Understanding marketing processes and consumer behavior

business essentials -- part 10 -- summary

Marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational goals." Consumers buy products that offer the best value -- the comparison of products benefits to its costs -- when it comes to meeting their goals and wants. The satisfied buyer perceives that the benefit derived from the purchase outweighs its costs.

5 outside factors comprise a company's external environment and influence its marketing programs by posing opportunities or threats:
(1) political and legal environment
(2) social and cultural environment
(2) technological environment
(4) economic environment
(5) competitive environment

Marketing managers plan and implement all marketing activities that result in the transfer of products to customers. These activities accumulate in the marketing plan -- a detailed strategy for focusing the effort to meet customer needs and wants.

Marketing managers rely on the "Four P's" of marketing, or the marketing mix.
The "Four P's" of marketing are:
(1) product: marketing begins with a product, a good, a service, or an idea designed to fill a consumer need or want. Product differentiation is the creation of a feature or image that makes a product differ from competitors.
(2) pricing: pricing is a strategy of selection of the most appropriate price at which to sell product.
(3) place (distribution): all distribution activities are concerned with getting a product from the producer to the consumer.
(4) promotion: promotion refers to techniques for communicating information about products and includes advertising.

Marketers think in terms of target markets -- groups of people who have similar ones and needs and who can be expected to show interest in the same products. Target marketing requires market segmentation -- dividing a market into customer types or "segments."

Members of a market segment must share some common traits that influence purchasing decisions. Following are three of the most important influences:
(1) geographic variables are the geographical units that may be considered in developing a segmentation strategy.
(2) demographic variables describe populations by identifying such traits as age, income, gender, ethnic background, marital status, race, religion, and social class.
(3) members of a market can be segmented according to such psychographic variables like lifestyles, interest, and attitudes.

Students of consumer behavior have constructed various models to help marketers understand how consumers decide to purchase products. One model considers five influences that lead to consumption:
(1) problem/need recommendation: the buying process begins with consumer recognizes a problem or need.
(2) information seeking: having recognized the need, consumers seek information.
(3) evaluation of alternatives: by analyzing the attributes that apply to a given product, consumers compare products in deciding which probably best meets the needs.
(4) purchase decision: "buy" decisions are based on rational motives, emotional motives, or both. Rational motives involve the logical evaluation of product attributes such as cost, quality, and usefulness. The national motives involve nonobjective factors and include sociability, imitation of others, and aesthetics.
(5) purchase evaluations: marketers want consumers to be happy after the consumption of products so they are more likely to buy them again.

Organizational (or commercial) markets, in which organizations buy goods and services to be used in creating and delivering consumer products, fall into three categories. (1) the industrial market consists of businesses that buying goods to be converted into other products or goods that are used during production. (2) before products reach consumers, they passed through the reseller market consisting of intermediaries that buy finished goods and resell them. (3) government and institutional markets: federal, state, and local governments by durable and nonverbal products. The institutional market consists of nongovernmental buyers such as hospitals, churches, museums, and charities.

A product is a good, service, or idea that is marketed to fill consumer needs and wants. Customers buy products because of the value that the offer. Thus, a successful product is a value package -- a bundle of attributes that, taken together, provides the right features and offers the right benefits. Attributes include such characteristics as ease-of-use, prestige of ownership, warranties, and technical support. Features are the qualities, tangible and intangible, that a company builds into its products (such as a 12 horsepower motor on a lawnmower). To be sellable, features also must provide benefits (example, an attractive lawn). The items in the value package are services and features that, collectively, add value by providing benefits that increase the customer's satisfaction.

Each product is given an identity by its brand in the way is packaged. The goal in developing brands, symbols that distinguish products and signal their uniform quality -- is to increase brand loyalty (the preference that consumers have for a product with a particular brand name). National brands are produced, widely distributed by, and carry the name of the manufacturer: they are often widely recognized because of national advertising campaigns. Licensed brands are brand names purchased from the organization or individuals who own them. When a wholesaler or retailer develops a brand name and has a manufacturer place it on a product, the product name is then called a private brand (or private label). With a few exceptions, a product needs some form of packaging -- a physical container in which is sold, advertised, or protected. A package makes the product attractive, displays the brand name, and identifies feature in benefits. It also reduces the risk of damage, breakage, or spoilage, and it lessens the likelihood of theft.