marketing strategy
O. C. Ferrell
Michael D. Hartline
Customers,
Segmentation, and
Target Marketing
C H A P T E R
Buyer Behavior in
Consumer Markets
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Irrational and unpredictable
Can progress through 5 stages (see next slide)
Does not always follow these stages in sequence
May be characterized by loyalty
Includes “what” to buy and “where” to buy
6-2
The Consumer Buying Process
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Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Evaluation
From Exhibit 6.1
6-3
Need Recognition
• Need
– Occurs when the consumer’s current level of satisfaction does
not equal their desired level of satisfaction.
• Want
– A consumer’s desire for a specific product that will satisfy the
need.
• Demand
– When wants for specific products are backed up by the
customer’s ability and willingness to pay for the product.
6-4
Discussion Question
• Many people criticize marketing as being
manipulative based on the argument that
marketing activities create needs where none
previously existed. Marketers of SUVs, tobacco
products, diet programs, exercise equipment, and
luxury products are typically most criticized.
Given what you now know about the differences
between needs and wants, do you agree with
these critics? Explain.
6-5
Information Search (1 of 2)
• Marketing activities can stimulate a desire for
information:
– Passive information search
– Active information search
• Sources of information:
– Internal sources
– Personal sources
– External sources
6-6
Information Search (2 of 2)
• Time, effort, and expense dedicated to information
search depends on:
– Degree of risk involved in the purchase
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Financial risk
Social risk
Emotional risk
Personal risk
– Amount of expertise with the product category
– Actual cost of the search
• Evoked set
– A narrowed down set of alternatives that the customer is
considering
6-7
Evaluation of Alternatives
• Customers evaluate products as bundles of attributes
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Brand attributes
Product features
Aesthetic attributes
Price
• Customers place different levels of importance on
attributes
• Important considerations in the evaluation stage:
– Products must be in the evoked set
– Consumers’ choice criteria must be understood
– Marketing programs must be designed to influence consumers’
opinions about product or brand image
6-8
Purchase Decision
• Purchase intention and the act of buying are distinct
concepts
• Potential intervening factors between intention and
buying (car example):
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Unforeseen circumstances
Angered by the salesperson or sales manager
Unable to obtain financing
Customer changes mind
• Key issues in the purchase decision stage:
– Product availability
– Possession utility
6-9
Postpurchase Evaluation
• Four possible outcomes in the postpurchase stage:
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Delight
Satisfaction
Dissatisfaction
Cognitive Dissonance
• Cognitive dissonance is more likely to occur when:
– Dollar value of the purchase increases
– Opportunity cost of rejected alternatives is high
– Purchase decision is very involving or emotional
• Firm’s ability to manage dissatisfaction and cognitive
dissonance is:
– A key to creating customer satisfaction
– A major influence on word of mouth communication
6-10
Factors Affecting the
Consumer Buying Process
• Decision-Making Complexity
– High/Low Complexity
• Individual Differences
– Demographics, perceptions, motives, interests, attitudes,
opinions, lifestyles, etc.
• Social Influences
– Culture, subculture, social class, reference groups, opinion
leaders, etc.
