Kotler Marketing Summary.docx
- 1. Kotler Marketing Summary Chapter-6 Consumer behavior is a crucial aspect of understanding how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Marketers must understand cultural, social, and personal factors to effectively market their products and find opportunities for new products. Cultural factors include culture, subculture, and social class, while social factors, such as reference groups, family, and social roles and statuses, affect consumer buying behavior. Personal factors, such as age, stage in the life cycle, occupation, and economic circumstances, also influence consumer behavior. Brand personality, lifestyle, and values also play a significant role in consumer behavior. Marketers must tailor their messaging to consumers' needs and preferences, focusing on selective attention, selective distortion, selective retention, subliminal perception, learning, and emotions. Emotional appeals can trigger people's desire to pass along information about brands, allowing firms to engage consumers in their brand stories. Consumer behavior is a complex process that involves various stages of decision-making, including problem recognition, information search, market partitioning, and evaluation of alternatives. The buying decision process starts long before the actual purchase and has consequences long afterward. Some consumers passively shop and may decide to make a purchase from unsolicited information they encounter in the normal course of events. Marketers must develop activities and programs that reach consumers at all decision stages, such as Procter & Gamble's new CoverGirl "Smokey Eye Look" makeup kit. The buying process starts when the buyer recognizes a problem or need triggered by internal or external stimuli. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers. They can then develop marketing strategies that spark consumer interest. Particularly for discretionary purchases such as luxury goods, vacation packages, and entertainment options, marketers may need to increase consumer motivation so a potential purchase gets serious consideration. Information search is another stage where consumers often search for only limited information. Surveys have shown that for durables, half of all consumers look at only one store, and only 30 percent look at more than one brand of appliances. We can distinguish between two levels of engagement in the search: the milder search state is called heightened attention. At this level, a person simply becomes more receptive to information about a product. At the next level, the person may enter an active information search: looking for reading material, phoning friends, going online, and visiting stores to learn about the product. Marketers must understand what type of information consumers seek—or are at least receptive to—at different times and places. Unilever, in collaboration with Kroger, the largest U.S. retail grocery chain, has learned that meal planning goes through a three-step process: discussion of meals and what might go into them; choice of exactly what will go into a particular meal, and finally purchase. Mondays turn out to be critical days for planning for
- 2. the week. Conversations at breakfast time tend to focus on health, but later in the day, at lunch, discussion centers more on how meals could possibly be repurposed for leftovers. Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. This process of identifying the hierarchy is called market partitioning. Buyers who first decide on price are price dominant; those who first decide on the type of car (sports, passenger, hybrid) are type dominant; those who choose the brand first are brand dominant. Type/price/brand-dominant consumers make up one segment; quality/service/type buyers make up another. Each may have distinct demographics, psychographics, and mediagraphics and different awareness, consideration, and choice sets. Evaluation of alternatives is another crucial aspect of consumer behavior. No single process is used by all consumers or by one consumer in all buying situations. There are several processes, and most current models see the consumer forming judgments largely on a conscious and rational basis. Some basic concepts will help us understand consumer evaluation processes. First, the consumer is trying to satisfy a need. Second, the consumer is looking for certain benefits from the product solution. Third, the consumer sees each product as a bundle of attributes with varying abilities to deliver the benefits. The attributes of interest to buyers vary by product—for example, hotels—Location, cleanliness, atmosphere, price 2. Mouthwash—Color, effectiveness, germ-killing capacity, taste/flavor, price 3. Tires—Safety, tread life, ride quality, price Consumers will pay the most attention to attributes that deliver the sought-after benefits. We can often segment the market for a product according to attributes and benefits important to different consumer groups. Beliefs and attitudes play a significant role in consumer behavior. People acquire beliefs and attitudes that influence buying behavior. Attitudes put people into a frame of mind: liking or disliking an object, moving toward or away from it. As a general rule, a company is well advised to fit its product into existing attitudes rather than try to change attitudes. If beliefs and attitudes become too negative, however, more active steps may be necessary. In conclusion, consumer behavior is a complex process that requires marketers to develop effective strategies and strategies to effectively engage consumers at all decision stages. By understanding consumer behavior and utilizing the five-stage model, marketers can better cater to their diverse needs and preferences while ensuring the success of their products and services. Chapter-8 Global competition is intensifying in various product categories, with new firms making their mark on the international stage. Companies like Shell, Bayer, and Toshiba have long been successful global marketers, but new firms are making their mark on the international stage. To compete, companies must continuously improve products at home and expand into foreign markets. Global firms plan, operate, and coordinate their activities on a worldwide
