The Consumer -

The Consumer -

QUIET BELL WORK 2. Answer questions List the 4 Ps, 2 Cs Skim chapter 2, note unfamilar terms 3. Prepare to submit homework assignment (article) BMI3C Unit 2 1

Read The Pet Hotel, page 36 Slide 1. THE CONSUMER CHAPTER 2 THE CONSUMER A consumer is the person who uses the product. A customer is the person who buys the product. Unit 2 3

BMI3C Slide Wouldnt this be the same person? Some examples when they are not? THE CONSUMER In the case of a parent or guardian of a child, the parent is considered a gatekeepera person who oversees the care of another. Unit 2 4 BMI3C

Slide Marketers attempt to appeal to the gatekeeper as well as the consumer. Why? NEEDS AND WANTS self-actualization/fulfillment esteem belonging safety Unit 2 Maslows Heirarchy of Needs 5

BMI3C Slide physiological NEEDS AND WANTS In our society, most people do not have difficulty satisfying needs. Unit 2 6 BMI3C

Slide Wants are items not necessary for survival, but add pleasure and comfort to our lives. NEEDS AND WANTS Marketers need to make a clear distinction between needs and wants. Unit 2 7 BMI3C

Slide why? NEEDS AND WANTS Unit 2 8 BMI3C Slide In places with poverty, war, or oppression basic needs may not be met.

Marketing focuses on meeting needs. NEEDS AND WANTS Unit 2 9 BMI3C Slide In developed countries, demand is more driven by wants. Marketing presents alternatives, and helps customers set up value

equations for each. CONSUMER DEMAND Consumer demand changes based on economic shifts and availability of new products. economy is stable in a slump unemployment unemployment down up demand

demandfor forgoods goods&and services services DOWN UP Unit 2 10 BMI3C Slide people people willwill

only buy buy things things they they want need CONSUMER DEMAND Unit 2 11 BMI3C

Slide Demand also changes based on wants, needs, or changes in perceived value. Marketers need to make decisions based on: educated guess, research, historic trends CONSUMER DEMAND Demand changes as retailers enter/exit the marketplace. Unit 2

12 BMI3C Slide Too many sellers of a product = demand As some close, less product available = demand CONSUMER DEMAND Unit 2 13 BMI3C

Slide Understanding fluctuations in consumer demand is essential to marketing. Because of this, marketers also use product life-cycle models to predict the life of new products. PRODUCT LIFE CYCLES PRODUCT LIFE CYCLES A PLC shows changes in consumer demand over time. Unit 2

15 BMI3C Slide no product can be in demand forever trends, technology and lifestyles change, affect consumer demand PRODUCT LIFE CYCLES Sales maturity decline growth

decision point introduction Time Unit 2 16 BMI3C Slide The traditional PLC consists of five stages. PRODUCT LIFE CYCLES

Homework Unit 2 17 BMI3C Slide In your notebook summarize the five steps of the traditional Product Life Cycle. PRODUCT LIFE CYCLES Introduction Stage

product is first introduced, product launch initial price is high to help recover costs costs include: Unit 2 18 BMI3C Slide machinery, set-up, training, storage, promotion, packaging, research, etc. PRODUCT LIFE CYCLES Introduction Stage

Unit 2 19 BMI3C Slide Who buys? Curious people, those who want new things first: early adopters, or trendsetters PRODUCT LIFE CYCLES Introduction Stage marketing: Unit 2

20 BMI3C Slide informs the consumer about product quickly establishes value equation PRODUCT LIFE CYCLES Introduction Stage Unit 2 21

BMI3C Slide some businesses arrange consignment deals: allow retailer to return unsold product after a period of time some manufacturers pay a shelf allowance for prime shelf space PRODUCT LIFE CYCLES Growth Stage Unit 2 22 BMI3C

Slide others start to buy product reputation spreads manufacturers advertise heavily PRODUCT LIFE CYCLES Growth Stage BMI3C Unit 2 23 Slide

- starts where costs have been recovered - start making profit PRODUCT LIFE CYCLES Growth Stage the faster a product reaches the growth stage, the sooner it makes profit product may be scrapped if unsuccessful Unit 2 24

BMI3C Slide if it is and it has lost money, it is called a bust PRODUCT LIFE CYCLES Growth Stage Unit 2 25 BMI3C Slide

first company to enter a market pays the most for R&D and advertising, but has no competition as competitors enter, they fight for market share: percentage of the total market PRODUCT LIFE CYCLES Market Share Example Coca Cola $ 47.0 M Pepsi Cola $ 46.5 M PC Cola

