Unit IV.

Analyzing
Consumer Demand

Marketing Management and Accountancy

Reasons Why We Purchase
from Austria, C., Castañeda, L. (2018) Professional salesmanship.

1. Basic needs 6. Emotional emptiness

2. Convenience 7. Lower prices
3. Replacement 8. Great value
4. Scarcity 9. Name recognition
5. Prestige or 10.Fad or innovation
aspirational purchase
Reasons Why We Purchase
from Austria, C., Castañeda, L. (2018) Professional salesmanship.

11.Compulsory purchases 16.Reciprocity or guilt

12.Ego 17.Event
13.Niche identity 18.Empathy
14.Peer pressure 19.Addiction
15.The “girl scout cookie 20.Fear
effect” 21.Indulgence
 Consumer Behavior

Cultural Social Personal Psychological

Age & Life Cycle Motivation

Culture Reference Groups

Occupation Perception

Subcultures Family Economic Situation Learning

Lifestyle Emotions

Social Class Roles and Status Personality and Self

Memory
Concept
Consumer Behavior: Cultural

– Culture - Most basic, basic values, perceptions, wants

and behaviors.
– Subculture – Life experiences
– Social Class - (1) lower lowers, (2) upper lowers, (3)
working class,(4) middle class,(5) upper middles,(6)
lower uppers,and (7) upper uppers
Consumer Behavior: Social

– Reference Groups - all the groups that have a direct (face-to-

face) or indirect influence on their attitudes or behavior
– Membership groups: Primary & Secondary, Aspirational Groups &
Dissociative Groups
– Family:
– Family of Orientation & Procreation
– Roles and Status
Consumer Behavior: Personal

– Age & Life Cycle

– Occupation
– Economic Situation
– Lifestyle
– Personality and Self Concept
Stanford’s Jennifer Aaker
researched brand personalities and
identified the following traits:
– 1. Sincerity (down-to-earth,honest,wholesome,and cheerful)
– 2. Excitement (daring,spirited,imaginative,and up-to-date)
– 3. Competence (reliable,intelligent,and successful)
– 4. Sophistication (upper-class and charming)
– 5. Ruggedness (outdoorsy and tough)
Consumer Behavior

Psychological
Motivation
Perception
SELECTIVE ATTENTION

– Attention is the allocation of processing capacity to some

stimulus.
– 1. People are more likely to notice stimuli that relate to a
current need.
– 2. People are more likely to notice stimuli they anticipate.
– 3. People are more likely to notice stimuli whose deviations are
large in relationship to the normal size of the stimuli.
SELECTIVE DISTORTION

– Even noticed stimuli don’t always come across in the way

the senders intended. Selective distortion is the
tendency to interpret information in a way that fits our
preconceptions.
SELECTIVE RETENTION

– Most of us don’t remember much of the information to

which we’re exposed, but we do retain information that
supports our attitudes and beliefs
Consumer Behavior

Psychological
Motivation
Perception
Learning
-Discrimination & Hedonic Bias
Emotions
Memory
 The Buyer Decision Process

Need Information Evaluation of Purchase Postpurchase

Recognition Search Alternatives Decisions Behavior
Unit V: Product
Strategy
Marketing Management and Accountancy
Product
Anything that can be
offered to a market for
attention, acquisition,
use, or consumption
that might satisfy a want
or need
Service
An activity, benefit or
satisfaction offered for
sale that is essentially
intangible and does not
result in the ownership
of anything
Products
Something that the
company believes will
benefit its customers
What can be marketed?
– Goods – Places
– Services – Properties
– Events – Organizations
– Experiences – Information
– Persons – Ideas
Levels of
Product
Classifications of a product

DURABILITY AND
TANGIBILITY
▪ Non Durable
▪ Durable
▪ Consumer Services
Classifications of a product

USE
▪ Consumer Goods
▪ Industrial Goods
Consumer Goods

– Convenience Goods - purchases frequently, immediately, and with minimal

effort
– Shopping Goods - those the consumer characteristically compares on such
bases as suitability, quality, price, and style
– Specialty Goods - have unique characteristics or brand identification for which
enough buyers are willing to make a special purchasing effort
– Unsought Goods - those the consumer does not know about or normally think
of buying, such as smoke detector
Industrial Goods

❖ Materials And Parts

❖ Raw Materials
❖ Farm Products
❖ Natural Products
❖ Manufactured Materials And Parts
❖ Component Materials - usually fabricated further
❖ Component Parts - enter the finished product with no further change in form
Industrial Goods

❖ Capital Items - long-lasting goods that facilitate developing or managing the

finished product
❖ Installations
❖ Equipment
❖ Supplies and Business Services - short-term goods and services that facilitate
developing or managing the finished product
❖ Maintenance and Repair Items
❖ Operating Supplies
❖ Maintenance and Repair Services
❖ Business Advisory Services
Product Differentiation

1. Form - the size, shape, or physical structure of a product.

2. Features - supplement their basic function
3. Customization - ability to individualize market offerings, messages, and
media. *Mass customization is the ability of a company to meet each
customer’s requirements—to prepare on a mass basis individually designed
products, services,programs,and communications
4. Performance Quality - the level at which the product’s primary characteristics
operate. (low, average, high, or superior)
Product Differentiation

