.1) Identify and explain the five stages of the consumer buying process. Give examples of marketing
activities designed to influence each stage.
The buying process begins when consumers recognize that they have an unmet need. This occurs when consumers realize that there is a discrepancy between their existing situation and their desired situation. Consumers can recognize needs in a variety of settings and situations. Some needs have their basis in internal stimuli such as hunger, thirst, and fatigue. Other needs have their basis in external stimuli such as advertising, window shopping, interacting with salespeople, or talking with friends and family.
When done correctly, marketing stimuli can prompt consumers to become interested in a product, leading to a desire to seek out additional information. This desire can be passive or active. In a passive information search, the consumer becomes more attentive and receptive to information, such as noticing and paying attention to automobile advertisements if the customer has a want for a specific car brand. A consumer engages in active information search when he or she purposely seeks additional information, such as surfing the Internet, asking friends, or visiting dealer showrooms. The amount of time, effort, and expense dedicated to the search for information depends on a number of issues. The most important is the degree of risk involved in the purchase.
Evaluation of Alternatives
In evaluating the alternative product or brand choices among the members of the evoked set, the consumer essentially translates his or her need into a want for a specific product or brand. Consumers evaluate products as bundles of attributes that have varying abilities to satisfy their needs. The most important consideration for marketers during the evaluation stage is that the marketer’s products must be in the evoked set of potential alternatives. For this reason, marketers must constantly remind consumers of their company and its product offerings.
After the consumer has evaluated each alternative in the evoked set, he or she forms an intention to purchase a particular product or brand. However, a purchase intention and the actual act of buying are distinct concepts. The customer may postpone the purchase due to unforeseen circumstances. Marketers can often reduce or eliminate these problems by reducing the risk of purchase through warranties or guarantees, making the purchase stage as easy as possible, or by finding creative solutions to unexpected problems. The key issues for marketers during the purchase stage are product availability and possession utility.
In the context of attracting and retaining buyers, postpurchase evaluation is the connection between the buying process and the development of long-term customer relationships. In the postpurchase stage, buyers will experience one of these four outcomes:
Ÿ Delight – The product’s performance greatly exceeds the buyer’s expectations.
Ÿ Satisfaction – The product’s performance matches the buyer’s expectations.
Ÿ Dissatisfaction – The product’s performance falls short of the buyer’s expectations.
Ÿ Cognitive Dissonance (Postpurchase Doubt) – The buyer is unsure of the product’s
performance relative to his or her expectations.
Consumers are more likely to experience dissatisfaction or cognitive dissonance when the dollar value of the purchase increases, the opportunity costs of rejected alternatives are high, or the purchase decision is emotionally involving. Firms can manage these responses by offering liberal return policies, providing extensive postpurchase support, or reinforcing the wisdom of the consumer’s
(6.2) Although the stages of the consumer buying process are typically discussed in a linear fashion,
consumers do not always follow the stages in sequence. Explain why this often occurs.
The consumer buying process involves five stages of activities that consumers may go through in buying goods and services. The process begins with the recognition of a need and then passes through the stages of information search, evaluation of alternatives, purchase decision, and postpurchase evaluation. The buying process depicts the possible range of activities that may occur in making purchase decisions. Consumers, however, do not always follow these stages in sequence and may even skip stages en route to making a purchase. Likewise, consumers who are loyal to a product or brand will skip some stages and are most likely to simply purchase the same product they bought last time. Consequently, marketers have a difficult time promoting brand switching because they must convince these customers to break tradition and take a look at what their products have to offer.
The buying process often involves a parallel sequence of activities associated with finding the most suitable merchant of the product in question. That is, while consumers consider which product to buy, they also consider where they might buy it. In the case of name brand products, this selection process may focus on the product’s price and availability at different stores or online merchants. Conversely, in the case of private-label merchandise, the choice of product and merchant are made simultaneously. The choice of a suitable merchant may actually take precedence over the choice of a specific product. In some cases, customers are so loyal to a particular merchant that they will not consider looking elsewhere.
Consumers may spend relatively more or less time in certain stages, they may follow the stages in or out of sequence, or they may even skip stages entirely. This variation in the buying process occurs because consumers are different, the products that they buy are different, and the situations in which consumers make purchase decisions are different. A number of factors affect the consumer buying process, including the complexity of the purchase and decision, individual influences, social influences, and situational influences.
The complexity of the purchase and decision-making process is the primary reason why the buying process will vary across consumers and with the same consumer in different situations. For example, highly complex decisions, like buying a first home, a first car, selecting the right college, or choosing elective surgery, are very involving for most consumers. These purchases are often characterized by high personal, social, or financial risk; strong emotional involvement; and the lack of experience with the product or purchase situation. In these instances, consumers will spend a great deal of time, effort, and even money to help ensure that they make the right decision. In contrast, purchase tasks that are low in complexity are relatively noninvolving for most consumers. In some cases, these purchase tasks can become routine in nature. For example, many consumers buy groceries by selecting familiar items from the shelf and placing them in their carts without considering alternative products.
