Buying Behaviour

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Ch 4. Developing a Global Vision

Situation Analysis - More than one set of environmental variables. Interactions between them - Trade and foreign policies, Tariffs and other barriers, and Exchange rates. Variables which are Especially Important- Infrastructure, Market structure, and Socio/cultural variables

Marketing Mix Pricing - Must consider transportation and insurance costs, taxes and tariffs Determine what customers will spend Ensure that foreign buyers will pay them May need to simplify a product to lower price

Distribution Challenges - Japanese distribution system is the most complicated in the world Retail institutions may differ from company’s domestic market Distribution channels and physical infrastructure may be inadequate

Product and Promotion - Standardization/Differentiation mainly in terms of Product and Promotions. Product and Promotion Extension (Standardization) Product Extension/Promotion Adaptation Product Adaptation/Promotion Extension Dual Adaptation (Product Invention

Global Marketing Standardization - World markets are becoming more alike Standardized products can be sold the same way worldwide Successful companies may vary products for global markets

Reasons for Expanding into International Markets - Domestic Market Saturated Excess capacity Leverage a unique product or technological advantage

Extend Product Lifecycle Higher Sales/Profits, Economies of Scale, Risk Diversification etc. Growth Opportunities Globalization of Markets

Global Vision Recognize and react to international marketing opportunities Be aware of threats from foreign competitors Use international distribution networks Large markets, economies of scale. The External Environment Culture – Language Religion Superstitions Etiquette Customs Traditions Notion of time

Economic and technological development ò The traditional society - e.g., Ghana, Bangladesh. ò The preindustrial Society - e.g., Madagascar and Uganda. ò The takeoff Society - e.g., Thailand, Malaysia, and Vietnam. ò The industrializing Society - e.g., Mexico, China, India, and Brazil.

Political Structure Extremes Legal Considerations – Tariffs, quotas, boycotts, exchange control Legal Considerations Trade Agreements: G.A.T.T. - Uruguay Round. Reduces tariffs by one-third world-wide

Patent/copyright protection Services under international rules Reduction of farm subsidies

World Trade Organization ò Created at the conclusion of the last G.A.T.T. agreement. ò G.A.T.T. agreement is part of W.T.O. ò Lower barriers and facilitate trade. ò Set rules governing trade between its members, settle trade disputes, and issue binding decisions.

Market Groups – N.A.F.T.A., Mercosur, E.U. Demographic Makeup: Population density Urban or rural Personal income Rise of global middle class Supply of professionals

Natural Resources

Entering the Global Marketplace ò Exporting - first step, low involvement and commitment of resources, establish market, skim market. ò Licensing - Least commitment, long-term, scarce capital, import restrictions, protect I.P., ò Contract Manufacturing - . ò Joint Ventures- reduce political risk, access to raw materials, export base, special skills of partner (Strategic Alliances).

ò Direct foreign investment - long term, high levels of commitment, large demand, low cost labor, access to raw materials, high import taxes, quotas or transportation costs.

Export Intermediaries Dumping Countertrade E-commerce Aspects of Going Global Internet greatly facilitating global trade.

Internet e-commerce sites Language translation software Global shippers Ch. 5 - Consumer Decision Making Understand how and why a consumer makes a purchase decision. In order to design more effective marketing strategies. Segmentation, positioning, and marketing mix. Consumer Decision Making - why? Why - several different factors have an influence on the decision making process. Could be classified as Individual or Internal Factors and Social or External Factors.

FACTORS INFLUENCING THE CONSUMER’S DECISION-MAKING PROCESS

Consumer Decision Making - How? The exact decision process involved. - Stages in the decision process. - How this process could be different for different types of products.

The Decision-Making Process Decision Making Process different for low vs. high involvement Products. Factors Affecting Inv. Levels Types of Buying Decisions Routine Decisions. Brand Loyalty - e.g., Soft drinks, cigarettes, perfumes. -- Inertia - Canned veg., paper towels. Jump from problem recognition to purchase. - Or a very low of internal search and evaluation. Limited Decision Making. Low levels on each stage of the decision process. Or alternative evaluation after purchase - variety seeking (e.g., shampoo, cereals). Extensive Decision Making. High Involvement Products - e.g., cars, houses, etc. Internal and external search, many alternatives, extensive evaluation. Problem Recognition. Difference between actual and desired states. --- Internal or external stimuli. Promotions can influence perceptions of actual state or desired state or the difference between them. Information Search. Internal - from memory. -- Previous experiences, previous searches (personal or public sources). External - Marketing or Non-Marketing sources. External Information. Marketing Sources - advertising, sales promotions, salespeople, labels, and packaging. Non-marketing Sources - Personal trial, observation, friends and relatives, and public sources like consumer reports.

Evoked set. Four or five brands which a consumer usually considers when making a decision. Evaluation of Alternatives. Different decision rules - simple….complex. ---- Select on one attribute. Cut-off points for each important attribute. Rank the attributes in order of importance and then evaluate alternatives on each. Post-purchase Behavior. Satisfaction based on expectations. --- Cognitive dissonance - doubts. New information to justify behavior. --- Strategies to reduce dissonance and to handle complaints satisfactorily. Individual Factors - Perception. The process of selecting, organizing, interpreting, and storing information. Stored as product position or product image. Individual Factors: Perception Selective Exposure - Based on interests and lifestyles. Selective distortion - conflicts with feelings or beliefs . Selective Retention - support for feelings or beliefs. Individual Factors - Motives. The driving forces that cause a person to take action to satisfy specific needs. Marketers need to categorize motives in order to study consumers and develop strategies. Maslow’s hierarchy provides one such categorization. Maslow’s Hierarchy of Needs Individual Factors - Learning. Experiential and conceptual.

