Overview:

Marketing has often been

misunderstood. One of the most
common misconception is associating
“marketing as selling” or “marketing
equals advertising”
What is Marketing?
 The process of continuously and profitably satisfying
target customer’s needs, wants, and expectations more
superiorly than competition.

 it is a social and managerial process by which individuals

and groups obtain what they need and want through
creating and exchanging products and value with others.

 a system concerned with the planning and development

of products and services, determination of prices, creation
of promotional programs and distribution system to
present and prospective market for satisfaction of their
existing needs and wants, thus maximizing profit in the
long-run
 Needs – a state of felt deprivation. The basic reason or minimum
requirement consumers look for in a product.
 Wants – the form taken by a human need as shaped by culture and
individual personality. Described in terms of objects that will satisfy a
need.
 Demands- human wants that are backed by buying power
 Product – anything that can be offered to a market for attention,
acquisition, use, or consumption, that might satisfy a want or need. It
includes physical objects, services, persons, places, organizations
and ideas.

 Service – any activity or benefit that one party can offer to another
that is essentially intangible and does not result in the ownership of
anything.

 Customer value – the difference between the values the customer

gains from owning and using a product and the costs of obtaining
the product.
 Customer satisfaction – the extent to which a products perceived
performance matches a buyer’s expectations.

 Total quality management – programs designed to constantly

improve the quality of products, services and marketing processes.

 Exchange – the act of obtaining a desired object from someone by

offering something in return.

 Through exchange marketing occurs. It is the act of obtaining a

desired object from someone by offering something in return.

 Types of exchange:
1. Hunting
2. Begging
3. Stealing
4. Exchanging
5 conditions for an exchange to take place:

There must be at least two parties

Each party must have something of value to
offer to the other
Each party must want to deal with the other
party
Each must be free to accept or reject the other’s
offer
Each party must be able to communicate and
deliver.
Transaction – a trade between two parties that involves at least two
things of value, agreed upon conditions, a time of agreement and a
place of agreement.

 Four conditions for a transaction to take place

1. At least two things of value preseent
Conditions that are agreed to
Time of agreement
Place of agreement

Relationship marketing – the process of creating, maintaining and

enhancing strong, value—laden relationships with customers and
other stakeholders.

Market – the set of all actual and potential buyers of a product.

Generalizations:
Marketing focuses on the satisfaction of customer
needs, wants and requirements
The philosophy of marketing needs to be owned by
everyone from within the organization
Future needs have to be identified and anticipated
There is normally a focus upon profitability,
especially in the corporate sector. However, as
public sector organizations and not-for-profit
organizations adopt the concept of marketing, this
need not always be the case.
Core Marketing Concept
Needs, Wants
& Demands

Core Goods,
Market Services &
Marketing Experiences
Concept

Exchange,
Transaction & Value &
Relationships Satisfaction
Functions of Marketing
• Identifying specific markets for products and
services.
• Identifying existing and future needs and wants of
these markets.
• Guiding the development of products, packages,
and services to fill these needs at a profit.
• Selling, delivering and collecting for and effecting
legal transfer (or rights to the use) of these goods
and services to the ultimate consumer or user.
Production Concept
Holds that consumers will favor products that are
available and highly affordable and that
management should therefore focus on improving
production and distribution efficiency.
The oldest philosophy that guide sellers in this
generation

Production Concept is usefull when:

 Demand for a product exceeds the supply
The product’s cost is to high and improved
productivity is needed to bring it down.
Product Concept
Product concept states that consumers
will favor products that offer the most
quality, performance and features. The
organization should therefore devote its
energy to making continuous product
improvements.
Selling Concept
 Many org’n follow the selling concept. Selling cocept is the
idea that consumers will not but enough of the
organizations products unless the org’n undertakes a
large-scale selling and promotion effort.
 This concept is typically practiced with unsought goods
(those that buyer do not normally think of buying)
 To be successful with this concept, the org’n must be good
at tracking down the interested buyer and selling them on
product benefits.
 Industries that use this concept usually have overcapacity.
Their aim is to sell what they make rather make what will
sell in the market.
Marketing Concept
Holds that achieving organizational goals depends on
determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and
efficiently than the competitors.

Marketing and selling concepts are often confused.

