MM FINAL EXAM REVIEWER

CHAPTER 2
THREE PHASES OF THE PURCHASE PROCESS

1. AWARENESS- This is the incipient phase of a customer’s awareness of who you are and what
you are all about. This phase of the customer buying cycle is where customers make their first
judgement of you, which is why a lot of marketing and advertising departments spend so much
time and money polishing the image of their business.
2. INTEREST- This phase of the customer buying cycle is when customers come to you. The
awareness phase is where you grab their attention, and this phase is where you have a chance
to build upon it. Customers are typically non-committal during this phase; they are likely still
doing plenty of research and shopping around.
3. PURCHASE- This phase of the customer buying cycle includes not only the actual purchase of the
good or service itself, but also the final evaluation. A customer might still be reviewing their
options in this phase, but what differs from the interest phase is that they have shown a distinct
desire to purchase the good or service in question.

DIFFERENT KINDS OF PURCHASES

CONSUMER LEVEL OF INVOLVEMENT

1. Low Involvement- are, however, typically products that are relatively inexpensive and pose a
low risk to the buyer if a mistake is made in purchasing them.

2. Medium Involvement- Consumers engage in limited problem solving when they already have
some information about a good or service but continue to search for a little more information.

3. High Involvement- decisions carry a higher risk to buyers if they fail. These are often more
complex purchases that may carry a high price tag, such as a house, a car, or an insurance policy.
These items are not purchased often but are relevant and important to the buyer

TYPES OF CONSUMER PRODUCTS

1. Convenience Product- is a product that is easy to get, inexpensive, consumed in a short period
of time, and bought on a frequent basis
2. Shopping Product- is a product that is not as easy to get, costs more money, are infrequently
purchased, and last a longer time. These products are in the category of durable goods because
they should last more than three years.
3. Specialty Product- Specialty products are products where consumers are concerned with brand
image and the quality of their purchases. Consumers really do not want substitutes and are
brand loyal.

DIFFERENT TYPES OF BUYING SITUATIONS

1. Straight Rebuy- when a company repeats their last order to the same supplier without any
modifications.
 2. Modified Rebuy- when a company reorders from an approved supplier but with modifications
to the order.

3. New Buy- when a company places an order with a certain supplier for the first-time.

What is Consumer Behavior?

is the study of consumers and the processes they use to choose, use (consume), and dispose of products
and services, including consumers’ emotional, mental, and behavioral responses.

TYPES OF CONSUMER BEHAVIOR

1. Complex buying behavior- This type of behavior is encountered when consumers are buying an
expensive, infrequently bought product. They are highly involved in the purchase process and
consumers’ research before committing to a high-value investment.
2. Dissonance-reducing buying behavior- The consumer is highly involved in the purchase process
but has difficulties determining the differences between brands. ‘Dissonance’ can occur when
the consumer worries that they will regret their choice.
3. Habitual buying behavior- Habitual purchases are characterized by the fact that the consumer
has very little involvement in the product or brand category. Imagine grocery shopping: you go
to the store and buy your preferred type of bread. You are exhibiting a habitual pattern, not
strong brand loyalty.
4. Variety seeking behavior- In this situation, a consumer purchases a different product not
because they weren’t satisfied with the previous one, but because they seek variety. Like when
you are trying out new shower gel scents.

CUSTOMER BEHAVIOR PATTERNS

1. Place of Purchase- Most of the time, customers will divide their purchases between several
stores even if all items are available in the same store.

2. Items Purchased- Analyzing a shopping cart can give marketers lots of consumer insights about
the items that were purchased and how much of each item was purchased. Necessity items can
be bought in bulk while luxury items are more likely to be purchased less frequently and in small
quantities.

3. Time and Frequency of Purchase- Customers will go shopping according to their feasibility and
will expect service even during the oddest hours; especially now in the era of e-commerce
where everything is only a few clicks away.

4. Method of Purchase- A customer can either walk into a store and buy an item right then and
there or order online and pay online via credit card or on delivery.

