Analyzing Consumer Markets: Marketing Management, 13 Ed

6
Analyzing
Consumer Markets
Marketing Management, 13th ed

Chapter Questions
• How do consumer characteristics

influence buying behavior?
• What major psychological processes
influence consumer responses to the
marketing program?
• How do consumers make purchasing
decisions?
• How do marketers analyze consumer
decision making?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-2
Crest Used Mobile Phones to Engage
Consumers in Its Irresistibility
Campaign
What Influences
Consumer Behavior?
Cultural
Cultural Factors
Factors
Social
Social Factors
Factors
Personal
Personal Factors
Factors

What is Culture?
Culture is the fundamental determinant

of a person’s wants and behaviors
acquired through socialization
processes with family and other key
institutions.

Subcultures
Nationalities
Nationalities
Religions
Religions
Racial
Racial groups
groups
Geographic
Geographic regions
regions

David’s Bridal Targets the Latino Sub-
Culture with its Collection of
Quinceañera Dresses

Fast Facts About
American Culture
• The average American:

• chews 300 sticks of gum a year
• goes to the movies 9 times a year
• takes 4 trips per year
• attends a sporting event 7 times each year

Social Classes
Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers

Characteristics of Social Classes
• Within a class, people tend to behave

alike
• Social class conveys perceptions of
inferior or superior position
• Class may be indicated by a cluster of
variables (occupation, income, wealth)
• Class designation is mobile over time

Social Factors
Reference
Family
groups
Social
Statuses
roles

Reference Groups
Membership
Membership groups
groups
Primary
Primary groups
groups
Secondary
Secondary groups
groups
Aspirational
Aspirational groups
groups
Dissociative
Dissociative groups
groups
Family Distinctions
Affecting Buying Decisions
• Family of Orientation
• Family of Procreation

Radio Shack Targets Women with
Female Store Managers

Roles and Status
What degree of status is

associated with various
occupational roles?

Personal Factors
Age
Self- Life cycle
concept stage
Lifestyle Occupation
Values Wealth
Personality

The Family Life Cycle

Brand Personality
Sincerity
Sincerity
Excitement
Excitement
Competence
Competence
Sophistication
Sophistication
Ruggedness
Ruggedness
Brand Personality

Lifestyle Influences
Multi-tasking
Time-starved
Money-constrained

Table 6.2 LOHAS (Lifestyles of Health
and Sustainability) Market Segments
• Sustainable Economy
• Healthy Lifestyles
• Ecological Lifestyles
• Alternative Health Care
• Personal Development

Figure 6.1
Model of Consumer Behavior

Key Psychological Processes
Motivation Perception
Learning Memory

Motivation
Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory
Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious the lowest, motivating
motivations unmet need and hygiene
factors
Maslow’s Hierarchy of Needs

Herzberg’s Two-Factor Theory

Perception
Selective Attention
Selective Retention
Selective Distortion
Subliminal Perception

Figure 6.3 State Farm Mental Map

Bahlsen Uses Crunchy Sounds to
Encode Brand Associations

Figure 6.4 Consumer Buying Process
Problem Recognition
Information Search
Evaluation
Purchase Decision
Post-purchase
Behavior (Cognitive Dissonance)
Problem Recognition

Sources of Information
Personal Commercial
Public Experiential

Figure 6.5 Successive Sets Involved in
Consumer Decision Making

Table 6.4 A Consumer’s Evaluation of
Brand Beliefs About Laptops

Figure 6.6 Stages between Evaluation
of Alternatives and Purchase

Perceived Risk
Functional
Functional
Physical
Physical
Financial
Financial
Social
Social
Psychological
Psychological
Time
Time

Figure 6.7 How Customers Use and
Dispose of Products

Other Theories of
Consumer Decision Making
Involvement Decision
• Elaboration Heuristics
Likelihood • Availability
Model • Representativene
• Low- ss
involvement • Anchoring and
marketing adjustment
strategies
Variety-seeking
Copyright ©•2009 Pearson Education, Inc. Publishing as Prentice Hall 6-38
Mental Accounting
• Consumers tend to…

• Segregate gains
• Integrate losses
• Integrate smaller losses with larger gains
• Segregate small gains from large losses

Marketing Debate
 Is target marketing ever bad?
Take a position:
1. Targeting minorities is exploitive.
or
2. Targeting minorities is a sound
business practice.

Marketing Discussion
 Do you have rules you employ in

spending money?
 Do you follow Thaler’s four principles
in reacting to gains and losses?

