978-0134728391 Chapter 11 Part 1

Chapter 11: Marketing Processes and Consumer Behavior

Chapter Overview

Many students think that marketing is merely sales or advertising. Actually, sales and advertising

are just a small part of the overall marketing process. Think of a product that you buy often. You

might not realize that everything about that product—from the time it is created, produced,

packaged, and shipped to you—involves various facets of marketing.

This chapter explains the concept of marketing and discusses the five forces that constitute the

external marketing environment. It also explains the purpose of a marketing plan, identifies the

four components of the marketing mix, and discusses the necessity of identifying market

segments. As the chapter unfolds, many variables surrounding both the consumer and

Learning Objectives

11-1. Explain the concept of marketing and identify the five forces that constitute the

external marketing environment.

11-3. Explain market segmentation and how it is used in target marketing.

11-5. Describe the consumer buying process and the key factors that influence that process.

11-7. Discuss the marketing mix as it applies to small business.

LIST OF IN-CLASS ACTIVITIES: INSTRUCTOR’S CHOICE

Activity

Description

Time

Limit

1. Ice–Breaker: Assessing the Marketing

Environment

Students consider various elements

from the marketing environment that

affect specific industries.

30 min.

2. Small-Group Discussion: Data

Mining

Students consider all the valuable

information they give to others about

themselves.

20 min.

3. Up for Debate: Social Networking

and Job Seeking

Students are divided into teams to

debate the advantages and

disadvantages of using Social

Networking to find jobs.

30 min.

4. Small-Group Discussion: Never Give

a German a Yellow Rose

Students consider what a foreign visitor

might notice about the American

marketplace.

30 min.

CHAPTER OUTLINE

Learning Objective 11-1:

Explain the concept of marketing and identify the five forces that constitute the external

marketing environment.

What Is Marketing?

The American Marketing Association defines marketing as “activities, a set of institutions, and

A. Delivering Value

Consumers buy products that offer the best value when it comes to meeting their needs and

wants.

1. Value and Benefits. Value compares a product’s benefits with its costs; benefits include

the product’s functions and emotional satisfaction associated with owning, experiencing,

costs.

2. Value and Utility. Products provide utility, which is the product’s ability to satisfy a

person’s want or need. Marketing strives to provide four kinds of utility—form utility

B. Goods, Services, and Ideas

Consumer goods are tangible products that consumers purchase for personal use; firms that

sell these goods are engaged in consumer marketing. Industrial goods are products that are

purchased by companies to be used in further production of goods; firms that sell products to

C. Relationship Marketing and Customer Relationship Management

Relationship marketing focuses on building long-lasting relationships between customers and

preferences. This leads to clearer pictures of customer preferences, and allows a business to

build closer relationships.

D. The Marketing Environment

Marketing decisions are affected by various influences in the external environment,

everything outside an organization’s boundaries that might affect it.

1. Political and Legal Environment. The political-legal environment is the relationship

2. Sociocultural Environment. Elements from this segment of the environment include

3. Technological Environment. Technological change happens so quickly in some

4. Economic Environment. Economic conditions affect many facets of marketing,

including consumer spending patterns and marketers’ plans for product offerings, pricing,

and promotional strategies. Interest rates and inflation concern marketers, as does the

general business cycle.

5. Competitive Environment. All marketers compete for the purchasing power of

consumers. Marketers must convince buyers that they should purchase one company’s

products rather than another’s. This sometimes occurs through product differentiation and

consumer segmentation. Substitute products may not look alike or they may seem very

against foreign products.

KEY TEACHING TIPS

 Students often forget that marketing is more than just advertising and sales. It is a set of

processes for creating, communicating, and delivering value to customers and for

managing customer relationships.

 Make sure that students grasp the concept of utility—the ability of a product to satisfy a

person’s want or need—as it is a difficult concept for some students.

 Consumer marketing involves the sale of consumer goods and services to consumers;

industrial marketing involves the sale of industrial goods and services to other

companies.

 Relationship marketing emphasizes building lasting relationships with customers and

suppliers. What do organizations hope to gain from relationship marketing?

 Make sure students understand the distinction between data warehousing and data

mining.

 Reinforce that every marketer is faced with forces from the external environment,

including the political-legal, sociocultural, technological, economic, and competitive

environments.

QUICK QUESTIONS

 How does a marketer create form utility, time utility, place utility, and ownership utility?

 What are some examples of consumer goods? What about industrial goods?

