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1 Consumer buying behavior

Consumer behavior - refers to the purchasing behavior of final consumers, i.e., individuals and
households purchasing goods and services for personal consumption.
All end consumers together constitute the consumer market.
To satisfy a specific need that highlights different motivations:

 for personal reasons

 by obligation (moral, legal...)
 for fun (to escape from routine)
 for reasons of knowledge or as a development of our capabilities
 for social demands (membership of various groups, status, prestige, feeling of belonging,
manifestation of authority, etc...)
Many people believe that marketing creates needs in people that did not exist before.
Experts in the field believe that marketing does not create needs, but is concerned with finding
and offering better solutions to old problems, stimulating awareness of existing needs in
individuals and suggesting their satisfaction through the purchase of novel, sophisticated or
ingenious products.
The study of consumer behavior produces indisputable benefits in decision making and the
formulation of commercial strategies, and can become the main differential competitive
advantage of companies. It makes it possible to segment the market more efficiently and to
adapt strategies to the consumer's characteristics. Both the company and the consumer benefit
from this knowledge.
Knowledge of consumer behavior will allow, among other things:
1) More effective identification of current and future needs
2) Improve communication skills with customers
3) Gain their trust and ensure their loyalty
4) More effective commercial action planning
In short, a better understanding of the consumer makes it easier to achieve marketing
objectives.
This study has been approached from different perspectives:
a) From the economic point of view, we seek to maximize our utility: "Homus economicus".
b) From a psycho-sociological approach, in addition to economic variables, psychological
(internal) and social (external) variables are considered.
c) From a motivational perspective, we will try to explain behaviors from the causes that
produce them.
It is difficult to understand consumer behavior because:
× They say they want to do one thing and then do another (unpredictable).
× They may not be aware of the motivation that leads to the purchase.
× They may react to influences by changing their opinion at the last moment.
 × There are needs that are never revealed
The study of consumer behavior is characterized by...

 Complexity
 To be changed according to the product life cycle
 To vary according to the type of product
o High-involvement purchasing
o Low-involvement purchases

Factors explaining the individual purchase process

 Cultural culture, subculture, social class

 Social reference groups, family, roles & status
 Personal age & FVC, occupation, economic circumstances, lifestyles, personality &
self-concept
 Psychological motivations, perceptions, learning, beliefs & attitudes
External factors are macro- and micro-environmental determinants that influence purchasing
behavior.
Macroenvironment
...economic
...political
...legal
...cultural
...technological
...and environmental
Microenvironment
...The social class
...Social groups
...The family
...Personal influences

1.1 Cultural factors

 Culture: set of norms, customs, values that make consumers behave in a similar way...
(social and institutional organization, production system)...
 Subculture: nationality, religious groups, racial groups and geographic areas
o Ethnic subcultures (race, language, nationality): African Americans, Asians, Hindus,
Arabs...
o Religious subcultures (values, behaviors): Roman Catholics, Protestants, non-
Christians...
o Regional subcultures (climate, natural resources, immigrants...)
 Implications: influence mainly on:
o The type of products purchased
o The form and place of acquisition
o Time and form of consumption

Cultural values oriented towards others:

 1) Relationships between individuals and groups in that society (e.g.: collective society
turns to others for guidance in its purchasing decisions, the argument "being an
individual" does not apply).
× Individual / collective
× Male / Female
× Competitive / cooperative
× Diversity / uniformity
Environmentally oriented cultural values:
2) Relationships between society and its economic, technical, physical environment (e.g.,
problem-solving, risk-taking, performance-oriented society with respect to its
environment / fatalistic society, oriented towards security and social prestige).
× Individual performance/ social level
× Tradition / change
× Risk / safety
× Problem solving / fatalistic
× Nature / Technology
Cultural values oriented towards the individual:
3) Reflect the goals and approaches to life that individual members of society consider
desirable (e.g., the acceptance and use of credit are largely determined by society's
position on the value of postponed versus immediate gratification).
× Sensual gratification / abstinence
× Material / non-material
× Hard work / leisure
× Postponed / immediate gratification
× Religious / lay
PDI (power distance) - the degree to which members of a society expect differences in power
levels to exist. A higher score suggests that there are expectations that some individuals will
have much more power than others. A low score reflects the perspective that people should have
equal rights.
IDV (individualism) - refers to the degree to which people expect to fend for themselves or,
alternatively, act primarily as members of a group or organization.
MAS (masculinity) - masculine values include competitiveness, assertiveness, ambition, and
the accumulation of wealth and material possessions. In a feminine culture (caring for others
and well-being), there are more instances of women in careers traditionally occupied by men.
UAI (risk aversion) - reflects the degree to which a society accepts uncertainty and risk. In
simple terms, cultures with higher scores on this scale avoid taking risks.
LTO (l/p orientation) - refers to the importance given in a culture to long term life planning as
opposed to immediate concerns
Social classes "are relatively homogeneous and permanent, hierarchically ordered divisions of
society whose members share similar values, interests and behaviors".
This variable is defined by other variables such as income, occupation, education, area of
residence, etc.
Implications:
  Influences the way we dress, talk, leisure activities and preferred means of
communication
 They show different preferences for brands/products...
SOCIAL CLASS:
× Subjective measurement
× Reputational measurement
× Objective measurement