- 3. basis, capturing R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors. To go global, companies must make a series of decisions, including whether to go abroad, which markets to enter, and how many countries to enter. The internationalization process typically has four stages: no regular export activities, export via independent representatives (agents), establishment of one or more sales subsidiaries, and establishment of production facilities abroad. When deciding which markets to enter, companies must define their marketing objectives and policies, which proportion of international to total sales will it seek. Some companies start small when they venture abroad, while others have bigger plans. Typical entry strategies include the waterfall approach, gradually entering countries in sequence, and the sprinkler approach, entering many countries simultaneously. Competitive considerations also play a role in choosing the countries to enter based on product, geography, income, population, and political climate. Getting a toehold in a fast- growing market can be a critical consideration. Global marketing faces challenges in evaluating potential markets, as each market has unique features. Companies often choose to sell to neighboring countries because they understand them better and can control entry costs more effectively. Developing markets, such as Brazil, Russia, India, China, and South Africa, offer many opportunities but also many challenges. The unmet needs of the developing world represent huge potential markets for food, clothing, shelter, consumer electronics, appliances, and many other goods. Many market leaders are relying on developing markets to fuel their growth, with Nestlé estimates about 1 billion consumers in emerging markets having increased their incomes enough to afford its products within the next decade. Developing markets account for about 82% of the world's population, and 90% of future population growth is projected to occur there. Brazilian firms that have succeeded internationally include aircraft manufacturer Embraer, sandal maker Havaianas, and brewer and beverage producer AmBev. Russia, a globally integrated, market-based economy, has a dwindling workforce and poor infrastructure. India's transformation over a generation has been staggering, with reforms in the early 1990s lowering trade barriers and liberalizing capital markets, bringing booming investment and consumption. India's rapid growth has opened a larger market for U.S. and Western goods, with about 16 million consumers being high-earning targets of youth lifestyle brands. However, India faces challenges such as poor infrastructure, public services, and restrictive labor laws. China's 1.34 billion people have sparked competition between domestic and international firms, with the country's entry into the World Trade Organization (WTO) easing manufacturing and investment rules. China's emerging urban middle class is active and discerning, demanding higher-quality products and variety. Foreign firms are fiercely competing, with Western companies benefiting from their reputation of quality, safety, and dependability. South Africa is an important market for international companies, with many international companies using it as a launch pad for African expansion. Africa has
- 4. experienced much change in recent years, with improvements in health, education, and social services. Mobile phones are playing an increasingly important marketing role in Africa, often accessed by mobile phones. Indonesia, the fourth-largest country in the world and the largest Muslim country, is also experiencing political stability and economic growth. Indonesia has become the third-fastest-growing economy in the region, behind India and China, largely due to its 240 million consumers. By 2030, forecasts expect the number of middle-class Indonesians to increase from 131 million to 244 million, and those in the "consumer class" to increase from 45 million to 135 million. Marketers have found Indonesian consumers to be brand- conscious, an important preference given their rising incomes. However, Indonesia presents challenges in effective, efficient distribution, as large importers have established distribution networks that allow them to reach beyond the one-third of the population living in the six or seven largest cities. Many companies are tapping into the growing middle class in developing markets by changing their conventional marketing practices. To satisfy the bottom of the pyramid, marketers are learning the nuances in marketing to a broader population in emerging markets, especially when cost reductions are difficult to realize because of the firm's established supply chain and when production methods and distribution strategy and price