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Quiet Bell Work. Read “The Pet Hotel”, page 36 Answer questions List the 4 Ps, 2 Cs Skim chapter 2, note unfamilar terms Prepare to submit homework assignment (article). THE CONSUMER. The Consumer. A consumer is the person who uses the product.

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Quiet bell work

Quiet Bell Work

  • Read “The Pet Hotel”, page 36

    • Answer questions

    • List the 4 Ps, 2 Cs

  • Skim chapter 2, note unfamilar terms

  • Prepare to submit homework assignment (article)

BMI3C

Unit 2


The consumer

THE CONSUMER


The consumer1

The Consumer

  • A consumer is the person who uses the product.

  • A customer is the person who buys the product.

    • Wouldn’t this be the same person? Some examples when they are not?

BMI3C

Unit 2


The consumer2

The Consumer

  • In the case of a parent or guardian of a child, the parent is considered a gatekeeper—a person who oversees the care of another.

    • Marketers attempt to appeal to the gatekeeper as well as the consumer. Why?

BMI3C

Unit 2


Needs and wants

Needs and Wants

  • self-actualization/fulfillment

  • esteem

  • belonging

  • safety

  • physiological

BMI3C

Unit 2

Maslow’s Heirarchy of Needs


Needs and wants1

Needs and Wants

  • In our society, most people do not have difficulty satisfying needs.

  • Wants are items not necessary for survival, but add pleasure and comfort to our lives.

BMI3C

Unit 2


Needs and wants2

Needs and Wants

  • Marketers need to make a clear distinction between needs and wants.

  • why?

BMI3C

Unit 2


Needs and wants3

Needs and Wants

  • In places with poverty, war, or oppression basic needs may not be met. Marketing focuses on meeting needs.

BMI3C

Unit 2


Needs and wants4

Needs and Wants

  • In developed countries, demand is more driven by wants. Marketing presents alternatives, and helps customers set up value equations for each.

BMI3C

Unit 2


Consumer demand

Consumer Demand

  • Consumer demand changes based on economic shifts and availability of new products.

economy is stable

economy is in a slump

unemployment down

unemployment up

demand for goods and services UP

people will buy things they want

demand for goods & services DOWN

people will only buy things they need

BMI3C

Unit 2


Consumer demand1

Consumer Demand

  • Demand also changes based on wants, needs, or changes in perceived value. Marketers need to make decisions based on:

    • educated guess, research, historic trends

BMI3C

Unit 2


Consumer demand2

Consumer Demand

  • Demand changes as retailers enter/exit the marketplace.

    • Too many sellers of a product =  demand

    • As some close, less product available =  demand

BMI3C

Unit 2


Consumer demand3

Consumer Demand

  • 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.

BMI3C

Unit 2


Homework

HOMEWORK

  • 1.Page 40

  • Questions:1. (b), (c)

  • 2. (b), (c)

  • 3. (a), (b)

  • 2.Read section 2.2

  • Work on this quietly until the bell!

BMI3C

Unit 2


Bell work

BELL WORK

  • Read 2.2

  • Show Mr. M yesterday’s homework

BMI3C

Unit 2


Product life cycles

Product Life Cycles


Product life cycles1

Product Life Cycles

  • A PLC shows changes in consumer demand over time.

    • no product can be in demand forever

    • trends, technology and lifestyles change, affect consumer demand

BMI3C

Unit 2


Product life cycles2

Product Life Cycles

  • The traditional PLC consists of five stages.

maturity

decline

growth

decision

point

introduction

BMI3C

Unit 2


Product life cycles3

Product Life Cycles

  • Homework

  • In your notebook summarize the five steps of the traditional Product Life Cycle.

BMI3C

Unit 2


Product life cycles4

Product Life Cycles

  • Introduction Stage

    • product is first introduced, “product launch”

    • initial price is high to help recover costs

      • costs include:

        • machinery, set-up, training, storage, promotion, packaging, research, etc.