CUSTOMER BEHAVIOR SEGMENTATION

1. Benefits Sought- A customer who buys toothpaste can look for four different reasons:
whitening, sensitive teeth, flavor, or price
2. Occasion or Timing-Based- Occasion and timing-based behavioral segments refer to both
universal and personal occasions.
  Universal occasions apply to the majority of customers or target audience. For example,
holidays and seasonal events when consumers are more likely to make certain
purchases
 Recurring-personal occasions are purchasing patterns for an individual customer that
consistently repeat over a while. For example birthdays, anniversaries or vacations
 Rare-personal occasions are also related to individual customers, but are more irregular
and spontaneous, and thus more difficult to predict. For example, attending a friend’s
wedding.
3. Usage Rate- Product or service usage is another common way to segment customers by
behavior, based on the frequency at which a customer purchases from or interacts with a
product or service
4. Brand Loyalty Status- Loyal customers are the ones who should receive special treatment and
privileges such as exclusive rewards programs to nurture and strengthen the customer
relationship and incentivize continued future business.
5. User Status- There are many different possible user statuses you might have depending on your
business. A few examples are: Non-users, Prospects, First-time buyers, Regular users, Defectors
(ex-customers who have switched to a competitor).
6. Customer Journey Stage- Segmenting the audience base on buyer readiness allows marketers to
align communications and personalize experiences to increase conversion at every stage

CHAPTER 3 Segmentation,Targeting Positioning

SEGMENTATION- any of the parts into which a thing is divided or naturally separates
MARKET SEGMENTS
1. Demographic segmentation - assumes that people with common characteristics will
have similar lifestyle patterns, tastes, and interests that will influence their purchasing
habits. Demographics include factors like age, gender, occupation, income, and
education.
2. Geographic segmentation- allows marketers to group people based on where they live,
work, or travel
3. Behavioral market segmentation- describes specific steps in their ideal customer’s
buying process, including what their ideal customers want, why they want it, the
benefits sought, and how they go about getting their needs met.
Behaviors can include:

 Purchasing reason
 Occasion or event
 Product benefits
 Buyer’s journey stage
 Engagement level
 4. Psychographic segmentation- divides people into groups based on their personality,
lifestyle, social status, activities, interests, opinions, and attitudes
BASES OF MARKET SEGMENTATION
Demographic- Age, sex, occupation, education, family size, income, race, nationality, religion
(Deodorant)
Geographic- Country, state, climate, population, density, urban, rural. (Clothes)
Behavioral- Occasion purchasing, (seasonal purchases- Summer)
Psychographic- Interest, lifestyle (Luxury brand)
SEGMENTING THE MARKET
Step 1: DEFINE YOU MARKET
Step 2: SEGMENT YOUR MARKET
Step 3: UNDERSTAND YOUR MARKET
Step 4: CREATE YOU CUSTOMERS SEGMENT
Step 5:TEST YOUR MARKETING STRATEGY
MARKET SIZING- Market sizing is traditionally defined as estimating the number of buyers of a
particular product, or users of a service.
3 TYPES OF MARKET SIZE
1. Total Addressable Market- refers to the maximum size of the opportunity for a
particular product or solution. In other words, if every single person who could
potentially find value in a product or solution purchased/started using it (i.e. 100%
market share)
2. Serviceable Available Market- The serviceable available market or served addressable
market is more clearly defined as that market opportunity that exists within a firm's
existing core competencies and/or past performance.
3. Serviceable Obtainable Market- The Serviceable Obtainable Market (SOM) is an
estimate of the portion of revenue within a specific product segment that a company is
able to capture.
POSITIONING: a mental space in your target audience’s mind that you can own with an idea
that has compelling meaning to the recipient. It’s in this mental space where your solution to
the recipient’s problem meet and form a meaningful relationship. This means you need to know
your customers and their problems as well as you know your own product.
CHAPTER 4: PRODUCTS, GOODS OR SERVICES
• A product is any item or service you sell to serve a customer’s need or want.
• They can be physical or virtual.
• A product may also be a hybrid — including both physical and virtual elements.
CHARACTERISTICS OF PRODUCTS

