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Chapter 5

MKT 701

1) Buyer Behavior in Consumer Markets Trying to understand the buyer behavior of consumers is a very trying and challenging task. The behavior of consumers is often irrational and unpredictable.
2) The Consumer Buying Process The consumer buying process is five stages of activities that consumers may go through in buying goods and services.
3) The Consumer Buying Process Stages Need Recognition, Information search, evaluation of alternatives, purchase decision, postpurchase evaluation
4) Need Recognition The buying process begins when consumers recognize that they have an unmet need.
5) Information Search Marketing stimuli can prompt consumers to become interested in a product, leading to a desire to seek out additional information. This desire can be passive or active.
6) Passive information search The consumer becomes more attentive and receptive to information, such as noticing and paying attention to automobile advertisements if the customer has a want for a specific car brand.
7) Active information search The consumer engages when he or she purposely seeks additional information, such as browsing the Internet, asking friends, or visiting dealer showrooms
8) Search for information depends on a number of issues (1) Degree of risk involved in the purchase, (2) amount of expertise or experience the consumer has with the product category, (3) the actual cost of the search in terms of time and money will limit the degree to which consumers search for information
9) Evaluation of Alternatives In evaluating the alternative product or brand choices among the members of the evoked set, the consumer essentially translates his or her need into a want for a specific product or brand.
10) Which consumer buying process stage is the hardest for marketers The evaluation of alternatives is the black box of consumer behavior because it is typically the hardest for marketers to understand, measure, or influence.
11) Evaluation stage considerations (1) The firm’s products must be in the evoked set of potential alternatives, (2) vital that marketers take steps to understand consumers’ choice criteria and the importance they place on specific product attributes, (3) marketers must often design marketi
12) Purchase Decision After the consumer has evaluated each alternative in the evoked set, he or she forms an intention to purchase a particular product or brand. However, a purchase intention and the actual act of buying are distinct concepts
13) Purchase intention The willingness of a customer to buy a certain product or a certain service
14) Act of buying Buying the product or service
15) Key issues for Marketers during Purchase Decision Marketers during the purchase stage are product availability and possession utility. Product availability is critical
16) Postpurchase Evaluation In the context of attracting and retaining buyers, what is the connection between the buying process and the development of long-term customer relationships
17) Delight the product’s performance greatly exceeds the consumer’s expectations
18) Satisfaction the product’s performance matches the consumer’s expectations
19) Dissatisfaction the product’s performance falls short of the consumer’s expectations
20) Cognitive Dissonance (Postpurchase Doubt) the consumer is unsure of the product’s performance relative to their expectations
21) Factors that affect the consumers buying process complexity of the purchase and decision, individual influences, social influences, and situational influences
22) Decision Making Complexity The complexity of the purchase and decision-making process is the primary reason why the buying process will vary across consumers and with the same consumer in different situations
23) Individual Influences The range of individual influences that can affect the buying process is quite extensive. Some individual factors, such as age, life cycle, occupation, and socioeconomic status, are fairly easy to understand and incorporate into the marketing strategy
24) Social Influences Social influences such as culture, subculture, social class, reference groups, and family have a profound impact on what, why, and how consumers buy. Among these social influences, none is more important than the family.
