Solution Manual For Marketing Management 3rd Edition Greg Marshall Mark Johnston

Solution Manual for Marketing Management, 3rd Edition, Greg Marshall Mark Johnston
Solution Manual for Marketing Management, 3rd

Edition, Greg Marshall Mark Johnston
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dition-greg-marshall-mark-johnston/
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Chapter 06
Understand Consumer and Business Markets
LEARNING OBJECTIVES
LO 6-1 Understand the value of knowing the consumer.
LO 6-2 Consider the role of personal and psychological factors in consumer decision making.
LO 6-3 Appreciate the critical and complex role of cultural, situational, and social factors in a
consumer purchase decision.
LO 6-4 Understand the consumer decision-making process.
LO 6-5 Understand the differences between B2C and B2B markets.
LO 6-6 Understand the critical role of the buying center and each participant in the B2B
process.
LO 6-7 Learn the B2B purchase decision process and different buying situations.
LO 6-8 Comprehend the role of technology in business markets.
CHAPTER OUTLINE
I. THE POWER OF THE CONSUMER
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
6-1
Chapter 06
A. Personal Characteristics
i. Life Cycle Stage (Age)
ii. Occupation
iii. Lifestyle
B. Gender Roles
C. Psychological Attributes
i. Motivation
ii. Attitude
iii. Perception
a. Selective Awareness
b. Selective Distortion
c. Selective Retention
6-2
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iv. Learning
v. Personality
II. EXTERNAL FACTORS SHAPE CONSUMER

CHOICES
A. Cultural Factors
i. Culture
ii. Subculture
B. Situational Factors
i. Physical Surroundings
ii. Personal Circumstances
iii. Time
C. Social Factors
i. Family
ii. Social Class
iii. Opinion Leaders
iv. References Groups
6-3
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III. THE LEVEL OF INVOLVEMENT INFLUENCES THE

PROCESS
A. Decision Making with High Involvement
B. Decision Making with Limited Involvement
IV. THE CONSUMER DECISION MAKING PROCESS
A. Problem Recognition
B. Search for Information
i. Information Sources
ii. Defining the Set of Alternatives
6-4
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C. Evaluation of Alternatives
i. Emotional Choice
ii. Attitude-Based Choice
iii. Attribute-Based Choice
D. Product Choice Decisions
E. Post Purchase Assessment
i. Dissonance
ii. Use/Nonuse
iii. Disposal
iv. Satisfaction/Dissatisfaction
V. ORGANIZATIONAL BUYING: MARKETING TO A
6-5
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BUSINESS
VI. DIFFERENCES BETWEEN BUSINESS AND

CONSUMER MARKETS
A. Relationship with Customers
B. Number and Size of customers
C. Geographic Concentration
D. Complexity of Buying Process
E. Complexity of the Supply Chain
F. Demand for Products and Services is Different in a

Business Market
i. Derived Demand
ii. Fluctuating Demand
iii. Inelastic Demand
6-6
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VII. BUYING SITUATIONS
A. Straight Rebuy
B. Modified Rebuy
C. New Purchase
VIII. BUYING CENTERS
A. Members of the Buying Center
i. User
ii. Initiators
iii. Influencers
iv. Gatekeepers
v. Deciders
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B. Pursuing the Buying Center
IX. THE PLAYERS IN BUSINESS TO BUSINESS

MARKETS
A. The North American Industrial Classification System

(NAICS)
B. Manufacturers
C. Resellers
D. Government
E. Institutions
X. THE BUSINESS MARKET PURCHASE DECISION

PROCESS
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A. Problem Recognition
B. Define the Need and Product Specifications
C. Search for Suppliers
D. Seek Sales proposals in Response to RFP
E. Make the Purchase Decision
i. Product Selection
i. Financial Criteria
ii. Value Criteria
iii. Service Criteria
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iv. Supplier Choice
v. Personal and Organizational Factors
F. Post purchase evaluation of Product and Supplier
XI. THE ROLE OF TECHNOLOGY IN BUSINESS

