Course Title

BrooklynChapter
Business
Title School
Levels of Strategic Planning
Business-Unit Strategy
Strategic Business Unit (SBU)
A division, product line, or other profit center
within a parent company
Market-Growth/Market-Share Matrix
A strategic planning tool based on the philosophy that a
product’s market growth rate and market share are
important in determining marketing strategy
Factors determining SBU/product’s position within a
matrix
 Product-market growth rate
 Relative market share
 Boston Matrix
High
Market Growth

Low Market share High

 Growth Strategy [Ansoff’s Matrix]

Existing Markets New Markets

Market Market
Penetration Development
Products
New

Product
Diversification
Development
Strategic Formulation
1 ) Porter’s Generic Strategies
 Overall cost leadership
 Differentiation
 Focus
2) Strategies for reaching global markets:
 Licensing
 Exporting
 Franchising
 Contract manufacturing
 Joint venture
 Foreign direct investment
Marketing Mix
 What is a Product ?

Levels of Products
and Services
• Core benefits
• Actual product
• Augmented
product

Course Title
Marketing
Chapter Title
 Adoption processes Model
• Learns of the new product,
Awareness • needs further information

• Interested enough to gather more

Interest information

• Look at the benefits and will it be enough

Evaluation to try the product

• make trial purchases to improve their original

Trial estimate of the new product’s value.

Adoption • Decide to purchase the product and use all the

time

Course Title
Marketing
Chapter Title
 Adopter Categories
• Small percentage, eager to try new things
Innovators • Don’t remain loyal

Early Adopters • More members, Tend to be more practical

• very important because of their influence

Early Majority • Beginning of mass market (1/3 market)

• The key to be profitable (why?)

Late Majority • Group of “Wait to see” (1/3 market)

• Highest profits once they started to purchase

Laggards • Last group to adopt something new

• Size depends on the market
Pricing strategies

1.Oligopolistic strategy

2.Penetration strategy

3.Skimming strategy
4.Price Discrimination strategy

5.Price-Quality strategy
Pricing strategies

6. Everyday Low pricing ( EDLP)

7. High-low pricing strategy

8. Bundling

9. Psychological pricing(odd pricing)

Placement
By definition placement refers to the “where”
and “how” the final consumer is able to obtain
the product , It cover two areas:

1) Channels of Distribution : Refer to Distribution

such as retailers or wholesalers – the middlemen
between you and the end consumer.
Placement

2)Physical Distribution: Refer to such areas

as transportation, warehousing, or inventory
control facilities.

How the product is transported?

How the product is stored?
Placement
Channels of distribution:

Direct Channel: when a producer and

ultimate consumer deals directly with each
other

Indirect Channel: : when there are

intermediaries between the producer and
consumer
Types of Distribution Channels
 Placement
Manufacturer Consumer

Manufacturer Retailer Consumer

Manufacturer Wholesaler Retailer Consumer

Manufacturer Wholesaler Jobber Retailer Consumer

A- Customer Marketing Channels

 Placement
Industrial
Channel 4 Manufacturer
customer

Industrial Industrial
Channel 3 Manufacturer
Distributer customer

Manufacturer Industrial Industrial

Channel 2 Manufacturer
Representativ Distributer customer

Manufacturer Industrial Industrial

Channel 1 Manufacturer
Sales Branch Distributer customer

B- Industrial Marketing Channels

 Placement
How do you determine the best “flow” for a
Product/Service?
1. What is your objective?
2. What are the purchasing characteristics of your
target consumer?
3. What is the nature of your product/service?
4. What does your competition do?
5. What are the legal issues if any with your product?
6. What other channels do you presently use?
7. What are the financial implications?
 Logistics & Transportation

Suppliers’ Manufacturers Wholesalers Retailers Consumers

plants

Channel of Distribution

Supply Chain
 Retail Strategies

Intensive Selective Exclusive

distribution distribution distribution
• Convenience goods • Shopping goods • Specialty goods
• Example: Frito Lay • Example: Sony HD • Example: Porsche
chips televisions cars

stores and retail outlets only one outlet in a

supermarkets geographic area.