25) Situational Influences Affect What? Affect the amount of time and effort that consumers devote to the purchase task
26) What are situational influences Physical and spatial influences, Social and interpersonal influences, Temporal (time) influences, Purchase task or product usage influences, and Consumer dispositional influences
27) Business Markets & Consumer Markets have what in common? Both contain buyers and sellers who seek to make good purchases and satisfy their personal or organizational objectives. Both markets use similar buying processes that include stages associated with need identification, information search, and product eva
28) How are Business Markets & Consumer different? Involves the consumption of the purchased products. Consumers buy products for their personal use or consumption. In contrast, organizational buyers purchase products for use in their operations. These uses can be direct, as in acquiring raw materials to
29) Commercial Markets These markets buy raw materials for use in producing finished goods, and they buy facilitating goods and services used in the production of finished goods. Commercial markets include a variety of industries, such as aerospace, agriculture, mining, constru
30) Reseller Markets These markets consist of channel intermediaries such as wholesalers, retailers, or brokers that buy finished goods from the producer market and resell them at a profit. Channel intermediaries have the responsibility for creating the variety and assortment
31) Government Markets These markets include federal, state, county, city, and local governments. Governments buy a wide range of finished goods ranging from aircraft carriers to fire trucks to office equipment. However, most government purchases are for the services provided t
32) Institutional Markets These markets consist of a diverse group of non-commercial organizations such as churches, charities, schools, hospitals, or professional organizations. These organizations primarily buy finished goods that facilitate their ongoing operations.
33) Unique Characteristics of Business Markets Business markets differ from consumer markets in at least four ways. These differences concern the nature of the decision-making unit, the role of hard and soft costs in making and evaluating purchase decisions, reciprocal buying relationships, and the de
34) General rule for Business Markets Build long-term client relationships. In business markets, buying needed products at the lowest possible price is not necessarily the most important objective. Since many business transactions are based on long-term relationships, trust, reliability, and
35) The buying center The adult head-of-household tends to make most major purchase decisions for the family, with input and assistance from children and other family members as applicable. In an organization, however, the buying center tends to be much more complex and diffic
36) Hard and soft cost The second difference between business and consumer markets involves the significance of hard and soft costs. Consumers and organizations both consider hard costs, which include monetary price and associated purchase costs such as shipping and installatio
37) Hard and soft cost for Organizations Organizations, however, must also consider soft costs, such as downtime, opportunity costs, and human resource costs associated with the compatibility of systems, in the buying decision
38) Reciprocity The third key difference involves the existence of reciprocal buying relationships. With
39) Reciprocity for consumer markets Consumer purchases, the opportunity for buying and selling is usually a one-way street: The marketer sells and the consumer buys.
40) Reciprocity for Business marketing Business marketing, however, is more often a two-way street, with each firm marketing products that the other firm buys
41) Mutual dependence Finally, in business markets, the buyer and seller are more likely to be dependent on one another. For consumer–marketer relationships, this level of dependence tends to be low
42) Business buying process Problem recognition, Develop product specification, Vendor Identification and Qualification, Solicitation of Proposals or Bids, Vendor Selection, Order Processing, and Vendor Performance Review
43) Problem Recognition The recognition of needs can stem from a variety of internal and external sources, such as employees, members of the buying center, or outside salespeople. Business buyers often recognize needs due to special circumstances, such as when equipment or machi
44) Develop Product Specifications Detailed product specifications often define business purchases. This occurs because new purchases must be integrated with current technologies and processes. Developing product specifications is typically done by the buying center.
45) Vendor Identification and Qualification Business buyers must ensure that potential vendors can deliver on needed product specifications, within a specified time frame, and in the needed quantities. Therefore, business buyers will conduct a thorough analysis of potential vendors to ensure they c
46) Solicitation of Proposals or Bids Depending on the purchase in question, the buying firm may request that qualified vendors submit proposals or bids. These proposals or bids will detail how the vendor will meet the buying firm’s needs and fulfill the purchase criteria established during t
47) Vendor Selection The buying firm will select the vendor or vendors that can best meet its needs. The best vendor is not necessarily the one offering the lowest price. Other issues such as reputation, timeliness of delivery, guarantees, or personal relationships with the m
48) Order Processing Often a behind-the-scenes process, order processing involves the details of processing the order, negotiating credit terms, setting firm delivery dates, and any final technical assistance needed to complete the purchase.