MARKETS
A. E-Procurement
XII. SUMMARY
6-10
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KEY TERMS
demographics The characteristics of human populations and population segments, especially

when used to identify consumer markets.
family life cycle The changes in life stage that transform an individual’s buying habits.
lifestyle An individual’s perspective on life that manifests itself in that person’s activities,
interests, and opinions (AIO).
gender roles Behaviors regarded as proper for men and women in a particular society.
motivation The stimulating power that induces and then directs an individual’s behavior.
attitude Learned predisposition to respond to an object or class of objects in a consistently

favorable or unfavorable way.
multiattribute model A model that measures an individual’s attitudes toward an object by

evaluating it on several important attributes.
perception A system to select, organize, and interpret information to create a useful, informative
picture of the world.
selective awareness A psychological tool an individual uses to help focus on what is relevant
and eliminate what is not relevant.
selective distortion The process in which an individual can misunderstand information or make
it fit existing beliefs.
selective retention The process of placing in one’s memory only those stimuli that support
existing beliefs and attitudes about a product or brand.
memory Where people store all past learning events.
short-term memory The information an individual recalls at the present time. Sometimes
referred to as working memory.
long-term memory Enduring memory storage that can remain with an individual for years or
even a lifetime.
learning Any change in the content or organization of long-term memory or behavior.
conditioning The creation of a psychological association between two stimuli.
cognitive learning Active learning that involves mental processes that acquire information to
work through problems and manage life situations.
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personality An individual’s set of unique personal qualities that produce distinctive responses
across similar situations.
culture A system of values, beliefs, and morals shared by a particular group of people that
permeates over time.
language An established system of ideas and phonetics shared by members of a particular

culture that serves as their primary communication tool.
cultural values Principles shared by a society that assert positive ideals.
nonverbal communication The means of communicating through facial expressions, eye

behavior, gestures, posture, and any other body language.
subculture A group within a culture that shares similar cultural artifacts created by differences
in ethnicity, religion, race, or geography.
family A group of two or more people living together and related by birth, marriage, or adoption.
household life cycle (HLC) A structured set of chronological activities a particular household
follows over time.
social class A ranking of individuals into harmonized groups based on demographic

characteristics such as age, education, income, and occupation.
aspirational purchases Products bought outside the individual’s social standing.
opinion leaders Individuals with expertise in certain products or technologies who classify,
explain, and then bestow information to a broader audience.
market mavens Individuals who have information about many kinds of products, places to shop,
and other facets of markets, and initiate discussions with consumers and respond to requests
from consumers for market information.
reference group A group of individuals whose beliefs, attitudes, and behavior influence
(positively or negatively) the beliefs, attitudes, and behavior of an individual.
desirability The extent and direction of the emotional connection an individual wishes to have
with a particular group.
degree of affiliation The amount of interpersonal contact an individual has with the reference
group.
primary groups Reference group with which an individual has frequent contact.
secondary groups Reference groups with which an individual has limited contact.
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involvement A significant outcome of an individual’s motivation that mediates the product

choice decision. It is activated by three elements: background and psychological profile,
aspirational focus, and the environment at the time of purchase decision.
high-involvement learning The learning process in which an individual is stimulated to acquire

new information.
low-involvement learning The learning process in which an individual is not prompted to value
new information, characterized by little or no interest in learning about a new product offering.
real state An individual’s perceived reality of present time.
preferred state An individual’s desires that reflect how he or she would like to feel or live in the
present time.
minimal information search When a consumer makes a purchase decision based on very little
information or investigation
extensive information search When a consumer makes a purchase decision based on a thorough
process of investigation and research
limited information search When a consumer makes a purchase decision based on incomplete
information and/or lack of personal knowledge
internal information search All information stored in memory and accessed by the individual
regarding a purchase decision.
external information sources Additional information an individual seeks from outside sources
when internal information is not sufficient to make a purchase decision.
complete set The very large set of possible alternatives a consumer considers during the initial
search for information
awareness set A reduced set of possible alternatives a consumer considers after eliminating
available options based on gathered information and personal preference.
consideration (evoked) set A refined list that encompasses the strongest options an individual
considers in a purchase decision once he or she has obtained additional information and carried
out an evaluation.
emotional choice A product choice based more on emotional attitudes about a product rather
than rational thought.
attitude-based choice A product choice that relies on an individual’s beliefs and values to direct
his or her assessment.
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attribute-based choice A product choice based on the premise that product choices are made by
comparing brands across a defined set of attributes.
post-purchase dissonance A feeling of doubt or anxiety following a recent purchase, generally