BMI3C

Unit 2


Product life cycles5

Product Life Cycles

  • Introduction Stage

    • Who buys? Curious people, those who want new things first: early adopters, or trendsetters

BMI3C

Unit 2


Product life cycles6

Product Life Cycles

  • Introduction Stage

    • marketing:

      • informs the consumer about product

      • quickly establishes value equation

BMI3C

Unit 2


Product life cycles7

Product Life Cycles

  • Introduction Stage

    • 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

BMI3C

Unit 2


Product life cycles8

Product Life Cycles

  • Growth Stage

    • others start to buy product

    • reputation spreads

    • manufacturers advertise heavily

BMI3C

Unit 2


Product life cycles9

Product Life Cycles

  • Growth Stage

  • starts where costs have been recovered, start making profit

BMI3C

Unit 2


Product life cycles10

Product Life Cycles

  • Growth Stage

    • the faster a product reaches the growth stage, the sooner it makes profit

    • product may be scrapped if unsuccessful

      • if it is and it has lost money, it is called a bust

BMI3C

Unit 2


Product life cycles11

Product Life Cycles

  • Growth Stage

    • 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

BMI3C

Unit 2


Product life cycles12

Product Life Cycles

  • Market Share Example

    Coca-Cola owns 47% of the market share (47/100)

BMI3C

Unit 2


Product life cycles13

Product Life Cycles

  • Growth Stage

    • factors preventing companies from realizing profit are called barriers to entry

      • may include: small market size, cost of R&D, advertising, equipment...

BMI3C

Unit 2


Product life cycles14

Product Life Cycles

  • Growth Stage

    • eventually only the most competitive products remain on the market

      How do you compete?

BMI3C

Unit 2


Product life cycles15

Product Life Cycles

  • Growth Stage

    • 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)

BMI3C

Unit 2


Product life cycles16

Product Life Cycles

  • Maturity Stage

  • The period when sales start to level off

BMI3C

Unit 2


Product life cycles17

Product Life Cycles

  • Maturity Stage

    • marketers keep the brand name in front of consumers

    • success and longevity of the product is highlighted

BMI3C

Unit 2


Product life cycles18

Product Life Cycles

  • Maturity Stage

    • 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

BMI3C

Unit 2


Product life cycles19

Product Life Cycles

  • Maturity Stage

  • EXAMPLES:

    • 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.

BMI3C

Unit 2


Product life cycles20

Product Life Cycles

  • Decline Stage

    • 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

BMI3C

Unit 2


Product life cycles21

Product Life Cycles

  • Decline Stage

    • other methods to reverse a decline: redesigning, reformulating, repackaging

    • may decide to remove the product from the market altogether

BMI3C

Unit 2


Product life cycles22

Product Life Cycles

  • Decision Point Stage

    • the final stage of the PLC

    • marketers must make important decisions regarding a product’s future

BMI3C

Unit 2


Product life cycles23

Product Life Cycles

  • Decision Point Stage

    • product may be reformulated, repackaged, and reintroduced

    • most often maintenance of a product involves new promotion and new pricing

BMI3C

Unit 2


Product life cycles24

Product Life Cycles

  • Decision Point Stage

    • if there is little hope for more profit–due to market saturation, decreased demand, or otherwise–product may be abandoned

BMI3C

Unit 2


Today s agenda

Today’s Agenda

  • MITRW

  • Activity sheet

  • Note

  • A little friendly competition

BMI3C

Unit 2


Nontraditional product life cycles

Nontraditional Product Life Cycles


Nontraditional product life cycles1

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.

  • Think of additional examples for each type of life cycle.

BMI3C

Unit 2


Nontraditional product life cycles2

Nontraditional Product Life Cycles

  • Fads

BMI3C

Unit 2


Nontraditional product life cycles3

Nontraditional Product Life Cycles

  • Fads

  • A product which is extremely popular for a very brief period of time, and loses popularity just as quickly.

Rubik’s cube, Cabbage Patch Kids, tamagotchi, Pet rock, “whatever”, “yadda yadda”

BMI3C

Unit 2


Nontraditional product life cycles4

Nontraditional Product Life Cycles

  • Fads

  • 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.

BMI3C

Unit 2


Nontraditional product life cycles5

Nontraditional Product Life Cycles

  • Trends

BMI3C

Unit 2


Nontraditional product life cycles6

Nontraditional Product Life Cycles

  • Trends

  • A trend has a more lasting effect on the market than a fad. A trend is usually a movement towards a style of product.

BMI3C

Unit 2

Organic foods, Beanie babies, the Simpsons, cell phones


Nontraditional product life cycles7

Nontraditional Product Life Cycles

  • Niche Markets

BMI3C

Unit 2


Nontraditional product life cycles8

Nontraditional Product Life Cycles

  • Niche Markets

  • A small section of the market dominated by a small group of products.

  • Short growth, level maturity.