Selling concept – takes an “inside-out” perspective

(focuses on existing product and uses heavy promotion
and selling efforts.
Marketing concept - takes an “outside-in”
perpspective (focuses on customer needs, values, and
satisfactions.
Societal Marketing Concept
 Holds that the org’n should determine the needs, wants
and interest of target markets. It should then deliver the
desired satisfactions more effectively and efficiently than
competitors in a way that maintains or improves the
consumers and the societies well being.
 The newest marketing philosophy
 Calls upon marketers to balance three considerations in
setting their marketing policies a. Company profits,
customer wants, societies interest.
 It has become good business to consider and think of
society’s interest when the organization makes marketing
decisions.
THE STRATEGIC 3’CS CONCEPT
Figure 1.1 – Two interacting Components of Marketing

MARKET COMPANY

Marketing is the interfacing of a company and its target

market. Figure 1.1. shows that both the company and its
market are equally imprtant. A marketer should always
consider the strengths and weaknesses of his company, he
must choose the market segmet where he can have a
leadership or potential leadership role. He should balance
between the company’s requirement for profit and his desired
market share.
THE STRATEGIC 3’CS CONCEPT
 Figure 1.2 – Two interacting Components of a Market

CUSTOMERS COMPETITION

One of the companys Ultimate objective is to satisfy his

customer BETTER THAN his competition, otherwise, his
competition will end up satisfying his customer better than
him

These three interacting and equally important components of

marketing will produce the strategic 3c’s of marketing
THE STRATEGIC 3’CS CONCEPT
Figure 1.3 – Two Srategic 3C’s of Marketing

CUSTOMER

COMPANY

COMPETITION
 Key Objective of the 3C’s of
Marketing
 Customers – to competently satisfy the needs, wants and
expectations of target customers
 Competition – to outperform them at all times
 Company – to ensure corporate health and profit

To be marketing oriented, the key obejctives of each of the

3c’s must be attained. The output of the 3c’s of marketing is
shown in figure 1.4
Strategic Marketing
Management
 Vision – explains the companys future and what it intends to
be. Fulfilling one’s vision is the purpose of going and
expanding business enterprise.

 Mission statement - is a statement of the organizations

purpose, what it wants to accomplish in the larger
environment. It answers the questions, “what is our business”
“Who is our customer”, what is the value of the customer?
What will our business be? What should our business be? A
clear mission statement guides people in the organization so
that they can work independently and yet collectivley toward
overall organizational goal.
Industry Analysis – looks at the five forces
of an industry structure namely:

Threat of new entrants

Threat of substitutes
Bargaining power of suppliers
Bargaining power of customers
Rivalry among competitions
Competitors analysis – looks at two competitors strategic
focus factors:
 Assumptions about themselves
 Their industry and their strategic corporate objectives.

Key Factors for success (or KFS)

 Identify the limit number of controllable as well as
uncontrollable functions, activities, factors or even bottlenecks
that must be managed well to outperform competition.

Example – good location of a retail store – controllable KFS

Weather of fishing business – uncontrollable KFS
Strengths – positive factors which will help the
company achieve its key result areas
Weaknesses - negative factors which may slow
down the attainment of the firm’s key result areas
Opportunities – positive situations which will
enhance the company’s position in the industry.
Threats – negative situations which may dampen
its position in the industry
Marketing Strategy

Target market and marketing mix are the two

interested components of a marketing strategy

Target Market – it is a fairly homogeneous group

and interrelated variables composed of product,
placement, price, and promotions that the
company assembles to satisfy a target group.
Factors to Consider in formulating
marketing strategies and tactics
In formulating marketing strategies and tactics, the following important factors
based on the 3cs of marketing must be considered.

Customers Market emerging opportunities

Industry- impending threats

Competition competitor’s strategy and tactics

Competitors strengths and weaknesses
Competitors strategic focus

Company companies strength and weaknesses

Industry structure and the firms competitive position
Executives
Social expectations
It is the process of knowing the overview of the
entire target market, but differentiating them from
competitors by recognition of submarkets with
similarity in needs but differes in demographic,
behavioral and psychological ways.

It enables the company to develop a positioning and

marketing mix strategy that can satisfy a smaller
(caled “niche”), more focused range of customers
needs and wants given the identified opportunity.
DEMOGRAPHIC SEGMENTATION
Most often starts with demographics.
Demographic segmentation deals with questions
such as “who you are” and How much you earn”
and is commonly used when planning and
allocating selling effort.

It divides the market into distinct groups of

buyers with different needs, characteristics or
behavior who might require separate products or
marketing mixes. (age, gender, civil status or
income class)
PSYCHOGRAPHIC SEGMENTATION

 Is concerned more with answers to qustions such as

“what you do” (instead of “who you are”) and “ how you
spend your money” (instead of “how much you earn”) and
is now often used for creating advertising messages. It is
done by asking consumer various questions and
classifying them according to a cluster of answers.

 It divides the market into different groups based on social

class, lifestye, or personaity characteristics.
BEHAVIORAL SEGMENTATION
 It enables marketers to match their marketing effort with
regards to consumer behavior. A customer with absoute
brand loyalty, for instance will not respond to price cuts of
competition.
 Firms can also launched different products to meet
different customer behaviors.