8
Identifying
Market Segments
and Targets

Chapter Questions
• What are the different levels of market

segmentation?
• How can a company divide a market
into segments?
• How should a company choose the
most attractive target markets?
• What are the requirements for effective
segmentation?

Baby Boomers: A Lucrative Market

Effective Targeting Requires…
• Identify and profile distinct groups of

buyers who differ in their needs and
preferences
• Select one or more market segments to
enter
• Establish and communicate the
distinctive benefits of the market
offering

Ford’s Model T Followed a Mass
Market Approach

Four levels of Micromarketing
Segments Niches
Local areas Individuals

What is a Market Segment?
A market segment consists of a

group of customers who share a
similar set of needs and wants.

Gather.com: A Niche
Social Networking Site

Flexible Marketing Offerings
• Naked
Discretionary
solution:
options:
ProductSome
and service
segment
elements that
members valuealloptions
segmentbutmembers
not all
value

Preference Segments
• Homogeneous preferences exist

when consumers want the same things
• Diffused preferences exist when
consumers want very different things
• Clustered preferences reveal natural
segments from groups with shared
preferences

Niche Marketers
Enterprise Rent-A-Car
targets the insurance-
replacement market

Baskin Robbins Focuses on
Local Marketing

The Long Tail
• Chris Anderson explains the long tail
equation:
• The lower the cost of distribution, the more
you can economically offer without having
to predict demand;
• The more you can offer, the greater the
chance that you will be able to tap latent
demand for minority tastes; and
• Aggregate enough minority taste, and you
may find a new market.

What is Customerization?
Customerization combines operationally

driven mass customization with customized
marketing in a way that empowers
consumers to design the product and service
offering of their choice.

Segmenting Consumer Markets
Geographic
Geographic
Demographic
Demographic
Psychographic
Psychographic
Behavioral
Behavioral

Claritas’ Prizm
• Education and affluence

• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility

Demographic Segmentation
Age
Age and
and Life
Life Cycle
Cycle
Life
Life Stage
Stage
Gender
Gender
Income
Income
Generation
Generation
Social
Social Class
Class

Toyota Scion
Targets Gen Y Consumers

Dove Targets Women

Figure 8.1
The VALS Segmentation System

Behavioral Segmentation
Decision Roles Behavioral Variables

• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
The Brand Funnel Illustrates
Variations in the
Buyer-Readiness Stage
• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used

Loyalty Status
Hard-core
Split loyals
Shifting loyals
Switchers

Figure 8.3 Behavioral
Segmentation Breakdown

The Conversion Model
Convertible Shallow Average Entrenched
Users Nonusers
Strongly Weakly
Ambivalent Available
unavailable unavailable

Segmenting for Business Markets
Demographic
Demographic
Operating
Operating Variable
Variable
Purchasing
Purchasing Approaches
Approaches
Situational
Situational Factors
Factors
Personal
Personal
Characteristics
Characteristics
Steps in Segmentation Process
Needs-based segmentation
Segment identification Marketing-Mix

Segment attractiveness Strategy
Segment profitability
Segment positioning
Segment acid test

Effective Segmentation Criteria
Measurable
Measurable
Substantial
Substantial
Accessible
Accessible
Differentiable
Differentiable
Actionable
Actionable

Figure 8.4 Patterns of
Target Market Selection



Crest Whitestrips Follows a
Multisegment Strategy

Figure 8.5 Segment-by-Segment
Invasion Plan

Pepsi used Megamarketing in India

Marketing Debate
 Is mass marketing dead?

Take a position:
1. Mass marketing is dead.
or
2. Mass marketing is still a viable way to build
a profitable brand.

 Think of various product categories.

 How would you classify yourself
in terms of the various segmentation
schemes?
 How would marketing be more or less
effective for you depending upon the
segment involved?

9
Creating
Brand Equity

Chapter Questions
• What is a brand and how does

branding work?
• What is brand equity?
• How is brand equity built, measured,
and managed?
• What are the important decisions in
developing a branding strategy?

ESPN: A Strong Brand

Steps in
Strategic Brand Management
• Identifying and establishing brand
positioning
• Planning and implementing brand
marketing
• Measuring and interpreting brand
performance
• Growing and sustaining brand value

What is a Brand?
A brand is a name, term, sign, symbol

or design, or a combination of them,
intended to identify the goods or
services of one seller or group of
sellers and to differentiate them from
those of competitors.