 Relationship marketing emphasizes building lasting relationships with customers and

suppliers. What do organizations hope to gain from relationship marketing?

 Make sure students understand the distinction between data warehousing and data

mining.

 What are some common political-legal factors that affect marketing?

 What are some common sociocultural factors that affect marketing?

 What are some common technological factors that affect marketing?

 What are some common economic factors that affect marketing?

 What are some examples of competing products?

 Why do marketers attempt to differentiate their products?

Use In-Class Activity 1: Ice-Breaker: Assessing the Marketing Environment

Time Limit: 30 minutes

Use In-Class Activity 2: Small-Group Discussion: Data Mining

Time Limit: 20 minutes

Learning Objective 11-2:

Explain the purpose of a marketing plan and identify its main components.

The marketing plan is a detailed strategy for focusing marketing efforts on customers’ needs

and wants. The plan identifies the marketing objectives, stating what marketing will accomplish

in the future. It contains a strategy that identifies the specific activities and resources that will be

used to meet the needs and desires of customers in the firm’s chosen target markets, so as to

accomplish the marketing objectives.

Every well–founded plan should begin with objectives or goals, setting the stage for everything

A. Marketing Strategy: Planning the Marketing Mix

Marketing strategy identifies the planned marketing programs, all the marketing activities

that a business will use to achieve its marketing goals, and when those activities will occur. A

company’s marketing managers are responsible for planning and implementing all the

activities that result in the transfer of goods or services to its customers. Marketing strategy

focuses on the needs and wants of customers in the chosen target markets. It also includes

four basic components, known as the marketing mix. This mix consists of the “Four Ps” of

marketing: product, pricing, place, and promotion.

1. Product. The product is a good, service, or idea designed to fill a consumer need.

Meeting consumer needs often requires that marketers change existing products.

2. Pricing. Pricing must be set to support direct and indirect costs, yet prices cannot be so

3. Place (Distribution). Place refers to the where and how customers get access to the

products they buy. Distribution activities are concerned with getting the product from the

4. Promotion. Promotion refers to techniques of communicating information about

a. Advertising is any form of paid nonpersonal communication used by an identified

sponsor to persuade or inform potential buyers about a product.

b. Personal selling is person-to-person sales, frequently used in business-to–business

marketing. The retail situation, though, is also personal selling.

5. Blending it all Together: Integrated marketing strategy ensures that the Four Ps blend

together so that they are compatible with one another and with the company’s non–

marketing activities as well.

KEY TEACHING TIPS

 Reinforce that although price may be the easiest of the Four Ps to change, a price that is

too high fails to attract buyers, and a price that is too low yields little profit.

 Make sure students understand that place is concerned with all of the activities involved

in getting products from producers to consumers.

 Reinforce that promotion refers to techniques—advertising, personal selling, sales

promotions, publicity, and PR—for communicating information about products.

 Remind students that the marketing mix consists of product, price, promotion, and place.

It is affected by variables such as consumer characteristics, consumer needs, emerging

marketing, and competition.

 Stress that the elements of the marketing mix—the Four Ps—are treated similarly by

small businesses and large businesses; only the implementation may change.

QUICK QUESTIONS

 What are the Four Ps?

 What is an integrated marketing strategy and why is it important?

HOMEWORK

CRM and the Marketing Mix

Now is a good time to assign Application Exercise 9 from the end-of–chapter materials as

homework. This assignment is designed to get students thinking about how to use the different

elements of the marketing mix to create an ongoing relationship with customers.

At-Home Completion Time: 30 minutes

Learning Objective 11-3:

Explain market segmentation and how it is used in target marketing.

Target Marketing and Market Segmentation

Target markets are groups of people or organizations on which a firm’s marketing efforts are

focused. Market segmentation divides a market into categories with similar wants and needs

B. Demographic Segments

Demographic variables describe populations, including such traits as age, income, gender,

ethnic background, marital status, race, religion, and social class. A segment can focus on a

single trait, or on a combination of traits.

C. Geo-demographic variables

Geo-demographic segmentation is a combination strategy. Geo-demographic variables are

a combination of geographic and demographic traits. Looking at people through this

combination of traits is becoming the most common segmentation tool.

D. Psychographic Segments

Psychographic variables include lifestyles, personalities, interests, and attitudes as these

impact people’s decision processes.

E. Behavioral Segmentation

Behavioral segmentation uses behavioral variables to market items, including such

KEY TEACHING TIP

The variables that can be used to divide a market into segments include geographic

segmentation, demographic segmentation, geo-demographic segmentation, psychographic

segmentation, and behavioral segmentation. Frequently, target markets are identified based on

some combination of variables.

