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lecture 1-2 Important Definitions: Marketing  – process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers, and to develop and maintain favorable relationships with stakeholders, in a dynamic environment. Target Market  – A specific group of customers on whom an organization focuses its marketing efforts. Marketing Mix  – Four marketing activities, including product, distribution, promotion and pricing, that a firm can control to meet the needs of customers within its target market.   Introduction to Marketing Summary:             The critical factor to remember from Chapter 1 is that organizations must focus on identifying the customers who not only will buy the products being offered by the organization, but also focus on maintaining these customer relationships so that customers continue to buy from the organization. Marketing is not a complicated process. Continuing to maintain a critical focus on the core marketing mix variables (product, distribution, promotion and price) allows organizations to both create and advance their marketing-related competitive advantages.     Chapter 6 – Target Markets:  Segmentation and Evaluation Important Definitions: Consumer Market  – Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits. Market Segment  – Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs. Segmentation Variables  – Characteristics of individuals, groups, or organizations used to divide a market into segments.   Target Marketing Selection Summary:             For students who have chosen to purchase either of the textbooks, but especially for those who are using the Pride and Ferrell textbook as a reference, you should immediately notice an important component of this class:  The topics covered in these mini-lectures and postings often will be very small components of the overall textbook chapters. This will occur in many of the topics that we cover, and is especially true for the present chapter. Although the textbook spends a significant amount of time introducing the overall concept of target market selection, the focus of this mini-lecture is on specific market segments that are profitable options for organizations today.             Depending on the product being sold, organizations might have consumer market segments, business market segments, or both. The focus of the present class will primarily be placed on organizations that are targeting consumers who are the actual end-users of the products they purchase. As such, it is important to understand that organizations today have a variety of options in terms of the market segments they identify and target as primary product-purchasing segments.   Consumers Defined by Generation             A significant emphasis for many organizations today is the ability to identify consumption groups based on their purchasing habits and spending characteristics. Three broad consumption cohorts identified in the United States today are the groups of consumers who fall into the categories of the Millennials (formerly known as Generation Y), Generation X, and the Baby Boomers. Although definitions of these social cohort groups differ, most industry experts accept the following descriptions of each group (sections of these descriptions are taken from The Atlantic – Bump, 2014)   Millennials  – Although the birth years of this group often vary depending on the source of the information, the most common accepted birth years for this group identify them as consumers born from the early 1980’s to the mid 2000’s.   Generation X  – Generally, this generation is defined as consumers born after the post–World War II baby boom, ranging from the mid-1960’s to the mid-1980’s.   Baby Boomers  - This generation is defined as consumers born during the post–World War II baby boom, ranging from the mid-1940’s to the early-1960’s.   The Millennials             Organizations have a variety of reasons explaining the emphasis they are placing on these groups of consumers. However, the reasons most often identified for the increased emphasis on selling products to the Millennial consumers fall into three categories:  1) the increased freedom of product selection that younger consumers possess today as compared to their counterparts of years past; 2) the vast differences in consumption habits as compared to previous generations; and 3) the increased spending power that younger consumers possess. The Millennial spending power is astonishing.  Experts predict that in 2017, Millennials will have spent approximately $200 billion in the United States alone (Solomon, 2015). The Millennials are also expected to possess the greatest amount of spending power by the 2018. In addition to this vast spending, the Millennials rely heavily on social media for both consumer education and consumption recommendations. Research indicates that this shift in promotional power will vastly re-shape the business-to-consumer retail market in the United States (Schroeder, 2017).   Generation X According to a Forbes study of generational cohorts (Howe, 2014), Generation X consumers belong to the most independent cohort group ever, were the first consumers to experience widespread divorce of their parents, and are much more likely than their predecessors, the baby boomers, to change jobs or careers multiple times. Additionally, the average Generation X consumer has accepted lower wages that accompany lower expectations, traditionally has performed poorly when investing income, and will likely work in full-time employment positions longer than the average baby boomer.  Finally, according to a study conducted by the University of Michigan ( http://lsay.org/ ), Generation X consumers are focused on value over prestige and have a stronger sense of being involved with their families, but are pessimistic about their financial future, including retirement options.   Baby Boomers             These consumers have often been the measuring stick for organizations seeking to establish and/or improve their marketing efforts. An article from CNN suggests that the viability of this group as a profitable target segment might not be as sound as once thought.    “So, how did the Me generation do for itself? Have the boomers prospered as much as they could have, or did they miss key opportunities to better their nation and their lives?  It depends on whom you ask.  