BMI3C

Unit 2

The Pet Hotel, The Cambridge Times, ethnic products


Nontraditional product life cycles9

Nontraditional Product Life Cycles

  • Seasonal Markets

BMI3C

Unit 2


Nontraditional product life cycles10

Nontraditional Product Life Cycles

  • Seasonal Markets

  • Consumer demand changes and is effected by the weather. Marketers anticipate periods of high and low demand, and work to create off-season opportunities.

BMI3C

Unit 2

Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates


Activity

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!)

  • PRIZES FOR BEST TABLE!

BMI3C

Unit 2


The consumer market

The Consumer Market


The consumer market1

The Consumer Market

  • Consumer Profiles

    • the kind of people most likely to be attracted to a specific product

BMI3C

Unit 2


The consumer market2

The Consumer Market

  • Consumer Profiles

  • cohort: a group that shares common characteristics and buying habits, also called a consumer segment

BMI3C

Unit 2


The consumer market3

The Consumer Market

  • Consumer Profiles

  • primary market: the most likely consumers

  • secondary market: other, occasional consumers

BMI3C

Unit 2


The consumer market4

The Consumer Market

  • Consumer Profiles

  • Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets

PRODUCT

CONSUMER PROFILE

ADVERTISING

BMI3C

Unit 2


The consumer market5

The Consumer Market

  • Demographics

  • the study of obvious characteristicts that categorize people

    • age, gender, family life cycle, income level, ethnicity, culture

BMI3C

Unit 2


The consumer market6

The Consumer Market

  • Demographics

  • Age

    • generally broken down into six groups: 0-14, 15-24, 25-44, 45-64, 65-74, 75 and over

    • Different researchers use different breakdowns

BMI3C

Unit 2


Five major generations

Five Major Generations

BMI3C

Unit 2


The consumer market7

The Consumer Market

  • Demographics

  • Age

    Baby boomers are the most important group to most businesses.... why?

BMI3C

Unit 2


The consumer market8

The Consumer Market

  • Demographics

  • Save ½ a page of space in your notes for a chart summarizing pages 52-53

BMI3C

Unit 2


The consumer market9

The Consumer Market

  • Demographics

  • Gender

    • Today very few products are marketed exclusively to one gender; gender roles have changed, many products are successfully marketed to both.

BMI3C

Unit 2


The consumer market10

The Consumer Market

  • Demographics

  • Family Life Cycle

    • A business may sell its products to various groups, but it will adjust marketing strategies for each.

BMI3C

Unit 2


The consumer market11

The Consumer Market

  • Demographics

  • Save ½ a page of space in your notes to copy table from page 57

BMI3C

Unit 2


The consumer market12

The Consumer Market

  • Demographics

  • Income Level

    • Businesses use this to determine whom to market to. Upper-income group can/will buy more expensive items.

BMI3C

Unit 2


The consumer market13

The Consumer Market

  • Demographics

  • Income Level

    • Most businesses target customers of average income and compete for customers’ discretionary income.

BMI3C

Unit 2


The consumer market14

The Consumer Market

  • Demographics

  • Ethnicity and Culture

    • especially important to a company wanting to get involved in international trade; must know what is acceptable by others.

BMI3C

Unit 2


Homework1

HOMEWORK

  • Copy charts from pages 52-53 and page 57 into your notes in the appropriate spots.

BMI3C

Unit 2


Bell work1

BELL WORK

  • Read “Info Tech”, page 55, answer questions

BMI3C

Unit 2


The consumer market15

The Consumer Market

  • Psychographics

    • a system for measuring consumer’s beliefs, opinions, and interests

    • group consumers by religion, taste, lifestyles, attitudes, personality – psychological factors

BMI3C

Unit 2


The consumer market16

The Consumer Market

  • Geographics

  • Marketers are also interested in where consumers live.