Ex. The Filipino consumer laundry habits can be

categorized into two types:
 Value conscious -
 High achievers – will pay more to achieve a certain
standard of whiteness, including doing multiple steps
INDUSTRIAL SEGMENTATION
 Industrial marketing or business to business marketing,
has fewer buyers who order in large quantities, has more
levels of decision-makers and whose demand once
derived is inelastic and fuctuating according to the
business of their cientele.
 Ex. Telecommunications company – businesses with
national branch networks ike telephone anf fax
mamchines, , bottled water in office despensers would
target companies with at least 100 employees. Sam
Miguel Food corp, leader in animal feeds ay segment their
market using operating variables like convincing existing
users of “food leftovers” to shift to BMEG animal feeds.
MARKET MEASUREMENT
2 Main Criteria for Market Attractiveness

 Market size – dependent on the number of qualified

customers and the frequency of purchase.

 Quaified customers – are customers who need or may

need the product, have the purchasing power to pay and
the authority to buy an available product.

 Market growth
Characteristics of Qualified Customers (with
an acronym of NPA)
 Need
– the need characteristics answers the question “how many percent of
the market would need the product”

 Pay
Customer need or interest is not enough. There must be enough
purchasing power for the consumer to be able to pay for the product.

 Authority and Availabiity

Persons below 18years of age, for exmple are not legal market for cars
and alcoholic beverages. They have no authority to use these products.
Men are obviously not the typical consumers to buy lipsticks, so they
constitute another category of those without “authority”
 MARKET TARGETING
 Consist of a set of buyers sharing common needs or
characteristics that the company decides to serve.
3 Target Coverage Strategies in a Heterogeneous Market
 Undifferentiated Marketing – the firm might decide to ignore market segment
differences and go after the whole market with no market offer. Focuses on what is
common in the needs of consumers rather than on what is different.

 Differentiated Marketing - the firm may choose two or more market segments and
design separate products for each. By offering product and market variations, it hopes
for higher sales and a stronger position within each target segment.

Differentiated marketing typically creates more total sales than undifferentiated

marketing. But it also increases the cost of doing a business.

 Concentrated Marketing - many firms see a third possibility that is especially

appealing when company resources are limited. Instead of going after a small share of
a large market, the firm goes after a large share of one or a few submarkets.
Market Positioning
A product position is the way the product is defined by
consumers on important attributes – the place the product
occupies in consumers minds relative to competing
products.

Consumers are overloaded with information about goods

and services. Thet cannot reevaluate products everytime
they make a decision making, they organize products into
caegories– they position” products, services, and
companies in their minds.
Market Positioning
A product position is a complex set of consumer
perceptions, impressions, and feelings consumers hold for
the product compared with competing products. Consumers
position products with or without the help of marketers.

Marketers do not want to leave their products position by

chance. Theyplan positions that will give their products the
greatest advantage in selected target market and they
design marketing mixes to create the planned position.
Marketing Mix
A set of controllable and interrelated
variables composed of product, place,
price, promotion that a company
assembles to satisfy a target group.
Product Decisions To satisfy the needs
and wants of target market

Quality Services
Features Warranties
Options Returns
Style
Brand Name
Packaging
Sizes
Price Decisions – to make the product
affordable and reflect the value of benefits
provided

List Price
Discounts
Allowances
Payment Period
Credit Terms
 Place Decisions
To make the product conveniently available to the target market
consistent with their purchasing patterns. In general decisions to be made
here includes the following:

a. Distribution channels to be used

b. The type of market covered whether it is inclusive, selective, or
exclusive
c. selection of specific channel members
d. inventory management of products
e. warehousing of finished goods
d. area and nature of distribution locations
e. the order processing
f. How products are to be transformed to the customer
g. delivery to customers through catering, home delivery, and
shipping services
 Promotion Decisions
These are decisions focusing on how to communicate information
about the products or services to the targeted market in such a way that
they will buy or avail them.

Factors to consider are:

a. promotional strategies
b. advertising
c. specific media selection
d. personal selling
e. sales force issue (commissions, quota, etc.)
f. sales promotion
g. Publicity
h. Marketing budget
Diagnostic Marketing Mix
Marketing Problem Marketing Solution
Low Availability Placement
Low Awareness Level Advertising

Low Trial Rate Pricing & or Promotions

Low Repeat Purchase Product and / or Service
Quality
Product Strategy
A product can be viewed from the standpoint of
its customers. It can be defined based on what
the product is and what the product can do or
what benefits thae cunsumer can derive from it.
It is often agreed that people do not buY
products or services; they buy the
expectation of benefits.