1.2 Social factors

A person's reference groups: "are groups that have a direct (membership groups) or indirect
influence on the person's attitudes or behaviors".
a) Primary groups: family, friends, neighbors, peers (+ informal)
b) Secondary groups: religious, professional and commercial groups (+ formal)
c) Aspiration group (to which you would like to belong)
d) Dissociative group (rejects its values...)
Reference groups influence in three ways:
(1) They show new behaviors and lifestyles
(2) Influence on attitudes and how we see ourselves
(3) They put pressure on what is right or wrong ➔ influence the final choice of products
and brands.
Implications:

 Choice of branded product

 Product and brand manufacturers can identify opinion leaders who belong to the
different groups
Opinion leaders: are people who move in informal circles that advise and offer information
about a specific product or product category. They are found in all strata of society. They create
trends in teenage music, language and fashion (urban tribes...).
Marketers should try to reach them through:

 Their demographic and psychographic characteristics

 Identifying the media preferred by them and targeting messages to them

Greater influence of the reference group ...

 the greater the VISIBILITY of consumption
 the higher the RISK (personal and psychological) perceived in the purchase
 greater insecurity or dependence on others (PERSONAL CHARACTERISTICS)
The family is the primary reference group that most influences buyer behavior.
 family of orientation, formed by the parents (towards politics, religion, economy, sense
of ambition...)
 procreative family consisting of spouse and children
Implications: it is interesting to know the role of the parent/child in the purchase of different
products and services.
TYPES OF FAMILIES (determine family decisions):

 Autonomous:
o Dominates the woman
o Man dominates
 Syncretic:
o Joint decisions, no children

Roles and status: the personal position within each group can be classified into roles and
statuses.
A role is the set of activities that a person is expected to perform in relation to the people
around him/her.
Each role carries with it a status that reflects the esteem in which it is held by society.
Implications: specialists are aware of the potential of their products and brands as status
symbols (although they vary with the different social classes).

Both external and internal factors are, in most cases, "uncontrollable" by marketers.
However, just as external factors are more predictable, internal consumer factors are very
difficult to decipher.

1.3 Personal factors

Age influences the consumption behavior of certain goods: clothing, furniture and leisure.
Chronological/biological age. I AM 50
Psychological age/cognitive age: I FEEL LIKE I'M 30
Consumption is determined by the family life cycle.
Occupation influences an individual's consumption patterns
Economic circumstances influence the choice of products:
× disposable income
× savings and resources
× creditworthiness
× attitude towards saving versus spending
Adapt products to economic circumstances.
Lifestyle is the pattern of living in the world as an expression of a person's activities, interests
and opinions.
People coming from the same culture, social class and profession may have very different
lifestyles. A very appropriate variable for MARKET SEGMENTING.
Personality includes the distinctive psychological characteristics that cause a person to
respond to his or her environment in a consistent and enduring manner.
Self-concept refers to the image we each have of ourselves: SELF CONCEPT
× Current self-concept
× Ideal self-concept
× Social concept of self

1.4 Psychological factors

Motivation is a "general predisposition that directs behavior towards obtaining what is
desired".
Need ≅ desire ≅ motivation.
Classification motives influence the purchase:
× physiological (hunger, thirst) or psychological (knowledge, friendship)
× Primary (to generic products) or selective (to specific brands/models)
× Rational or emotional
× Conscious or unconscious
Masslow daughter

