978-0134292663 Chapter 6 Lecture Notes Part 1

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Part 2: Determine the Value Propositions Different Customers Want

Chapter 6

Understanding Consumer and Business Markets

I. CHAPTER OVERVIEW

In this chapter, consumer behavior is defined and reasons for purchasing studied. Students learn

about the process of purchase, beginning with prepurchase behavior and ending with postpurchase

behavior. Students will understand how situational factors at the time and place of purchase can

influence consumer behavior. Students begin to think about how consumers’ relationships with

other people influence their decision-making process.

Although consumer marketing is an important area in marketing, so is business-to-business

marketing (B2B). In this chapter, students learn that the fortunes of business buyers and sellers can

hinge on a single transaction. Students learn how marketers categorize businesses and other

organizations to develop effective business marketing strategies. Business buying behavior and the

business buying decision process is evaluated. Finally, the important world of business-to-business

e-commerce is explored.

II. CHAPTER OBJECTIVES

1. Define consumer behavior and explain the purchase decision-making process.

2. Explain how internal factors influence consumers’ decision-making processes.

3. Show how situational factors and consumers’ relationships with other people influence

consumer behavior.

4. Understand the characteristics of business-to-business markets and business-to-business

market demand and how marketers classify business-to-business customers.

5. Identify and describe the different business buying situations and the business buying

decision process including the use of e-commerce and social media.

III. CHAPTER OUTLINE

Part 2: Determine the Value Propositions Different Customers Want

IV.

MARKETING MOMENT INTRODUCTION

Ask students to retrace a complicated decision process such as a new cell phone,

computer, or car. Now ask students about their decision to buy a can of pop from a

vending machine. Use these examples to introduce the different types of consumer

decision processes.

159

REAL PEOPLE, REAL

CHOICES—HERE’S MY

PROBLEM AT WEIGHT

WATCHERS

Two out of three American

adults are overweight, and

one-third are obese. Today’s

consumers want a more holistic

and personalized solution.

Weight Watchers’ “Beyond the

Scale” program takes a

personalized approach based

on each member’s lifestyle and

goals.

Dondeena’s job was to

transform the Weight Watchers

face-to-face business.

Her challenge was to

modernize the experience for

busy consumers and to appeal

to more than the 50+ segment.

Her team addressed the

seasonal nature of a business

that starts strong in January and

then goes downhill. To make

weekly meetings more

productive and entertaining,

.Weight Watchers could mix

them up with lectures by

lifestyle experts and offer

classes in yoga, Pilates, and

other forms of exercise to

provide a “one-stop shopping”

experience for attendees. People

want the benefits of Weight

Watchers, but Dondeena had to

think of new ways to deliver

services given the realities of

consumer behavior today.

Dondeena considered her

options:

Option 1. Make the weekly

meetings more productive and

entertaining.

Option 2. Design an immersive

well-being event that would

debunk and shift current

assumptions about Weight

Watchers.

Option 3. Organize a

Exhibit: Dondeena Bradley

Chapter 6: Understanding Consumer and Business Markets

END–OF-CHAPTER ANSWER GUIDE

Chapter Questions and Activities

QUESTIONS: TEST YOUR KNOWLEDGE

6.1 What is consumer behavior? Why is it important for marketers to understand consumer

behavior?

Consumer behavior is the process involved when individual or groups select, purchase, use,

and dispose of goods, services, ideas, or experiences. It is important that marketers understand

consumer behavior because wants and needs are satisfied best when marketers understand the

behaviors of consumers.

6.2 Explain habitual decision making, limited problem solving, and extended problem solving.

What is the role of perceived risk in the decision process?

With habitual decision making consumers make little or no conscious effort. They don’t search

for information and they don’t compare alternatives. They make purchases automatically.

Limited problem solving means that consumers do some work to make a decision but not a

great deal.

Extended problem solving occurs when consumers make very important decisions and go

through a variety of steps in making a decision.

As a rule, we are more involved in the decision-making process for products that we think are

risky in some way.

6-3 Explain the steps in the consumer decision-making process?

Problem recognition

Information search

Evaluation of alternatives

Product choice

Postpurchase evaluation

This question asks students to be creative with what they have learned about the consumer

decision process (especially the problem recognition component). Some ideas to get them

started might be to ask them to first think about when the four topics would normally become

problems. For life insurance, it might be when one is worried about illness, possibility of

death, provisions for loved ones, when a new child is born, etc. For mouthwash, it might be

hedonistic pleasure (it tastes good), one’s breath smells, one does not wish to offend another

person, one is about to kiss another, etc. A new automobile might be a sign of success, need for

latest safety features, or desire of the latest model of automobile. A health club membership

Part 2: Determine the Value Propositions Different Customers Want

might be a sign of desire to return to health, reduce weight, maintain fitness, or even a social

outlet.

6-4 What is perception? Explain the parts of the perception process: exposure, attention, and

interpretation. For marketers, what are the implications of each of these components?