 Intended for customers

 Created to provide benefits to a market
 Exchanged for value

CONSUMER PRODUCTS
Consumer products, or business-to-consumer (B2C) products, are sold to end-users and
intended for personal use.
• Convenience products- frequently bought, widely available, easy to obtain,
typically have a low price
• Shopping products - purchased less frequently, have a higher price
• Specialty products - requires more targeted promotion
• Unsought products- have a little awareness or proactive demand
BUSINESS PRODUCTS
Business products, or business-to-business (B2B) products, help other companies create their
own products or operate their business.
• Examples of business products include raw materials, equipment, supplies, business
services, and software.
INDUSTRY PRODUCTS
Industry products, or vertical market products, serve broad business sectors such as energy,
healthcare, financial services, or information technology.
• (e.g., a healthcare application for managing patient data).

SERVICES are intangible properties where the service receiver does not obtain anything
tangible or ownership. They are perishable in nature as they need to be provided at a moment
when requested by the consumer.
SERVICES THREE MAIN FACTORS:
• Tangibility-Products are physical assets that can be owned, touched, and
transferred
• Perishability-Ability to save, resold, or returned once purchased
• Ownership-Transfer goods from a seller to a buyer
PRODUCT DEPTH is how many variations of each product the store is carrying
• Example: Drugman, Biochemis, Mercury drug
PRODUCT BREADTH is how many different products a store is offering for sale. The more
products are offered the broader is the product assortment of this business.
• Example: A retailer that sells many different types of products is considered to have a
large product breadth

CHAPTER 5 : NEW PRODUCT AND INNOVATION

-Change is Inevitable
- Change is Good
- Change is Fun
PHILOSOPHIES OF PRODUCT DEVELOPMENT
"top-down (when a company thinks up a new idea, develops it, and doesn't involve the
customer until somewhat later in the process) or
"bottom-up" (ideas spring from the customers them- selves, and the company then pursues
them in development).
WHERE DO NEW IDEAS COME FROM?

Internal
● The Boss
● R&D, In-house experts, Brainstorming
● Employees (e.g., suggestion box) Feedback from front-line, sales force

External
● Customers (complaints, lead-users, marketing research focus groups, scan blogs)
● Business partners (requirements to decrease costs, requests to enhance quality),
● Competition
● Context (remember PEST); i.e., Trend-spotting

BETA TESTING- beta version of the product is made available for trial and consumption.
FORECASTING
-Upon completion of the test marketing, the marketing manager takes the customer data and
tries to predict the product's likely success
● First estimate the market potential (MP)
● Next estimate of purchase intention (PI)
● Finally, the Price Company (PR)
TIMING
-New product development can move along fairly speedily for straightforward brand or line
extensions in the context of a mature consumer packaged
PRODUCT LIFE CYCLE
1.Market introduction
2. Market growth
3.Maturity
4. Decline
TARGET MARKET
1. Innovators

 The so-called innovators are the first 3-5% who like to try new ideas and are willing to
take risks. They tend to be relatively educated and confident in assessing the product on
their own.
2. Early Adopters

 are the next group (10-15%); these are even more influential as opinion leaders,
primarily because they are a bigger group. This group is so influential that the loss of
one of these early adopters costs the firm more than the loss of later adopters.
3. The Early majority

 (34%) are more risk averse than the first two groups. They're waiting to hear that the
early adopters have had favorable experiences with the new product.
4. Late majority
(34%) are even more cautious, often older and more conservative, and wish to buy only
proven products
5. Laggards
Or non-adopters (5-15% are the most risk averse, skeptical of new products, and
stereotypically lower in income.
GROWTH STRATEGIES
 ● Market penetration means we're hunkering down and trying to sell more the same stuff
to the same customers.
● Product development is for the company that wishes to be innovative. New or modified
products are offered to the current customer base to keep them happy.
● Market development is the path we take when we're settled on our product mix and we
think there are more segment opportunities to target.
● Diversification is the toughest. We're going after new customers with new products.