(6.3) Explain the five different target marketing strategies and give examples of firms that use each one.
Also, discuss how firms might approach the targeting of noncustomers.
Once the firm has completed segmenting a market, it must then evaluate each segment to determine its attractiveness and whether it offers opportunities that match the firm’s capabilities and resources. Just because a market segment meets all criteria for viability does not mean the firm should pursue it. Attractive segments might be dropped for several reasons including a lack of resources, no synergy with the firm’s mission, overwhelming competition in the segment, an impending technology shift, or ethical and legal concerns over targeting a particular segment. Based on its analysis of each segment, the firm’s current and anticipated situation, and a comprehensive SWOT analysis, a firm might consider five basic strategies for target market selection.
Ÿ Single Segment Targeting – Firms use single segment targeting when
their capabilities are intrinsically tied to the needs of a specific market
segment. Many consider the firms using this targeting strategy to be true
specialists in a particular product category. Good examples include New
Belgium Brewing (craft beer), Porsche, and Ray-Ban. These and other
firms using single segment targeting are successful because they fully
understand their customers’ needs, preferences, and lifestyles. These firms
also constantly strive to improve quality and customer satisfaction by
continuously refining their products to meet changing customer preferences.
Ÿ Selective Targeting – Firms that have multiple capabilities in many
different product categories use selective targeting successfully. This
strategy has several advantages including diversification of the firm’s risk
and the ability to “cherry pick” only the most attractive market segment
opportunities. Procter & Gamble (P&G) uses selective targeting to offer
customers many different products in the family care, household care, and
personal care markets. Besides the familiar deodorants, laundry detergents,
and hair care products, P&G also sells products in the cosmetics, snack
food and beverages, cologne, and prescription drug markets.
Ÿ Mass Market Targeting – Only the largest firms have the capability to
execute mass market targeting, which involves the development of multiple
marketing programs to serve all customer segments simultaneously. For
example, Coca-Cola offers roughly 400 branded beverages across many
segments that fulfill different consumer needs in over 200 countries around
the world. Likewise, Frito-Lay sells hundreds of different varieties of snack
foods around the world.
Ÿ Product Specialization – Firms engage in product specialization when their
expertise in a product category can be leveraged across many different
market segments. These firms can adapt product specifications to match the
different needs of individual customer groups. For example, many consider
Littmann Stethoscopes, a division of 3M, as the worldwide leader in
auscultation technology. Littmann offers high-performance electronic
stethoscopes for cardiologists, specially designed stethoscopes for
pediatric/infant use, lightweight stethoscopes for simple physical assessment,
and a line of stethoscopes for nursing and medical students. The company
also offers a line of veterinary stethoscopes.
Ÿ Market Specialization – Firms engage in market specialization when their
intimate knowledge and expertise in one market allows them to offer
customized marketing programs that not only deliver needed products but
also provide needed solutions to customers’ problems. The Follett
Corporation is a prime example. Follett specializes in the education market
by serving over 760 schools, colleges, and universities in the United States
and Canada. The company’s slogan “Powering education. Worldwide.” is
based on the firm’s goal to be the leading provider of educational solutions,
services, and products to schools, libraries, colleges, students, and lifelong
In addition to targeting a subset of current customers within the product/market, firms can also take steps to target noncustomers. There are many reasons why noncustomers do not purchase a firm’s products. These reasons can include unique customer needs, better competing alternatives, high switching costs, lack of product awareness, or the existence of long-held assumptions about a product. The key to targeting noncustomers lies in understanding the reasons why they do not buy and then finding ways to remove these obstacles. Removing obstacles to purchase, whether they exist in product design, affordability, distribution convenience, or product awareness, is a major strategic issue in developing an effective marketing program.
(6.4) Identify and discuss the three traditional market segmentation strategies. Include in your answer a discussion of the relative advantages and disadvantages of each strategy.
Many segmentation approaches are traditional in the sense that firms have used them successfully for decades. Many of today’s most successful firms use these tried-and-true approaches. Some organizations actually use more than one type of segmentation, depending on the brand, product, or market in question.
Mass marketing involves no segmentation whatsoever. Companies aim mass-marketing campaigns at the total (whole) market for a particular product. Companies that adopt mass marketing take an undifferentiated approach that assumes that all customers in the market have similar needs and wants that can be reasonably satisfied with a single marketing program. Mass marketing works best when the needs of an entire market are relatively homogeneous. Mass marketing is also advantageous in terms of production efficiency and lower marketing costs. However, the strategy is inherently risky. By offering a standard product to all customers, the organization becomes vulnerable to competitors that offer specialized products that better match customers’ needs. In industries where barriers to entry are low, mass marketing runs the risk of being seen as too generic. This situation is very inviting for competitors who use more targeted approaches. Mass marketing is also very risky in global markets where even global brands like Coca-Cola must be adapted to match local tastes and customs.