$ 4.5 M MC Cola $ 2.0 M Unit 2 $ 100.0 M 26 Total BMI3C Revenue Slide

Company Coca-Cola owns 47% of the market share (47/100) PRODUCT LIFE CYCLES Growth Stage factors preventing companies from realizing profit are called barriers to entry Unit 2 27 BMI3C

Slide may include: small market size, cost of R&D, advertising, equipment... PRODUCT LIFE CYCLES Growth Stage eventually only the most competitive products remain on the market Unit 2 28 BMI3C Slide

How do you compete? PRODUCT LIFE CYCLES Growth Stage Unit 2 29 BMI3C Slide a company may produce low-end products to establish minimum prices and validate expensive products not sold under a well-known brand name (ie. Panasonic

makes Techniks and Quasar) PRODUCT LIFE CYCLES Maturity Stage The period when sales Sales start to level off Time PRODUCT LIFE CYCLES

Maturity Stage Unit 2 31 BMI3C Slide marketers keep the brand name in front of consumers success and longevity of the product is highlighted PRODUCT LIFE CYCLES Maturity Stage Unit 2

32 BMI3C Slide since major costs have been recuperated and costs are low, products usually make large profits during this stage company takes this profit to develop new products PRODUCT LIFE CYCLES Maturity Stage EXAMPLES: Unit 2

33 BMI3C Slide Sony took the money from producing Walkmans and put it into developing Discmans. Disney took profits from its amusement parks to launch a cruise ship line. This also expands their brand name into a new market. PRODUCT LIFE CYCLES Decline Stage Unit 2

34 BMI3C Slide company cannot find new consumers for their product profits decrease; marketers try to find the reason for decline if it is a temporary decline, it may be reversed by a small price change, or new ad PRODUCT LIFE CYCLES Decline Stage Unit 2

35 BMI3C Slide other methods to reverse a decline: redesigning, reformulating, repackaging may decide to remove the product from the market altogether PRODUCT LIFE CYCLES Decision Point Stage Unit 2 36

BMI3C Slide the final stage of the PLC marketers must make important decisions regarding a products future PRODUCT LIFE CYCLES Decision Point Stage Unit 2 37 BMI3C

Slide product may be reformulated, repackaged, and reintroduced most often maintenance of a product involves new promotion and new pricing PRODUCT LIFE CYCLES Decision Point Stage Unit 2 38 BMI3C Slide

if there is little hope for more profitdue to market saturation, decreased demand, or otherwiseproduct may be abandoned TODAYS AGENDA Unit 2 39 BMI3C Slide MITRW Activity sheet Note A little friendly competition

NONTRADITIONAL PRODUCT LIFE CYCLES NONTRADITIONAL PRODUCT LIFE CYCLES In the textbook, read pages 46 to 49 and make a summary note on Fads, Trends, Niche Markets, and Seasonal Markets. Include in your notes the diagrams on page 46. Unit 2 41 BMI3C Slide

Think of additional examples for each type of life cycle. NONTRADITIONAL PRODUCT LIFE CYCLES Unit 2 42 BMI3C Slide Fads NONTRADITIONAL

PRODUCT LIFE CYCLES Fads BMI3C Unit 2 43 Rubiks cube, Cabbage Patch Kids, tamagotchi, Pet rock, whatever, yadda yadda Slide A product which is extremely popular for a very brief period of time, and loses popularity just as quickly. NONTRADITIONAL

PRODUCT LIFE CYCLES Fads Unit 2 44 BMI3C Slide Fads are unpredictable, and high-risk. Companies try to get out of the market just as the fad peaks. If they wait too long, they get stuck with excess inventory. NONTRADITIONAL PRODUCT LIFE CYCLES


Organic foods, Beanie babies, the Simpsons, cell phones Slide A trend has a more lasting effect on the market than a fad. A trend is usually a movement towards a style of product. NONTRADITIONAL PRODUCT LIFE CYCLES Unit 2 47 BMI3C

Slide Niche Markets NONTRADITIONAL PRODUCT LIFE CYCLES Niche Markets A small section of the market dominated by a small group of products. Short growth, level maturity. Unit 2 48 BMI3C Slide

The Pet Hotel, The Cambridge Times, ethnic products NONTRADITIONAL PRODUCT LIFE CYCLES Unit 2 49 BMI3C Slide Seasonal Markets NONTRADITIONAL