A product is anything that can be offered to a

market for attention, acquisition, use or or
consumption that might satisfy a want or need.
Levels of Product
 Core Product -
The most basic level of product, which addresses the folowing
question:
What is the buyer really buying?

Ex. Car – core benefit is convenience and speed

 Actual Product
Characteristics: Quality level, features, design, brand name,
packaging

Ex. Car – Honda, Red, 2012 model, automatic

 Augmented Product
Additional consumer services and benefits buid around the core and
actual product.

 Ex. Car – warranty, customer service support

Product Classification
1. Consumer products – products bought by consumers for final
consumption

Types of Consumer products:

 Convenience – products that consumers usually buys frequently,
immediately and with a minimum of comparison and buying effort.
(candy, soap, newspapers, staples, sugar)

 Shopping – products that are less frequently purchased by

customer and consumers spend much time and effort in gathering
information and making comparisons. (furniture, clothing, used
cars, appliances)
Product Classification
1. Consumer products – products bought by consumers for final
consumption

Types of Consumer products:

 Specialty – these are consumer products with unique characteristics or
brand identification. Buyers of these products are willing to make special
purchase effort.
( ex. Manny pacquiao’s memorabilias, collection)

 Unsought – products that are consumer either dosnt know about or knows
about but does not normaly think of buying. These product require a lot of
advertising, personal selling and other marketing effort.
Product Classification
2. Industrial Products – products purchased for further
processing or for use in conducting a business.

Types of Industrial Products

1. Materials and parts – products that become a part of the
buyer’s product, through further processing or as components.

2. Capital Items – products that aid in the buyers production or

operations
3. Supplies and Services – products that do not enter the
finished product at all.
Individual Product Decisions /
Product Attributes
Product Quality

Products overall durability, reliability, precision, ease of

operation and repair

Product Features

Tool for differentiating the company’s product from

competitor’s products

Product Design

Tools for differentiating and positioning a company’s goods

and services
Branding
Brand

A name, term, sign, symbol, or design

or a combination of them intended to
identify the goods or services
What is Brand Equity?

An intangible asset that depends on

associations made by the consumer
Building and managing Brand Equity?

Three stages required in order to build a strong

brand:

• Introduction – introduce a quality product with

the strategy of using the brand as a platform
from which to launch future products.
• Elaboration – make the brand easy to
remember and develop repeat usage
• Fortification – the brand should carry a
consistent image over time
Characteristics of a Good Brand
Name
It should suggest something about the product’s
benefits and qualities
IT should be easy to pronounce, recognize and
remember
The brand name should be distinctive
It must be versatile
It should be capable of registration and legal
protection
Brand Strategy
• Company introduces additional items in given
product category under the same brand name

Brand Extensions
• Involves the use of a successful brand name to
launch new or modified products in a new category

Multi-branding
• Seller develops two or more brands in the same
product category

New Brand
• Creating new brand name for new product category
PACKAGING
• The activities of designing and producing the
container or wrapper for a product

• The container or wrapper is called the package

• Creates instant consumer recognition of the

company or brand

• Gives the company an advantage over

competitors
Three Levels of Material

Primary Package – the products immediate

container
Secondary Package – the material that protects the
primary package and that is thrown away when the
product is about to be used
Shipping Package – packaging necessary to store,
identify, and ship the product.

LABELLING

Part of packaging and consists of printed information

appearing on or with the package
LABELLING
• May be simple tag attached to the product or a complex
graphic that is part of the package
• Might carry only the brand name or a great deal of
information

Functions of Labelling

• The label identifies the product or brand

• The label might grade the product
• The label might describe several things about the product
• The label might promote the product
PRODUCT LINE & MIX
DECISIONS

Principles & Methods of Marketing

PRODUCT LINE
 it is a group of products that are closely related because
they function in similar manner, are sold to the same
customer groups, are marketed through the same types of
outlets, or fall within a given price ranges.
 Example:
Honda & Toyota produces several lines of cars.
Samsung produces several lines of communications
products
Nike produces several lines of athletic shoes.
PRODUCT LINE LENGTH
 The line is too long if the manager can increase profits
by adding items.
 The line is too short if the manager can increase profits
by dropping items.
 The company must manage its product lines
carefully. It can systematically increase the length of its
product line in two ways:
 By stretching its line
By filling its line
PRODUCT LINE LENGTH
 Every company’s product line covers a certain
range of the products offered by the industry as a
whole.
 Example:
 BMW automobiles are located in the medium-
high price range of the automobile market.
Toyota focuses on the low-to-medium price range.
PRODUCT LINE STRETCHING