QUICK QUESTIONS

 What demographic variables would affect your purchase of a cell phone?

 Would other variables affect your purchase of a cell phone, such as behavioral or

psychographic variables?

 How can psychographic variables—unlike geographic and demographic variables—be

changed by marketing efforts?

Learning Objective 11-4:

Discuss the purpose of marketing research and compare the four marketing research

methods.

Marketing Research

Marketing research, the study of what customers need and want and how best to meet those

needs and wants, is a powerful tool for gaining decision–making information. Its role is to

increase competitiveness by clarifying the interactions among a firm’s stakeholders, marketing

variables, environmental factors, and marketing decisions.

A. The Research Process

Market research can occur at almost any point in a product’s life cycle. Typically, however,

it is used in developing new or altered products.

1. Study the current situation. What is the need and what is being done to meet it?

3. Collect data. Secondary data are already available from previous research. When

secondary sources are unavailable or inadequate, researchers must obtain primary data,

4. Analyze the data. Data are of no use until organized into information.

5. Prepare a report. This report should sum up the study’s methodology and findings. It

should also identify solutions and, where appropriate, make recommendations on a

course of action.

B. Research Methods

The success of a research study often depends on the method a research team uses. There are

four basic methods of market research.

1. Observation. Observation involves watching and recording consumer behavior.

2. Surveys. One way to get useful information is by performing surveys, a method of

collecting data in which the researcher interacts with people to gather facts, attitudes, or

3. Focus Group. In a focus group, participants are gathered in one place, presented with an

4. Experimentation. Experimentation compares the responses of the same or similar

people under different circumstances or regarding different products, or product features.

HOMEWORK

Market Research

Now is a good time to assign Application Exercise 10 from the end–of-chapter materials as

homework. This assignment is designed to get students thinking about secondary data sources

and how to apply it to target marketing and the basis upon which target markets are segmented.

At-Home Completion Time: 45 minutes

Learning Objective 11-5:

Describe the consumer buying process and the key factors that influence that process.

Understanding Consumer Behavior

Consumer behavior is the study of the decision process by which people buy and consume

products.

A. Influences on Consumer Behavior

Influences on consumer behavior can include psychological (motivations, perceptions,

ability to learn, attitudes), personal (lifestyle, personality, economic status), social (family,

opinion leaders, and reference groups such as friends, coworkers, and professional

B. The Consumer Buying Process

Various models have been constructed to help marketers understand how consumers come to

purchase products; marketers use this information to develop marketing plans. The consumer

buying process includes five steps:

1. Problem/Need Recognition. The consumer recognizes a problem or a need.

2. Information Seeking. Consumers seek information from personal sources, marketing

4. Purchase Decision. Ultimately, consumers make purchase decisions. Rational motives

5. Postpurchase Evaluation. Only satisfied customers will likely make repeat purchases.

KEY TEACHING TIP

QUICK QUESTIONS

 What are some examples of psychological influences and personal influences on

consumers? What about social influences and cultural influences?

 What is the difference between rational motives and emotional motives when consumers

make a purchase decision? Are emotional motives related to psychographics?

Learning Objective 11-6:

Discuss the four categories of organizational markets and the characteristics of business-to–

business (B2B) buying behavior.

Organizational markets and buying behaviors. Marketing to organizations that buy goods

and services used in creating and delivering consumer products or public services involves

various kinds of markets and buying behaviors different from those in consumer markets.

A. Business Marketing

Organizational markets fall into four categories: service companies, industrial, reseller, and

government/institutional markets.

1. Services Market. The services companies market encompasses the many firms that

provide services to the purchasing public.

3. Reseller Market. The reseller market consists of marketing intermediaries, such

as wholesalers and retailers that buy finished products and resell them.

4. Government and Institutional Market. In addition to federal and state governments,

the institutional market consists of nongovernment organizations, such as hospitals,

churches, charities, and museums, that also use supplies and equipment as well as legal,

accounting, and transportation services.

B. B2B Buying Behavior

Organizational buying behavior bears little resemblance to consumer buying practices.

Differences include the buyers’ purchasing skills and an emphasis on buyer–seller

relationships.

1. Differences in Buyers. Industrial buyers purchase in large quantities, and are trained,

2. Differences in the Buyer-Seller Relationship. Industrial buying situations often involve

frequent, enduring buyer-seller relationships, emphasizing personal selling by trained