franchises
People

It is essential that the right people be

recruited as a part of the staff that delivers
service. They must be given the right training
and service knowledge to be able to give the
customers value for their money and their
performance must be monitored. Staff employed
without training can lead to variable quality of
service. The right staff for providing service can
be an effective tool for customer retention.
Physical Evidence
Physical evidence is the environment in
which a company provides service. A customer
will immediately form an impression based on
the physical evidence of the service provided.
This can influence a customer’s opinion about the
organization. Thus, an organization must ensure
that they get it right. If you visit a restaurant, you
expect to see a clean and well-kept environment.
If you don’t, you may not visit the place again.
Process
It is an essential element of service
marketing. Delivery of service to customers
directly depends on these processes. These
processes include the administrative processes,
preparation and delivery of service. Some
companies take care of their customer accounts
and set up efficient processes to ensure good
customer experience. For example, credit card
renewal for a customer, when their old credit
card validity expires
 Promotion
Promotions are a two-way communication
programs designed to inform, remind, or
persuade customers to buy your products

Inform Remind

Persuade
 Promotion
Promotion mix :
The combination of tools a marketer uses:
advertising, personal selling, public relations, and
sales promotion
Integrated Marketing communication(IMC) :
A way of thinking about promotion that
combines all the promotionaltolls into one
comprehensive and unified promotional strategy
Promotional mix
So …. a Brand is ……

• The mental representation in the minds of

consumers of information linked to your firm
or business.

• It is a Name , Sign or Symbol that identifies &

helps to differentiate products or services.

• Brands can be local ,regional or worldwide

Finally……
A good brand name should:
• Be protected under trademark law.
• Be easy to pronounce
• Be easy to remember
• Be easy to recognize
• Be easy to translate into all languages in the
markets where the brand will be used
• Attract attention
• Suggest product benefits or Suggest usage
(E.g. Easy-Off).
 Marketing Mix Interaction
Marketing
Considerations
Convenience Shopping Specialty Unsought

Customer buying Frequent purchase; Less frequent Strong brand Little product
little planning, little purchase; much preference and loyalty; awareness or
behavior
comparison or planning and shopping special purchase knowledge (or, if
shopping effort; low effort; comparison of effort; little aware, little or even
customer involvement brands on price, comparison of brands; negative interest).
quality, and style low price sensitivity

Price Low price Higher price High price Varies

Distribution Widespread Selective distribution Exclusive distribution Varies

distribution; in fewer outlets in only one or a few
convenient locations outlets per market
area
 Marketing Mix Interaction
Marketing
Convenience Shopping Specialty Unsought
Considerations
Promotion Mass promotion Advertising and More carefully Aggressive
by the producer personal selling targeted advertising and
by both the promotion by personal selling
producer and both the producer by the producer
resellers and resellers and resellers.

Examples Toothpaste, Major Luxury goods, Life insurance

magazines, and appliances, such as rolex and Red Cross
laundry detergent televisions, watches or fine blood donations.
furniture, and crystal
clothing.
8- Customerservice
Customer service plan should be included that
include plans for
• Customer communication
• After sale service
• Service level agreement
• Service quality control
• Retaining customers
• Customer complaint handling
• Developing the customer base – loyalty programs
Consumer Behavior
 Consumer Behavior
After studying this chapter, you should be able to:
1. Define the consumer market and construct a
simple model of consumer buyer behavior
2. Name the four major factors that influence
consumer buyer behavior
3. List and understand the major types of buying
decision behavior and the stages in the buyer
decision process
4. Describe the adoption and diffusion process for
new products
 Few findings which motivated study
of Consumer Behavior
•Of all the products launched every year, only 55%
survive five years later.
e.g. FIAT launched Uno, Palio, Sienna etc but the could
not survive profitably.
•Of the various new product concepts offered by
over 100 leading companies, only 8% reached
the market and out of this 8% only 17% achieved
the marketing objectives.
e.g. HUL launched pre-cooked ready-to-eat rice, in line
with Nestle’s Maggi, but failed miserably.
 Golden Rules

Satisfying the consumer’s need is more

important than the expectations of the
management.

