Business Fundamentals - Marketing Principles PDF

BUSINESS FUNDAMENTALS CHAPTER 12 Understanding Marketing Principles and Developing Products AGENDA Course Information and Announcements What is Marketing? The Marketing Environment Target Market and Segmentation Consumer Behaviour The Mar...

BUSINESS FUNDAMENTALS CHAPTER 12 Understanding Marketing Principles and Developing Products AGENDA Course Information and Announcements What is Marketing? The Marketing Environment Target Market and Segmentation Consumer Behaviour The Marketing Mix AGENDA Course Information and Announcements What is Marketing? The Marketing Loading… Environment Target Market and Segmentation Consumer Behaviour The Marketing Mix  WHAT IS MARKETING? The four Ps of marketing: Product Price Place (distribution – where is it sold?) Promotion (communication – how do we tell customers about our offering?) Marketing Concept: The whole firm is directed toward serving present and potential customers at a profit GOODS, SERVICES AND IDEAS Marketing can be designed for: Consumer goods: tangible products purchased by individuals for their use Food, clothing Industrial goods: products purchased by companies to use directly or Loading… indirectly to produce other products Components, raw materials, equipment Services: intangible products to serve users’ needs Insurance, health care, hydro, haircuts… Ideas: thoughts or behaviours Recycling, gambling, drugs, voting Source: http://www.rcmp-grc.gc.ca/youth-jeune/res-eng.htm https://www.youtube.com/watch?v=mSdUUkdb2G4 https://www.youtube.com/watch?v=rClJW9gnchc https://www.youtube.com/watch?v=972fCFe0Nt8 AGENDA Course Information and Announcements What is Marketing? The Marketing Environment Target Market and Segmentation Consumer Behaviour THE MARKETING ENVIRONMENT Copyright © 2023 Pearson Canada Inc. COMPETITIVE FACTORS Source: http://www.referralcandy.com/blog/why-does-coke- still-advertise/ Brand Competition Competition from companies selling similar products Based on the buyer’s perception of the different brands’ benefits Example: Pepsi vs. Coke Substitute Products Competition from companies selling products that satisfy the same need Example: juice vs. Pepsi, train vs. bus 11 Copyright © 2023 Pearson Canada Inc AGENDA Course Information and Announcements What is Marketing? The Marketing Environment Target Market and Segmentation Consumer Behaviour SEGMENTATION AND TARGET MARKET Market segmentation Dividing a consumer market into categories Focus on traits that affect product need and buying behaviour Selecting specific segment(s) to pursue (or target) Target market A group of potential customers who have similar wants and needs Copyright © 2023 Pearson Canada Inc. MARKET SEGMENTATION Loading… This Photo by Unknown Author is licensed under CC BY-SA 14 MARKET SEGMENTATION Different criteria can be used, either alone or combined, to divide the market into groups of similar customers Demographic: choosing demographic characteristics to identify a group of potential consumers Geographic: dividing consumers by continents, rural-urban, climate, cities, province, etc. Geodemographic: combination of geographic and demographic traits; becoming the most common segmentation tool Psychographic: targeting consumers who have similar lifestyles, attitudes, interests, opinions, etc. Behavioural: targeting consumers according to their use of the product, or knowledge of the product DEMOGRAPHIC VARIABLES Marketers can use a single classification (age 20 to 30) or a combination of age, income, gender, language, ethnicity, etc. Ag Gende e r Marital Religio Status Languag Incom n Educatio e e Family n Size Occupatio Ethnicit 16  n y GEOGRAPHIC VARIABLES The area of residence affects product consumption Rainfall and umbrellas (BC, England) Snowfall, snowmobiles and snow blowers Boats and water access Hot summers and backyard pools Local businesses such as dépanneurs, hair salons, shoe repair stores… rely on local customers 17 Copyright © 2023 Pearson Canada Inc.  