PRODUCT LIFE CYCLES Seasonal Markets BMI3C Unit 2 50 Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates Slide Consumer demand changes and is effected by the weather. Marketers anticipate periods of high and low demand, and work to create off-season opportunities. ACTIVITY

My Fives At your tables, try to identify five specific products which follow each of the non-traditional PLCs. (The ones presented in class do not count!) Unit 2 51 BMI3C Slide PRIZES FOR BEST TABLE! HOMEWORK

1. 2. Page 40 Questions: 1. (b), (c) 2. (b), (c) 3. (a), (b) Read section 2.2 Unit 2 52 BMI3C

Slide Work on this quietly until the bell! Read 2.2 2. Show Mr. M yesterdays homework BMI3C Unit 2 53 1.


Slide - the kind of people most likely to be attracted to a specific product THE CONSUMER MARKET Consumer Profiles Unit 2 57 BMI3C Slide

cohort: a group that shares common characteristics and buying habits, also called a consumer segment THE CONSUMER MARKET Consumer Profiles primary market: the most likely consumers Unit 2 58 BMI3C Slide

secondary market: other, occasional consumers THE CONSUMER MARKET Consumer Profiles Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets Unit 2 59 BMI3C ADVERTISING Slide

PRODUCT CONSUMER PROFILE THE CONSUMER MARKET Demographics - the study of obvious characteristicts that categorize people Unit 2 60

BMI3C Slide - age, gender, family life cycle, income level, ethnicity, culture THE CONSUMER MARKET Demographics Age Unit 2 61 BMI3C Slide

generally broken down into six groups: 0-14, 15-34, 35-50, 51-69, 70-88, 88 and over Different researchers use different breakdowns SIX MAJOR GENERATIONS Generation Age Characteristics GI Generation 89+ Children of the WWI generation & fighters in WWII & young in the

Great Depression Mature 70 - 88 Radio; Big-Band/Swing music Korean and Vietnam War generation Baby Boomers 51 - 69 Rock n Roll; first TV generation; save-the-world 35 - 50

latch-key kids Generation Y Millennium Kids 15-34 digital literacy as they grew up in a digital environment; 24/7 place; want fast and immediate processing Generation Z Tweens:10 -14 Toddler/Elementary

never known a world without computers and cell phones 1901-1926 1927- 1945 1946 - 1964 Generation X Born after 2001 BMI3C: Unit 2 62 1981-2000

Slide 1965 -1980 THE CONSUMER MARKET Demographics Age Unit 2 63 BMI3C Slide

Baby boomers are the most important group to most businesses.... why? THE CONSUMER MARKET Demographics Unit 2 64 BMI3C Slide Save a page of space in your notes for a chart summarizing pages 52-53

THE CONSUMER MARKET Demographics Gender Unit 2 65 BMI3C Slide Today very few products are marketed exclusively to one gender; gender roles have changed, many products are successfully marketed to both.

THE CONSUMER MARKET Demographics Family Life Cycle Unit 2 66 BMI3C Slide A business may sell its products to various groups, but it will adjust marketing strategies for each. THE CONSUMER MARKET

Demographics Unit 2 67 BMI3C Slide Save a page of space in your notes to copy table from page 57 THE CONSUMER MARKET Demographics Income Level

Unit 2 68 BMI3C Slide Businesses use this to determine whom to market to. Upperincome group can/will buy more expensive items. THE CONSUMER MARKET Demographics Income Level Unit 2

69 BMI3C Slide Most businesses target customers of average income and compete for customers discretionary income. THE CONSUMER MARKET Demographics Ethnicity and Culture Unit 2 70

BMI3C Slide especially important to a company wanting to get involved in international trade; must know what is acceptable by others. HOMEWORK Unit 2 71 BMI3C Copy charts from pages 52-53 and page 57 into your notes in the appropriate spots.

Slide 1. BELL WORK BMI3C Unit 2 Slide 72 Read Info Tech page 55 answer questions THE CONSUMER MARKET

Psychographics Unit 2 73 BMI3C Slide a system for measuring consumers beliefs, opinions, and interests group consumers by religion, taste, lifestyles, attitudes, personality psychological factors THE CONSUMER MARKET

Geographics Unit 2 74 BMI3C Slide Marketers are also interested in where consumers live. THE CONSUMER MARKET Geographics Urban consumer Unit 2

75 BMI3C Slide live within the boundaries of a city live in apartments, condos, houses with small yards spend on cultural events, restaurants, public transport THE CONSUMER MARKET Geographics Suburban consumer

