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Steps in the Decision Making Model
- 1. Need Recognition
- 2. Determination of Involvement Level
- 3. Identification of Alternatives
- 4. Evaluation of Alternatives
- 5. Purchase Decision
- 6. Post Purchase Behavior
What is Need Recognition?
the consumer realizes there is something they want or need, like a light bulb burns out.
What is the determination of involvement level
How much involvement will go into the decision
What is a high involvement level in the decision making model
Occurs with high risk, expensive, important to everyday life, health, or safety. How long will you have the product, tied to self image, include comparing products, compare price, check reviews, ask friends, pay attention to ads, read the package
What is a low involvement level in the decision making model?
goes right to purchase, occurs with low risks, oreo cookies
What is the Identification of Alternatives
Occurs with high involvement, means seeking information on what choices are available
What is the evaluation of alternatives?
Trying to figure out which choices are better or which is bes, use evaluative criteria: a basis for maing a decision. IE for a car, gas mileage, make model, safety ratings, appearance, color, style, price, number of miles on a car
What is the Purchase decision?
what to buy and where to buy it with different motives
What are the product buying motives
The reason for buying a product
what is the patronage buying motive
The reason where the product is purchased
What is Post Purchase Behavior?
Anything that happes after the purchase, like product use
What is Cognitive dissonance?
Second Thoughts, want to be avoided because positive word of mouth, future purchases, avoid returns, and product disposal
What is Copeland's Classification?
the classification of goods based on purchase behavior
What are the Classification of goods based on Purchase Behavior?
- Convenience Good,
- Shopping Good,
- Specialty Good,
- Unsought Good
What is a Convenience good?
- it is purchased without much effort, low involvement.
- Also an impulse good, or emergency good, aka immediate need, ie running out of gas
What is a Shopping Good?
A good purchased with effort, high involvement
What is a homogeneous good?
the consumer perceives all brands as the same, effort is put into finding the cheapest option
What is a heterogeneous good?
the consumer perceives differences between brands, effort is into quality comparisons
What is a specialty good
the consumer has brand insistence
What is an Unsought good?
the consumer does not recognize a need for the product, either because the consumer doesn't need the product or the consumer needs the product but doesn't know it
What is Social influence on buying behavior
things that would impact on how people buy products, useful for target marketing
How does social class effect buying behavior?
based on the source of income, used because socio-economic class is a better indicator of buyer behavior than income class
What is the upper class of the social class of buying behavior?
They do not need to work for income, their consumer behavior is they are the only ones that spend more on services than products
What is the Upper middle class of the social class of buyer behavior?
these are professionals and upper management. their consumer behavior is the conspicuous consumption is more common among members of this class than the other classes, they are buying things to show the individual is successful
What is the buyer behavior of the lower middle class?
these are white collar, sales, office, teaching, small business owner. Their consumer behavior is to conform is a more powerful motive
What is the Upper lower class of the social classes of buyer behavior?
These are blue collar workers, skilled labor, truck drivers, plumbing, factory, farming. Their consumer behavior, they put more purchases on credit than member os the other classes
What is the lower lower class of the social classes of buyer behavior?
These people are unskilled labor, likely unemployed or underemployed. Their consumer behavior is the compensatory consumption, purchases to make up for what can't be afforded.
What are the Reference groups within buyers behavior?
These are groups an individual uses as a model for behavior, primary, secondary, aspirational.
What is a primary reference group within buyer behavior?
Has regular contact with individual, most powerful reference group
What is the secondary reference group of buying behavior?
the group that the buyer has something in common with. People of the same age, like the same music.
What is the aspiration reference group of buying behavior?
This is the group that the individual does not belong to but would like to.
What roles does families and households have in buying behavior?
they have roles that can be played in the buying process for a household, same individual can play more than one role and each role could be played by more than one individual
What is the influencer int he household buying behavior?
One that can influence the decision to purchase something.
What is the user in the household of buying behavior?
This is the actual user of the product
What is the decider within the household of buying behavior?
This person who makes the decision
Who is the buyer within the household buying behavior?
The person going to the store and buying the product.
What are the main Psychological factors for buying something?
- Learning Theory
- Self Concept
What is the the Maslow Hierarchy of Need theory?
attempted to rank order motives or needs in the order they would be satisfied. Self-actualization, esteem, social, safety, and physiological- biological
Why is the Maslow Hierarchy of Need theory useful to marketers?
helps the marketer develop multiple appeals for a product, try to have an appeal to each level.