Occurs when a company lengthen its

product line beyond its current range. A
company can stretch its line downward,
upward or both ways.
It could be:
Stretching Downward
Stretching Upward
Stretching Both Ways
STRETCHING DOWNWARD
 most companies initially locate at the upper end of
the market and later stretch their lines downward.
Reasons why Company Stretch Downward
 It may have first entered the upper end and to
establish a quality image and intended to roll
downward later.
 It may respond to a competitor’s attack on the upper
end by invading the low end.
 It may find faster growth taking place at the low end.
 Example:
 Xerox has long dominated the medium and large
copier segments, by the late 1980’s, the small copier
segment was growing at a much faster rate. Canon,
Sharp and other Japanese competitors had entered
the low-end segment, where they quickly dominated.
Moreover, these competitors used their success at the
low-end as a base for competing with Xerox in the
mind size copier segment. Thus, to meet shifts in the
market demand, Xerox introduced a line of small
copiers.
Stretching Upward
 companies at the lower end of the market may
want to enter the higher end.
Reasons why Company Stretch Upward
 They maybe attracted by a faster growth rate of
higher margins at the higher end.
 They may simply want to position themselves as
full-time manufacturers
 They may simply want to add prestige to their
current products.
Stretching Both Ways – companies in the middle range of
the market may decide to stretch their lines both directions.
Filling in the Product Line – a product line can be
lengthened by adding more items within the present range of
the line.
Reasons for Product Line Filling
 Reaching for extra profits
 Trying to satisfy dealers
 Trying to use excess capacity
 Trying to be the leading full-line company
 Trying to plug holes to keep out competitors
PRODUCT LINE MODERNIZATION – in some cases,
product line length is adequate, but the line needs to be
modernized.

PRODUCT LINE FEATURING – is when the manager selects

one or a few items in the line to feature. Sometimes,
managers feature promotional models at the low end of the
line to serve as “traffic builders”
PRODUCT MIX DECISIONS

It is the set of all product lines

and items that a particular seller
offers for sale.
Example:
Avon product mix consists of four major
products lines: COSMETICS, JEWELRY,
FASHION, HOUSEHOLD ITEMS. Each
product line consist of several sublines. For
example, cosmetics breakdown into lipstick,
eyeshadow and so on. Each line and subline
have many individual items.
 A company’s product mix has four important dimensions:
width, length, depth and consistency.
 The width of product mix refers to the number of different
product lines the company
 The length of product mix refers to the total number of
items the company carries.
 The depth of product mix refers to the numbers of versions
offered of each in the product line.
 The consistency of the product mix refers to how closely
related the various product lines are in the end use,
production requirements, distribution channels or in some
other way.
 THESE PRODUCT MIX DIMENSIONS PROVIDE THE
HANDLES FOR DEFINING THE COMPANY’S PRODUCT
STRATEGY
NEW PRODUCT DEVELOPMENT
PROCESS

Idea Generation

It is the systematic search for new-

product ideas.
Major Sources of New Product
Ideas

 Internal Sources – These are ideas that come from within the company
through formal research and development. It can pick the brain of its
scientists, engineers, and manufacturing people. Or company executives
can brainstorm new-product ideas. The company’s sales people are another
good source because they are in daily contact with customer.

 Customers – Almost 28 percent of all new-product ideas come from

watching and listening to customers. The company may learn about
consumer needs and wants through surveys, focus groups and most often
consumers create new products on their own and companies can benefit by
finding these products and putting them in the market.
Major Sources of New Product
Ideas
 Competitors – About 30 percent of new product ideas come from analyzing
competitor’s products. The company can watch competitor’s ads and other
communication to get clues about their new products.

 Distributors, Suppliers & Others

 Resellers – they were close to the market and can pass along information
about consumer problems and new product possibilities.

 Suppliers – they can tell the company about new concepts, techniques and
materials that can be used to develop new products.

 Other – these include trade magazines, shows and seminars; government

agencies; new product consultants; advertising agencies; marketing research
firms; university and commercial laboratories and inventories.
Idea Screening
The purpose of screening is to spot good
ideas and drop poor ones as soon as
possible. Product development costs rise
greatly in later stages. The company wants
to go ahead only with the product ideas that
will turn into profitable products.
Concept Development & Testing
 Concept Development
To develop a new product into alternative product concepts, find out how
attractive each concept is to customers, and choose the best one.
 Concept Testing
Testing new product concepts with a group of target consumers to find out
if the concepts have strong consumer appeal.