49) Vendor Performance Review The final stage of the buying process involves a review of the vendor’s performance. In some cases, the product may flawlessly fulfill the needed specifications, but the vendor’s performance is poor. In this stage, both product and vendor specifications c
50) Market Segmentation the process of dividing the total market for a particular product or product category into relatively homogeneous segments or groups
51) Traditional Market Segmentation Approaches Mass Marketing, Differentiated Marketing, and Niche Marketing
52) Mass Marketing Companies aim campaigns at the total (whole) market for a particular product. Assumes that all customers in the market have similar needs and wants that can be reasonably satisfied with a single marketing program
53) Differentiated Marketing (1) Dividing the total market into groups of customers having relatively common or homogeneous needs, and (2) attempting to develop a marketing program that appeals to one or more of these groups. This approach may be necessary when customer needs are sim
54) Niche Marketing Some companies narrow the market concentration approach even more and focus their marketing efforts on one small, well-defined market segment or niche that has a unique, specific set of needs. Will typically pay higher prices for products that match their
55) Individualized Segmentation Approaches Due to advances in communication and Internet technology, individualized segmentation approaches have emerged. These approaches are possible because organizations now have the ability to track customers with a high degree of specificity
56) One-to-One Marketing When a company creates an entirely unique product or marketing program for each customer in the target segment. This approach is common in business markets where companies design unique programs and/or systems for each customer
57) Mass Customization An extension of one-to-one marketing, mass customization refers to providing unique products and solutions to individual customers on a mass scale
58) Permission Marketing Although similar to one-to-one marketing, is different in that customers choose to become part of a firm’s market segment. Customers give companies permission to specifically target them in their marketing efforts
59) Criteria for Successful Segmentation Identifiable and Measurable, Substantial, Accessible, Responsive, and Viable and Sustainable
60) Identifiable and Measurable The characteristics of the segment’s members must be easily identifiable. This allows the firm to measure identifying characteristics, including the segment’s size and purchasing power.
61) Substantial The segment must be large and profitable enough to make it worthwhile for the firm. The profit potential must be greater than the costs involved in creating a marketing program specifically for the segment.
62) Accessible The segment must be accessible in terms of communication (advertising, mail, telephone, etc.) and distribution (channels, merchants, retail outlets, etc.).
63) Responsive The segment must respond to the firm’s marketing efforts, including changes to the marketing program over time. The segment must also respond differently than other segments.
64) Viable and Sustainable The segment must meet the basic criteria for exchange, including being ready, willing, and able to conduct business with the firm. The segment must also be sustainable over time to allow the firm to effectively develop a marketing strategy for serving the
65) Identifying Market Segments This involves selecting the most relevant variables to identify and define the target market or markets. Many of these variables, including demographics, lifestyles, product-usage, or firm size, derive from the situation analysis section of the marketing
66) Segmenting Consumer Markets The goal in segmenting consumer markets is to isolate individual characteristics that distinguish one or more segments from the total market. The key is to segment the total market into groups with relatively homogeneous needs
67) Behavioral Segmentation Is the most powerful approach because it uses actual consumer behavior or product usage to make distinctions among market segments. Typically, these distinctions are tied to the reasons that customers buy and use products.
