitively expensive to deliver Depend on:
Automated delivery Personalization

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Successful Segmentation
Requires that market segments fulfill 5 criteria:
Identifiable and Measurable Substantial Accessible Responsive Viable and Sustainable

Avoid ethically sensitive, but legal, segments Avoid segments that do not match the firms expertise

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Segmenting Consumer Markets

Behavioral Segmentation Demographic Segmentation Geographic Segmentation Psychographic Segmentation

From Exhibit 6.3

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Benefit Segmentation of the Snack Food Market

Exhibit 6.4

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Positioning

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Positioning

According to Kotler, Positioning is the act of designing the companys offering and image to occupy a distinctive place in the target markets mind.

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Case in point Nestle Nesvita

Target market Demographics I am an .. SEC A/B, 18-23 year old Educated female Psychographic & Behavioral I am the type of person who is trustworthy, confident (habit or attitude relating to product usage) I like to think of myself as Caring, loving, helpful (relevant values) I want to be seen as.. brave (social image)
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Case in point Nestle Nesvita

Frame of Reference So when Im shopping (in the market for) a Milk brand (category/ segment name) I prefer Nestle Nesvita (your brand name)

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Case in point Nestle Nesvita

Owned Benefit Because it gives me Strength through my bones (their experience or feeling) as a result of Calci lock (50% more Calcium + Vitamins) (factual support)

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Nestle Nesvita Positioning Statement

To SEC A & B, 18-23 year old Educated females, who are caring, trustworthy, helpful & confident, Nestle Nesvita is the milk brand which provides strength to them through their bones, because of Calci lock (50% more Calcium + Vitamins).

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Nestle Nesvita

Tv Commercial

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