For survival, there is not option before the

companies but to understand and adapt to
consumer motivation and behavior.
 Golden Rules
Effective Marketing can positively influence the
consumer, provided the product/service
offered satisfies his/her needs and
expectations

The right marketing program can activate a

latent demand and lead to successful sales
 Consumer Behavior
The mental and emotional processes and
physical activities people engage in when they
select, purchase, use, and dispose of products
or services to satisfy particular needs and
desires
 Consumer Behavior
 The study of consumer behavior is so
important in marketing because companies
must understand customer motivations and
reasons for purchasing a product or service
 One important part of consumer behavior is
the process we all go through when
purchasing a product
 The decision making process and factors that
influence it
 Model of Consumer Behavior
Marketing stimuli Other stimuli include:
consists of the 4 Ps • Economic forces

• Product • Technological forces

• Price • Political forces

• Place • Cultural forces

• Promotion
Model of
Consumer
Behavior
Factors influencing consumer decision
 Factors affecting consumer behavior

Cultural Factors Social Factors

•Buyer’s culture •Reference groups
•Buyer’s subculture •Family
•Buyer’s social class •Roles and status
 Factors affecting consumer behavior

Personal Factors Psychological Factors

•Age and life-cycle •Motivation
stage •Perception
•Occupation
•Economic situation •Learning
•Lifestyle •Beliefs and attitudes
•Personality and self-
concept
Factors affecting consumer behavior

Culture is the learned values,

perceptions, wants, and
behavior from family and
other important institutions
 Factors affecting consumer behavior

Subcultures are groups of people within a

culture with shared value systems based on
common life experiences and situations.
• Chinese
• Indians
• Malays
• Eurasians
 Factors affecting consumer behavior

Social classes are society’s relatively permanent

and ordered divisions whose members share
similar values, interests, and behaviors
• Measured by a combination of occupation,
income, education, wealth, and other
variables
 Factors affecting consumer behavior

The major social classes:

• Upper class
• Middle class
• Working class
• Lower class
 Factors affecting consumer behavior

Social Factors
Groups
•Membership groups have a direct influence and
to which a person belongs.
•Aspirational groups are groups to which an
individual wishes to belong.
•Reference groups are groups that form a
comparison or reference in forming attitudes or
behavior.
 Factors affecting consumer behavior

Social Factors
Groups
• Opinion leaders are people within a reference
group with special skills, knowledge,
personality, or other characteristics that can
exert social influence on others
• Buzz marketing enlists opinion leaders to spread the word.
• Social networking is a new form of buzz marketing
• MySpace.com
• Facebook.com
 Factors affecting consumer behavior

Social Factors
• Family is the most important consumer-buying
organization in society
• Social roles and status are the groups, family,
clubs, and organizations to which a person
belongs that can define role and social status
 Factors affecting consumer behavior

Personal Factors
• Personal characteristics
• Age and life-cycle stage
• Occupation
• Economic situation
• Lifestyle
• Personality and self-concept
 Factors affecting consumer behavior

Personal Factors
Age and life-cycle stage
• RBC (Royal Bank of Canada) Royal Bank has
identified five life-stage segments:
• Youth—younger than 18 years
• Getting started—18-35 years
• Builders—35-50 years
• Accumulators—50-60 years
• Preservers—over 60 years
 Factors affecting consumer behavior

Personal Factors
• Occupation affects the goods and services
bought by consumers
• Economic situation includes trends in:
• Personal income
• Savings
• Interest rates
 Factors affecting consumer behavior

Personal Factors
• Lifestyle is a person’s pattern of living as
expressed in his or her psychographics.
• Measures a consumer’s AIOs (activities,
interests, and opinions) to capture
information about a person’s pattern of
acting and interacting in the environment.
 Factors affecting consumer behavior

Personal Factors
SRI Consulting’s Values and Lifestyle (VALS) typology:
• Classifies people according to how they spend money
and time:
• Primary motivations
• Resources
 Factors affecting consumer behavior

Personal Factors
Primary motivations
• Ideals
• Achievement
• Self-expression
 Factors affecting consumer behavior

Personal Factors
Resources
• High resources
• Innovators exhibit all primary motivations.
• Low resources
• Survivors do not exhibit strong primary
motivation.
VALS Lifestyle
Classifications
 Factors affecting consumer behavior

Personal Factors
Personality and Self-Concept
• Personality refers to the unique psychological
characteristics that lead to consistent and
lasting responses to the consumer’s
environment
 Factors affecting consumer behavior

Personal Factors
Personality and Self-Concept
• Self-concept refers to people’s
possessions that contribute to
and reflect their identities
 Factors affecting consumer behavior

Psychological Factors
• Motivation
• Perception
• Learning
• Beliefs and attitudes
 Factors affecting consumer behavior

Psychological Factors
Motivation
• A motive is a need that is sufficiently pressing to
direct the person to seek satisfaction.
• Motivation research refers to qualitative
research designed to probe consumers’ hidden,
subconscious motivations.
 Factors affecting consumer behavior