attributed with high-involvement, large purchases.
instrumental performance The actual performance features of the product in terms of what it
was promised to do.
symbolic performance The image-building aspects of the product in terms of how it makes the
consumer feel after purchase.
B2B (business-to-business) markets Markets in which a firm’s customers are other firms,
characterized by few but large customers, personal relationships, complex buying processes, less
price sensitive demand.
supply chain A complex logistics network characterized by high levels of coordination and
integration among its members.
product demand Demand within business markets affected by three critical dimensions: derived
demand, fluctuating demand, and inelastic demand
derived demand Demand that originates from the demand for consumer products in business-to-
consumer markets.
acceleration effect When small changes in consumer demand lead to considerable shifts in
business product demand.
inelastic demand When changes in demand are not significantly affected by changes in price.
buying decisions Decisions made throughout the purchase decision process that vary widely and
are based on factors such as: nature of the purchase, number of people involved in the decision,
understanding of the product being purchased, and time frame for the decision.
straight rebuy A buying decision that requires little evaluation because the products are
purchased on a consistent, regular basis.
out supplier A company that is not on a firm’s list of approved suppliers.
modified rebuy A buying decision in which a customer is familiar with the product and supplier
in a purchase decision, but is looking for additional information because of one or more of three
circumstances: the supplier has performed poorly, new products have come into the market, or
the customer believes it is time for a change and wants to consider other suppliers.
new purchase A buying decision in which the purchase of a product or service by a customer is
occurring for the first time.
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buying center A number of individuals with a stake in a purchase decision who manage the
purchase decision process and ultimately make the decision.
users Actual customers of a product or service who have a great deal of input at various stages of
the buying decision process, but are typically not decision makers.
initiator The individual who starts the buying decision process.
influencers Individuals, either inside or outside the organization, with relevant expertise in a
particular area who provide information used by the buying center in making a final buying
decision.
gatekeepers Individuals who control access to information and relevant individuals in the
buying center.
deciders Individuals within the buying center who ultimately make the purchase decision.
North American Industrial Classification System (NAICS) A system developed by the United
States, Canada, and Mexico that classifies companies on the basis of their primary output to
define and segment business markets.
original equipment manufacturer (OEM) Manufacturing firms that sell products that are used
as integral manufacturing components by their customer companies.
end-user purchases A category of products purchased by manufacturers that represents the

equipment, supplies, and services needed to keep their business operational.
capital equipment A firm’s significant, long-term investments in critical equipment or

technology necessary for its manufacturing and production activities.
materials, repairs, operational (MRO) Products used in everyday business operations that are
not typically considered to be a significant expense for the firm.
resellers Companies that buy products and then resell them to other businesses or consumers for
a profit.
government Local, state, and federal entities that have unique and frequently challenging
purchasing practices for manufacturing firms.
institutions Nongovernmental organizations driven by the delivery of service to the target

constituency, rather than by profits.
request for proposal (RFP) The document distributed to potential vendors that outlines an
organization’s product or service needs. It serves as a starting point from which vendors put
together their product solution.
6-15
Chapter 06
product choice The first decision made in the purchase decision process that is usually based on
a single criterion
supplier choice Selecting between multiple suppliers offering similar product configurations by
examining their qualifications.
reliability The percentage of time a product works without failure or stoppage.
personal factors The needs, desires, and objectives of those involved in a purchase decision.
organizational factors Organization-wide beliefs and attitudes that factor into a purchase
decision.
electronic data interchange (EDI) Sophisticated programs that link a customer with its
suppliers to manage inventories and automatically replenish supplies.
e-procurement The process of online business purchasing.
APPLICATION QUESTIONS
1. As we have discussed, understanding the consumers in a target market is critical to creating

