2.3 Consumer Mkt.
2.1 CONSUMER DEMAND
Definitions:
 Consumer – a person who uses a product (not necessarily a
customer)
 Customer – person who buys a product
 Gatekeeper – a person who oversee the care of another
Need and Wants
 Needs – are essential for survival (i.e. food, protection,
affiliation)
 Wants – add pleasure and comfort to our lives, but not
necessary for survival
In developed markets such as Canada, consumer demand is driven
more by wants than needs, so marketing is directed towards
presenting choices to customers. Want is a function of the value
equation.
Changes in Consumer Demand
Changes can occur for the following reasons:
1) Economic Shifts (affects disposable income and what
consumers value as necessities)
2) Changes in spending patterns and personal tastes
Business must be able to gauge fluctuations in consumer demand,
thus they rely on product life cycle models.
2.2 Product Life Cycle
BMI – THE CONSUMER
2.3 Consumer Mkt.
Product Life Cycle (PLC) – describes the changes in
consumer demand over time, and is used to alert marketers
of when changes in demand may occur
Traditional Product Life Cycle
Consists of 5 Stages:
1) Introduction Stage
- Product Launch – the moment a new product is
introduced into the marketplace
- Very expensive process since new machinery and
training costs, promotional activities and a great deal
of uncertainty, therefore initial price of product high
- Focus is to market to Early adopters (trendsetters)
- A need to establish the value equation early
- Very little competition at this time – product can
reach growth stage quicker
- Important to use a pull strategy since consumer
has little information about the product, so
consumers must be given incentives to buy it
- Manufacturers will pay a shelf allowance to retailer
to provide space for new product
2) Growth Stage
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2.3 Consumer Mkt.
- At this point, product visible, new consumers, and
time where product will catch on or fail
- Most crucial time for advertising since product will
either catch or fail
- Product considered a “bust” if it is removed from
market before costs have been recouped
- Products reputation spread by word of mouth and
advertising
- The faster a product can reach this stage, the faster
profits can be made
- Must monitor market share (sales as a % of the
total sales of market)
- Competitors modify their products to compete
- Competitors may face high barriers to entry (costs
of R&D, design costs, advertising and raw materials)
- Only competitive products last through this stage
- Market growth stimulated by advertisement
- Companies usually use a “push” strategy in this
stage
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2.3 Consumer Mkt.
3) Maturity Stage
- Sales of product are minimal or increase slowly
- Advertising must be directed towards keeping brand
in front of customers mind
- Marketing highlights history of product and benefits
- Most costs recovered and newer costs are lower
- Profits used to develop new products and fund new
product launches, relying on brand name to promote
other products
4) Decline Stage
- Unable to find new customers for the products
- Profits decrease, and company must either redesign,
repackage or try to reverse decline
5) Decision Point Stage
- Final stage where future of product must be decide
- Research conducted to decide if product is to be
reformulated, repackaged or reintroduced as ”new
and improved”
- Involves new promotion and new pricing
BMI – THE CONSUMER
2.3 Consumer Mkt.
NON TRADITIONAL PRODUCT LIFE CYCLES
Fads
- A product, service or idea that is popular for a very
short period of time
- Fads can be books, activities, songs, phrases, gestures
- Most commonly toys and games
- Marketers can make or lose a lot of money, thus fads
are a high risk venture since demand is hard to
predict
- Fads die very quickly, and the key is to get out before it
does
Trends
- A product that is more lasting, and is a mass movement
toward a particular style or value
- Marketers can predict growth of markets by looking at
trends
Niche Market
- Small section of the market that have little competition
since there are not enough consumers to make the
market attractive to competitors, but large enough to
be profitable for one company
Seasonal Markets
- Seasonal fits do not align with the traditional product life
cycle, thus it is important to anticipate periods of high and
low demand
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2.3 Consumer Mkt.
2.3 THE CONSUMER MARKET
Consumer Profiles
- Every customer is different, the key is to be able to
anticipate or influence their buying decision
- Consumer Profile – a description of the people most
likely to be attracted to a specific product, putting
consumers into cohorts (similar habits).
o Primary market – most likely consumers
o Secondary market – occasional consumers
- Consumer Segment – groups of consumers with
common characteristics and buying habits, which helps
direct marketing efforts
Demographics
- Study of distinct characteristics of people (age, gender,
family life cycle, income level, culture and ethnicity)
- Used to develop consumer profiles
Age – there are 6 different age groups, according to the
government, each of which is different
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0-9
10-15
16-19
20-25
25-20
40-55
55+
Pre-customer
Allowance customers
Youth market
Postsecondary market
Family Formation
Establishment
Mature Market
2.3 Consumer Mkt.
OTHER IMPORTANT FACTORS WITH DEMOGRAPHICS
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Baby Boomers (1946-1963) – most important group
right now, which means future opportunities
Gender - products are marketed exclusively to a
gender, but there are changing gender roles, so
advertising must reflect that

Family Life Cycle – a persons stage in the life cycle
will determine wants, needs and purchasing patterns,
thus marketing must be tailored to match the needs of
various stages
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Income Level – determines what people can afford
and where to markets
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Ethnicity and Culture - important to research the
culture of the target market, to avoid offending them
(i.e. colours mean different things in various cultures)
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2.3 Consumer Mkt.
Psychographics
- This is a system for measuring consumer’s beliefs,
opinions, and interests
- It profiles consumers according to religious beliefs,
tastes in music, lifestyle, attitudes toward health,
personality traits and other psychological factors
- Can design the marketing mix and develops specific
marketing strategies and plans to the targets, but it is
difficult to measure (See list of samples)
Geographic
- Consumers living in different geographic regions have
different wants and needs, and could create sales
opportunities
- There are three main categories:
o Urban – within boundaries of a city
 Money spent on cultural events, parking,
restaurants, public transportation
o Suburban – lives just outside the city
 Needs one car, spends money on gardens,
BBQ’s, furnishings
o Rural – Farmers, live on large pieces of land
 Riding mowers, tractors, farm equipment,
trucks, snow removal equipment
- Brand Development Index - indicates the potential
for brand development
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2.3 Consumer Mkt.
Calculated as:
Per Capita Sales/ Brand in Region
Per capita Sales/Brand in Country
* 100
If greater than 100 – brand fully developed in area
If less than 100 – brand has developmental potential
Statistics
Can also categorize consumers by how often they use a
product:
o Heavy user - try to create brand loyalty
 Advertising, coupons, loyalty cards, sampling,
push strategy
o Medium user – try to convert
 Use many of the same techniques as heavy
users
Classified
as one
o Light user
o Non-user
 First time users – want to attract this
point of entry, by identifying when people
will enter the market (i.e. new mothers)
 Don’t plan to use – must create a new
value equation for consumer to demonstrate
benefits of using product, since you must
change brand habits, and show solution to
some problem to encourage use
BMI – THE CONSUMER