Perception is the process by which people select, organize, and interpret information from the

outside world. The issues that marketers need to understand during the perceptual

process include:

a. Exposure—the stimulus must be within the range of people’s sensory receptors to be

noticed. It is also known that consumers choose to pay attention to some stimuli but not

to others (a process known as perceptual selection). Consumers are likely to be aware

of messages that speak to their needs but largely ignore those that do not.

b. Interpretation—consumers assign meaning to the stimulus. This meaning is influenced

by prior associations they have learned and assumptions that they make. If we don’t

interpret the product the way it was intended due to prior experiences, the best

marketing ideas will be “wasted.”

c. Attention—is the extent to which mental processing activity is devoted to a particular

stimulus.

The perception process has implications for marketers, because, as consumers absorb and

make sense of the vast quantities of information competing for their attention, the odds are that

any single message will get lost in the clutter.

6-5 Describe Maslow’s hierarchy of needs as it relates to motivation.

The hierarchy of needs categorizes motives according to five levels of importance, the more

basic needs being on the bottom of the hierarchy and the higher needs at the top. The hierarchy

suggests that before a person can meet needs at a given level, he must first meet the lower

level’s needs.

People start at the lowest level with basic physiological needs for food and sleep. Then they

progress to higher levels to satisfy more complex needs, such as the need to be accepted by

others or to feel a sense of accomplishment. Ultimately, they can reach the highest-level needs,

where they will be motivated to attain such goals as self-fulfillment.

6-6 How does gamification influence consumers’ motivation to interact with brands?

Marketers use their understanding of consumer needs for prestige, status, and accomplishment

when they use gamification. Gamification applies game design techniques, often by awarding

points or badges to nongame experiences in order to drive consumer behavior. Nike+, for

example, allows consumers to earn points and set goals to motivate themselves to exercise

more.

Chapter 6: Understanding Consumer and Business Markets

6-7 What is behavioral learning? What is cognitive learning?

Learning is a relatively permanent change in consumer behavior that is caused by experience

or acquired information. Behavioral learning theories are those theories of learning that focus

on how consumer behavior is changed by external events or stimuli. Cognitive theories are

those theories that stress the importance of internal mental processes and that view people as

problem solvers who actively use information from the world around them to master their

environment.

6-8 What are the three components of attitudes?

An attitude is a learned predisposition to respond favorably or unfavorably to stimuli, based on

relatively enduring evaluations of people, objects, and issues. A person’s attitude has three

components—affect, behavior, and cognition. These emphasize the interrelationships among

knowing, feeling, and doing. Depending on the nature of the product, one of these three

components—knowing, feeling, or doing—will be the dominant influence in creating an

attitude toward a product.

6-9 What is personality?

Personality is the unique set of psychological characteristics that consistently influences the

way a person responds to situations in the environment. Several theories attempt to explain

consumptive differences based on personality. Trait theory focuses on identifiable personality

characteristics, such as innovativeness, self-confidence, and sociability, which influence many

purchase decisions. Studies have linked these characteristics, as well as a person’s

self-concept, to buying behavior in which people seek products that enhance or minimize their

personal attributes.

Some of the specific personality traits relevant to marketing strategies are: innovativeness,

materialism, self-confidence, sociability, and need for cognition.

6-10 What is family life cycle?

Lifestyle is a pattern of living that determines how people choose to spend their time, money,

and energy and that reflects their values, tastes, and preferences.

6-11 Explain what lifestyle means.

Marketers often develop marketing strategies that recognize that people can be grouped into

market segments based on similarities in lifestyle preferences and family life cycle.

6-12 How do situational influences, such as the physical environment and time, shape

consumer purchase decisions?

When, where, and how consumers shop—situational influences—shape their purchase

choices. Some important situational cues are physical surroundings and time pressures.

Part 2: Determine the Value Propositions Different Customers Want

Marketers know that dimensions of the physical environment, including decor, smells,

lighting, music, and even temperature, influence consumption. Sensory marketing is becoming

big business. Specialized companies sell scents to hotels, car manufacturers, and even banks.

Store environment influences many purchases. Two dimensions, arousal and pleasure,

determine whether a shopper will react positively or negatively to a store environment. In

other words, the person’s surroundings can be either dull or exciting (arousing) and either

pleasant or unpleasant Marketers know that the time of day, the season of the year, and how

much time a person has to make a purchase affects decision making. There is the “always

open” convenience of “stores” on the web, ready to serve a customer at any time.

6-13 What are cultures, subcultures, and micro cultures? How do culture, subcultures, and

microcultures influence consumer behavior?

Think of culture as a society’s personality. Culture can be thought of as the learned values and

patterns of behavior that stem from the shared meanings, rituals, and traditions among

members of a society and that influence their attitudes, beliefs, preferences, and priorities

toward abstract ideas, activities, and products. Subculture is a group coexisting with other

groups in a larger culture whose members share a distinctive set of beliefs or characteristics.