A more concrete and physical presentation of the concept will increase the
reliability of the concept test.
Business Analysis
The business analysis will be done once the
management has decided on its product concept
and marketing strategy.
It is a review of the sales, costs, and profit
projections for a new product to find out whether
these factors satisfy the company’s objectives.
 Product Development
It is a strategy for company growth by offering
modified or new products to current market
segments. Developing the product concept into a
physical product in order to assure that the
product idea can be turned into a workable
product.
 Test Marketing
 It is the stage of new product development where the product and
marketing program are tested in more realistic market settings.
 It gives the marketer experience with marketing the product before
going to the expense of full introduction.
 It lets the company test the product and its marketing program-
positioning strategy, advertising, distribution, pricing, branding and
packaging and budget levels
 It gives management the information needed to make a final decision
about whether to launch the new product.
Commercialization
This process is done by introducing the new
product into the market. It will face high costs
PRODUCT LIFE CYCLE
PRODUCT LIFE CYCLE
 Product Development – start when the company finds and
develops a new-product idea. During this stage, sales are zero
and the company’s investment cost’s mount.

 Introduction – this stage starts when the new product is first

launched. Profits are negative and low because of the low sales
and high distribution and promotion expenses.

 Growth – this stage offers rapid sales growth and increasing

profits. During this stage the company tries to improve the
product, enter new market segments and distribution channels
and reduce its prices slightly.
Product Life Cycle
 Maturity – it is when sales growth slows down and profits
stabilize. The company seeks strategies and programs to
extend this stage by renewing sales growth, including
market, product and marketing mix modification.

 Decline – the product enters a decline stage in which sales

and profits decreases. The company’s task in this stage is to
recognize the decline and to decide whether the product
should be maintained, harvested or dropped. If the product is
discontinued, it may be sold to another firm or liquidated for
salvage value
 Consumer Markets and
Consumer Buyer Behavior
Characteristics Affecting Consumer
Behavior
A. CULTURAL FACTORS – this factor exerts the broadest
and deepest influence on consumer behavior. The marketer
needs to understand the role played by the buyer’s culture,
subculture and social class.

Culture
 The set of basic values, perceptions, wants and behaviors
learned by a member of society from family and other
important institution.
 It is the most basic cause of a person’s wants and
behavior. Human behavior is largely learned.
Subculture
 A group of people with shared value systems based on common
life experiences and situation.
 It includes nationalities, religions, racial groups and geographic
regions.
 Many subcultures make up important market segments and
marketers often design products and marketing programs
tailored to their needs.

Social Class
 Relatively permanent and ordered divisions in a society whose
members share similar values, interest and behaviors
 It is not determined by a single factor, such as income, but is
measured as a combination of occupation, income, education,
wealth and other variables.
Characteristics Affecting Consumer
Behavior
B. SOCIAL FACTORS

Groups – two or more people who interact to accomplish individual or mutual

goals.

Types of Groups
 Membership groups – groups that have a direct influence and to which a
person belongs
 Primary groups – groups with whom there is regular but informal interaction
such as family, friends, neighbors and co-workers
 Secondary groups – groups which are more formal and have less regular
interaction. These include organizations like religious groups, professional
associations and trade unions.
 Reference groups - served as direct (face to face) or indirect points of
comparison or reference in forming a person’s attitudes or behavior.
Characteristics Affecting Consumer
Behavior

Family – the most important consumer buying

organization in society and it has been researched
extensively.

Role and Status

Role – consists of the activities people are expected
to perform according to the persons around them.
Status – each role carries a status reflecting the
general esteem given to it by society.
Characteristics Affecting Consumer
Behavior

c. PERSONAL FACTORS
Age and Life-Cycle Stage

People change the goods and services they buy over

their lifetimes. Tastes in food, clothes, furniture and
recreation are often are related.
Buying is also shaped by the stage of the family life
cycle – the stages through which families might pass
as they mature over time
Family Life-Cycle Stages
YOUNG MIDDLE-AGED OLDER
Single Single Older married

Married without Married without children Older unmarried

children
Married with children Married with children

Divorced with Married without

children dependent children

Divorced without children

Divorced with children

Divorced without
dependent children
Occupation

 A person’s occupation affects the goods and

services bought.
Marketer’s try to identify the occupational
groups that have an above average interest in
their products and services. A company can
even specialize in making products needed by a
given occupational group.
Lifestyle
 a person’s pattern of living as expressed in his or
her activities, interests and opinions. It involves
measuring consumer’s major AIO dimensions –
Activities (work, hobbies, shopping, sports, social
events) Interests (food, fashion, family, recreation)
and Opinions (about themselves, social issues,
business, products)
It captures something more than the person’s social
class or personality; it profiles a person’s whole
pattern of acting and interacting in the world.
Lifestyle Classifications
 Actualizers – people with the highest incomes and so many resources that
they can indulge in any or all self-orientations. Image is important to them,
not for status, but as an extension of their taste, independence and
character. They have wide ranging interests, are open to change and tend to
buy “the finer things in life”

 Fulfilleds – mature, responsible, well-educated professionals. Their leisure

activities center on their homes, but they are well-informed and open to new
ideas. They have high incomes, but are practical, value-oriented consumers.

