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Module 4 Consumption

Module 4 Consumption. What is it?. Society of mass production and consumption People who possess a lot of buying power are admired Consumer demand is stimulated through marketing techniques The act of using goods and services to satisfy needs and wants. Opposite of production

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Module 4 Consumption

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  1. Module 4Consumption

  2. What is it?

  3. Society of mass production and consumption • People who possess a lot of buying power are admired • Consumer demand is stimulated through marketing techniques • The act of using goods and services to satisfy needs and wants. • Opposite of production • Easy access to credit

  4. Production of goods whose obsolescence is planned

  5. 4.1.1 Factors of consumption

  6. Disposable income • The income left over after all expenses have been paid. • Money at our discretion to spend on goods & services. • Determines our consumption. • Deferred consumption.

  7. Price effect • There is generally an inverse relationship between price and demand • Inferior goods • Goods that decrease in demand as income rises • Generics vs. name brand • Normal goods • Goods that show a constant demand despite changes in income.

  8. The substitution effect • Depending on their disposable income people may decide to substitute one product for one that is similar such as: • Hamburgers for filet mignon • Civic for trans am • Hydro for solar • Disposable products for durable ones

  9. Conspicuous consumption • The desire to display your wealth or to be identified with a particular social group • Law of diminishing marginal utility • Factors that determine patterns of consumption • Religion • Age • Gender • Price / Disposable Income • Education • Needs and Wants

  10. 4.1.2 The importance of advertising

  11. What is it?

  12. The image above is a “coke” bottle. This is one of the most recognizable symbols of popular culture. The first coke was sold in 1886. For the year 1886-1887 the company sold nine bottles per day, Since then the Coca Cola company sells 1.5 billion drinks daily Coca Cola is one of the largest multinational corporations employing over 90 000 people and operating in over 200 countries.

  13. Marketing is much more than an advertisement • Identifying customer’s needs in order to provide goods and services to exploit them. • “Necessity is the mother of invention” • Planning and executing a campaign from the conception of a product to the delivery to consumer. • Four P’s of Marketing • Price • Product • Place • Promotion

  14. Age Target Market Hobbies Location

  15. Market • The group of potential consumers who share common needs and wants. • The target market has the ability and willingness to buy the product. • Businesses strive to meet the needs and wants of their customers.

  16. Mass Marketing • A single marketing plan used to reach all consumers.

  17. Target Market • The group of consumers that a company desires to have as customers.

  18. Market Segmentation • Dividing the entire market into smaller groups (of people) who share similar characteristics. • Allows businesses to customize products and marketing strategies.

  19. Demographics • Segmenting the market based on personal characteristics such as age, gender, income, ethnic background, education and occupation. • Example: middle class, males, ages 20-40, who are construction workers.

  20. Age Demographics • Baby Boomer Generation • 9.6 Million born between 1946-1964 • Posses 51% of the wealth in the country • Large discretionary/disposable income • Like Luxury/Recreational Items • Generation X • 2.8 Million born between 1965-1972 • Product of dual income households/divorce • Savvy & Skeptical Consumers • Financially Cautious • Like sharp images, music, sense of humor

  21. Age Demographics • Generation Y • 9.1 Million born between 1972-1992 • Computer Generation • Accustomed to interactivity • Millions in spending power/influences billions in purchases • Generation Z • 7.3 million Born between 1993-2011 • Grew up with 9/11 • Cell phones/computers/MP3’s/Tech Savvy • Still growing and mysterious demographic

  22. Psychographics • Segmenting the market based on values, attitudes and lifestyles. • Example: People interested in professional football.

  23. Geographics • Segmenting a market based on where a person lives. Geographic segmentation can refer to local, regional, national or global markets. • Example: A small local store will segment to the surrounding area like a town, while big companies like Nike market Internationally.

  24. Behavioral Segmentation • Dividing consumers into groups according to their response to a product. Behavioral segmentation divides markets into groups based on what they are looking for in a product and why they buy the product. • Example: Purchasing Nike shoes because Michael Jordan wears them.

  25. Eat Fresh There are somethings money can't buy. For everything else there's ............ A Diamond is Forever Wii would like to play

  26. Pleasure you want. Protection you trust. Strong enough for a man, made for a woman The best a man can get Cha~Cha~Cha Have a Happy Period

  27. Advertising • To increase the demand for the good or service • Instructs, Promotes and Reinforces Products or Organizations

  28. Questions companies consider before launching a campaign. • What are the product’s unique selling points? • What are hidden qualities important to the buyers? • Is there adequate demand for the product? • How much to invest in venture? • Who are you targeting? • What is the objective of the campaign?

  29. Types of Advertising • Objective • Generally informs and appeals to the intellect

  30. Subjective • Appeals to emotions and our subconscious desires • Characteristics • Use of celebrities • Models who are young, attractive, sexy • Escape ads • Association with money, power and success

  31. Misleading • Illegal in Quebec • Examples • Bait and Switch • % off without indicating original price • Lowest price in town!

  32. Advantages and Disadvantages • Pros • They inform consumers • Mass consumption due to advertising leads to mass production and therefore lowers cost • Allows for competition which drives prices lower • Creates jobs

  33. Cons • Encourages impulsive consumption • Manipulates consumers • Sells images and perceptions • Increases price of a product • Seeks conformity • Promotes questionable social conduct

  34. Not all ads are made equal • Evaluating different types of ads • Television • Radio • Print • Internet • Product Placement • Point of purchase

  35. Commonly used advertising techniques • Information • Unfinished comparison • Status • Peer approval • Hero endorsement • Sexual attraction • Entertainment • Intelligence • Independence

  36. Do not be fooled by advertisements • Does the ad appeal to your emotions? • Look beyond the appeal to find out what the ad really says • What is unique to the product? • Be alert to ads that are misleading • Read the fine print

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