Some experts say the boomers did not plan well for their future, especially their financial futures, relying instead on the whimsy of a historically rosy economic era to carry them along.  Others contend the boomers may have had sound, long-term plans, but were sandbagged by economic and political shifts so dynamic that the boomer generation became preoccupied with adapting to their new world and rewriting the social contracts that bind our nation together, instead of fulfilling long-term financial and personal goals.  ‘I think theyve been baby bummers,’ says Suze Orman, a personal finance expert and host of her own financial advice television and radio show.  ‘We are a fascinating generation,’ she says, admitting that shes a boomer herself. ‘Were really independent and free-thinking,’ but from a financial perspective, ‘we did not save money, and we loved to spend money. Many of (the boomers) were saved by the real estate markets, and their wealth was created for them; they did not create it themselves.’”  (Trickey, 2006)   Bump, Philip (2014), “Here Is When Each Generation Begins and Ends, According to Facts,” the Atlantic, March 25, 2014. https://www.theatlantic.com/national/archive/2014/03/here-is-when-each-generation-begins-and-ends-according-to-facts/359589/   Howe, Neil (2014), “Generation X:  Once Xtreme, Now Exhausted,” Forbes, August 27, 2014. https://www.forbes.com/sites/neilhowe/2014/08/27/generation-x-once-xtreme-now-exhausted-part-5-of-7/#530fedf04843   Schroeder, Jules (2017), “How To Tap Into The Millennial $200 Billion Buying Power With Social Media,” Forbes, October 31, 2017. https://www.forbes.com/sites/julesschroeder/2017/10/31/how-to-tap-into-the-millennial-200-billion-buying-power-with-social-media/#619724291161   Solomon, Micah (2015), “The Millennial Customer Has $200 Billion To Spend (But Wants A New Style Of Customer Service),” Forbes, January 21, 2015.  https://www.forbes.com/sites/micahsolomon/2015/01/21/the-millennial-customer-has-arrived-has-200-billion-to-spend-and-wants-a-new-style-of-customer-service/#76f1e5ab3e29   Trickey, Helyn (2006), “Looking to the 60s generation for lessons on how to plan,” CNN, February 20, 2006. http://www.cnn.com/2006/US/02/15/babyboomers.planning/index.html   [Finally, please do not expect (or dread) a 4 page mini-lecture post every time.  This topic is extremely popular in the media and finding information to bolster the discussion presented in the mini-lecture is rather easy to find. It also tends to be a good topic with which to start the class, as students often find it easy to get involved in this discussion.]   Questions and Discussion Points for the Discussion Board on Blackboard:   1) Identify the organizations that have been particularly successful in reaching one or more of the cohort groups identified in this topic.   2) Identify the factors that are important in reaching these cohort groups. In other words, what characteristics of these groups separate them from other groups and make them viable options as target segments?   3) What does the future hold for organizations specializing in sales to younger consumers? Some organizations are already trying to prepare for the next group of younger consumers who will emerge in the coming years. What can organizations expect from this new group of young consumers? How will they differ from the Generation X and Millennial consumers of today?   4) Do any of the marketing mix variables require special attention in terms of their utilization in reaching any of the cohort groups identified in this topic? Additionally, would any of the marketing mix variables be more important in terms of their utilization in reaching any of the cohort groups?  (Just as a hint, I probably would not be presenting these questions to you if I did not believe that the answers are both yes. Therefore, your ability to identify the appropriate marketing mix variables and support your positive response to the question will be important in    responding to this question.)     Important Definitions: Consumer Buying Behavior  – The decision processes and purchasing activities of people who purchase products for personal or household use and not for business purposes Psychological Influences  – Factors that in part determine people’s general behavior, thus influencing their behavior as consumers; examples include consumer perceptions, motives, ability to learn, attitudes, personality characteristics, self-concepts, and lifestyles Social Influences  – The forces other people exert on one’s buying behavior; examples include consumer roles, family, reference group members, opinion leaders, social classes, cultures, and subcultures     Psychological and Social Influences on Consumer Behavior Summary:             As consumers, we make purchase decisions for a variety of reasons. As seen in Chapter 7 of the Pride and Ferrell textbook, consumers making purchase decisions that require some level of cognitive thought process often move through a decision process.  Although we often develop our own thought processes and adapt our overall decision process to fit our individual needs and wants, it is accepted that most consumers become repetitive in their cognitive consumption decision-making.             This consumer decision-making process has important implications for organizations because each organization making products available to consumers would like to be considered or remembered in this process. Therefore, from an organizational prospective, it is critical to understand 1) the process by which consumers make decisions, 2) what factors influence these decisions, and 3) which of these factors influence consumption decisions to the greatest degree. Two critical factors impacting consumer decisions today are psychological and social influences (defined above).             Psychological influences have increased in importance as a consumer’s ability to learn about products has become much easier. Although the internet and the information available on it is often misused as a crutch to explain a large number of trends and experiences in marketing today, organizations cannot deny that the internet has made access to product information and comparison easier for the ultimate consumer. (For more information on consumers’ reliance of online product reviews, see https://www.brightlocal.com/learn/local-consumer-review-survey/). Consequently, as consumers have access to greater amounts of information that can potentially impact their consumption experiences, organizations are finding that it is critical to not only provide consumption-specific information, but to make it readily accessible. A critical implication from this process is that organizations that do not provide the type of consumption information desired by consumers are allowing consumer to develop negative attitudes about the organization and its products.             