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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 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 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 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 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 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 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

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 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 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.
  • popcorn chips
  • bread carrots
  • apple peanuts

BMI3C

Unit 2

purchase decision making process4
Purchase Decision Making Process
  • Make your decision based on your criteria.
  • popcorn chips
  • bread carrots
  • apple peanuts

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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