Reinforcement and repetition boost learning. Stimulus generalization. Stimulus discrimination. Individual Factors - Values Consumers with similar value systems exhibit similar consumption patterns. Value systems vary across cultures and subcultures. Individual Factors - Beliefs and attitudes. Beliefs - knowledge that an individual holds as true. Attitudes - Clusters of interrelated beliefs. Attitude change strategies. Changing beliefs. --- Changing the importance of beliefs. --- Adding new beliefs. Individual Factors - Personality. Psychological makeup and environmental forces. Could influence the types and brands of products purchased. Self-concept - ideal self-image and real self image. Some Common Pers. Traits Individual Factors - Lifestyle. Attitudes, interests, opinions. General and Product specific. Psychographic segments. Social Factors - Culture and Subculture. Understanding cultural differences becomes important in international markets. Subcultures - Mormons, Hispanics, Harley-Davidson bikers. Social Factors: Ref. Groups Social Factors - opinion leaders

Target opinion leaders. ---- Testimonials. ---- Celebrity endorsements. ----- Group sanctioning. Social Factors - Family. Family decisions and decision making roles. Initiators, Influencers, Decision Makers, Purchasers. Family Life Cycle. Social Factors - Social Class. Segmentation variable. --- Fragmentation in U.S. society. Important in overseas markets. Ch. 6 - Consumer Decision Making Understand how and why a consumer makes a purchase decision. In order to design more effective marketing strategies. Segmentation, positioning, and marketing mix. Consumer Decision Making - why? Why - several different factors have an influence on the decision making process. Could be classified as Individual or Internal Factors and Social or External Factors.

FACTORS INFLUENCING THE CONSUMER’S DECISION-MAKING PROCESS

Consumer Decision Making - How? The exact decision process involved. - Stages in the decision process. - How this process could be different for different types of products. The Decision-Making Process Decision Making Process different for low vs. high involvement Products. Factors Affecting Inv. Levels Types of Buying Decisions

Routine Decisions. Brand Loyalty - e.g., Soft drinks, cigarettes, perfumes. -- Inertia - Canned veg., paper towels. Jump from problem recognition to purchase. - Or a very low of internal search and evaluation. Limited Decision Making. Low levels on each stage of the decision process. Or alternative evaluation after purchase - variety seeking (e.g., shampoo, cereals). Extensive Decision Making. High Involvement Products - e.g., cars, houses, etc. Internal and external search, many alternatives, extensive evaluation. Problem Recognition. Difference between actual and desired states. --- Internal or external stimuli. Promotions can influence perceptions of actual state or desired state or the difference between them. Information Search. Internal - from memory. -- Previous experiences, previous searches (personal or public sources). External - Marketing or Non-Marketing sources. External Information. Marketing Sources - advertising, sales promotions, salespeople, labels, and packaging. Non-marketing Sources - Personal trial, observation, friends and relatives, and public sources like consumer reports. Evoked set. Four or five brands which a consumer usually considers when making a decision. Evaluation of Alternatives. Different decision rules - simple….complex. ---- Select on one attribute.

Cut-off points for each important attribute. Rank the attributes in order of importance and then evaluate alternatives on each. Post-purchase Behavior. Satisfaction based on expectations. --- Cognitive dissonance - doubts. New information to justify behavior. --- Strategies to reduce dissonance and to handle complaints satisfactorily. Individual Factors - Perception. The process of selecting, organizing, interpreting, and storing information. Stored as product position or product image. Individual Factors: Perception Selective Exposure - Based on interests and lifestyles. Selective distortion - conflicts with feelings or beliefs . Selective Retention - support for feelings or beliefs. Individual Factors - Motives. The driving forces that cause a person to take action to satisfy specific needs. Marketers need to categorize motives in order to study consumers and develop strategies. Maslow’s hierarchy provides one such categorization. Maslow’s Hierarchy of Needs Individual Factors - Learning. Experiential and conceptual. Reinforcement and repetition boost learning. Stimulus generalization. Stimulus discrimination. Individual Factors - Values

Consumers with similar value systems exhibit similar consumption patterns. Value systems vary across cultures and subcultures. Individual Factors - Beliefs and attitudes. Beliefs - knowledge that an individual holds as true. Attitudes - Clusters of interrelated beliefs. Attitude change strategies. Changing beliefs. --- Changing the importance of beliefs. --- Adding new beliefs. Individual Factors - Personality. Psychological makeup and environmental forces. Could influence the types and brands of products purchased. Self-concept - ideal self-image and real self image. Some Common Pers. Traits Individual Factors - Lifestyle. Attitudes, interests, opinions. General and Product specific. Psychographic segments. Social Factors - Culture and Subculture. Understanding cultural differences becomes important in international markets. Subcultures - Mormons, Hispanics, Harley-Davidson bikers. Social Factors: Ref. Groups Social Factors - opinion leaders Target opinion leaders. ---- Testimonials. ---- Celebrity endorsements. ----- Group sanctioning. Social Factors - Family. Family decisions and decision making roles. Initiators, Influencers, Decision Makers, Purchasers.

Family Life Cycle. Social Factors - Social Class. Segmentation variable. --- Fragmentation in U.S. society. Important in overseas markets.

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