A developing psychologically-driven business phenomenon is lifestyle marketing.  Pride and Ferrell define a lifestyle as “an individual’s pattern of living expressed through activities, interests, and opinions (page 228).” Additionally, the same authors suggest that “Lifestyle patterns include the ways people spend time, the extent of their interaction with others, and their general outlook on life and living” (page 228). A variety of organizations have developed marketing campaigns designed both to identify potentially-profitable lifestyle segments and to reach this consumption group through product sales.  (I am leaving it up to you, the students, to identify which organizations fit this description in your discussion.) However, there is an inherent danger in targeting consumers based on their lifestyles. Research suggests that certain organizations have actually created negatives in the minds of a broad range of consumers by placing a significant emphasis on reaching certain smaller groups of consumers based on lifestyle. In other words, large groups of consumers are making decisions to NOT buy certain brands because they do not “fit” into the lifestyle associated with the brand.  Therefore, established or potentially lucrative target segments are lost to what often are considered more bland or generic competitors simply because these competitors have maintained a more mainstream marketing plan for their brands.   Question 1 :  As previously mentioned, the availability of consumption-related information on the internet has made consumer learning much easier. How has the availability of this information impacted other specific psychological influences of consumption? For example, has the availability of this information made it easier for us as consumers to change our attitudes toward certain brands?   Question 2 :  Which organizations have been successful at identifying and marketing to specific lifestyle segments? What makes certain lifestyle segments better options for organizations than others? Additionally, what organizations have suffered because of their reliance on targeting specific lifestyle segments? Are there other organizations that might be headed for the same damaging outcome in the near future?                 The second influence presented in this discussion, social influence, has been a topic of much academic research in marketing. A significant amount of this research is focused on determining who, within a consumer’s group of social influences, has the greatest impact on a consumer and the consumption decisions he or she makes As seen in the definition of social influences, a consumer has a variety of individuals or groups that can impact purchase decisions.  It is also important to note that consumers are not always proactively seeking the information that these sources provide. For example, younger consumers are often counseled by their parents as to what constitutes a practical purchase decision. However, given the option of where to obtain information that will help lead to a purchase decision, many younger consumers will opt to consult with friends or peers, where the importance of practical purchases is often deemed unimportant.             A second popular research stream involving social influences on consumers compares the impact of these social influences with the impact of media-related influences. A significant amount of research has attempted to determine what types of consumers are more influenced by media promotion than social influences. As consumers, we are inundated with information from a multitude of sources trying to influence us to purchase certain brands of products. Who do we trust? What information leads us to buy one brand over another? Through what channel can organizations best reach their target market?             Think about a very simple decision that most of us make every day:  We are thirsty and would like something to drink. SOME (but nowhere near all) of the consumption decisions that need to be made, and that are based primarily on some type of social influence, are listed below.   a)         Which product category to consume? b)         Which brand within this product category to consume? c)         What flavor of the brand within this product category to consume?               If this decision is based on personal taste preference, the decision is usually rather easy. However, research indicates that many consumers will select a beverage based on factors other than taste, many of which are socially motivated. We might choose to purchase a drink based on what is endorsed by our favorite celebrity (social), our family’s history of drink consumption (social), or the expected and accepted drink of choice at our place of work (social). The decision might also involve the motivation of appearing health conscious in front of colleagues (social), the opinion of a reference group member who has identified his or her beverage of choice (social), or the positive or negative expectations associated with specific cultures (social) and their product selections.  Although most of us would agree that we do not go through a cognitive thought process this extensive when making a simple beverage purchase, the social ramifications of the purchase CAN be far-reaching. Finally, to drive this point home, all of these social-based factors might play a role in a purchase decision for a product as inexpensive and insignificant as a beverage. Think about how the impact of a specific social factor exponentially increases in importance as the price associated with the purchase or the social significance of the purchase increases.   Question 3 :  Which groups of consumers are more likely to be influenced by social influences as compared to mass media influences? What makes these groups of consumers (or target markets) more receptive to social influences than to mass media influences? What role does culture or sub-culture play in this distinction?