an effective value proposition. Assume you are the Vice President of Marketing for Regal
Cinemas. What do you think is the demographic profile (including the age, income, and life
cycle stage) of your largest target market? As part of a mini-market research project, visit a
movie theatre on a weekend and track the people entering. How old are they? Are they
families or people meeting friends?
Possible demographic profile: age - Teens 12-17 and young Adults 18-24; income - likely to
have household incomes of $75,000 or greater; life cycle stage – independence.
2. You are the marketing manager for the Bowflex Revolution Home Gym. You believe the
product appeals to both men and women. As you develop the marketing strategy, what
differences might you consider in the product based on whether a man or woman is buying?
What about the marketing communications (message, choice of media)?
Men and women may differ in the type of “work-out” they prefer and therefore the “work-
out” programs available may differ. Men and women may differ in the style of the actual
equipment itself. Therefore, the design of the gym may reflect these preferences. There may
be other issues; however, the marketing manager should only consider those differences that
may influence the decision-making process.
Marketing managers understand that men and women vary not only in the products they
require but also in the marketing communications to which they are receptive.
6-16
Chapter 06
In addition, women and men both read magazines but the kinds of magazines they read vary
greatly, so marketers place ads in different magazines to reach both groups. Men prefer
automotive and sports magazines while women choose health and epicurean magazines.
Therefore, medium choice will be affected by this issue.
In addition, the message itself varies by gender with men preferring a “self-help” message
and women responding to a “help others” communication.
3. You are the marketing manager for Lenovo laptop computers. Identify and briefly discuss
the differences between the consumer market for laptops and the business market. Then give
an example of each difference using college students as the consumer market and defense
related companies as the business market.
B2B Market Consumer Market