Most firms use some form of market segmentation by (1) dividing the total market into groups of customers having relatively common or homogeneous needs and (2) attempting to develop a marketing program that appeals to one or more of these groups. Within the differentiated approach, there are two options: the multisegment approach and the market concentration approach. Firms using the multisegment approach seek to attract buyers in more than one market segment by offering a variety of products that appeal to different needs. Firms using this option can increase their share of the market by responding to the heterogeneous needs of different segments. The multisegment approach is the most widely used segmentation strategy in medium- to large-sized firms. It is extremely common in packaged goods and grocery products. Firms using the market concentration approach focus on a single market segment. These firms often find it most efficient to seek a maximum share in one segment of the market. The main advantage of market concentration is specialization because it allows the firm to focus all its resources toward understanding and serving a single segment. Specialization is also the major disadvantage of this approach. By “putting all of its eggs in one basket,” the firm can be vulnerable to changes in its market segment, such as economic downturns and demographic shifts.
Some companies narrow the market concentration approach even more and focus their marketing efforts on one small, well-defined market segment, or niche, that has a unique, specific set of needs. Customers in niche markets will typically pay higher prices for products that match their specialized needs. The key to successful niche marketing is to understand and meet the needs of target customers so completely that, despite the small size of the niche, the firm’s substantial share makes the segment highly profitable. An attractive market niche is one that has growth and profit potential but is not so appealing that it attracts competitors.
(7.1) Compare and contrast brand loyalty and brand equity, as well as how these concepts are related.
Must a brand possess high brand loyalty in order to possess high brand equity? Explain.
Brand loyalty is a positive attitude toward a brand that causes customers to have a consistent preference for that brand over all other competing brands in a product category. There are three degrees of brand loyalty: brand recognition, brand preference, and brand insistence. Brand recognition exists when a customer knows about the brand and is considering it as one of several alternatives in the evoked set. This is the lowest form of brand loyalty and exists mainly due to the awareness of the brand rather than a strong desire to buy the brand. Brand preference is a stronger degree of brand loyalty where a customer prefers one brand to competitive brands and will usually purchase this brand if it is available. Brand insistence, the strongest degree of brand loyalty, occurs when customers will go out of their way to find the brand and will accept no substitute. Customers who are brand insistent will expend a great deal of time and effort to locate and purchase their favorite brand.
The value of a brand is often referred to as brand equity. Another way of looking at brand equity is the marketing and financial value associated with a brand’s position in the marketplace. Brand equity stems from four elements: brand awareness, brand loyalty, brand quality, and brand associations. Brand awareness and brand loyalty increase customer familiarity with a brand. Customers familiar or comfortable with a specific brand are more likely to consider the brand when making a purchase. When this familiarity is combined with a high degree of brand quality, the inherent risk in purchasing the brand decreases dramatically. Brand associations include the brand’s image, attributes, or benefits that either directly or indirectly give the brand a certain personality.
Although brand loyalty is only one part of brand equity, it is hard to imagine that a brand could have high equity without high brand loyalty. This is especially true with respect to brands that enjoy high brand insistence. These brands are so vital to customers that they will expend great time and effort to acquire them. As a result, the marketing and financial value associated with these brands is likely to be very high—resulting in high brand equity.
(7.2) Discuss the benefits associated with offering a large portfolio of products. What are some of the key
issues involved in managing the product portfolio?
Although offering a large portfolio of products can make the coordination of marketing activities more challenging and expensive, it also creates a number of important benefits:
Ÿ Economies of Scale – Offering many different product lines can create
economies of scale in production, bulk buying, and promotion. Many
firms advertise using an umbrella theme for all products in the line.
Nike’s “Just Do It” and Maxwell House’s “Good to the Last Drop” are
examples of this. The single theme covering the entire product line saves
considerably on promotional expenses.
Ÿ Package Uniformity – When all packages in a product line have the
same look and feel, customers can locate the firm’s products more
quickly. It also becomes easier for the firm to coordinate and integrate
promotion and distribution. For example, Duracell batteries all have the
same copper look with black and copper packaging.
Ÿ Standardization – Product lines often use the same component parts.
For example, Toyota’s Camry and Highlander use many of the same
chassis and engine components. This greatly reduces Toyota’s
manufacturing and inventory handling costs.
Ÿ Sales and Distribution Efficiency – When a firm offers many
different product lines, sales personnel can offer a full range of choices
and options to customers. For the same reason, channel intermediaries
are more accepting of a product line than they are of individual
Ÿ Equivalent Quality Beliefs – Customers typically expect and believe
that all products in a product line are about equal in terms of quality and
performance. This is a major advantage for a firm that offers a
well-known and respected line of products. For example, Crest’s
portfolio of oral care products all enjoys the same reputation for high