premiums are hard to command because of consumer price sensitivity. Digital strategies will be crucial in developing markets, given the rapid penetration of smart phones as more than a means of communication. Competition is also growing from companies based in developing markets, such as Wipro, Cemex, HTC, and Petronas. Companies from emerging markets can identify neglected niches in larger markets or acquire one or more firms in developed markets. Product innovation has become a two-way street between developing and developed markets. Cooperative organizations conduct exporting activities for producers, often of primary products, and are partly under their administrative control. Export-management companies manage a company's export activities for a fee. Direct exporting involves domestic-based export departments, overseas sales branches, traveling sales representatives, and foreign-based distributors or agents. Companies use direct or indirect exporting to test the waters before building a plant and manufacturing their product overseas. Companies can adapt their websites to provide country-specific content and services to their highest potential international markets, ideally in the local language. Licensing is a simple way to engage in international marketing, with the licensor having less control over the licensee than over its own production and sales facilities. Contract manufacturing, franchising, and joint ventures are also effective ways to enter foreign markets. Joint ventures can be necessary or desirable for economic or political reasons, but can also have drawbacks, such as disagreements over investment, marketing, or policies. The value of a partnership extends beyond increased sales or access to distribution, as good partners share "brand values" that help maintain brand consistency across markets.
- 5. Acquisition is another strategy for international companies to acquire local brands for their brand portfolio. Strong local brands can tap into consumer sentiment in a way international brands may find difficult. A good example of a company assembling a collection of "local jewels" is SABMiller. Deciding on the marketing program is crucial for international companies. At one extreme is a standardized marketing program worldwide, which promises the lowest costs; Table 8.1 summarizes some pros and cons. At the other extreme is an adapted marketing program in which the company, consistent with the marketing concept, believes consumer needs vary and tailors marketing to each target group. Global similarities and differences have led to a convergence of lifestyles, creating global markets for more standardized products, particularly among the young middle class. The vast penetration of the Internet, the spread of cable and satellite TV, and the global linking of telecommunications networks have led to a convergence of lifestyles. Increasingly shared needs and wants have created global markets for more standardized products, particularly among the young middle class. Consumer behavior may reflect cultural differences that can be pronounced across countries. Hofstede identifies four cultural dimensions that differentiate countries: individualism versus collectivism, high versus low power distance, masculine versus feminine, and weak versus strong uncertainty avoidance. These dimensions measure how much the culture reflects assertive characteristics more often attributed to males versus nurturing characteristics more often attributed to females (highly masculine: Japan; low: Nordic countries). Marketing adaptation is essential for most products due to these differences. Companies should review the following elements and determine which add more revenue than cost if adapted: Product features, Labeling, Colors, Materials, Sales promotion, Prices, Advertising media, Brand name, Packaging, Advertising execution, and Advertising themes. The best global brands are consistent in theme but reflect significant differences in consumer behavior, brand development, competitive forces, and the legal or political environment. Developing global product strategies requires knowing what types of products or services are easily standardized and what are appropriate adaptation strategies. Product standardization is important for some products to cross borders without adaptation better than others, and consumer knowledge about new products is generally the same everywhere because perceptions have yet to be formed. Many leading internet brands— such as Google, eBay, Twitter, and Facebook—made quick progress in overseas markets. High-end products also benefit from standardization because quality and prestige often can be marketed similarly across countries. Product adaptation alters the product to meet local conditions or preferences. Flexible manufacturing makes it easier to do so on several levels. A company can produce a regional version of its product. Dunkin' Donuts has been introducing more regionalized products, such as Coco Leche donuts in Miami and sausagekolaches in Dallas. A company can produce a country version. Kraft blends different coffees for the British, French, and Latin Americans.
- 6. In conclusion, global firms must consider both direct investment and acquisition strategies when developing global product strategies. By understanding the factors that influence consumer behavior, brand development, competitive forces, and the legal or political environment, companies can develop effective strategies to adapt their products and reach diverse markets.