The Role of Brands
Identify
Identify the
the maker
maker
Simplify
Simplify product
product handling
handling
Organize
Organize accounting
accounting
Offer
Offer legal
legal protection
protection

The Role of Brands
Signify
Signify quality
quality
Create
Create barriers
barriers to
to entry
entry
Serve
Serve as
as aa competitive
competitive
advantage
advantage
Secure
Secure price
price premium
premium

What is Branding?
Branding is endowing
products and services with the
power of the brand.

What is Brand Equity?
Brand equity is the added value

endowed on products and services,
which may be reflected in the way
consumers, think, feel, and act with
respect to the brand.

Brand Knowledge
Thoughts Feelings
Knowledge
Images
Beliefs
Experiences

Advantages of Strong Brands
• Improved • Larger margins

perceptions of • More inelastic
product consumer
performance response
• Greater loyalty • Greater trade
• Less cooperation
vulnerability to • Increased
competitive marketing
marketing communications
actions effectiveness
• Less
Apple is a Strong Brand

What is a Brand Promise?
A brand promise is the marketer’s

vision of what the brand must be and
do for consumers.

Burger King Builds Its Brand with
Social Connectivity

Brand Equity Models
• Brand Asset Valuator

• BRANDZ
• Brand Resonance

BAV Key Components
Differentiation
Energy
Relevance
Esteem
Knowledge

Figure 9.3 Brand Dynamics Pyramid
(BRANDZ)
Strong Relationship
Bonding
Advantage
Performance
Relevance
Presence
Weak Relationship

Figure 9.4 Brand Resonance Pyramid

Drivers of Brand Equity
Brand Elements
Marketing Activities
Meaning Transference

Brand Elements
Brand
names URLs
Slogans
Elements
Logos
Characters
Symbols

Brand Element Choice Criteria
• Memorable
• Meaningful
• Likeability
• Transferable
• Adaptable
• Protectible

Slogans
• We try
Like a good
harderneighbor, State Farm is
• there
We’ll pick you up
• Just
Nexteldo–itDone
•• Nothing
Zoom Zoom runs like a Deere
•• Save 15%it or more in 15 minutes or
I’m lovin’
• less
Innovation at work
• This Bud’s for you
• Always low prices
Designing Holistic Marketing Activities
Personalization
Integration
Internalization

Internal Branding
• Choose the right moment
• Link internal and external marketing
• Bring the brand alive for employees

Figure 9.5 Secondary Sources of
Brand Knowledge

Measuring Brand Equity
Brand
Brand Audits
Audits
Brand
Brand Tracking
Tracking
Brand
Brand Valuation
Valuation

Table 9.2 The 10 Most Valuable Brands
Brand 2006 Brand Value (Billions)
Coca-Cola $67.00
Microsoft $56.93
IBM $56.20
GE $48.91
Intel $38.32
Nokia $30.13
Toyota $27.94
Disney $27.85
McDonald’s $27.50
Mercedes-Benz $22.13
Managing Brand Equity
Brand
Brand Reinforcement
Reinforcement
Brand
Brand Revitalization
Revitalization
Brand
Brand Crises
Crises

Interbrand’s Steps in Calculating
Brand Equity
• Market segmentation
• Financial analysis
• Role of branding
• Brand strength
• Brand value calculation

Devising a Branding Strategy
Develop
Develop new
new brand
brand
elements
elements
Apply
Apply existing
existing brand
brand
elements
elements
Use
Use aa combination
combination of
of
old
old and
and new
new

Branding Terms
• Line extension
Brand line
• Brand mixextension
Category
• Brand extension
Branded variants
• Sub-brandproduct
Licensed
• Parentdilution
Brand brand
• Family/Corp
Brand portfolio
brand

Brand Naming
Individual
Individual names
names
Blanket
Blanket family
family names
names
Separate
Separate family
family names
names
Corporate
Corporate name-
name-
individual
individual name
name combo
combo

Reasons for Brand Portfolios
• Increasing shelf presence and retailer

dependence in the store
• Attracting consumers seeking variety
• Increasing internal competition within
the firm
• Yielding economies of scale in
advertising, sales, merchandising, and
distribution

Brand Roles in a Brand Portfolio
Flankers Cash Cows
Low-end High-end
Entry-level Prestige

Marketing Debate
 Are brand extensions good or bad?

Take a position:
1. Brand extensions can endanger brands.
or
2. Brand extensions are an important
brand-growth strategy.