Psychological Factors
Abraham Maslow’s Hierarchy of
Needs
• People are driven by
particular needs at particular
times.
• Human needs are arranged
in a hierarchy from most
pressing to least pressing
 Factors affecting consumer behavior

Psychological Factors
• Perception is the process by which people
select, organize, and interpret information to
form a meaningful picture of the world from
three perceptual processes:
• Selective attention
• Selective distortion
• Selective retention
 Factors affecting consumer behavior
Psychological Factors
• Selective attention is the tendency for people to
screen out most of the information to which they
are exposed
• Selective distortion is the tendency for people to
interpret information in a way that will support
what they already believe
• Selective retention is the tendency to remember
good points made about a brand they favor and
to forget good points about competing brands
 Factors affecting consumer behavior
Psychological Factors
Selective Consumer pays attention to certain stimuli and
Exposure ignores others

Selective Consumer interprets info so that is is consistent with

Comprehension his beliefs

Selective Average consumer only remembers

Retention 30% of information heard
 Factors affecting consumer behavior

Psychological Factors
• Learning is the changes in an individual’s
behavior arising from experience and occurs
through interplay of:
• Drives
• Stimuli
• Cues
• Responses
• Reinforcement
 Elements of learning
1. Motives: motivation or drive is very important for learning.
E.g. showing adsfor winter goods just before winter and
summer products just before summer.
2. Cues: Motives stimulate learning, whereas “Cues” are the
stimuli that give direction to these motives. E.g. in the market
place, price, styling, packaging, store display all serve as
cues to help consumer to decide a particular product from a
group.
3. Response: Response is how the consumers react to the
motives or a cue, and how they behave. Response can be
overt (open, physical or visible) or covert (hidden or mental).
4. Reinforcement: Reinforcement is an important element which
increases the probability (tendency or likelihood) of a
particular response to occur in future as a result of a given set
of motives and cues. + or -
 Factors affecting consumer behavior

Psychological Factors
Beliefs and Attitudes
• Belief is a descriptive thought that a person has
about something based on:
• Knowledge
• Opinion
• Faith
 Factors affecting consumer behavior

Psychological Factors
Beliefs and Attitudes
Attitudes describe a person’s relatively consistent
evaluations, feelings, and tendencies toward an
object or idea
Four Types of Buying Decision Behavior

• Complex buying behavior

• Dissonance-reducing buying behavior
• Habitual buying behavior
• Variety-seeking buying behavior
 Types of Buying Decision Behavior
1. Complex Buying Behavior
• Occurs when consumers are highly motivated in
a purchase and perceive significant differences
among brands.
• Purchasers are highly motivated when:
• Product is expensive
• Product is risky
• Product is purchased infrequently
• Product is highly self-expressive
 Types of Buying Decision Behavior

2. Dissonance-reducing buying behavior

occurs when consumers are highly involved with
an expensive, infrequent, or risky purchase, but
see little difference among brands.
• Post-purchase dissonance occurs when the
consumer notices certain disadvantages of the
product purchased or hears favorable things
about a product not purchased.
 Types of Buying Decision Behavior

3.Habitual buying behavior occurs when

consumers have low involvement and there is
little significant brand difference.
4.Variety-seeking buying behavior occurs when
consumers have low involvement and there are
significant brand differences.
Factors influencing consumer decision
 Decision-Making process
1. Problem recognition
2. Information search
3. Alternative evaluation
4. Purchase decision / or no purchase
5. Post-purchase evaluation ( cognitive
dissonance)
The Consumer Decision Process

This five-stage process represents the steps

people undergo when they make a conscious
effort to learn about the options and select a
product–the first time they purchase a product,
for instance, or when buying high-priced, long-
lasting items they don’t purchase frequently. This
is called complex decision making
High and Low Involvement Decisions
High-involvement Decisions:
Characterized by high levels of
importance thorough information
processing, and substantial differences
between alternatives