Motivations help marketers understand how different products fit into the plans, goals and lives
of potential consumers.
Perception is "the process by which an individual selects, organizes and interprets information
inputs to create a meaningful picture of the world".
Perception depends on physical stimuli and the environment.
The same object can be perceived differently by people due to the process of SELECTIVE
PERCEPTION.
Selective attention: process by which meaningful stimuli are evaluated, while those that are
meaningless or inconsistent with our beliefs are discarded.
Selective distortion: individuals distort the information they receive to fit their beliefs or
attitudes.
Selective retention: refers to the way in which individuals retain only a limited number of
messages in memory.
Consumers tend to remember messages that support their existing beliefs and attitudes.
Learning reflects the changes that arise in a person's behavior due to experience.
Experience is acquired through learning (it is an outcome). Learning is a change in behavior and
is reinforced by experience (it is a process). Learning can lead to habit and brand loyalty.
Repetition of these processes leads to generalization and discrimination.
A belief is a descriptive thought that a person has about something.
The brand image created by the company generates beliefs about certain products and services.
The individual acts according to his or her beliefs.
An attitude is described by a person's permanent cognitive evaluations, favorable or
unfavorable, emotional feelings and action tendencies toward some object or idea.
The attitude...
× You learn
× It has direction and intensity
× It is related to a behavior
× Stable and generalizable
× It is very difficult to change

The purchase decision process (PDC) of a product is made up of a series of sequential stages
whose importance, intensity and duration depend on the type of purchase/product being made.
Behavior will vary depending on the association or dissociation between the buyer, consumer
and payer roles:

 initiator, influencer, decision-maker, buyer, user

High involvement Low involvement

Significant differences Complex purchase behavior Varied search behavior
between brands (car, cell phone, clothing...) (cookies, beer, socks...)
Little difference between Dissonance-reducing Usual purchase behavior
brands purchase behavior (carpet, (bread, coffee, salt...)
type of flooring in the
home...)

High involvement Low involvement

Time invested Much Little
Search for information Activate Null
Response to information Critical evaluation Ignored/accepted without
evaluation
Brand evaluation Clear/different. Vague and generic
Prob. to create brand loyalty Grande Little
The process starts with the recognition of the problem:

 There is a need and a desire to satisfy it

 The mk action: Identify stimuli and motivations that incite purchase and adapt strategies
that provoke interest.
Once the problem has been recognized, the information search process begins: (intensified
attention active search)

 Internal sources: memory, previous experience

 External sources: personal, commercial, public, experimental
 The intensity of the search depends on: product knowledge, perceived risk, type of
purchase, etc.
The next stage is the evaluation or analysis of possible alternatives to solve the problem or
satisfy the need:

 The attributes of the candidate products are perceived and valued.

 Preferences are formed according to these assessments
After evaluating different alternatives, the decision maker will choose whether or not to buy the
product:

 If NOT buying, analyze the causes

o Lack of information, lack of money, perceived risk, the attitudes of others,
situational factors, etc.
 If you buy: analyze the related decisions that affect consumer satisfaction: seller,
quantity, timing, method of payment...
Post-purchase feelings or sensations will appear: satisfaction or dissatisfaction depending on
expectations and perceptions when using it.

 Continued satisfaction will encourage repeat purchases and brand loyalty (automobiles
and mobile)
  Dissatisfaction will lead to rebranding
 Cognitive dissonance can be experienced
COGNOSCITIVE DISONANCE: State of anxiety caused by the difficulty of choosing among several
alternatives. These are doubts about whether the right decision has been made.
Advertising can help to reduce it, or a friend's testimonial can reaffirm the purchase decision.
Causes of discontent
× Price
× Price variability
× Services
× Number of alternatives
× Similarity of alternatives
× Credibility of information sources
× Competence communication
Solutions
1) Implement a code of conduct for customer service.
2) Keeping calm
3) Listen well
4) Recognizing the problem
5) Swallowing pride and apologizing
6) Do not take things personally
7) Investigate the situation before taking action
8) Customize the answers
9) Offering a solution
10) Taking the conversation offline
11) Making an extra effort
12) Follow-up

2 Organizational buying behavior

Industrial purchase
× Demand is more concentrated, both in number and geographically, making it easier to
carry out direct marketing.
× Demand is fluctuating faster and faster.
× A single person does not usually make the purchase decision.
× The decision process is more formalized, time-consuming and complex because
• They are usually purchases with a high monetary value.
• Some may be of a highly technical nature
• The purchase will affect many individuals in the organization
× Demand is derived: its demand depends, ultimately, on the final demand.
× Demand is usually price inelastic: changes in price have little influence on the demand
for the industrial product.
 × Buyers and sellers work more closely together to build long-term relationships, so it
makes sense to apply relationship marketing ("companies no longer treat suppliers as
suppliers but as an extension of their business").
× Direct purchasing is more common: they tend to buy from producers rather than from
intermediaries, especially if the product is technically complex or very expensive.
× Reciprocity arises: they select suppliers who, if possible, also buy from them.
× The leasing formula is used: a common formula in the industrial market, instead of
purchase.
Types of purchasing situations
a) First purchase
b) Buyback
c) Modified repurchase