 Believers- conservative, predictable consumers with more modest incomes

who favor American products and established brands. Their lives are
centered on family, church, community and nation.

 Achievers – successful, work-oriented, politically conservative people who

get their satisfaction from their jobs and families. They respect authority and
the status quo and favor established products that show off their success.
Lifestyle Classifications
 Strivers – people with values similar to those of achievers, but fewer
economic, social and psychological resources. Style is extremely important
to them.

 Experiencers – Avid consumers who spend heavily on clothes, fast food,

music and other youthful favorites. The youngest of all groups, they have a
lot of energy which they pour into physical exercises.

 Makers – people who like to affect their environment in practical ways. They
value self- sufficiency and focus on the familiar-family, work and physical
recreation.

 Strugglers – people with the lowest incomes and too few resources to be
included in any consumer orientation. With their limited means, they tend to
be brand loyal consumers.
Personality and Self-Concept
 Personality - a person’s distinguishing psychological
characteristics that lead to relatively consistent and lasting
responses to his environment. It is usually describes such
as self-confidence, dominance, sociability, autonomy,
defensiveness, adaptability and aggressiveness.

 Self- Concept – the mental picture, generally of a kind that

is quite resistant to change, that depicts not only details that
are potentially available to objective investigation by others.
Characteristics Affecting Consumer
Behavior
D. PSYCHOLOGICAL FACTORS
Motivation- the act or process of motivation
Motive is a need that is sufficiently pressing to direct the person
to seek satisfaction. Psychologists have developed theories of
human motivation.
Two of the most popular are the theories of Sigmund Freud and
Abraham Maslow – have quite different meanings for consumer
analysis and marketing.
Characteristics Affecting Consumer
Behavior
Freud’s Theory of Motivation
Freuds assumes that people are largely
unconscious about the real psychological forces
shaping their behavior. He sees the person as
growing up and pressing many urges. These
urges are never eliminated or under perfect
control; they emerged in dreams, in slips of the
tongue, in neurotic and obsessive behavior or
ultimately in psychoses.
Freuds suggests that a person does not fully
understand his or her motivation.
Characteristics Affecting Consumer
Behavior
Maslow’s Theory of Motivation
Maslows sought to explain why people re driven by
particular needs at particular times. Why does one
person spend much time and energy on personal safety
and another on gaining the esteem of others? Maslows
answer is that human needs are arranged in a hierarchy,
from the most pressing to the least pressing. In order of
importance, they are physiological needs, safety needs,
social needs, esteem needs and self-actualization
needs.
Characteristics Affecting Consumer
Behavior

Perception – the process by which people

select, organize, and interpret information to
form a meaningful picture of the world.
Characteristics Affecting Consumer
Behavior
Three Perpetual Processes
 Selective Attention – the tendency for people to screen
out most of the information to which they are exposed –
means that marketers have to work especially hard to
attract the consumer’s attention.
 Selective Distortion – the tendency for people to interpret
information in a way that will support what they already
believe.
 Selective Retention – the tendency for people to retain
information that supports their attitudes and beliefs
Characteristics Affecting Consumer
Behavior
 Learning - it describes changes in an individual’s behavior arising from
experience. Learning theorists sat that most human behavior is learned.
Learning occurs through the interplay of drives, stimuli, cues, responses,
and reinforcement.
 Drive – a strong internal stimulus that calls for action
 Cues – minor stimuli that determine when, where and how the person
responds.

Beliefs and Attitudes

 Belief – it is a descriptive thought that a person has about something
 Attitude – it describes a person’s relatively consistent evaluations, feelings
and tendencies toward an object or idea. It put people into a frame of mind
liking or disliking things, of moving toward or away from them.
Consumer Buying Roles
Several Roles in a Buying Decision
 Initiator – the person who first suggests or thinks of the idea
of buying a particular product.
 Influencer – a person whose views or advice influences the
buying decision
 Decider – the person who ultimately makes a buying
decision or any part of it – whether to buy, what to buy, how
to buy, or where to buy
 Buyer – the person who makes an actual purchase
 User – the person who consumes or uses a product or
service
Types of Buying Behavior
 Complex Buying Behavior – consumer buying behavior in
situation characterized by high consumer involvement in a
purchase and significant perceived differences among
brands
 Dissonance – Reducing Buying Behavior
 Consumer buying behavior in situations characterized by
high involvement but few perceived differences among
brands

