lecture 7+8+9 Flashcards
Purchase Decision Influences (socio-cultural/social)
- Culture: values, beliefs, customs/tastes deemed important to a group of people
- Subcultures: groups under cultures that include additional criteria
Social class
Peer groups
Reference groups
Gender roles
Purchase Decision Influences (situational)
How you make your solutions available to your target audience
- Physical environment
- Time
Buyer adoption process
Similar to steps in making a buying decision but incorporates adoption (purchase after initial trial) and confirmation (loyalty)
Stages in Buyer Adoption Process
- Awareness
The consumer becomes aware of the new product but lacks information about it. - Interest
The consumer seeks information about the new product - Evaluation
The consumer considers whether trying the new product makes sense - Trial
The consumer tries the new product on a small scale to improve his or her estimate of its value. - Adoption
The consumer decides to make full and regular use of the new product.
Diffusion of innovation
Key characteristics that impact success:
1. Relative advantage
2. Compatibility with existing values & practices
3. Complexity - how easy for customers
4. Trial ability - how easily sampled/experienced
5. Observability - how visible to view
Diffusion of innovation graph
Innovators (2.5%)
Early adopters (13.5%)
Early majority (34%)
Late majority (34%)
Laggards (16%)
Elasticity
High: small change in price ==> large change in demand
Low: large change in price ==> small change in demand
4 types of B2B markets
Producers
Resellers (retailers)
Government
Nonprofits
Market seg. variables
Demographic
Behavioral
Psychographic
Geographical
5 Steps of Targeting
- Evaluation criteria
Differentiability
Measurable , sustainable, accessible,actionable - Developing segment profiles
- Choosing targeting strategies
Undifferentiated, differentiated, concentrated, customized - Positioning
Developing a strategy aimed at influencing - Customer relationship management (CRM)
Toward a segment of one
Maximize the “lifetime value” of
each customer
Deliver “customer equity”
Three Layers of a Product
Inner: core benefit
Second: actual product (features, brand name, quality, packaging, design)
Third: added value (after sale service, delivery and credit, warranty)
Classifying products
- Consumer products (durable and non-durable)
- B2B products (i.e. Kelloggs sells cereal to supermarket)
Product line vs. product mix
Line: Group of related products that a company sells under a single brand
Mix: Set of all product lines a firm offers for sale
B2B Products
- Equipment
- Maintenance/repair/operating
- Raw materials
- Processed materials
- Component parts
- Specialized services (i.e. cleaning,
Creating a strong brand identity
- Brand names are a key decision
- Brand equity: value of a brand to an organization (established brand is more attractive than generic brand)
High equity = high customer loyalty, perceived quality, name awareness - Branding strategies
Product life cycle
- Introduction (little to no sales, customers getting familiar with the product)
- Growth (growing demand, generates high revenue, competitors start to come in)
- Maturity (most profitable stage!!, competition high, companies try to have product stay in this stage as long as possible
- Decline (product loses market share and attention)
**NOTE: companies can choose to re-innovate products, re-introduce them to the market, and they will start the PLC again
Branding strategies
- Individual brand
- Family/umbrella branding (i.e. Apple has the Macbook, iPhone, iPad)
- Private label or store brands (i.e. Bowl & Basket, Kirkland)
- Generic brands
- Co branding (two brands work together, both bring value)
Product innovation
Innovation: a product that customers perceive to be new and different from existing products
- To innovate a product: can be a simple change, like a change in packaging, or a structural change in product itself
ACV
All commodity volume. Ratio of total sales of all your products compared to other retailers in the region. We want to achieve a certain ACV –> stores that distribute your product
4 Types of Innovations
- Continuous: modifications to existing products that sets them apart from competitors (do not require significant learning for target audience)
- Dynamically continuous: change in existing product (requires moderate learning)
- Convergence: 2 or more technologies coming together to create a new system with greater benefit than its parts
- Discontinuous: totally new product that creates major change in the way we live (i.e. car)
Product Development Process
- Idea generation and first screening
- Product concept development and second screening
- Marketing strategy development
- Business analysis (most ideas fail here)
- Technical development (idea becomes an official product)
- Market testing
- Commercialization
Product Adoption Process
Process by which customer begins to buy and use a new good, service, idea
1. Awareness (aware but lacks info)
2. Interest (seek info)
3. Evaluation (consider to try product)
4. Trial (try to improve estimate of its value)
5. Adoption (decide to make regular use of product)
Diffusion of innovation vs. product adoption process
Innovation: process by which use of a product spreads through a given (target) population
Adoption: process by which customer begins to buy and use a new good, service, idea (“learning curve” for the customer)
Customer value-driven marketing strategy (four parts)
Select customers to serve:
-Segmentation
-Targeting
Decide on a value proposition:
-Differentiation
-Positioning
Personal characteristics
A buyer’s decisions also are influenced by personal characteristics such as the buyer’s
occupation, age and life-cycle stage, economic situation, lifestyle, and personality and
self-concept.
Value propositions
A set of benefits that a company promises to deliver to customers to satisfy their needs
Geographic (segm)
Divide market into different geographical units (nations, states, regions, neighborhoods)
Demographic (segm)
Divide based on variables like age, gender, income, ethnicity, life stage
Psychographic (segm)
Divide based on social class, lifestyle, personality
Behavioral (segm)
Divide based on customer attitudes, uses, responses to a product
- Occasion: when customers get the idea to buy
- Benefits: the uses and benefits customers seek from a product