2.1 First purchase

First-time purchase (or new purchase) - situation in which the buyer purchases a product or
service for the first time
Novelty of decision: high
Information required: maximum
Consideration of new alternatives: important
 No previous experience
 A high volume of information is required
 Various alternatives are carefully studied
 The risk associated with the decision is high
 This is important because it will determine whether subsequent purchases can be made.
 The decision process is lengthy

2.2 Buyback
Repurchase (or direct repurchase) - a situation in which the buyer places an order that has
already been ordered on previous occasions without making any modifications
Novelty of the decision: low
Information required: minimum
Consideration of new alternatives: none
 It is a very frequent type of decision
 There is previous experience, so
× product specifications are fixed
× So hardly any new information is needed
× No new alternatives are considered
 The decision process is therefore short and routine.
 The important thing in this case is to ensure supply and meet product specifications
(and price).

2.3 Modified repurchase

Modified repurchase - situation in which the buyer wishes to modify product specifications,
price, terms or suppliers
Novelty of decision: medium
Information required: moderate
Consideration of new alternatives: limited
 It is an intermediate situation between the two previous ones
 There is dissatisfaction with previous purchases for one or more reasons
 Additional information is sought, screening criteria are reviewed and alternatives are
reevaluated.

The industrial purchasing process

Problem identification description of the need product specification search for

suppliers request for proposals choice of suppliers specification of the ordering
routine review of results
Problem identification - someone in the company identifies the existence of a problem or need
(resulting from external or internal stimuli) that can be solved through the acquisition of a
product or service.
Description of the need - phase of the business purchasing process in which the organization
describes the general characteristics of the product it needs, as well as the quantity required.
Product specification - phase of the business purchasing process in which the buying
organization decides on the most appropriate technical characteristics for the item needed, and
specifies them
Supplier search - a phase of the corporate purchasing process in which the buying organization
attempts to find the best vendors. Internal and/or external sources of information are used.
Request for Proposals - phase of the corporate purchasing process in which the buyer invites
qualified suppliers to issue proposals.
Supplier selection - phase of the corporate purchasing process in which the buyer studies the
proposals and selects one or more suppliers.
Specification of the ordering routine - phase in which the buyer places the final order with
the selected supplier(s), detailing elements such as technical specifications, quantity of product
required, expected delivery time, return policy and warranties.
Performance review - phase in which the buyer assesses his satisfaction with his suppliers,
deciding on the continuation, modification or termination of his commercial relations.
The purchasing center (or department) includes all members of the organization who are
involved in the business purchasing decision process.
In order to carry out a commercial action aimed at an organization, it is important to know the
role of the different people involved in the purchasing process.
It is not a fixed unit within the company, different people will assume different roles for different
purchasing situations.
Participants perform the following functions or assume the following roles:
 × Initiators: those who recognize that it is necessary to buy something to solve a
problem/satisfy a need.
× Decision makers: determine the choice of products and suppliers
× Influencers: they directly or indirectly affect the purchase decision, contributing to the
definition of specifications and providing information to evaluate different alternatives.
× Buyers: have the formal authority to make the final purchasing decision, choosing
suppliers and agreeing on purchasing terms. They are called purchasing agents or
purchasing managers.
× Controllers (gatekeepers): control the flow of information to third parties, with
responsibility for dealing directly with suppliers.
× Users: they will use the product or service to be acquired. In many occasions, they are
the initiators of the process.
Factors influencing the purchase of organizations
× Environmental factors
o Economic environment factors: level of primary demand, economic outlook, interest
rates...
o Culture and customs
× Organizational factors
o It is important that each organization and its marketing specialists understand: the
organization's own objectives, policies, procedures, structure and systems.
× Interpersonal factors
o The buying center consists of numerous participants who influence each other
(very subtle) interpersonal influences
o Participants can influence the purchase decision because:
Control benefits and penalties
They are popular
Have special expertise or special relationship with important participants

× Individual factors
o Each participant brings his or her: motives, perceptions and personal preferences.
o They are defined by: age, income, education, professional identification, personality
and attitude towards risk.
Benefits of B2B adoption
1. Transaction cost savings (purchase is efficient for both parties)
2. Reduces order processing costs (price reduction)
3. Reduces order-to-delivery time (important for transatlantic suppliers)
4. Allows procurement managers to focus on more strategic issues (reduce monotony and
paperwork and spend more time managing inventory and working more creatively with
suppliers).
5. Access to a wider variety of products
6. Reduced need to maintain inventories
3 Market segmentation

Through segmentation, companies divide large, heterogeneous markets into smaller segments
in order to reach them more effectively with products and services that meet their unique needs.
Factors leading to segmented marketing
 Increased competition
 Proliferation of distribution channels and advertising media
Market segmentation is a division of the market into individual groups.