CHAPTER 6: PRICING
Pricing is the method of determining the value a producer will get in the exchange of goods and
services
DEMAND-MARKET DESIRE TO BUY

SUPPLY-MARKET CAPACITY TO PRODUCE

The law of supply says that when prices rise, companies see more profit potential and increase
the supply of goods and services.
The law of demand states that as prices rise, customers buy less.
Low pricing strategy -consistently low-priced products. Instead of offering discounts, coupons,
and promotions, companies focus on providing consumers with low-price products.
High Price Strategy- keeps the price of the product on the higher side when compared to
similar products(or competitor) products in the market.
CGR(current gross revenue)=
AP(actual production)
ASP(actual selling price)
FGR(future gross revenues)
CP(current prices)
EQ(estimated quantity)
CGR= AP x ASP
FGR= CP x EQ
PSYCHOLOGICAL PRICING is a strategy that uses pricing to influence a customer's spending or
shopping habits to make more or higher value sales
6 TYPES OF PSYCHOLOGICAL PRICING
 • Charm pricing and odd-even pricing
• Slashing the MSRP
• Artificial time constraints
• Innumeracy
• Price appearance
• Flat-rate bias
NON-LINEAR PRICING is a strategy that takes into account a variety of factors beyond the cost
of a product or service. These can include the customer’s willingness to pay, the value they
place on the product, and the competition.
Nonlinear pricing can impact pricing in the following ways:
Quantity discounts
discounts for larger quantities of a product or service, encouraging bulk purchases and
increasing sales.
Time-based pricing
based on the time of day, week, or year, such as charging higher prices during peak hours or
seasons.
Location-based pricing
based on the location of the consumer, such as charging higher prices in tourist areas or urban
areas.
Personalized pricing
based on the consumer’s purchasing history, demographics, or other factors.
Sales and promotions
to create a sense of urgency and encourage consumers to make a purchase.
CHANGES

 EARN
 SAVE
 SPEND
 DONATE

CHAPTER 7: CHANNELS AND DISTRIBUTION

Distribution channels and supply chain logistics are essential components of business
operations that are used to bring products from the manufacturer to the end customer.
Distribution channels refer to the various ways that products are made available to customers.
This can include direct sales from the manufacturer to the customer.
A DISTRIBUTION CHANNEL'S COMPONENTS:
 Producer: To generate things and services for consumers, producers mix labor
and capital.
 Agent: During the distribution process, agents frequently act on behalf of the
producer to take payments and transfer ownership of the goods and services.
 A wholesaler is a person or business that sells merchandise to retailers in big
quantities and frequently at discounted rates.
 Retailer: An individual or company that offers things for immediate use or
consumption to the general public in small quantities.
 End User: A customer who purchases a good or service.
TYPES OF DISTRIBUTION CHANNELS

 Direct- a direct channel lets customers buy products directly from the producer. Due to
the fact that consumers are purchasing through this short or direct channel, they might
pay less.
 Indirect- the consumer can purchase the goods through an indirect channel from a
wholesaler or store. For products that are offered in conventional brick-and-mortar
establishments, indirect channels are typical.
 Hybrid- Direct and indirect routes are both used by hybrid distribution channels. A
manufacturer of a good or service has the option of selling their goods or services
directly to customers as well as through a retailer.
SUPPLY CHAIN LOGISTICS- encompasses the entire process of getting products from the
manufacturer to the customer. It involves planning, organizing, and executing the movement of
goods from the point of origin to the point of consumption.
DESIGNING A SMART DISTRIBUTION SYSTEM
1. Define the system's goals: The first step is to identify the purpose of the smart
distribution system.
2. Conduct a feasibility study: Before you begin designing a smart distribution system,
conduct a feasibility study to determine the technical and economic viability of the
system
 3. Determine the scope of the system: Decide on the scope of the smart distribution
system
4. Choose the right technologies: Smart distribution systems rely on a range of
technologies, including sensors, communication networks, and analytics tools.
5. Implement the system: Once you have identified the right technologies, it's time to
implement the system
6. Monitor and optimize the system: Finally, once the system is in place, it's important to
continuously monitor and optimize its performance.
CHANNEL POWER is when one member of the channel attempts to guide and support members
of the other channel. The channel member that assumes this position is known as the channel
captain. Channel power occurs in four different ways; economic power, expertise,
identification, and legitimate right.
CHANNEL CONFLICT occurs when a member of one channel believes that another channel is
acting in a way that interferes with the channels projections and goals for the quarter or any
period of time.