All of us are members of subcultures and marketers must know which of those subcultural

groups are important to us. Micro cultures are groups of consumers who identify with a

specific activity or art form. These form around music groups such as the Dave Matthews

Band, media creations such as World of Warcraft, or leisure activities such as extreme sports.

6-14 What is the significance of social class to marketers?

Social class is the overall rank of people in a society. This rank is determined based on factors

such as family background, education, occupation, and income. For marketers, awareness of

one’s social class is very important because it is often an indicator of how much money a

consumer spends and even where it will be spent.

6-15 What are reference groups, and how do they influence consumers?

Reference groups are a set of people that a consumer is motivated to please or imitate.

Reference groups influence consumer behavior to the extent that the purchase is conspicuous

to others. However, decisions that groups make for individuals often differ from the

decisions that the individuals would make for themselves. Conformity and sex roles are often

taught by reference groups. Marketers play a part in this learning process.

6-16 What are opinion leaders?

Opinion leaders are persons who influence others’ attitudes or behaviors because they are

perceived as possessing expertise about the product. Opinion leaders usually exhibit high

levels of interest in the product category and may continuously update their knowledge by

Chapter 6: Understanding Consumer and Business Markets

reading, talking with salespeople, etc. Opinion leaders are valuable information sources,

among the first to buy a new product, and can have an impact (either positive or negative) on

the product’s success.

6-17 What are gender roles?

Some of the strongest pressures to conform come from our gender roles, society’s

expectations regarding the appropriate attitudes, behaviors, and appearance for men and

women. Numerous products take on masculine or feminine attributes, and consumers often

associate them with one gender or another. Some new parents even make sure they use blue

diapers for boys and pink ones for girls! Marketers play a part in teaching us how society

expects us to act as men and women. Marketing communications and products promoted to

the two groups portray women and men differently. These influences teach us what the

“proper” gender roles of women or men should be and which products are appropriate for

each gender.

Men’s sex roles are changing too. Men are concerned as never before with their appearance.

Men spend $7.7 billion on grooming products globally each year. In Europe, 24 percent of

men younger than age 30 use skincare products—and 80 percent of young Korean men do. In

fact, no doubt one of the biggest marketing buzzwords over the past few years is the

metrosexual—a straight, urban male who is keenly interested in fashion, home design,

gourmet cooking, and personal care.

6-18. How do B2B markets differ from consumer markets?

Business and organizational customers are usually few in number, may be geographically

concentrated, and often purchase higher-priced products in larger quantities. Businesses

purchase equipment, maintenance, repair, and operating products, as well as specialized

services, and the materials and component parts needed to produce goods. Business demand

is also usually derived demand (demand derived from another good or service).

6-19 Explain what we mean by derived demand, inelastic demand, fluctuating demand, and joint

demand.

Demand in business markets differs from consumer demand. Most demand for

business-to-business products is derived, inelastic, fluctuating and joint.

Derived Demand

Consumer demand is based on a direct connection between a need and the satisfaction of that

need. However, business customers do not purchase goods and services to satisfy their own

needs. Businesses instead operate on derived demand, because a business’s demand for goods

and services comes either directly or indirectly from consumers’ demand for what it produces.

Inelastic demand means that it usually does not matter if the price of a business-to-business

product goes up or down—business customers still buy the same quantity. Demand in

business-to-business markets is mostly inelastic because what is being sold is often just one of

Part 2: Determine the Value Propositions Different Customers Want

the many parts or materials that go into producing the consumer product. It is not unusual for a

large increase in a business product’s price to have little effect on the final consumer product’s

price.

Fluctuating Demand

Business demand also is subject to greater fluctuations than is consumer demand. There are

two reasons for this. First, even modest changes in consumer demand can create large

increases or decreases in business demand. An example would be air travel. A rise in jet fuel

prices, causing higher ticket prices and a shift by some consumers from flying to driving

vacations, can cause airlines to postpone or cancel orders for new equipment, creating a

dramatic decrease in demand for planes from manufacturers such as Boeing and Airbus.

Joint demand occurs when two or more goods are necessary to create a product. For example,

Porsche needs tires, batteries, and spark plugs to make that Limited Edition Boxster S that

piqued your interest earlier. If the supply of one of these parts decreases, Porsche will be

unable to manufacture as many automobiles, and so it will not buy as many of the other items

either.

6-20 How do we generally classify B2B markets?

Business-to-business markets can be broken into three general categories. The major

categories are producers, resellers, and organizations. NAICS refers to the North American

Industry Classification System. NAICS is the numerical coding system that the United States,

Canada, and Mexico use to classify firms into detailed categories according to their business

activities and shared characteristics. This system replaced the U.S. Standard Industrial

Classification (SIC) system in 1997 in order for NAFTA countries to compare economic and

financial statistics.

6-21 Describe the buyclass framework. What are new-task buys, modified rebuys, and straight

rebuys?

A <keyterm id=”ch6term012″ linkend=”gloss6_012″ preference=”0″

role=”strong”>buyclass</keyterm><link linkend=”ch6mn_012″ preference=”1″/> framework

identifies the degree of effort required of the firm’s personnel to collect information and make

a purchase decision.