68) Consequently of behavioral segmentation Unlike other types of consumer segmentation, is most closely associated with consumers’ needs. A common use of behavioral segmentation is to group consumers based on their extent of product usage—heavy, medium, and light users
69) Demographic Segmentation divides markets into segments using demographic factors such as gender (e.g., Secret deodorant for women), age (e.g., Abercrombie & Fitch clothing for teens and young adults), income (e.g., Lexus automobiles for wealthy consumers), and education (e.g., on
70) Psychographic Segmentation Deals with state-of-mind issues such as motives, attitudes, opinions, values, lifestyles, interests, and personality. These issues are more difficult to measure, and often require primary marketing research to properly determine the makeup and size of var
71) Geographic Segmentation Characteristics often play a large part in developing market segments. For example, firms often find that their customers are geographically concentrated
72) VAS (Values and Lifestyle) Customer Profile Divides adult U.S. consumers into one of eight profiles based on their level of resources and one of three primary consumption motives: ideals (knowledge and principles), achievement (demonstrating success to others), or self-expression (social or physica
73) Innovators These consumers have abundant resources and high self-esteem. Are successful, sophisticated consumers who have a taste for upscale, innovative, and specialized goods and services. Are concerned about image as an expression of self, but not as an expressio
74) Thinkers Are well-educated consumers who value order, knowledge, and responsibility. These consumers like to be as well informed about the products they buy as they are about world and national events. Although Thinkers have resources that give them many choices o
75) Achievers The lifestyle of an Achiever is focused and structured around family, a place of worship, and career. Are conventional, conservative, and respect authority and the status quo. These individuals are very active consumers who desire established, prestigious
76) Experiencers Are young, enthusiastic, and impulsive consumers who are motivated by self-expression. These consumers emphasize variety, excitement, the offbeat, and the risky. Experiencers enjoy looking good and buying “cool” products. Example products: fashion, entert
77) Believers Are conservative, conventional consumers who hold steadfast beliefs based on traditional values related to family, religion, community, and patriotism. These consumers are predictable in that they follow established routines centered on family, community,
78) Strivers Are motivated by achievement, yet they lack the resources to meet all their desires. As a group, they are trendy, fun loving, and concerned with the opinions and approval of others. These consumers see shopping as a social activity and an opportunity to d
79) Makers Like Experiencers, are motivated by self-expression. However, these consumers experience the world by engaging in many do-it-yourself activities such as repairing their own cars, building houses, or growing and canning their own vegetables. Are practical
80) Survivors Live narrowly focused lives and have few resources with which to cope. They are primarily concerned with safety, security, and meeting needs rather than fulfilling wants. As a group, they are cautious consumers who represent a fairly small market for most
81) Target Marketing Strategies Once the firm has completed segmenting a market, it must then evaluate each segment to determine its attractiveness and whether it offers opportunities that match the firm’s capabilities and resources
82) Single Segment Targeting Firms use single segment targeting when their capabilities are intrinsically tied to the needs of a specific market segment. Many consider the firms using this targeting strategy to be true specialists in a particular product category.
83) Example of single segment targeting New Belgium Brewing (craft beer), Porsche, and Ray-Ban. These and other firms using single segment targeting are successful because they fully understand their customers’ needs, preferences, and lifestyles. These firms also constantly strive to improve qu
84) Selective Targeting Firms that have multiple capabilities in many different product categories use selective targeting successfully. This strategy has several advantages, including diversification of the firm’s risk and the ability to cherry pick only the most attractive mar
85) Example of selective targeting Procter & Gamble uses selective targeting to offer customers many different products in the family care, household care, and personal care markets. Besides the familiar deodorants, laundry detergents, and hair care products, P&G also sells products in the
86) Mass Market Targeting Only the largest firms have the capability to execute mass market targeting, which involves the development of multiple marketing programs to serve all customer segments simultaneously.
87) Example of Mass Marketing For example, Coca-Cola offers roughly 400 branded beverages across many segments that fulfill different consumer needs in over 200 countries around the world. Likewise, Frito-Lay sells hundreds of different varieties of snack foods around the world
88) Product Specialization Firms engage in product specialization when their expertise in a product category can be leveraged across many different market segments. These firms can adapt product specifications to match the different needs of individual customer groups.
89) Example of Product Specialization For example, many consider Littmann Stethoscopes, a division of 3M, as the worldwide leader in auscultation technology. Littmann offers high performance electronic stethoscopes for cardiologists, specially designed stethoscopes for pediatric/infant use, l
90) Market Specialization Firms engage in market specialization when their intimate knowledge and expertise in one market allows them to offer customized marketing programs that not only deliver needed products, but also provide needed solutions to customers’ problems.
91) Example of Market Specialization The Follett Corporation is a prime example. Follett specializes in the education market and serves over 800 schools, colleges, and universities in the U.S. and Canada. The company’s slogan “Simplifying the delivery of education everywhere” is based on the
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