 with common needs, characteristics, and behaviors

 which may require specific products or marketing combinations
Segmentation utility
 Helps to establish priorities
 Reveals business opportunities
 Facilitates competitive analysis
 Allows the adjustment of offers to specific needs
Requirements for effective segmentation
1) Accessible (must be accessible and effectively serviced)
2) Measurable (size, purchasing power, segment profiles must be measurable)
3) Substantial (large enough or profitable enough to serve them)
4) Differentiable (with respect to its response to the elements of the marketing mix and
marketing programs)
5) Possible to follow/actionable (effective programs should be designed to attract and
serve the different segments)
Inconveniences segmentation:
× Production, distribution and communication costs are skyrocketing
× Difficulty in developing economies of scale to reduce unit costs
Market segmentation
1. Identify variables
2. Develop perils of each segment
Target audience segmentation
3. Calculate the attractiveness
4. Selecting target segments
Positioning
5. Develop positioning strategy for target segments
6. Develop a marketing mix for each segment
Segmentation bases

 Geographic, psychographic, demographic, commercial instruments

Corporate buyers can be segmented:
a) Geographically
b) Demographically
c) Depending on the benefits sought
d) The level of use
e) Frequency of use and level of fidelity
In addition, they are also segmented according to:
1) Customer operational variables (technologies, frequency of use, consumer needs)
2) Purchasing approaches (companies with centralized or decentralized purchasing; power
structure, general purchasing policies, purchasing criteria)
3) Situational factors (urgency, order size...)
4) Personal characteristics (buyer-seller similarity, attitude towards risk, loyalty)
The target audience is made up of a group of consumers who share special needs or
characteristics that the company decides to serve.
Once the market has been segmented, companies must decide:

 HOW MANY segments to serve and HOW to serve them

(1) to address a target audience in a generalized way,
(2) to several target audiences in a differentiated manner
(3) focus on a single type of audience/segment
Segmentation strategies:
a) Undifferentiated (mass) marketing
b) Differentiated (segmented) marketing
c) Concentrated (niche) marketing
d) Micromarketing
Undifferentiated strategy

 The company addresses the market as a whole with a single offer. It focuses on the
common aspects of consumers' needs rather than on their differences.
 It is based on distribution and mass advertising, and they try to give the product a
superior image in the consumer's mind.
 Questionable strategy because it does not adequately satisfy consumers
 Ignores the existence of market segments
 Advantage: saves costs
 Disadvantage: difficult to develop a product that satisfies everyone.
Differentiated strategy

 The company decides to target several market segments and develops separate offers for
each of them.
 Diverse products and marketing programs lead to higher company sales and a stronger
position within each segment
 Increase product development, production, research and promotion costs
 Select several target markets, and target each of them with differentiated marketing
strategies.
  Advantages: more sales, products more adapted to customers (more loyalty), useful for
cases of seasonal demand
 Disadvantage: very expensive strategy
Concentrated strategy

 The company pursues a large share in one or very few segments or niches. The niches
are smaller and attract 1 or 2 competitors.
 Requires high knowledge of the needs and high reputation of the company
 The company is able to market more effectively and efficiently
 It can be very profitable but also entails great risks
 It concentrates on only one (or a few) market segments. The company's marketing
strategy targets only those segments.
 Advantages: If it works, a strong market position is achieved, reduced costs
 Disadvantages: Risk of segments disappearing, if a niche gets too big, it will attract
competition, moving to other segments usually costs too much
Micromarketing strategy

 It consists of customizing products and marketing programs to suit the tastes of

individuals (individual marketing) or specific locations (local marketing).
 Local marketing: tailoring brands and promotions to the needs of local consumer groups
 One-to-one marketing is micromarketing taken to its extreme: one-to-one marketing,
personalized marketing or one-to-market marketing.
The targeting strategy will depend:

 Of the company's resources:

o If they are limited  estr. mktg concentrado
 Degree of product variability:
o Uniform products estr. undifferentiated mktg.
o Products varied design  differentiated or concentrated mktg str.
 Degree of market variability
 Competitors' marketing strategies:
o If the competition carries out a differentiated marketing strategy  our company will
do the same.
o If the competitor pursues a non-differentiated marketing strategy  differentiated or
concentrated company (competitive advantage)
POSITIONING: The act of designing a business offer and image aimed at occupying a
distinguishable place in the mind of the target public. It is therefore the place that the product
occupies in the minds of consumers with respect to other products).
1. Identifying competitive advantages on which to build positioning
2. Select the most suitable one(s)
3. Communicate the chosen position to the market