GEODEMOGRAPHIC VARIABLES Combination of geographic and demographic characteristics Used to obtain a more specific segment of potential buyers Example: young urban professionals, educated, 25- to 39-year-olds, with high-paying jobs living downtown in a major city Source: https://www.asaecenter.org/asae-home/resources/articles/an_plus/2021/june/why- young-professionals-should-be-your-associations-next-investment 18 Copyright © 2023 Pearson Canada Inc. PSYCHOGRAPHIC VARIABLES Useful when developing a marketing strategy Lifestyles Opinions Interests Attitudes Important variable because these elements can be changed through marketing efforts Source: http://bigcowdesigns.blogspot.com/2010/10/poster- design-reduce-reuse-and-recycle.html Copyright © 2023 Pearson Canada Inc. 19 PSYCHOGRAPHIC SEGMENTATION Prizm C5 Lifestyle/Geodemographic Segmentation Divides Canadian population into 68 clusters Example: Satellite Burbs Average family income of $143,173 Global consciousness Family-centric Active in their religious community Enthusiastic purchasers Copyright © 2023 by Nelson Education Ltd.20 BEHAVIOURAL VARIABLES Dividing into groups based on consumer knowledge, use or response to a product Variables include: Benefits sought: reasons for buying Example: Benefits sought in a shoe can include arch support for running shoes, comfort for work, style for going out User status: current, non- or ex-user Usage rate: heavy or light/occasional user Loyalty status: highly brand loyal, switchers Occasion for use: time of day, occasion 21 Copyright © 2023 Pearson Canada Inc. WHO IS THE TARGET MARKET? Who would be interested in this product? Source: https://www.amazon.ca/Studio-Original-Authentic-Ostrich- Pillow/dp/B00B4S6SLW Which segmentation variables are used? 22 Source: https://www.dailymail.co.uk/femail/article-2473972/Bonkers-Ostrich-Pillow-hat- lets-snooze-anytime.html  WHO IS THE TARGET MARKET? Who would be interested in this product? Which segmentation variables are used? 23 Source: https://m.baklol.com/baks/Misc/Strangest-Gadgets-That-You-Can-_1873/AB-Hancer-_23987 WHO IS THE TARGET MARKET? Who would be interested in this product? Which segmentation variables are used? 24 Source: https://www.amazon.ca/dp/B07QZQ31F8?ascsubtag=[artid|10055.g.28649116[src|[ch| [lt|&linkCode=gs2&tag=hearstmagazin-20  POSITIONING Positioning: the place the product, brand, service occupies in the consumer’s mind It requires: Assessing the positions occupied by competitors Determining the important dimensions underlying these positions Choosing a position in the market where the organization’s marketing efforts will have the greatest impact 25 Copyright © 2023 by Nelson Education Ltd  PERCEPTUAL MAPPING Displaying, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds 26  IN-CLASS ACTIVITY IN SMALL GROUPS Find a suitable celebrity to help promote the following items: Wet wipes An all-inclusive beach resort Banking services Electric scooters For each product or service: 1. Describe the typical consumer (specify the segmentation variables) 2. Identify a celebrity who SHOULD promote the product (with a brief explanation of who the celebrity is and why they are suitable) 3. Identify a celebrity who should NOT (explain why) 27 AGENDA Course Information and Announcements What is Marketing? The Marketing Environment Target Market and Segmentation Consumer Behaviour UNDERSTANDING THE BUYER’S DECISION Buying behaviour (or consumer behaviour) is the study of the process by which customers come to purchase and consume a product or service Factors of influence include: Psychological factors: motivations, perceptions, attitudes Personal factors: personality, lifestyle, financial situation Social factors: family, opinion leaders, reference groups such as friends, co-workers… Cultural factors: culture, subculture, social class THE CONSUMER BUYING PROCESS 12-30 THE CONSUMER BUYING PROCESS (2) Problem recognition Consumer becomes aware of a problem or need May be automatic (the need for food or sleep) Due to a lifestyle change (new parents, retirement) Information seeking The information search may be long and detailed, or short and limited Buying a car versus buying a candy bar Copyright © 2023 Pearson Canada Inc. 31 THE CONSUMER BUYING PROCESS Evaluation of alternatives Products are compared according to the selection criteria determined by the consumer to identify the best choice Purchase decision Loading… The choice may be made based on rational or emotional motivations Rational motives are based on the evaluation of attributes, cost, quality, usefulness Emotional motives are based on fear, sociability, aesthetics, imitation of others 32 Copyright © 2023 Pearson Canada Inc. POST-PURCHASE EVALUATION Marketers want consumers to be happy with their purchase To ensure repeat purchases Dissatisfied consumers may File a lawsuit Return the product Publicly “vent” or criticize Word-of-mouth is powerful, and can’t be controlled Copyright © 2023 Pearson Canada Inc. 33