New-task buy is a buying situation classification used by business buyers to categorize a new

purchase that is complex or risky and that requires extensive decision-making. Modified rebuy

is a buying situation classification used by business buyers to categorize a previously made

purchase that involves some change and that requires limited decision-making. Straight rebuy

is a buying situation classification used by business buyers to categorize routine purchases that

require minimal decision-making. Strategies include:

Straight rebuy—minimal time, regularly purchased, vendor loyalty, and low risk

decision.

Modified rebuy—firm wants to shop around, firm needs new products, requires more

time and effort than straight rebuys. Vendors try to be added to the approved list.

Chapter 6: Understanding Consumer and Business Markets

New-task buy—characterized by uncertainty and risk, more effort, unfamiliar with the

product and the firms selling the product.

6-22 What is a buying center? What are the roles of the various people in a buying center?

A buying center is a group of people in an organization who influence and participate in

particular purchasing decisions. The various roles played by members of the buying center

include:

User: a member of a business-buying center who will actually use a business product.

Initiator: the member of a business buying center that first recognizes that a purchase

needs to be made and notifies others in the organization.

Gatekeeper: the member of a business-buying center that controls the flow of

information to other members.

Influencer: a member of a business-buying center who affects the buying decision by

dispensing advice or sharing expertise.

Decider: the member of a business buying center that has the authority to make the

final purchase decision.

Buyer: the member of a business-buying center who has the formal authority and

responsibility for executing the purchase.

6-23 Explain the steps in the business buying decision process.

The stages in the business buying decision process (see Figure 6.10 for more detail and

explanation) are:

a. Problem Recognition

b. Information Search

c. Evaluation of Alternatives

d. Product and Supplier Selection

e. Postpurchase Evaluation

The business buying decision process involves a number of stages that are similar to, but

more complex than, the steps followed by consumers when making a purchase decision. A

single purchase may involve the recognition of a problem that can be resolved by making a

purchase. The recognition stage is accompanied by the submission of a purchase requisition

and initiates the subsequent steps of developing product specifications, identifying potential

suppliers, requesting and obtaining proposals, evaluating proposals, selecting a supplier,

placing the order, and finally, formally evaluating the performance of the product and the

supplier. See Figure 6.10 for more details.

6-24 What is single sourcing? Multiple sourcing? Outsourcing?

Single sourcing is the process of buying a particular product from only one supplier. Multiple

sourcing is the business practice of buying a particular product from several suppliers.

Part 2: Determine the Value Propositions Different Customers Want

Outsourcing is the business process of obtaining outside vendors to produce goods or services

that otherwise might be supplied “in house.”

6-25 Explain the role of intranets and extranets in B2B e-commerce. Describe the security issues

firms face in B2B e-commerce and some safeguards firms use to reduce their security risks.

An intranet is an internal corporate computer network that uses Internet technology to link

company departments, employees, and databases. They allow companies to process internal

transactions with greater control and consistency because of stricter security measures than

those they can use on the entire web.

An extranet allows certain suppliers, customers, and others outside the organization to access a

company’s internal system. Extranets can be especially useful for companies that need to have

secure communications between the company and its dealers, distributors, and/or franchisees.

Private exchanges are systems that link a specially invited group of suppliers and partners over

the web. A private exchange allows companies to collaborate with suppliers they trust—

without sharing sensitive information with others.

 ACTIVITIES: APPLY WHAT YOU’VE LEARNED

6-26 Creative Homework/Short Project This chapter indicated that consumers go through a series of

steps (from problem recognition to postpurchase evaluation) as they make purchases. Write a

detailed report describing what you as a consumer would do in each of these steps when

deciding to purchase one of the following products:

a. A suit for an upcoming job interview

b. A piece of jewelry to be given to a special friend for his or her birthday

c. A fast-food lunch

d. A Christmas tree

Then make suggestions for what marketers might do to make sure that consumers like you who

are going through each step in the consumer decision process move toward the purchase of

their brand. (Hint: Think about product, place, price, and promotion strategies.)

MyMarketingLab for answers to Assisted Graded Questions.

6-27 In Class, 10–25 Minutes for Teams During the last week of class, your professor explains how

she wants to employ a gamification strategy next semester to further motivate and engage

students, and she is asking for your help. Develop a simple gamification strategy that she can

use in the classroom. Describe what the goals should be, how progress will be measured, and

what the reward system will be.

Students are typically very familiar with computer games and will enjoy using their creativity

to develop a gamification strategy. Gamification applies game design techniques, by awarding

points or badges to nongame experiences in order to drive consumer behavior. Many believe

Chapter 6: Understanding Consumer and Business Markets

that gamification will become an even more significant trend in the future. Students can discuss

whether they would study more if they could collect badges for their efforts.

6-28 Creative Homework/Short Project You probably had more than one school in mind before you

ultimately decided on the college or university you are now attending. To better understand how

consumers make decisions, prepare an outline that shows how internal influences like

perception, motivation, and so on had an impact on the decision you made about which school

to attend. Include specific examples for each type of internal influence in your outline.