Low-involvement Decisions:
Occur when relatively little
personal interest, relevance, or
importance is associated with a
purchase
The Consumer Decision Process
1.Need recognition:
The first step of the consumer decision process is
recognizing that there is a problem or unmet
need and that this need warrants some action.
Whether we act to resolve a particular problem
depends upon two factors:
(1) the magnitude of the difference between what
we have and what we need, and
(2) the importance of the problem.
The Consumer Decision Process
2. Information Search:
is the amount of information needed in the
buying process and depends on:
•The strength of the drive,
•The amount of information you start with,
•The ease of obtaining the information,
•The value placed on the additional information
•The satisfaction from searching
The Consumer Decision Process
2. Information Search:
Sources of information:
•Personal sources: family and friends
•Commercial sources: advertising, Internet
•Public sources: mass media, consumer
organizations
•Experiential sources: handling, examining, using
the product
The Consumer Decision Process
3. Evaluation of Alternatives:
Evaluation criteria vary from consumer to
consumer and from purchase to purchase, just as
the needs and information sources vary. One
consumer may consider price most important
while another puts more weight on quality or
convenience.
The Consumer Decision Process
4. The Purchase Decision:
After much searching and evaluating (or perhaps
very little), consumers at some point have to
decide whether they are going to buy. Anything
marketers can do to simplify purchasing will be
attractive to buyers.
The Consumer Decision Process
4. The Purchase Decision:
The purchase decision is the act by the consumer
to buy the most preferred brand.
The purchase decision can be affected by:
 Attitudes of others
 Unexpected situational factors
The Consumer Decision Process
5. The Postpurchase Behavior:
•The post-purchase decision is the satisfaction or
dissatisfaction the consumer feels about the
purchase.
•Relationship between:
•Consumer’s expectations
•Product’s perceived performance
The Consumer Decision Process
Post-Purchase Decision

• The larger the gap between expectation and

performance, the greater the consumer’s
dissatisfaction.
• Cognitive dissonance is the discomfort
caused by a post-purchase conflict
The Consumer Decision Process
5. The Postpurchase Behavior:
It is normal for consumers to experience some
post-purchase anxiety after any significant or
non-routine purchase. This anxiety reflects a
phenomenon called cognitive dissonance.
According to this theory, people strive for
consistency among their cognitions (knowledge,
attitudes, beliefs, and values). When there are
inconsistencies, dissonance arises, which people
try to eliminate.
The Buyer Decision Process
Post-Purchase Decision

• Customer satisfaction is a key to building

profitable relationships with consumers—to
keeping and growing consumers and reaping
their customer lifetime value
 The Buyer Decision Process for
New Products
• New product is a good, service, or idea that
is perceived by some potential customers as
new.
• Adoption process is the mental process an
individual goes through from first learning
about an innovation to final regular use.
The BTuhyeerBDueyceisrioDnePcrioscioesnsPforrocess for
New Products New Products
Stages in the Adoption Process

• Awareness is when the consumer becomes aware

of the new product but lacks information.
• Interest is when the consumer seeks information
about the new product.
The BTuhyeerBDueyceisrioDnePcrioscioesnsPforrocess for
New Products New Products
Stages in the Adoption Process

• Evaluation is when the consumer considers

whether trying the new product makes sense.
• Trial is when the consumer tries the new product
to improve his or her estimate of value.
• Adoption is when the consumer decides to make
full and regular use of the product

5-94
The BTuhyeerBDueyceisrioDnePcrioscioesnsPforrocess for
New Products New Products
Individual Differences in Innovation

• Early adopters are opinion leaders and adopt new ideas

early but cautiously.
• Early majority are deliberate and adopt new ideas before
the average person.
• Late majority are skeptical and adopt new ideas only after
the majority of people have tried it.
• Laggards are suspicious of changes and adopt new ideas
only when they become tradition.
The BTuhyeerBDueyceisrioDnePcrioscioesnsPforrocess for
New Products New Products
Individual Differences in Innovation
 The Buyer Decision Process for
New Products
Influence of Product Characteristics on Rate of
Adoption

• Relative advantage is the degree to which an

innovation appears to be superior to existing products.
• Compatibility is the degree to which an innovation fits
the values and experiences of potential consumers.
The Buyer Decision Process for
New Products
Influence of Product Characteristics on Rate of
Adoption

• Complexity is the degree to which the innovation is

difficult to understand or use.
• Divisibility is the degree to which the innovation may be
tried on a limited basis.
Consumer Behavior Across International
Borders
• Differences can include:
• Values
• Attitudes
• Behaviors
• The question for marketers is whether to adapt or
standardize the marketing.
Factors influencing consumer decision
EvaluatingTraining

Return on Investment ( ROI ) A Fifth type of Evaluation

Net Program Benefits:
Program benefits - Program Costs
Return on Investment
ROI = ( Net Prog. Benefits ÷ Prog. Costs ) x 100%

Note: Those Factors can be calculated for a certain period of

time after the training completion according to org.
perspective