1º) Identify the different competitive advantages on which to create the positioning:
 × The company must understand the needs of its target consumers, better than the
competition, and offer them more value will gain greater competitive advantage.
× Positioning begins with differentiating the company's marketing offering so that it
produces more value for consumers than that of the competition.
How can the company differentiate its offering?
× Depending on the characteristics of your product (style, design, consistency, durability,
reliability, repairability...)
× Depending on your services (fast, convenient and accurate delivery, installation, repair,
customer training, consulting)
× Depending on the selected channel (channel coverage)
× Depending on people (friendly, optimistic, competence, politeness...)
× Depending on the image (quality, symbols, color, atmosphere), they convey the
personality of the company or brand.
On what basis can you position yourself?
 by the characteristics of the product
 by the benefits or problems solved by the product
 in relation to a competitor
 according to the use or applications of the product
 by user class
 ALWAYS in relation to the MARKET, to the TARGET AUDIENCE
2º) Select the most appropriate one(s)
× Avoid three fundamental positioning errors:
o Under-positioning (vague idea about the
company)
o Over-positioning (too limited an image of the
company)
o Confusing positioning (excessive number of
segmentation bases or continuous change of
segmentation bases...)
o Questionable positioning (lack of coherence in
the chosen positioning bases)
3º) Communicate the chosen position to the market.
4 Strategies to differentiate and position the offer

Competitive advantage - characteristics or attributes of a product or brand that give it a certain

superiority over competitors.
Differentiation must...
 to give value to the buyer
 be defensible
 if it is not clear, make yourself known
 to get people to agree to pay a higher price for the product
 price premium > differential cost surcharge > differential cost supplement
Quality - degree of conformity about the set of characteristics and attributes of a product, with
respect to the needs of the purchaser
Brand value
× It is the power to attract consumer preference and loyalty.
× A strong brand creates CONNECTIONS with its customers.
High brand value means achieving competitive advantages
× High level of awareness demarcates
× High level of loyalty
× Increased bargaining power
× Easy to extend lines and markings
× Defense against price competition
× Build strong relationships with loyal customers

Unique brand advantages Disadvantages single brand

New product, lower marketing costs New product fails: can drag down the
New product, inherited prestige. company's prestige
Joint venture advertising Incompatible products
Consistent quality
Reduced flexibility
Multi-brand advantages Disadvantages multiple brands
The failure of a new product does not Promotional expenses and
influence the rest of the product. very high advertising
Better segment the market.
Increased store space
Creates internal competition
Marketing of incompatible products

Second brand advantages Disadvantages second brand

Market segmentation Non-shared promotional expenses
Increased sales Confusion, cannibalism
Reinforcement of the first mark
Private label advantages Disadvantages private label
Minor communication expenses Carry-over effect if it fails
Increased distributor control
Customer loyalty
Packaging functions:

 Protecting the product

 Help sell it
 Do not make the price more expensive
 Ease of use and disposal
Three levels:
1. Primary packaging (immediate)
2. Secondary packaging (box)
3. Packaging (logistics, box of boxes)
The label:

 Identify the product

 Sorting products (quality)
 Describe aspects of the same
 Promote: differentiate
Support services: source of differentiation

 Ease of ordering
 Speed, accuracy and attention to product delivery
 Product installation
 Maintenance, repairs
 Technical and training consultancy
5 Organization and management of the Marketing function

TASKS OF THE SALES MANAGEMENT OR MARKETING DEPARTMENT

1.- SITUATION ANALYSIS.
– Consumer behavior
– Competitors' products
– Market segments
– Identify opportunities and threats
– Analysis of strengths and weaknesses of the organization itself and the competition.
2.- PLANNING.
– Selecting target markets
– Determine the objectives we want to achieve
– Design actions (long and short term) using the 4Ps
– Prepare a budget of income, expenses and profits.
3.- ORGANIZATION AND EXECUTION.
– Marketing organization design
– Execution and implementation of the marketing plan.
4.- C O N TROL.
– Measurement of results and comparison with forecasts
– Correct negative deviations and exploit positive ones.
Characteristics of commercial problems
× large number of variables
× difficulty in determining demand response
× interaction between variables
× instability of the effects and relationships between variables
× effects of competitors
× delayed and anticipated responses
× multiple territories
× multiple products
× interrelationship of the commercial function with the rest of the business functions
× multiple objectives and stakeholders
× uncertainty
× lack of standard rules
In most companies, the main bodies reporting to the General Management correspond to the
different core activities that play a specific role in getting the product or service to the customer.
These activities are divided into:

 Primary or line activities: those directly related to the production and marketing of the
product.
o Inbound logistics (warehouses)
o Outbound logistics (orders)
 o Product installation, repair and maintenance
o Marketing and after-sales service
 Support or auxiliary activities: support the primary activities and support each other,
providing raw materials, technology, human resources and various business functions.
o Company infrastructure
o Human resources management
o Technology development
o Shopping