Students can consider college size, location, ranking, specific fields of study, and costs. They

will also consider other factors and discuss how each of these dimensions influenced their

decision. For example, many students are motivated to attend a university if awarded a

full-tuition scholarship. By contrast, if students perceive the cost of tuition to be too high, they

might be dissuaded from attending a university.

6-29 Creative Homework/Short Project Think about some of the products and services you purchase

each month (pizza on Saturday night or your smart phone bill) as well as a few impulse

purchases you might make (new music from iTunes). Categorize each of these items according

to Maslow’s hierarchy of needs. Explain why your budget does or doesn’t match this hierarchy

of needs (i.e., most of your budget goes toward physiological needs, followed by safety needs

and so on). What does this say about your motivations?

Students can categorize the products and service they purchase each month, match them to the

levels on Maslow’s hierarchy of needs (Figure 6.5), and share their lists with the class.

People start at the lowest level with basic physiological needs for food and sleep. Then they

progress to higher levels to satisfy more complex needs, such as the need to be accepted by

others or to feel a sense of accomplishment. Ultimately, they can reach the highest-level needs,

where they will be motivated to attain such goals as self-fulfillment.

6-30 In Class, 10–25 Minutes for Teams Assume you are a sales manager of products used in

landscaping. Your customers are municipalities that range in size from very large to very small.

Your company offers its customers a wide range of products—everything from simple rakes

and shovels to large heavy-duty tractors and computerized irrigation equipment. Thus,

purchases made by your customers include straight rebuys, modified rebuys, and new-task

purchases. You have a meeting scheduled this week with your regional sales manager. He wants

to talk about how you can get the business for all types of purchases. Develop an outline of

your planned discussion on this. Then with a classmate, present your ideas to your boss in a

role-playing situation.

Allow students to make assumptions as long as they state what their assumptions are. Students

should also refer to chapter material on the three different buy situations. Remember that

students’ answers can vary on the three purchase opportunities. The key is how each student

states assumptions and provides rationale for his or her decision. A recommended selection is

indicated below. New-task purchases should go through all steps, while the other two

alternatives (straight rebuy and modified rebuy) must be modified with respect to the model.

Recommendations are:

Part 2: Determine the Value Propositions Different Customers Want

Rakes—straight rebuy—assumes an existing manufacturing company.

Large heavy-duty tractors—modified rebuy—assumes that certain features might have

changed; suppliers would have to be queried as to supply, stock, etc. A case could be

made for this being new task if major changes were projected.

High-tech computerized irrigation equipment—most will say this is new task, if

modified rebuy is chosen the student must provide an explanation.

6-31 For Further Research (Individual) In this chapter, we learned that firms may use rich media in their

messages online to create interaction and engagement with consumers. “Surf” the web and find at least

three examples of rich media. Develop a report that describes the three rich media examples you found,

what you believe the advertiser was seeking to gain in terms of interaction and engagement, and your

opinion about the rich media suggestions for use in this ad and how it might be improved.

Students can find examples of rich media and share their findings with the class.

6-32 For Further Research (Groups) We learned in this chapter that when considering a product need,

consumers have an evoked set of brands and a consideration set of brands. With some of your classmates,

conduct a simple research study and explain your results using the following steps. Select a product that

students in college would might purchase.

a. Develop a questionnaire that you will ask student participants to complete. The

questionnaire should ask students to list all of the brands of the product you have selected

that they are aware of. Give them at least five minutes to complete this question.

b. Then ask them to tell you which ones would they seriously consider buying if they were

going to make a purchase today.

c. Develop a report using the results of the survey. What conclusions can you draw from the

research?

 APPLYING MARKETING METRICS

B2B customers (clients) are very busy professionals and thus are notoriously reluctant to take time

to provide data to marketers. In order to measure important issues described in the chapter, such as

overall client satisfaction, service quality by the vendor firm, level of customer engagement,

repurchase intentions, and speed and effectiveness of problem resolution, marketers must employ

the most user-friendly and efficient data collection methods available when dealing with these

professional business clients. Otherwise, it is highly unlikely that they will take time to provide

any useful data for market planning and decision making.

6-33 Take a few minutes to go back and briefly review what you learned in Chapter 4 about the different

approaches to collecting data. Propose an approach to collecting the above types of information

from a busy B2B customer in a way that is most likely to result in his or her cooperation. Be as

specific as you can in describing your chosen approach and explain why you selected it.

MyMarketingLab for answers to Assisted Graded Questions.

Chapter 6: Understanding Consumer and Business Markets

 CHOICES: WHAT DO YOU THINK?

6-34 Critical Thinking Changing demographics and cultural values are important to marketers. What

are some current trends that may affect the marketing of the following products?

a. Housing

b. Food

c. Education

d. Clothing

e. Travel and tourism

f. Automobiles

MyMarketingLab for answers to Assisted Graded Questions

6-35 Critical Thinking Consumers often buy products because they feel pressure from reference

groups to conform. Does conformity exert a positive or a negative influence on consumers?

