Fourth Edition

PART 4 . . . . . . . . . . . . . . . . . . . . . . . .

Understanding Principles of Marketing

Copyright 2003 Prentice Hall, Inc.

Chapter 10

Understanding Marketing
Processes and Consumer
Behavior
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In our factory, we make

lipstick. In our advertising,
we sell hope.
~ Charles Revson
Revlon Cosmetics

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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
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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!
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The Influence of Marketing

Permeates Everyday Life
Goods
Consumer
Industrial

Services
Ideas

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Relationship marketing
emphasizes lasting
relationships with
customers and suppliers
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The External Environment

Shapes Marketing Programs

Political
& Legal
Environment

Competitive
Environment

The Firm & It's Marketing Plan

Plans
Strategies
Social &
Economic
Cultural
Decisions
Environment

Environment

Technological
Environment
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The Competitive Environment

Drives Marketing Decisions
Substitute product competition
Brand competition

International competition

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Marketing Mix
The Four Ps

roduct
ricing

lace
(Distribution)
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romotion
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The Promotional Mix

Advertising

Sales
Promotions

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Personal
Selling

Public
Relations

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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
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Identifying Market Segments

Geographic Demographic
Variables
Variables

Psychographic
Variables
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Consumer Behavior

Why do
consumers
purchase and
consume
products?

Psychological Influences
Personal Influences
Social Influences
Cultural Influences

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The Consumer Buying Process

Personal & Environmental Factors
Psychological

Problem
Recognition

Personal

Information
Seeking

Social

Evaluation of
Alternatives

Purchase
Decision

Cultural

Postpurchase
Evaluation

Marketing Factors
Product
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Pricing

Promotion

Place
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Organizational Markets

Industrial
Market
Reseller
Market

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Government &
Institutional Market
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Organizational Buying Behavior

Differences in buyers
Professionals
Specialists
Experts

Differences in buyer/seller relationships

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Product Features and Benefits

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

Benefits
The results of using
those products
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Classifying Products
Consumer

Industrial

Convenience Goods

Expense Items

Shopping Goods

Capital Items

Specialty Goods

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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.

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Developing New Products

The New Product Development Process
Product Mortality Rates

Strategy of introducing new products to respond

quickly to customer or market changes
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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
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The Worlds 10 Most Valuable Brands

1. Coca Cola

6. Intel

2. Microsoft

7. Disney

3. IBM

8. Ford

4. GE

9. McDonalds

5. Nokia

10.AT&T

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

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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

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Product Packaging
Attracts consumers
Displays brand name
Protects contents

Supplies information
Communicates features
and benefits
Provides features and
benefits (e.g. easy pour
spout)
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The International Marketing Mix

PRODUCTS
PRICING

PROMOTION
DISTRIBUTION
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Small Business and the Marketing Mix

Products

Pricing
Promotion
Distribution
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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
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Chapter Review
Define product and distinguish between
consumer and industrial products
Explain the importance of branding and
packaging

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