What is the Herzberg Theory?
This is when an individual perceives an object or product as a bundle of attributes that can be sorted into two groups, dissatisfiers and satisfiers
What are Dissatisfiers of the Herzberg Theory?
they are hygiene factors, they may present the object as undesirable.
What are satisfiers according to Herzberg Theory?t
they are motivators, they have attributes that can attract
What is perception in marketing?
What in individuals attitude is of an object or product
What are the influences on consumer perception?
- Physical character of the object
- the individuals condition
- others influence
What is the gestalt principle?
It is an individuals perception of an object is influence by the object's surroundings, like putting the car on a nice dealer's lot
What are the reactions to stimuli within perception?
They are ways information about the object could be interpreted
What is selective exposure?
You notice what is important to you
What is selective distortion?
The way you interpret the stimuli to fit preconception, if you don't like somebody or something you are more likely to notice their flaws
What is selective retention?
How you remember what is important to you
What is the learning theory?
we are teaching people to buy, a stimulus-response
What are the four parts of the Learning Theory?
Define Drive within the learning theory
it is the hunger, the need or want
What are the cues within the learning theory?
it is the bell, or advertisement
What is the response within the learning theory?
It is the dog drool or purchase
What is the reinforcement in the learning theory?
it is the food or product satisfaction.
Considered both a need and a want
What is self-concept?
It is the opinion about yourself, people buy products that reinforce their self concept
What are the three levels of self concept?
What is the actual self-concept?
What you really think about yourself
What is the ideal self-concept?
What you would like to think of yourself
What is the others of self-concept?
What you think other people think of you.
What are the two main differences of business to business market to the consumer market?
- Customer Differences
- Demand Differences
What are the Customer differences in the business to business market?
- Larger size orders
- few customers and prospects
What are the demand differences in the Business to business markets
- A derived demand
- short term price inelastic
What is a derived demand?
derived from the consumer market, more paint for cars because of consumer wants
What is short term price inelastic?
The price has less impact on demand in the short term
What is cyclical?
The demand swings up and down more than consumer demand does.
What is professional purchasing?
the buyers buy the product as a job and have a lot of product knowledge
What is direct purchasing?
What is reciprocity?
One business agrees to buy off another business if that business agrees to buy off of them.
What is a long term rental?
Leasing of equipment, office
What are the types of buying situations?
- Straight Rebuy
- Modified Rebuy
- New Task
- Systems selling or turn key selling
What is a straight rebuy?
What is a modified rebuy?
Reordering with something different.
What is a new task?
A first time purchase by a business
What is systems selling or turn key selling?
the purchase includes a bundle of services along with the product, services like delivery, training, installation, maintenance, repair contract
What are the roles in business buying?
Who are the influencers in business buying?
Research and development; finance people
Who are the buyers in business buying?
The person that negotiates the purchase
Who are the deciders in business buying?
The person who makes the buying decision, often a manager or owner
Who are the gatekeepers in business buying?
Someone who controls the flow of information to other roles in the buying process, a secretary or assistant making appointments, mail room sorter.
What is the organization buying culture?
Different ways that a business can make buying decisions
What are the types of organizational buying cultures?
What is an autocratic buying culture?
One person makes the decision, common in small businesses
What is a democratic buying culture?
The majority rules, common with retailers who use buying committees and the committee votes whether or not to carry a product
What is a consultative buying culture?
One person makes decisions but gets input from others.
What is a consensus buying culture?
All must agree, most likely in partnerships.
What are the types of business markets?
Vertical and horizontal
What is a horizontal business market?
The product is used by most types of businesses.
What is the vertical business market?
The product is only used by one type of business.
What are the specialty markets?
- Farm Market
- Reseller Market
- Government Market
- Buying Online
How is a farm market described as a specialty market?
Agribusiness, both a customer and source of supply
What are the issues facing farm market today?
Corporate farms are replacing family farms. Farms are becoming fewer but larger. Contract farming on increase, when a farmer signs a contract before producin the crop to sell it at a specified price, common with poultry
What is a reseller market?
Stores or any other type of retailer or wholesaler
What is the evaluative criteria in the reseller market?
Resellers use different criteria like merchandise turnover, profit margin, traffic building potential
What are buying committees?
A group of buyers who make the decision on whether or not a product democratically
What are resident buyers?