With what types of products is conformity more likely to occur?

Most students will probably say that conformity has no effect on them (only on others). This is

very normal because most believe that conformity is negative (even though we all do it daily).

What if we all chose to drive on any side of the road, could cut in line at any time, or didn’t

have to pay for something if we didn’t want to? Have students follow this line of thinking

about when conformity is good. Is conformity necessary to a have a well-functioning society?

Next, talk about the negative aspects of conformity or peer pressure. Is all peer pressure bad?

What if your peers (friends) encouraged you to brush your teeth because your breath smelled?

Would this be bad? The need to conform seems to lessen as we grow older and more mature.

However, most adults feel that conformity is necessary to make sense out of things and feel

that youth should conform more (even though they did not want to when they were young).

Make a list of conformity products and have the class judge the list.

6-36 Ethics Marketers have been shelling out the bucks on sensory marketing techniques for years to

appeal to your subconscious mind. And studies show that it works. But is sensory marketing

fair? Some say it’s a way to enhance the purchasing process, while others say marketers are

unethically manipulating consumers. What are some of the pros and cons associated with

sensory marketing? What is your position?

MyMarketingLab for answers to Assisted Graded Questions

6-37 Critical Thinking E-commerce is dramatically changing the way B2B transactions take place.

What are the advantages of B2B e-commerce to companies? To society? Are there any

disadvantages of B2B e-commerce?

After reviewing this section in the chapter, students should be able to see that not only are B2B

transactions important, but they have dramatically moved to the Internet. In fact, with all the

Part 2: Determine the Value Propositions Different Customers Want

dot.com failures in the last several years, very few have been in the B2B sector. Most of the

successes on the Internet come from the business area. B2B e-commerce serves is beneficial to

both companies and society because it allows firms to provide service to customers more

quickly and at lower costs than was possible previously It projected that business marketing

via B2B exchanges will grow even more in the next several years. Business is truly becoming

a paperless enterprise thanks to the Internet.

The greatest disadvantages (if the business allows them to happen) are:

Security.

Lack of personal face time with customers.

Cost of setup.

Training of employees.

Cultural change.

Volumes of data amassed.

Hiring of techies to establish programs and monitor them.

The advantages would include:

Cost savings.

Loyalty through technology.

Instant information for employees.

Improved communications.

Improved decision-making.

Improved modeling and creativity.

True partnerships with distributors, suppliers, and customers.

These suggestions are not all-inclusive and are meant to stimulate creative thought on the

subject.

6-38 Critical Thinking M-commerce (short for mobile commerce) is a rapidly growing category

of e-commerce that takes place via a smart phone or tablet instead of a desktop or laptop computer.

How has M-commerce changed the way consumers shop? What do marketers need to do now and

in the future to better support their M-commerce customers? What do you think the future of

m-commerce will be?

Students can share their experiences in e-commerce via their smart phone or tablet.

M-commerce has definitely changed the way consumers shop because many people have their

smart phones with them most of the time, so their shopping opportunities are expanded.

Marketers need to make M-commerce as convenient as possible by designing user-friendly

websites, easy check-out and payment capabilities, easy to understand shipping information,

and a quick purchase confirmation. Students can share their thoughts on the future of

m-commerce.

6-39 Critical Thinking The practice of buying business products based on sealed competitive bids is

popular among all types of business buyers. What are the advantages and disadvantages of this

Chapter 6: Understanding Consumer and Business Markets

practice to buyers? What are the advantages and disadvantages to sellers? Should companies

always give the business to the lowest bidder? Why or why not?

Sealed competitive bids help to ensure fairness and a “level playing ground.” The advantage for

buyers is that the process eliminates bias from the decision process. The disadvantage is that

typically only low price, and not other competitive factors, is considered in the decision

process. The advantage for sellers is the ability to be considered in an unbiased manner. The

disadvantage for sellers is that they have no knowledge of what their competitors have included

or excluded from their bid. Often a company could make a better offer with this type of

information. This makes selling guesswork and difficult at best.

6-40 Ethics When firms implement a single sourcing policy in their buying, other possible suppliers

do not have an opportunity to compete for the business. Is this ethical? What are the advantages

to the company? What are the disadvantages?

Many businesses practice single sourcing. The advantage is that the buyer and seller can work

closely, which is important when a firm needs frequent deliveries or specialized products. The

disadvantage is that the firm is at the mercy of the chosen supplier to deliver the needed goods

or services without interruption. Whether or not this is ethical can be argued either way. If the

law is followed and at some point, other businesses are given the opportunity to become the

single source, this practice can be viewed as ethical. If no other business is ever given the

opportunity to become a single source, then the ethics might be questioned.

6-41 Critical Thinking In the buying center, the gatekeeper controls information flow to others in the

center. Thus, the gatekeeper determines which possible sellers are heard and which are not.