Five configurations of the marketing function according to the company's orientation:

 Simple Sales Department (production oriented) - in this case, the Marketing function is
reduced to SALES.
 Sales Department with Ancillary Functions (sales oriented) - Sales and other Marketing
activities are considered equivalent in importance, although some functions, such as
advertising, are beginning to be separated to initiate the creation of a department
complementary to Sales.
 Marketing Department independent of the Sales Department (incipient marketing
orientation) - at this stage, marketing and sales are separate functions, with the same
hierarchical level and are expected to work as a team. However, coordination problems
are likely to arise.
 Modern Marketing Department (marketing orientation, i.e. market orientation) - if there
are coordination problems between the marketing and sales departments, a common
director for marketing and sales can be included, plus two deputy directors reporting on
each of these sets of functions
 Two separate marketing departments - The organization recognizes the need to
distinguish its actions according to whether they are aimed at the end consumer
(Consumer Marketing Department) or the distributor (Trade Marketing Department).
Ways to organize the Marketing Department
a) Functional organization
b) Geographical organization
c) Product and brand management organization
d) Customer-driven management organization
e) Matrix organization
f) Divisional corporate organization
Functional organization

 Specialists in each function report to the department director to coordinate their

activities.
 Typical of SMEs, with a reduced or very homogeneous product range and operating in
simple environments.
 The main advantage is its administrative simplicity
 The main disadvantage is that there is a risk of lack of coordination between the
different functional areas.
Geographical organization

 The geographical area of operation is divided into several sub-areas, regardless of the
characteristics of the customers and products.
  Advantage: It is effective if the areas have homogeneous social, economic and
infrastructure conditions, but different from those of the other areas.
 Disadvantages: Otherwise unprofitable the complexity of the structure and the difficulty
of control involved.
Product and brand management organization

 If the number of products or brands is numerous and diverse, an organization by

homogeneous products/brands may be appropriate, so that the Product and/or Brand
Manager is the Marketing Manager of that division.
 Advantages of product/brand organization:
× The product manager is able to develop a more cost-effective product marketing mix by
coordinating all activities.
× May be able to react more quickly to problems that may arise in the marketplace
× It is an excellent method of training young executives, as it introduces them to all
operational areas of the company.
 Disadvantages of organization by products/brands:
× It can lead to conflicts due to the lack of autonomy in the decisions that product
managers can make.
× Product managers are experts in their product, but not in other tasks/functions.
× This system is more costly in economic terms, as it is difficult to coordinate all functions.
Customer-driven management organization

 Similar to the territorial organization, but in this case customers are not classified by
their geographic location but by their different characteristics or needs.
 It works in large companies serving sufficiently large and differentiated markets.
 Market managers develop annual long-term plans for their markets, analyze where the
market is heading and what new products the company should offer.
 Its most important advantage is that marketing activities are organized to meet the
needs of different consumer groups rather than on the basis of marketing functions,
geographic criteria, etc.
 Disadvantages: lack of decision-making autonomy, more cost in the long term
Matrix organization

 The basic types of organizational designs can be combined with each other to create
more complex structures.
 One of the most common is the PRODUCT/MARKET organization: the company, in this
case, not only produces several products, but also directs them to several markets.
 Advantages: concentration of functions
 Disadvantages: high cost and conflicts of competence

Corporate organization

 As companies expand, they tend to convert their large product management teams into
separate divisions. Each division establishes its own departments and services, giving
rise to the problem of deciding which activities and services will be centralized. Large
companies generally follow one of the following three models
 Non-Corporate Marketing: There is no marketing personnel at the corporate level; all
divisions have their own marketing department.
 Corporate Marketing Moderate: There is a small proportion of corporate marketing
personnel who assist management in assessing market opportunities, advise company
departments...
 Intense Corporate Marketing: The company has a marketing department that handles all
marketing activities.
6 The Marketing Plan

Planning involves managing our limited resources (time and costs) in order to use them
efficiently and achieve certain objectives in the best possible way.
Furthermore, the use of resources must not only be efficient, but also effective; customers are
limited and success is only certain when planning is aimed at satisfying those buyers.
Plan characteristics:
× Formal document: it cannot be a collection of ideas in the manager's head.
× Structured, orderly.
× Systematized: it has to be coherent with each other.
× It must establish fields of responsibility.
× It must establish control procedures
Advantages of planning
 It indicates how to get from the current situation to the fulfillment of our goals and
objectives. It is the company's road map.
 It is useful for management control and strategy implementation, and allows a better
response to unforeseen events.
 Helps in assigning responsibilities and tasks
 Stimulates reflection and better use of resources
 It serves to realize the opportunities, threats, strengths and weaknesses that exist at the
time of drafting the plan or that may foreseeably appear.
 It allows to obtain resources for the realization of the plan
Planning problems:
× Not all the necessary information is always available
× Those who have to carry it out sometimes do not do it correctly.
× Forecasts are rarely 100% accurate
× The long term is not attractive to some managers, who prefer short-term results.
× The plan may generate a lack of flexibility
Stages of the marketing plan