CHAPTER 8 ADVERTISEMENT
Advertising is any paid promotion of a product, service or idea meant to influence one or more people.
The main goal of advertising is to persuade someone to buy a project or perform an action

TYPES OF ADVERTISEMENT:

Above the line advertising is not targeted to a specific group and is created to reach large audiences.
TV, radio and magazine advertisements are usually this type.

Below the line advertising is a type of advertisement that is directed toward a specific target audience.
These can be mailing lists, in-store advertisements and commercials created for a specific program

Through the line advertisement is often used for brand-building campaigns and has a mix of above and
below the line techniques. They're usually widely distributed advertisements that use cookies or digital
data to personalize the customer's experience

IMPORTANCE OF ADVERTISEMENT

 It helps you understand your audience

 It increase your sales
1. Brand awareness
2. Traffic increase
3. Engagement boost
4. Multimedia interest increase
5. Lead generation
6. Targeted market research
COMPONENTS OF AN ADVERTISING MESSAGE

 Headline
 Sub-headline
 Copy
 Images
 Call-to-action

Methods of Evaluating Advertising Effectiveness

1. Communication Effect Research

Portfolio Tests · Direct Rating Method · Laboratory Tests

2. Sales Effect Research

3. Analysis Tool
4. Integrated Direct Marketing

CHAPTER 9: INTEGRATED MARKETING COMMUNICATIONS: MEDIA CHOICES

Integrated marketing communication is the the process of coordinating all this activity across
different communication methods. Note that a central theme of this definition is persuasion.
STEPS ON MEDIA SELECTION
• Deciding on reach, frequency, and impact;
• Choosing among major media types;
• Media Planning and Scheduling
Reach is a measure of the percentage of people in the target market exposed to the ad
campaign during a given span of time
Frequency is the number of times the average person in the target market is exposed to an
advertising message during a given period.
three kinds of media schedules:
Continuous
Occasional
Seasonal
WAYS TO MEASURE THE EFFECTIVENESS OF AN ADVERTISING CAMPAIGN:
SET A SPECIFIC GOAL.
ANALYZE SITE TRAFFIC
REVIEW LEAD QUALITY
ANALYZE KEY METRIX (Before and after)
SURVEY TESTING.

CHAPTER 10: Customer satisfaction & Customer relationships

CUSTOMER EVALUATION is a document that you can use to collect data/information from your
customers about their experience through your company.
How do customer evaluate products?

3 POSSIBLE OUTCOMES
• The customers are delighted
• The customers are satisfied
• The customers are dissatisfied
THE COMPARATIVE MODEL:
low-involvement purchases. In these circumstances, the buyer typically gathers little to no
information, if any, and any alternative evaluation is typically quick and easy
High-involvement purchases. When there are large disparities between brands and when the
consumer is heavily involved in the purchase, complex buying behavior emerges.
Experiential purchase- The consumption of goods or services with the intention of having an
experience
SOURCES OF EXPECTATIONS:
• Marketing information
• Personal experiences
• Online ratings
 • Friends and Family advice
CUSTOMER EXPERIENCE focuses on all the interactions a customer has with your brand
CUSTOMER EXPECTATION focuses on how well those experiences met their expectations
What do customers look for?
• Price
• Quality
• Choice
• Convenience.
CRM or Customer Relationship Management is a system that helps in collecting, organizing,
and managing the customer information
A loyalty program is a system of structured rewards given to customers, usually in exchange for
desired behaviors, with the goals of increasing customer loyalty and collecting customer data

RFM, also known as RFM analysis, is a type of customer segmentation and Behavioral targeting
used to help businesses rank and segment customers based on the recency, frequency, and
monetary value of a transaction.
Customer lifetime value is the total revenue you as an ecommerce business earn from a
customer over time. It takes into account all their orders ever