Does the gatekeeper have too much power? What policies might be implemented to make sure

that all possible sellers are treated fairly?

The job of the gatekeeper is to gather information and materials from salespeople, schedule

sales presentations, and control supplier’s access to other participants in the buying process. If

the gatekeeper is doing his/her job right, then the appropriate information should get to the

decision makers. If personality or other variables enter in, the questions about the use of power

and treating sellers might be questioned.

6-42 Critical Thinking Outsourcing and offshoring are practices often surrounded by controversy.

What are the benefits of outsourcing for businesses? For consumers? What are the

disadvantages of outsourcing for businesses? For consumers? Should outsourcing be regulated

to protect American interests both at home and abroad? Why or why not?

Outsourcing has been around long enough that students might have some strong feelings about

if they believe it is value-added or not. Outsourcing is an increasingly popular strategy, but also

a controversial one. Many critics object when American companies contract with companies or

individuals in remote places like China or India to perform work that used to be done at home.

These tasks range from complicated jobs like writing computer code to fairly simple ones like

manning reservations desks, call centers for telephone sales, and even taking drive-through

orders at American fast-food restaurants. Students can debate whether or not outsourcing

Part 2: Determine the Value Propositions Different Customers Want

should be regulated. Some may wish to see the government protect the American worker,

especially for federal contracts paid for by taxpayer dollars. Others may see government

regulation as a limit on free enterprise.

 MINIPROJECT: LEARN BY DOING

The purpose of this miniproject is to increase your understanding of the process that consumers go

through when making a purchase decision. First, select one of the following products (or some

other product of your choice) that now or in the future might be in the market for.

• New or used car

• Spring break vacation

• Apartment

• Computer or smart phone

6-43 Problem Recognition Describe the problem that might lead you to purchase this product.

Students should refer to Figure 6.1 Steps in The Consumer Decision-Making Process as they

select a product and go through the steps of the buying process.

Problem recognition occurs whenever a consumer sees a significant difference between her

current state of affairs and some desired or ideal state.

6-44 Information Search Use the Internet to gather some initial information about the product you

chose. Visit at least two stores or locations where the product may be purchased to gather

further information.

Students can use the Internet to gather information. Comparison shopping agents (or

ShopBots) such as Shopzilla.com and NexTag.com are web applications that can help online

shoppers to find what they are looking for at the lowest price.

6-45 Evaluation of Alternatives Identify at least five alternative product options that you are

interested in. Narrow down your selection to two or three choices. Which are the most

feasible? What are the pros and cons of each?

There are two components to this stage of the decision-making process. First, a consumer armed

with information identifies a small number of products in which he is interested. Then he

narrows down his choices by deciding which of all the possibilities are feasible and by

comparing the pros and cons of each remaining option. As a buyer begins to look

systematically at different possibilities he/she will also identify important characteristics or

evaluative criteria that he/she will use to decide among them.

6-46 Product Choice Make a final decision about which product you will purchase. Describe the

heuristics that aided in your decision making.

Deciding on one product and acting on this choice is the next step in the decision-making

process. Consumers often rely on decision guidelines when weighing the claims that

Chapter 6: Understanding Consumer and Business Markets

companies make. These heuristics, or mental rules-of-thumb, help simplify the

decision-making process. One such heuristic is “price = quality.” Many people willingly buy

the more expensive brand because they assume that if it costs more, it must be better.

Perhaps the most common heuristic is <keyterm id=”ch5term009″ linkend=”gloss5_009″

preference=”0″ role=”strong”>brand loyalty; this occurs </keyterm><link

linkend=”ch5mn009″ preference=”1″/>when we buy the same brand repeatedly Another

heuristic is based on country of origin. We assume that a product has certain characteristics if

it comes from a certain country. Sometimes a marketer wants to encourage a country

association even when none exists.

6-47 Postpurchase Evaluation If this is a product you have actually purchased, explain the

reasoning behind your current satisfaction or dissatisfaction with the product. If not, develop

several reasons you might be satisfied or dissatisfied with the product.

In the last step of the decision-making process, the consumer evaluates just how good a

choice it was. The evaluation of the product results in a level of consumer

satisfaction/dissatisfaction, which is determined by the overall feelings, or attitude, a person

has about a product after purchasing it.

6-48 Prepare a report that explains in detail the decision-making process for the product in your

purchase scenario.

Students can present their decision-making process to the class and compare their purchase

scenarios.

V: MARKETING IN ACTION CASE: REAL CHOICES AT

AIRBUS

Summary of Case

Since early 2015, there have been more than 4,500 worldwide orders for aircraft in the A320neo

product line. In January 2016, German carrier Lufthansa put into use the A320neo’s improved

airplanes. Airbus was first to the market with significant pre-orders and a commanding lead in the

single-aisle market. Airbus’s competition is from Boeing whose 737 MAX has increased fuel

efficiency. Boeing, however, is behind Airbus. The 787 MAX is operating 18 months behind

Airbus and did not have its first flight until after the initial delivery of the A320neo. As of

December 2015, Boeing had 3,072 firm orders for the 737.