BMI3C

Unit 2


The consumer market17

The Consumer Market

  • Geographics

  • Urban consumer

    • live within the boundaries of a city

    • live in apartments, condos, houses with small yards

    • spend on cultural events, restaurants, public transport

BMI3C

Unit 2


The consumer market18

The Consumer Market

  • Geographics

  • Suburban consumer

    • lives on the outskirts of the city

    • needs at least one car

    • spends money on gardens, barbecues, home furnishings

    • almost always commutes

BMI3C

Unit 2


The consumer market19

The Consumer Market

  • Geographics

  • Rural consumer

    • usually need a truck to carry items

    • often has large parcels of land and needs riding mower, tractor, other farm equipment

BMI3C

Unit 2


The consumer market20

The Consumer Market

  • Geographics

  • Brand Development Index (BDI)

    • used to see how well a product is selling in one region in comparison to the total market

BMI3C

Unit 2


The consumer market21

The Consumer Market

  • Geographics

  • Brand Development Index (BDI)

  • If BDI < 1, brand is underdeveloped in this area. If BDI > 1, brand is developed better than average.

per capita sales in region

= BDI

per capita sales across entire market

BMI3C

Unit 2


Brand development index bdi

Brand Development Index (BDI)

  • Example

  • Hostess Potato Chips

  • Pop. of Canada: 30M

  • Sales nationwide: $120M

  • Pop. of Cambridge: 100K

  • Sales in Cambridge: 350K

BMI3C

Unit 2


Brand development index bdi1

Brand Development Index (BDI)

  • Example

  • A value under 1 means the brand is not fully developed in this area.

350 ÷ 100

3.5

= = .875

120 ÷ 30

4

BMI3C

Unit 2


Brand development index bdi2

Brand Development Index (BDI)

  • Example

  • Hostess Potato Chips

  • Pop. of Canada: 30M

  • Sales nationwide: $120M

  • Pop. of Toronto: 4M

  • Sales in Toronto: 18M

BMI3C

Unit 2


Brand development index bdi3

Brand Development Index (BDI)

  • Example

  • A value greater than 1 means the brand is fully developed in this area.

18 ÷ 4

4.5

= = 1.125

120 ÷ 30

4

BMI3C

Unit 2


Warm up task

WARM-UP TASK

  • Grab a magazine

  • Find an ad

  • Identify—in as much detail as possible—the target market for the advertised item

BMI3C

Unit 2


Product use statistics

Product Use Statistics


Product use statistics1

Product Use Statistics

  • Groups consumers based on frequency of use:

    • heavy user

    • medium user

    • light user

    • non-user

often grouped together

BMI3C

Unit 2


Product use statistics2

Product Use Statistics

  • Non-users

  • Group #1: those entering the market category for the first time.

BMI3C

Unit 2


Product use statistics3

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.

    • diapers to expectant parents

BMI3C

Unit 2


Product use statistics4

Product Use Statistics

  • Group #2: individuals who do not plan to use products in this category.

BMI3C

Unit 2


Product use statistics5

Product Use Statistics

  • Marketers must create a value equation to change consumers’ habits and opinions, and convince consumers to purchase product.

    • cell phone industry

BMI3C

Unit 2


Product use statistics6

Product Use Statistics

  • TOTAL BENEFITS

  • must be greater than

  • TOTAL COSTS

  • to create

  • VALUE

BMI3C

Unit 2


Purchase decision making process

Purchase Decision Making Process


Purchase decision making process1

Purchase Decision Making Process

  • Discover the need or want.

  • I’m hungry

BMI3C

Unit 2


Purchase decision making process2

Purchase Decision Making Process

  • Set criteria for what will satisfy your need or want.

    • quick, no prep work, something to munch on, can eat on couch

BMI3C

Unit 2


Purchase decision making process3

Purchase Decision Making Process

  • Search for products which match your criteria.

  • popcornchips

  • breadcarrots

  • applepeanuts

BMI3C

Unit 2


Purchase decision making process4

Purchase Decision Making Process

  • Make your decision based on your criteria.

  • popcornchips

  • breadcarrots

  • applepeanuts

BMI3C

Unit 2


Purchase decision making process5

Purchase Decision Making Process

  • Purchase the product.

  • Go to the kitchen, grab some chips.

BMI3C

Unit 2


Purchase decision making process6

Purchase Decision Making Process

  • Evaluate your purchase decision.

  • Was I satisfied with my decision?

BMI3C

Unit 2


Purchase decision making process7

Purchase Decision Making Process

  • The process takes longer the more expensive the product because

    • more money → bigger risk

    • less experience with more expensive items

BMI3C

Unit 2


Purchase decision making process8

Purchase Decision Making Process

  • Motivation

    • biological need

    • emotional need

    • rational forces

    • social forces

  • → peer pressure

  • → celebrity endorsements

BMI3C

Unit 2


Purchase decision making process9

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.

  • Have someone write it out; be prepared to share with class.

BMI3C

Unit 2


Assignment

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:

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

BMI3C

Unit 2


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