Habitual Buying Behavior

 Consumer buying behavior in situations characterized by low
consumer involvement and few significant perceived brand
differences
New Product Pricing Strategy
Positioning Strategy
 Premium-Pricing Strategy – producing a high-quality
product and charging the highest price
 Economy Pricing Strategy – producing a lower quality
product but charging a low price.
 Good-Value Strategy – represent a way to attack
premium prices. It says, “We have high quality, but a lower
price”
 Overcharging Strategy – producing a lower quality
product but charging at a high price. In the long run,
however, customer will likely feel “taken” and that they will
stop buying the product and will complain to other about it.
Market Skimming Pricing – setting a high price
for a new product to skim maximum revenues layer
by layer from the segments willing to pay the high
price; the company makes fewer but more
profitable sale.

Market Penetration Pricing – setting a low price

for new product in order to attract a large number
of buyers and a large market share.
Product Mix Pricing Strategies
Product Line Pricing – setting the price steps between
various products in a product line based on cost
differences between the products, customer evaluations
of different features, and competitor’s prices.
EX. Nokia N series cellphone, Samsung TV,
Optional Product Pricing – the pricing of optional or
accessory products along with a main product.
Ex. Cellphone – casing,mps, wallpapers, chain
Computer – webcam, scanner, printer
Product Mix Pricing Strategies
 Captive-Product Pricing – setting a price for by-products in order to
make the main product’s price more competitive

Ex. Blades for a razor

Film for a camera
Computer & software

 By-Product Pricing – setting a price for by-products in order to make

the main products price more competitive.

Ex. Lumber mills – they sell bark chips and saw dust as
decorative for home and commercial landscaping
Processed meats – they sell every part of it from the bone, blood
and even intestines
Product Mix Pricing Strategies
Product-Bundle Pricing – combining several products
and offering the bundle at a reduced price. Price
bundling can promote the sales of products consumers
might not otherwise buy.

Ex. Shampoo with conditioner included

Toothpaste with toothbrush
Hotel packaged includes room, meals and
entertainment
Computer with additional software
 Product Adjustment Strategies
Discount and Allowance Pricing
Forms of Cash and Allowances
 Cash Discount – price reduction to buyers who pay their bills promptly
 Quantity Discount – price reduction to buyers who buy large volumes
 Functional Discount – also called a trade discount; offered by the seller to
trade channel members who perform certain functions
 Seasonal discount – price reduction to buyers who buy merchandise or
services out of season.
Example: Hotels, motels and airlines will offer seasonal discounts in
their slower selling periods
 Allowances - another type of reduction from the list price.
Example:
a. Trade in Allowances - price reductions given for turning in an old item
when buying a new one
b. Promotional Allowances – payments or price reductions to reward
dealers for participating in advertising and sales-support programs.
Segmented Pricing – companies often will
adjust their basic prices to allow for
differences in customers, products, and
locations. In segmented pricing, the company
sells a product at two or more prices, even
though the difference in prices is not based on
differences in costs.
Forms of Segmented Pricing
 Customer Segment Pricing – different customers pay different prices for the same
product
Example:
Fare – charge a lower rate for students and senior citizen
Beach Resort – charge a lower admission for children and adults
 Product-Form-Pricing – different versions of the product are priced differently, but
not according to differences in their costs.

 Location Pricing –different location are priced differently, even though the cost of
offering each location is the same.
Example:
Movie Houses (Cinema) – vary their seats prices because of audience
preferences for certain locations

 Time Pricing – prices vary by the season, the month, the day and even the hour.
Example:
 Airline company
 Flowers
 seafood
Psychological Pricing
A pricing approach that considers the psychology
or prices and not simply the economics; the price is
used to say something about the product.

Promotional Pricing
Temporarily pricing products below the list price
and sometimes even below cost, to increase short-run
sales.

Value Pricing
Offering just the right combinations of quality and
good service at a fair price.
Geographical Pricing
Five Geographical Pricing
 FOB (Free on Board) Origin Pricing – a geographic pricing strategy in which
goods are placed free on board a carrier; the customer pays the freight from
the factory to the destination

 Uniform Delivered Pricing – a geographic pricing strategy in which the

company charges the same price plus freight to all customers, regardless to
their location.

 Zone Pricing – the company sets up two or more zones. All customers within
a zone pay the same total price; the more distant the zone, the higher the
price

 Basing Point Pricing – a geographic pricing strategy in which the seller

designates some city as a basing point and charges all customers the freight
cost from that city to the customer location, regardless of the city from which
good are actually shipped.

 Freight Absorption Pricing – a geographic pricing strategy in which the

company absorbs all or part of the actual freight charges in order to get the
business
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