Unit 2 76 BMI3C Slide lives on the outskirts of the city needs at least one car spends money on gardens, barbecues, home furnishings almost always commutes THE CONSUMER MARKET Geographics Rural consumer

Unit 2 77 BMI3C Slide usually need a truck to carry items often has large parcels of land and needs riding mower, tractor, other farm equipment THE CONSUMER MARKET Geographics Brand Development Index (BDI)

Unit 2 78 BMI3C Slide used to see how well a product is selling in one region in comparison to the total market THE CONSUMER MARKET Geographics Brand Development Index (BDI) per capita sales in region

per capita sales across entire market = BDI Unit 2 79 BMI3C Slide If BDI < 1, brand is underdeveloped in this area. If BDI > 1, brand is developed better than average. BRAND DEVELOPMENT INDEX (BDI)

Example Hostess Potato Chips Pop. of Canada: 30M Sales nationwide: $120M Pop. of Cambridge: 100K Unit 2 80 BMI3C Slide Sales in Cambridge: 350K BRAND DEVELOPMENT INDEX (BDI)

Example 350 100 120 30 = 3.5 4 = .875 Unit 2 81 BMI3C

Slide A value under 1 means the brand is not fully developed in this area. BRAND DEVELOPMENT INDEX (BDI) Example Hostess Potato Chips Pop. of Canada: 30M Sales nationwide: $120M Pop. of Toronto: 4M Unit 2 82 BMI3C

Slide Sales in Toronto: 18M BRAND DEVELOPMENT INDEX (BDI) Example 18 4 = 120 30 4.5 4 = 1.125

Unit 2 83 BMI3C Slide A value greater than 1 means the brand is fully developed in this area. WARM-UP TASK Unit 2 84

BMI3C Slide 1. Grab a magazine 2. Find an ad 3. Identifyin as much detail as possiblethe target market for the advertised item PRODUCT USE STATISTICS PRODUCT USE STATISTICS Groups consumers based on frequency of use:

Unit 2 86 BMI3C often grouped together Slide heavy user medium user light user non-user PRODUCT USE STATISTICS

Non-users Unit 2 87 BMI3C Slide Group #1: those entering the market category for the first time. PRODUCT USE STATISTICS Marketers try to attract this point-of-entry target by identifying who will enter the market and when, and then promote their brand.

Unit 2 88 BMI3C Slide diapers to expectant parents PRODUCT USE STATISTICS Unit 2 89 BMI3C

Slide Group #2: individuals who do not plan to use products in this category. PRODUCT USE STATISTICS Marketers must create a value equation to change consumers habits and opinions, and convince consumers to purchase product. Unit 2 90 BMI3C Slide

cell phone industry PRODUCT USE STATISTICS TOTAL BENEFITS must be greater than TOTAL COSTS to create Unit 2 91 BMI3C Slide


Im hungry PURCHASE DECISION MAKING PROCESS Set criteria for what will satisfy your need or want. Unit 2 94 BMI3C Slide quick, no prep work, something to munch on, can eat on couch PURCHASE DECISION MAKING PROCESS

Unit 2 chips bread carrots apple peanuts 95 BMI3C popcorn

Slide Search for products which match your criteria. PURCHASE DECISION MAKING PROCESS Make your decision based on your criteria. Unit 2 bread carrots apple peanuts

96 BMI3C chips Slide popcorn PURCHASE DECISION MAKING PROCESS Purchase the product. Unit 2 97 BMI3C

Slide Go to the kitchen, grab some chips. PURCHASE DECISION MAKING PROCESS Evaluate your purchase decision. Unit 2 98 BMI3C Slide Was I satisfied with my decision?

PURCHASE DECISION MAKING PROCESS The process takes longer the more expensive the product because Unit 2 99 BMI3C more money bigger risk less experience with more expensive items Slide a) b)

PURCHASE DECISION MAKING PROCESS Motivation biological need emotional need rational forces social forces peer pressure Unit 2 100

BMI3C Slide celebrity endorsements PURCHASE DECISION MAKING PROCESS In groups of 2-3, go through the purchase decision making process for an item costing between $200 and $500. Start with a need/want and your solution is to buy one product. Unit 2 101 BMI3C

Slide Have someone write it out; be prepared to share with class. ASSIGNMENT Read article on page 66-67, answer questions on page 67 in full and complete sentences, hand in before end of class. Test review: Unit 2 103 BMI3C Slide

Section 2.1, 2.2., 2.3, 2.4 (not Thorndike or Alderfer), 2.5, handouts, assignments

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