• Situational Influences
6-11
Common Situational Influences
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Physical and Spatial Influences
Social and Interpersonal Influences
Temporal (Time) Influences
Purchase Task or Product Usage Influence
Consumer Dispositional Influences
From Exhibit 6.2
6-12
Understanding Business Buying
Behavior
• Four Types of Business Markets:
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Producer markets (a.k.a. commercial markets)
Reseller markets
Government market
Institutional markets
• Unique Characteristics of Business Markets:
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The Buying Center
Hard and Soft Costs
Reciprocity
Mutual Dependence
6-13
The Business Buying Process
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Problem Recognition
Develop Product Specifications
Vendor Identification and Qualification
Solicitation of Proposals or Bids
Vendor Selection
Order Processing
Vendor Performance Review
6-14
Market Segmentation
• The process of dividing the total market for a particular
product or product category into relatively homogeneous
segments or groups
• Should create groups where members are similar to each
other but dissimilar to other groups
• Involves the fundamental decision of whether to segment
at all
• Typically allows firms to be more successful
6-15
Traditional Market
Segmentation Approaches
• Used successfully for decades by many successful firms
• Are not out-of-date
• Are sometimes used in combination with newer
approaches
6-16
Mass Marketing
• Involves no segmentation whatsoever
• Is an undifferentiated approach
• Works best when the needs of an entire market are
homogeneous
• Is efficient from a production standpoint
• Results in lower marketing costs
• Is inherently risky and vulnerable to competitors
6-17
Differentiated Marketing
• Involves dividing the total market into groups of
customers having relatively common or homogenous
needs and developing a strategy to pursue one or more of
these groups
• May be necessary when customer needs are similar
within groups but differ across groups
• Involves two options:
– Multisegment approach
– Market concentration approach
6-18
Niche Marketing
• Focuses marketing efforts on one small, well-defined
market segment or niche that has a unique, specific set of
needs
• Requires that firms understand and meet the needs of
target customers so completely that the firm’s substantial
share of the segment makes it highly profitable
6-19
Individualized
Segmentation Approaches
• Are viable due to advances in technology
• Allow firms to combine demographic data with
behavioral data to precisely match customer preferences
• Will become more important in the future
• Can be prohibitively expensive to deliver
• Depend on:
– Automated delivery
– Personalization
6-20
Three Individualized
Segmentation Approaches
• One-to-one marketing
– Involves creating an entirely unique product offering for each
customer
• Mass customization
– An extension of one-to-one marketing
– Refers to providing unique solutions to individual customers
on a mass scale
• Permission marketing
– Customers choose to become a member of the firm’s target
market
– Key advantage  Customers are already interested in the
product offering
6-21
Discussion Question
• Many consumers and consumer advocates are critical of
individualized segmentation approaches due to personal
privacy concerns. They argue that technology has made
it far too easy to track buyer behavior and personal
information. Marketers counter that individualized
segmentation can lead to privacy abuses, but that the
benefits to both consumers and marketers far outweigh
the risks. Where do you stand on this issue? What are
the benefits and risks associated with individualized
segmentation?
6-22
Successful Segmentation
• Requires that market segments fulfill 5 criteria:
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Identifiable and Measurable
Substantial
Accessible
Responsive
Viable and Sustainable
• Avoid ethically sensitive, but legal, segments
• Avoid segments that do not match the firm’s expertise
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Discussion Question
• The size of the consuming population over the
age of 50 continues to grow. What are some of
the current ethical issues involved in targeting
this age group? As this group gets older, will
these issues become more or less important?
Explain.
6-24
Identifying Market Segments
• Involves selecting the most relevant variables to identify
and define the target market
• Involves the isolation of individual characteristics that
distinguish one or more segments
6-25
The Chinese Market
• With 1.4 billion consumers, the Chinese market is hard to
ignore. U.S. products are already having some success there.
• What are the challenges faced by U.S. businesses in harnessing
the potential of the Chinese market?
Beyond the Pages 6.2
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Segmenting Consumer Markets
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Behavioral Segmentation
Demographic Segmentation
Geographic Segmentation
Psychographic Segmentation
From Exhibit 6.3
6-27
Benefit Segmentation
of the Snack Food Market
Exhibit 6.4
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VALS Consumer Profiles
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Innovators
Thinkers
Achievers
Experiencers
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Believers
Strivers
Makers
Survivors
From Exhibit 6.5
6-29
Segmenting Business Markets
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Type of Organization
Organizational Characteristics
Benefits Sought or Buying Process
Personal and Psychological Characteristics
Relationship Intensity
6-30
Target Marketing Strategies
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Single Segment Targeting
Selective Targeting
Mass Market Targeting
Product Specialization
6-31
Basic Strategies for
Target Market Selection
Exhibit 6.6
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