– Situation analysis objectives and strategies actions and tactics

Situation analysis

 The objective of this stage is to gather all relevant information to assess the situation and
decide, in the next stage, the objectives and strategies to be considered, as well as the
actions to carry them out.
 From this information, the marketing manager must identify threats, opportunities,
strengths and weaknesses.
 Company and product/market definition
 Market analysis:
– Behavior, trends, segmentation
 Analysis of the environment
 Analysis of current and potential competition
  Internal analysis of resources and capabilities:
- Product portfolio
- Financial capacity
- Competitive advantage
- Technology
- Organization
Objectives and strategies

 After analyzing the situation, the objectives and strategies for achieving them will be
established.
 The objectives should:
o Subordination to corporate strategies
o Answer the "what" and "when" not the "how" and "why".
o Be well defined so that they are understandable
o To be quantified (if possible)
o Refer to a specific time and place
o Be realistic, achievable
o Motivating, neither too easy nor too difficult
 TYPES OF STRATEGIES (Ansoff):
1. Market penetration strategy
2. Market development strategy
3. Product development strategy
4. Diversification strategy
 TYPES OF STRATEGIES (Porter)
1. Cost strategy
2. Differentiation strategy
3. Approach strategy
 TYPES OF STRATEGIES (Miles and Snow)
1. Prospectors
2. Defenders
3. Analyzers
4. Reactors
 TYPES OF STRATEGIES (Kotler)
1. Leader strategy
2. Challenger strategy
3. Follower strategy
4. Specialist strategy
 Other strategies depending on the objectives through internal / external development of
the company:
- Vertical integration strategies
- Horizontal integration strategies
 Depending on the type of product marketed:
- Undifferentiated products Est. PUSH
- Somewhat differentiated products combination est. PUSH & PULL
- Highly differentiated products Est. PULL
Actions and tactics

 Marketing mix - 4P
The budget is a quantitative plan of the company's objectives.
The marketing budget can be of two types:

 Promotion budget: forecast of the cost of all activities to differentiate, publicize and
promote the company's offer among its target segment.
 Marketing management budget: forecast of the cost of marketing activities, i.e., product
management, pricing and distribution system management
Control of results: to ensure compliance with the marketing plan and check that the objectives
set out in the plan are being achieved.
Phases:
– Measuring the results of actions undertaken
– Diagnose the degree of compliance with the planned objectives.
– Take corrective action
Various controls must be carried out. The most common are the annual plan, profitability and
strategic:
× CONTROL OF THE ANNUAL PLAN: to verify that the company achieves the planned
objectives, through sales analysis, market share, financial analysis and monitoring of the
activities of consumers or users.
× PROFITABILITY CONTROL: determining actual profitability by products, territories,
markets and channels
× STRATEGIC CONTROL: analyze the overall effectiveness of the marketing performed by
the organization, through the "marketing audit".
CONTROL INSTRUMENTS:
× Sales analysis
× Market share analysis
× Financial analysis
× Profitability analysis
× Satisfaction analysis
× Efficiency level
× Sales-marketing campaign ratios
× Marketing Audit
The Marketing Audit is an extensive, systematic, independent and periodic examination of the
company's business environment, objectives, strategies and activities in order to detect threats
and opportunities and recommend an action plan to improve the company's business
performance.
Formal content of the marketing plan
1. Summary/Executive Summary: its purpose is to give the reader a quick overview of the
most important points of the plan.
2. Plan index
3. Introduction: explains how to understand and work with the document itself.
4. Situation analysis
5. Definition of products and markets: define the target market and the products with
which we address this market.
6. Diagnosis of the situation (SWOT): identify strengths and weaknesses, opportunities
and threats.
7. Marketing objectives: quantitative, coherent, hierarchical and referenced to a specific
period of time.
8. Marketing strategies: Specific action developed to achieve an objective.
9. Action plans: Concrete marketing activities that arise from the strategy decided for the
achievement of the objectives.
10. Budget and income statement. Expenses involved in the marketing plan actions and
comparison with expected revenues.
11. Summary: brief, with the most important points of the plan.
12. Annexes: any information of interest, graphs, diagrams, complementary studies...etc.