 How can you relate the different models

brand equity presented in this chapter?
 How are they similar? Different?
 Can you reconstruct a brand-equity
Model that incorporates the best of each?

10
Crafting
the Brand Positioning

Chapter Questions
• How can a firm choose and

communicate an effective positioning in
the market?
• How are brands differentiated?
• What marketing strategies are
appropriate at each stage of the
product life cycle?
• What are the implications of market
evolution for marketing strategies?
What is Positioning?
Positioning is the act of designing the

company’s offering and image to
occupy a distinctive place in the minds
of the target market.

Value/USP (Unique Selling Proposition)
Propositions
• Perdue Chicken
• More tender golden chicken at a moderate
premium price
• Domino’s
• A good hot pizza, delivered to your door
within 30 minutes of ordering, at a
moderate price

Competitive Frame of Reference

Defining Associations
Points-of- Points-of-parity
difference (POPs)
(PODs) • Associations that
• Attributes or are not
benefits necessarily
consumers unique to the
strongly associate brand but may be
with a brand, shared with other
positively brands
Copyright ©evaluate, and
2009 Pearson Education, Inc. Publishing as Prentice Hall 10-119
PODs and POPs

Establishing Category Membership
• This “four-in-one
entertainment
solution” from
Konica failed to
establish category
membership

Conveying Category Membership
Announcing
Announcing category
category benefits
benefits
Comparing
Comparing to
to exemplar
exemplar
Relying
Relying on
on the
the product
product
descriptor
descriptor

Consumer Desirability Criteria for PODs
Relevance
Relevance
Distinctiveness
Distinctiveness
Believability
Believability

Deliverability Criteria for PODs
Feasibility
Feasibility
Communicability
Communicability
Sustainability
Sustainability

Differentiation Strategies
Product Personnel
Channel Image

Product Differentiation
• Product form • Style

• Features • Design
• Performance • Ordering ease
• Conformance • Delivery
• Durability • Installation
• Reliability • Customer training
• Reparability • Customer
consulting
• Maintenance
Personnel Differentiation:
Singapore Airlines

Channel Differentiation

Image Differentiation

Claims of Product Life Cycles
• Products have a limited life

• Product sales pass through distinct
stages each with different challenges
and opportunities
• Profits rise and fall at different stages
• Products require different strategies in
each life cycle stage

Figure 10.1 Sales and
Product Life Cycle

Figure 10.2 Common
Product Life-Cycle Patterns

Figure 10.3 Style, Fashion, and
Fad Life Cycles

The Pioneer Advantage

Figure 10.4 Long-Range Product
Market Expansion Strategy

Strategies for Sustaining
Rapid Market Growth
• Improve product quality, add new features,
and improve styling
• Add new models and flanker products
• Enter new market segments
• Increase distribution coverage
• Shift from product-awareness advertising to
product-preference advertising
• Lower prices to attract the next layer of price-
sensitive buyers

Stages in the Maturity Stage
Decaying
Growth Stable
maturity

Marketing Product Modifications
• Quality
improvements
• Feature
improvements
• Style improvements

Marketing Program Modifications
Prices
Distribution
Advertising
Sales promotion
Services

Ways to Increase Sales Volume
• Convert nonusers
• Enter new market segments
• Attract competitors’ customers
• Have consumers use the product on
more occasions
• Have consumers use more of the
product on each occasion
• Have consumers use the product in
new ways
A Product in Decline

Market Evolution Stages
Emergence Growth
Maturity Decline

Emerging Markets
Latent
Single-niche
Multiple-niche
Zibbie Zone is one of several

Mass-market
virtual worlds tied to toys.

Figure 10.5 Maturity Strategies

Marketing Debate
 Do brands have finite lives?

Take a position:
1. Brands cannot be expected to last
forever.
or
2. There is no reason for a brand to
ever become obsolete.

 What strategies do firms use to

try to position themselves on the
basis of pairs of attributes and
benefits?

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6

Marketing Management, 13th ed

• How do consumer characteristics

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-4

Culture is the fundamental determinant

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-5

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-6

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-7

• The average American:

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• Within a class, people tend to behave

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What degree of status is

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Behavior Behavior Behavior is

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• Consumers tend to…

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 Is target marketing ever bad?

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 Do you have rules you employ in

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Marketing Management, 13th ed

• What are the different levels of market

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• Identify and profile distinct groups of

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Local areas Individuals

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A market segment consists of a

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• Homogeneous preferences exist

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Customerization combines operationally