5. Conformance Quality - the degree to which all produced units are identical
and meet promised specifications
6. Durability - a measure of the product’s expected operating life under natural
or stressful conditions
7. Reliability - a measure of the probability that a product will not malfunction or
fail within a specified time period
8. Repairability - measures the ease of fixing a product when it malfunctions or
fails
9. Style - describes the product’s look and feel to the buyer. It creates
distinctiveness that is hard to copy
Service Differentiation

1. Ordering ease - how easy it is for the customer to place an order with the
company
2. Delivery - to how well the product or service is brought to the customer; It
includes speed, accuracy, and care throughout the process
3. Installation - the work done to make a product operational in its planned
location
4. Customer training - helps the customer’s employees use the vendor’s
equipment properly and efficiently
Service Differentiation

5. Customer consulting - includes data, information systems, and advice services

the seller offers to buyers
6. Maintenance and repair programs - help customers keep purchased products
in good working order
7. Returns
1. Controllable returns - result from problems or errors by the seller or customer and
can mostly be eliminated with improved handling or storage, better packaging, and
improved transportation and forward logistics by the seller or its supply chain
partners.
2. Uncontrollable returns - result from the need for customers to actually see, try, or
experience products in person to determine suitability and can’t be eliminated by the
company in the short run through any of these means.
Product Life Cycle

1. Products have a limited life.

2. Product sales pass through distinct stages, each posing different challenges,
opportunities, and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing,
and human resource strategies in each life-cycle stage.
Introduction Growth
Stage Stage
Product Life
Cycle

Maturity Decline
Stage Stage
Introduction—A period of slow sales growth as the product
is introduced in the market. Profits are nonexistent because
of the heavy expenses of product introduction.

Growth—A period of rapid market acceptance and

substantial profit improvement.
Product Life
Cycle
Maturity—A slowdown in sales growth because the product
has achieved acceptance by most potential buyers.Profits
stabilize or decline because of increased competition.

Decline—Sales show a downward drift and profits erode.

Common Product Life-Cycle Patterns
 Product Life Cycle
6

0
Conception Introduction Growth Maturity Decline
Sales Promotion Competitors
Introduction

– Companies that plan to introduce a new product must decide when to enter the
market
– Products coming out six months late—but on budget—earned an average of 33
percent less profit in their first five years
– Products that came out on time but 50 percent over budget cut their profits by
only 4 percent
– MARKET PIONEER GAINS THE GREATEST ADVANTAGE
Introduction

– Benefits of pioneer advantage

– Early users will recall the pioneer’s brand name if the product satisfies them.
– The pioneer’s brand establishes the attributes the product class should possess.
– It normally aims at the middle of the market and so captures more users.
Market Pioneers
Market pioneers overtaken by
later entrants
– Bowmar (hand calculators),
– Apple’s Newton (personal digital assistant),
– Netscape (Web browser),
– Reynolds (ballpoint pens),
– Osborne (portable computers)
First movers also have to watch out for the
“second-mover advantage.”
Introduction

– Inventor - first to develop patents in a new-product category

– Product pioneer - first to develop a working model
– Market pioneer - first to sell in the new-product category
Introduction: Long-Range Product
Market Expansion Strategy
 Product Life Cycle
6

0
Conception Introduction Growth Maturity Decline
Sales Promotion Competitors
Growth

– To sustain rapid market share growth now, the firm:

– improves product quality and adds new features and improved styling.
– adds new models and flanker products (of different sizes, flavors, and so forth) to
protect the main product.
– enters new market segments.
– increases its distribution coverage and enters new distribution channels.
– shifts from awareness and trial communications to preference and loyalty
communications.
– lowers prices to attract the next layer of price-sensitive buyers.
 Product Life Cycle
6

0
Conception Introduction Growth Maturity Decline
Sales Promotion Competitors
Maturity

Growth Stable Decaying

Maturity Maturity Maturity
Three ways to change the course
for a brand
– MARKET MODIFICATION
– PRODUCT MODIFICATION
– MARKETING PROGRAM MODIFICATION
 Product Life Cycle
6

0
Conception Introduction Growth Maturity Decline
Sales Promotion Competitors
Harvesting - gradually reducing
a product or business’s costs
Decline
while trying to maintain sales

Divesting - sell the product to

another firm
Product Management

– A product system is a group of diverse but related items that function in a

compatible manner.
– A product mix (also called a product assortment) is the set of all products and
items a particular seller offers for sale.
Product Mix

– The width of a product mix - how many different product lines the
company carries
– The length of a product mix - the total number of items in the mix
– The depth of a product mix - how many variants are offered of
each product in the line
– The consistency of the product mix - describes how closely
related the various product lines are in end use, production
requirements, distribution channels, or some other way
Product Line Strategy

These four product mix dimensions permit the company to

expand its business in four ways. It can add new product
lines, thus widening its product mix. It can lengthen each
product line. It can add more product variants to each
product and deepen its product mix. Finally, a company can
pursue more product line consistency. To make these product
and brand decisions, it is useful to conduct product line
analysis.