Relationship Invest more in maintaining Impersonal; exists through
with Customers personal relationships electronic communication
Number and Size More customers but buy in smaller,
Few but larger customers
of Customers less frequent quantities
Geographic Suppliers located strategically near
Could be anywhere in the world
Concentration the buyers
Fewer people directly involved and
Complexity of Complex process that can take a the purchase decision is often
Buying Process long time and involve more people based on personal and
psychological benefits
Consumer perceptions about their
Derived from consumer demand
Demand for own needs mitigated by
and more inelastic (less price
Products environmental factors and
sensitive)
marketing stimuli
4. You work for Siemens Power Generations systems and are responsible for the sale of large,
expensive ($2 million to $5 million) turbine generators to power utility companies. You
have been contacted by the Ever-Sure Utility Corporation in Any Town, USA. Identify the
buying center you are likely to find inside the company and how you would market the
generators to the buying center group.
You are likely to find every traditional role in the buying center, including:
Users - Actual consumers of the product
Initiator - Could be user or executive who starts the process
Influencer - Individuals in and out of company who affect decision
Gatekeeper - Control access to key participants in the process
6-17
Chapter 06
Decider - Person(s) responsible for making final decision
MANAGEMENT DECISION CASE
Taking the Nike Experience Direct to Consumers
As described in the case, Nike is facing competitors (e.g. Under Armor) who are changing their
distribution strategies from B2B to B2C. Nike has traditionally been a B2B company when it
comes to distribution. Though it is not without experience in B2C distribution, it lacks the scale
of experience that firms like Apple (retail stores) and Amazon (e-commerce) have in direct-to-
consumer product delivery. The questions below are intended to have students think through the
implications to Nike, both internally and externally, as they move more of their sales to B2C.
One of the nice things about this case is that students will be very familiar with the brands
discussed, and it is easy to see these examples in real life (just visit any Foot Locker, Apple
Store, or go to https://www.underarmour.com/) and to see the variety of B2C channels.
Questions for Consideration
1. This chapter highlights how marketing efforts are different for B2B and B2C firms. As Nike,
and other manufacturers, continue to expand into B2C channels, what are some differences in
B2C and B2B behavior that might affect Nike’s approach to these channels?
There are many considerations and actions in marketing that are different in B2C and B2B
markets. Nike, moving more toward B2C, will face a few of these:
Purchases in B2C are usually in small quantities and for individual consumption with the
decision to buy usually the actual consumer of the product. In B2B the quantities are
much larger (hundreds to thousands of times larger) and the end-consumer is not the
buyer. Nike has primarily been dealing in the B2B channel so has well developed sales
systems and processes designed to meet, often face-to-face with buyers of large quantities
of their shoes. In the B2C channel, delivering a personalized touch for each sale and
processing, potentially millions of small sales instead of thousands of large sales, will
challenge Nike existing skills (see next question for discussion on skills).
Brand perception is one of the highest deciding factors in many B2C consumer decisions.
Fortunately for Nike, they are one of the world’s top brands.1 In B2B, decisions are, of
course, influenced by brand, but other specifications are considered in a much more
deliberate process, often with many people involved in the final decision. Again, Nike will
have to build or adapt its current culture and processes to match the needs and wants of
the consumer. Arguably, Nike has done this with their product. And, there is no shortage
of promotion from Nike. But, the “place” part of the four Ps Nike has been outsourcing.
Meeting consumers’ expectations in service, and understanding their decision process
will be a bit new to Nike.
6-18
Chapter 06
2. What are some hurdles Nike may face as it expands its B2C business? Consider this question
both internally, with new skills Nike needs to amass, and externally, with challenges it may
face from its B2B channel partners.
Nike was selected for this case because of its interesting and complex business environment.
As the case notes, nearly all of Nike’s distribution is through a traditional B2B channels
(manufacturer to distributors to retail to consumers) and Nike owns very few direct-to-retail
outlets. Therefore, internally, Nike has less experience with managing direct retail than say,
Starbucks, and will need to acquire those skills, very likely by hiring experienced retail
personnel and/or hiring out tasks to consulting firms who specialize in retail design. Specific
skills, such as site selection, store design, and distribution design could be more easily hired
out. But there are also ongoing tasks that require skills such as daily management of the
stores and retail personnel, infrastructure control (such as communications, cash registers
and payment systems, and updating SKU data.), and promotional planning.
Aside from building their own retail chain, and all the skills and effort involved, Nike could
(and is) expanding its retail direct-to-consumer access online. While this channel does not
require the skills of managing a network of physical stores, it comes with its own set of
challenges related to the scale and management of e-commerce sites. On one hand, if Nike
built more retail stores, the company would need to emulate Apple in its store rollout. On the
other hand, as Nike expands its e-commerce presence, it needs to emulate Amazon in its
ability to stock and deliver product though a highly personalized online presence.
Regardless of which retail approach or combination of these Nike takes, it will also face
some backlash from its current retail distribution network. Every pair of shoes that is sold
directly to the consumer by Nike is one less pair that was sold through the traditional
network. Nike will need to address the needs of the distributors and retailers that, today,
account for nearly all of their sales. Acting too quickly, without addressing the needs of these
stakeholders, could cause a swift backlash from the distribution channel partners. Likewise,
pricing is one of the issues often faced by firms in Nike’s position. Nike has a need to keep
prices at or close to their suggested retail price, significantly lower prices leads consumers
to devalue the brand. If Nike has its own retail channel(s) and choose to lower prices with a
sales promotion, it will reduce business for the distribution partners. Often, what is done in
these scenarios is the manufacture always only sales at the MSRP (with the exception of
discontinued items or “outlet mall” locations). This allows the distribution partners to price
at MSRP, run sales promotions, and offer other services to draw in customers.
3. What would be some negative consequences to consumers if all manufacturers sold only
B2C and eliminated wholesaler distributors who supply retail stores?
Since retail stores that are not owned by the manufacture are not exclusive to the
manufacturer, consumers can visit a store (e.g., Foot Locker) and find a variety of brands.
Nike, certainly has a presence at Foot Locker, but so does Adidas, Puma, New Balance,
Asics, Reebok and others. For consumers, non-manufacturer owned stores offer convenient
6-19
Solution Manual for Marketing Management, 3rd Edition, Greg Marshall Mark Johnston
Chapter 06
shopping for a category of product (athletic shoes) in one place and advice that is, or at least
appears to be, unbiased toward a given brand.
Imagine having to visit four shops to compare the top brands of shoes you were interested in.
Even car dealers (who are brand specific) have found it better for them to locate near each
other to make it easier for consumers to move between brands. A retail store with shoes from
multiple vendors, arguable could be an advantage to Nike if customer came in looking for
Adidas and found the new Jordan Retro’s more appealing.
SUGGESTED VIDEO
Dole: Buying from Vendors around the Globe (7:05 minutes)
Description: Dole manages their large scale operations by contracting vendors from around the
world. Discusses some essential steps of business-to-business marketing.
1. Dole creates partnerships with its vendors, are there any drawbacks with this philosophy?
Partnership are highly valuable to most companies. However, there are some disadvantages
to partnerships. For example, risk of divulging sensitive information to competitors and
potential opportunism by suppliers
2. What are some of the criteria that Dole should consider when selecting vendors?
Here are a few criteria for selecting vendors:

• On-time delivery
• Product quality
• Price/cost
• Facilities and technology
• Responsiveness to customer needs
• Professionalism of salesperson
• Quality of relationship with vendor
1
http://interbrand.com/best-brands/best-global-brands/2016/ranking/
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Solution Manual for Marketing Management, 3rd

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LO 6-1 Understand the value of knowing the consumer.

consumer purchase decision.

LO 6-4 Understand the consumer decision-making process.

LO 6-5 Understand the differences between B2C and B2B markets.

LO 6-8 Comprehend the role of technology in business markets.

I. THE POWER OF THE CONSUMER

i. Life Cycle Stage (Age)

II. EXTERNAL FACTORS SHAPE CONSUMER

ii. Personal Circumstances

ii. Social Class

iii. Opinion Leaders

iv. References Groups

III. THE LEVEL OF INVOLVEMENT INFLUENCES THE

A. Decision Making with High Involvement

B. Decision Making with Limited Involvement

IV. THE CONSUMER DECISION MAKING PROCESS

B. Search for Information

ii. Defining the Set of Alternatives

ii. Attitude-Based Choice

iii. Attribute-Based Choice

D. Product Choice Decisions

E. Post Purchase Assessment

V. ORGANIZATIONAL BUYING: MARKETING TO A

VI. DIFFERENCES BETWEEN BUSINESS AND

A. Relationship with Customers

B. Number and Size of customers

D. Complexity of Buying Process

E. Complexity of the Supply Chain

F. Demand for Products and Services is Different in a

ii. Fluctuating Demand

iii. Inelastic Demand

VII. BUYING SITUATIONS

VIII. BUYING CENTERS

A. Members of the Buying Center

B. Pursuing the Buying Center

IX. THE PLAYERS IN BUSINESS TO BUSINESS

A. The North American Industrial Classification System

X. THE BUSINESS MARKET PURCHASE DECISION

B. Define the Need and Product Specifications

C. Search for Suppliers

D. Seek Sales proposals in Response to RFP

E. Make the Purchase Decision

ii. Value Criteria

iii. Service Criteria

iv. Supplier Choice

v. Personal and Organizational Factors

F. Post purchase evaluation of Product and Supplier

XI. THE ROLE OF TECHNOLOGY IN BUSINESS

demographics The characteristics of human populations and population segments, especially

attitude Learned predisposition to respond to an object or class of objects in a consistently

multiattribute model A model that measures an individual’s attitudes toward an object by

memory Where people store all past learning events.

learning Any change in the content or organization of long-term memory or behavior.

conditioning The creation of a psychological association between two stimuli.

language An established system of ideas and phonetics shared by members of a particular

cultural values Principles shared by a society that assert positive ideals.

nonverbal communication The means of communicating through facial expressions, eye

social class A ranking of individuals into harmonized groups based on demographic

aspirational purchases Products bought outside the individual’s social standing.