The A320neo’s problems are causing a delay in delivery schedules. Qatar Airways had been

scheduled to receive the first delivery in late 2015. However, the airline complained of engine

problems and refused to take possession. Airbus had to compensate Lufthansa because the airline

was restricted to using the A320neo only at the airports with additional technical staff. Although

the A320neo has been plagued with problems, the delays in delivery are expected to end. With

more than 4,000 awaiting orders, Airbus has the potential to turn something bad into something

good. There are a lot of customer relationships that need soothing. How does the company get

customers not to cancel orders and choose Boeing’s aircraft? Airbus’s challenges are far from over.

Part 2: Determine the Value Propositions Different Customers Want

Suggestions for Presentation

This case could be assigned for various out-of-class or in-class discussion activities.

Out-of-Class

Airbus has the potential to turn something bad into something good. There are a lot of customer

relationships that need soothing. How does the company get customers not to cancel orders and

choose Boeing’s aircraft?

In-Class

In groups or as individuals, discuss the marketing strategy that can be utilized to meet the concerns

that Airbus is facing.

Divide the class into groups of three to five students and have each group conduct a strengths,

weaknesses, opportunities and threats (SWOT) analysis to determine how Airbus can develop

strategies to get customers not to cancel orders and choose Boeing’s aircraft?

You Make the Call

6-49 What is the decision facing Airbus?

Students may come up with a number of different decisions that Airbus might make such as:

What can be done to improve the production schedule and avoid delays in delivery?

What can Airbus do to remedy the persistent engine problems of the A320neo?

A more comprehensive decision would be:

Has Airbus stepped away from its focus on customer needs and if so, what should the

company do now?

6-50 What factors are important in understanding this decision situation?

Airbus has a long-standing reputation for quality.

Airbus has long-standing relationships with its customers.

Airbus has a first-mover advantage since Lufthansa has already put the A320neo into

use.

Airbus can reduce delays by reviewing its manufacturing protocols for the A320neo.

Boeing may improve its delivery capabilities

6-51 What are the alternatives?

Students might recommend a variety of different marketing strategies. Some possibilities are:

Make no changes and see if the market will continue to provide support.

Chapter 6: Understanding Consumer and Business Markets

Conduct research into the manufacturing process for the A320neo with a view to

maintaining quality while decreasing production time

6-52 What decision(s) do you recommend?

Students may focus on several of the alternatives developed. They should be encouraged to

discuss which alternative actions are more critical.

6-53 What are some ways to implement your recommendation?

Students may make a variety of suggestions for implementation depending on their

recommendations. These may include specific promotion activities, specific pricing, research

activities and many others.

 MYMARKETINGLAB

Go to mymktlab.com for Auto-graded writing questions as well as the following

Assisted-graded writing questions:

6-54 Creative Homework/Short Project Sometimes advertising or other marketing activities cause

problem recognition by showing consumers how much better off they would be with a new

product or by pointing out problems with products they already own. Discuss problem

recognition for the following product categories. Make a list of some ways marketers might try

to stimulate problem recognition for each product. Present your ideas to your class.

a. Toothpaste

b. A home security system

c. A new automobile

d. An online dating service

e. A health club membership

6-55 Creative Homework/Short Project As a director of purchasing for a firm that manufactures

motorcycles, you have been notified that the price of an important part used in the manufacture

of the bikes has nearly doubled from $100 to nearly $200. You see your company having three

choices: (1) buying the part and passing the cost on to the customer by increasing your price;

(2) buying the part and absorbing the increase in cost, keeping the price of your bikes the same;

and (3) buying a lower-priced part that will be of lower quality. Prepare a list of pros and cons

for each alternative. Then explain your recommendation and justification for it.

WEB RESOURCES

Pearson MyMarketingLab: www.mymktlab.com

Pearson Education, Inc. www.pearson.com

Search engines: Google www.google.com, Excite (www.excite.com), Yahoo! (www.yahoo.com),

Part 2: Determine the Value Propositions Different Customers Want

Travel websites: TripAdvisor www.tripadvisor.com, Expedia.com www.expedia.com, and Hotel

Chatter (www.hotelchatter.com)

Social network services: Facebook www.facebook.com, Sermo www.sermo.com,

Comparison shopping agents (or ShopBots): www.Shopzilla.com and www.NexTag.com

Personality’ assessment based on color preferences: www.colorquiz.com

VALS segmentation groups and online survey: www.strategicbusinessinsights.com/

Social media site for B2B networking: www.linkedin.com

American Red Cross (not-for-profit institutions): www.redcross.org

Resellers: Walmart (www.walmart.com), Target (www.target.com)

Federal Business Opportunities (federal government information on business opportunities—“The

U.S. Government’s One-Stop Virtual Marketplace”): www.FBO.gov

GE Healthcare (sells a wide range of equipment to hospitals from surgical equipment to molecular

imaging machines): www.gehealthcare.com