They are used by small retailers, buyers who are located in a major market to represent the small retailers
What is a government Market?
The government is the customer
What are the two common ways government buys?
- Open bidding
- negotiated contract
What is open bidding?
A government announces what the government wants to buy including specifications, and then a business wanting to sell submits a bid
What is a negotiated contract with a government market?
Used instead of open bidding, used when there is only one source for the product
What are the three types of buying online?
- Private exchange
- English auction
- Reverse auction
What is a private exchange?
A supplier gets access to buyer's inventory information with purchases becoming automatic, there is a set reorder point that triggers an order, common with retailers
What is an english auction?
Items listed for sale sold to highest bidder
What is a reverse auction?
Sellers bid to buyers specifications with lowest bid winning sale.
What is a Market?
anyone who might buy the product includes both customers (people who have purchased the product) and prospects (people who might purchase the product)
What is a Market Segmentation?
splitting the market into segments
What is Target Marketing?
market segment you want to sell to (you can have more than one)
What is Market Aggregation?
don’t segment, called majority fallacy (assumption that everyone buys your product for the same reason)
What are the Parameters for using market segmentation?
What is the demographic parameter?
people fact like age, gender
What is the economic parameter?
income or wealth
What is the psychographic parameter?
attitudes or beliefs (things in the mind), examples: lifestyles, benefit sought from the product, attitude toward product
What are the benefits of using Market Segmentation?
can focus on specific benefits for each segment, make everybody happy = better reviews (word of mouth), avoid majority fallacy
What are the requirements for successful segmentation?
- Measurable Parameter
- Large enough segment
- Ability to pay
- Have need
- Accessible to promotion
What is a measurable parameter?
it is clear which segment someone fits into, like age, example of a parameter that is not measurable would be happy people versus unhappy people
What is a large enough segment?
must be enough people to sell to so the business can make money
What is the ability to pay?
people in the segment must be able to afford the product
What is the have need?
people in the segment must need the product
What does accessible to promotion mean?
must be able to communicate with the segment in a cost effective manner, usually requires a targeted media
What are the people fact demographics?
- Age group
- Family Life Cycle Stage
What are the breakdown of age groups?
- Young adult
- Mature adult
Why is the youth market targeted?
targeted because they are influencers in household buying decision
Why is the young adult market targeted?
younger than 35, most popular target for advertisers, young adults are more likely to try new products and they less brand loyal
Why is the mature adult market targeted?
older than 35, highest income
What age is classified as a senior?
Older than 65
What are the Family Life Cycle Stages?
- Young Married
- Full nest I
- Full nest II
- Empty nest
- Older single
What is young married?
What is full nest I?
youngest child is at home during the day (not in first grade), household income tends to be lower because something has to be done for the child at home
What is full nest II?
youngest child is in school, children in school tend to stronger influencers of household buying decisions
What is empty nest?
no kids at home
What is older single?
What are other Demographics?
Why would marketers what to use Geographics?
Target people where they live
Why would marketers use a target region?
like cold climates versus warm climates for clothing
Why would marketers use a type of Neighborhood?
like urban, suburban, rural
What are the economics used?
could be wealth or income but is usually income
What are the measurements of income?
- Personal income
- Disposable income
- Discretionary income
What is Personal income?
What is disposable income?
net income, take home pay, personal income after taxes and deductions
What is discretionary income?
disposable income minus fixed expenses (expenses you have to pay like rent, car payment, phone plan)
What is the list of value of income?
- Money income
- Real income
- Psychic income
Define money income?
In dollars and cents
What is real income?
the purchasing power of your income, like income adjusted for inflation (when prices go up the value of income goes down)
What is psychic income?
how well off you feel you are
What are Psychographics?
- Attitudes and beliefs
What are the types of Attitude toward products?
- Authority seekers
What is the percentage and attitude of realists?
35%, people who make a decision based on experience or facts they believe to be true, market by statistics, facts, study results
What is the percentage and attitude of authority seekers?
31% - people who make a decision based on the recommendation of someone they perceive to be an expert, market by ads with doctor’s recommendation
What is the percentage and attitude of skeptics?
23% - people who don’t believe over the counter drugs work anyway or that there is any difference between them, market by don’t bother
What is the percentage and attitude of realists?
11% - people who like being sick because it gets them attention, market by exaggerate the benefits of the drug, list symptoms, ads that focus on attention given to sick people