M300 EXAM 1
social risk
friends, relatives, or your significant other may not approve of the purchase
What can be marketed?
services, places, ideas, organizations, events, people
You are shopping for some clothes for an event taking place in three days. What situational factors might influence your purchasing?
-The budget you have -Time you have -Friends who are shopping with you -Your mood
growth share matrix
-can help firms analyze and design businesses and products to achieve objectives, such as enhanced profits, sales, or share -matrix is a tool that uses business or product's market share data and the growth of the market in which the business or product operates to develop a strategy for growth
Political Analysis
-Current and future laws and regulations -Lobbying organizations and efforts -Ecological and environmental issues, social welfare policies -Present and future political climate i.e protecting the customer
social analysis
-Demographics -Lifestyle trends -Customer needs -Buying trends -Ethical and/or religious issues
Economic Analysis
-Economic growth -Inflation rates -Unemployment levels/recession -Exchange rates/interest rates -Customer confidence levels/customer income levels/housing prices -Ecological and environmental issues
Segmentation can help increase the effectiveness of
-Promotion: such as media advertising, to avoid wasting money on unprofitable segments. - Product Development: For example, P&G has identified nine laundry detergent segments and has developed products to meet each segment's needs. - Pricing: For example, USAir charges business travelers $571 to fly to Newark, NJ, and vacationers $189.
Linking growth share matrix and product market expansion grid
-Question Mark, Star, diversification, product development, market development are all build strategies (improve market position by investing) -Cash cow and market penetration are hold strategies (hold onto them as they make money)
example of extended problem solving for college
-options in different areas -different attributes (location, private vs. public, majors, size, cultural opportunities, study abroad) -different information sources (word of mouth, brochures, magazines, rankings, websites)
technological analysis
-present and future state of technology -competing technologies to present technologies -innovation potential -customer use of technology/speed of technology transfer/rates of obsolescence -legislation on technology ex: With Netflix and Hulu, it forced the entire movie retail industry to change
competitive analysis
-present direct competitors -present indirect competitors -intensity of competition and trends -competitor success
4. Purchase decision: buying value
-what to buy: performance values -when to buy: convenient times -where to buy: convenient location -who will buy - exclusive or not -how much to buy - optimal amounts -how to pay - financing terms, applepay, etc.
six types of customer value
1) Form Value 2) Time Value 3) Possession value 4) Place Value 5) Information Value 6)Service value
Strategic Planning steps
1. Defining the Company's Mission 2. Setting Company Objectives (detailed and supportive) 3. Designing the Business Portfolio (different products for the market) 4. Implementing the Marketing Strategy
Consumer Decision Process
1. Problem recognition 2. Information search 3. Evaluation and selection 4. Store choice and purchase 5. Post-purchase behavior
A general marketing model
1. Understand the Marketplace and Customer Needs 2. Design a Customer Value-Driven Marketing Strategy 3. Deliver the Marketing Strategy: 4Ps 4. Build Profitable Customer Relationships
Strategic groups analysis
1. firms can identify competitors based on the key characteristics of the competing firms. -similar competitive strategies -similar firm characteristics -similar types of assets
psychological factors
1. personality (people typically buy products that reinforce their self-concept) 2. motivation (force driving them to purchase or not purchase) ex: customers can purchase to reflect their success (buying a BMW) 3. risk (performance, financial, physical, social, time-loss) 4. learning (past experience or purchase of different brands) 5. perception (ex: Inkwell is a great place to drink a coffee and relax vs Starbucks is a chain marketing over-priced drinks)
situational factors
1. physical environment (color, smell, crowding, size, clutter, noise, light) 2. time (the amount of time you have available to make a decision) 3. personal factors (your mood, the amount of money you have in hand, with whom you are shopping, etc.)
consumer purchase decision process
1. problem recognition: perceiving as a need or problem 2. information search: seeking value 3. alternative evaluation: assessing value 4. purchase decision: buying value post 5. purchase behavior: value in consumption or use
socio-cultural
1. reference groups (cluster of people that share the same attitude, evaluations, aspirations, or behaviors. Also aspirational groups where one wishes to belong to) 2. opinion leaders (hold significant status among consumers; ex: doctors)
Where do we look for great opportunities?
1. unmet customer needs - needs customers recognize but are not being met by existing solutions. Unmet needs are usually based on the shortcomings of existing products. (reactive) ex: customers wanting a privacy screen for their laptop 2. Solutions for customers- that are so radical or revolutionary that they can't envision them. (proactive) recent ex: wireless communication, nanotechnology distant ex: automobiles, airplanes
The Adidas group owns reebok, Adidas and Taylor-made brands. Adidas uses these different brands to pursue
A differentiated segmentation strategy
Concentrated / Niche Marketing
A strategy most often used by small firms that directs the firm's efforts toward serving a very small segment. ex: Oshkosh Truck - the world's largest producer of airport rescue trucks
Differentiated marketing
A strategy where numerous products are offered to different segments through differential use of the 4Ps. Most common strategy used by companies today ex: Levis, Coca- Cola, Fidelity Investments, and Chase offer many different products and services to different segments of customers.
Market share example for discount brand
BK sold 40 mil and all of fast-food sold 200 mil. If BK is a discount brand that sells its hamburgers for $0.50 compared to $1 for every other brand. =(40mil * $0.50)/(40 mil * $0.50) + (200-40)mil * $1 =20mil/180mil =11%
penetration strategy
Increase frequency of use among existing customers using existing products (i.e., same customers, same products) how? sales promotions and usage expansion ex: ziplock bag for coins, sewing supplies
customized marketing
Customized is an extreme version of differentiated marketing as the company strives to meet the needs of very small segments by customizing their offering to fit the individual customer's needs. Also called one-to-one marketing
diversification strategy
Develop new products for new customers (i.e., new products to new customers) ex: Campbell soup targeting to Chinese customer, Lulu targeting male customers
Usage
Divide a population into groups based on purchase frequency and usage level. Employs actual behavior and customers to segment the market which is different from the other bases which describe characteristics of various customers in the marketplace.
Needs
Divide a population into groups based on the ability of the product or service to satisfy their needs. ex: some car buyers seek safety while others seek performance and styling. ex: some online shoppers seek convenience while others seek the best price
demographics
Divide consumers into groups based on sex, income, age, occupation, race, religion, education, etc. ex: GAP segments based on age
Geography
Divide the overall market into groups based on geography. Most products derive the majority of their sales from a very small number of regions. ex: Gain laundry detergent is know for its intense scent and has great distribution in the southern parts of the US
Psychographics or lifestyle variables
Divide the population into homogeneous groups based on behavioral and lifestyle profiles developed by analyzing consumer Activities, Interests, and Opinions (AIO) and Values, Attitudes, and Lifestyles (VALS) through surveys ex: Anthropolgie targets free-spirited consumers
market development strategy
Find new customers in new markets (i.e., same products to new customers) How? widen the distribution network of the product examples: Lulu lemon opening store in south Korea
Undifferentiated Marketing or Mass Marketing
Firms produce only one product or product line and market it in the same manner to all consumers. This approach does not use the segmentation process. benefits: everyone is the customers, inexpensive for marketers shortcomings: vulnerable to competition, can't satisfy different segments
2. Setting Company Objectives
Greater profits is the primary objective. Growth, brand loyalty/awareness, satisfaction, sustainability.
Promotion
How customers are informed about the products ex: KIA holidays on us sales event
Price
How much the customer pays for the product
Societal marketing concept
Marketing must serve all three to be successful -society: human welfare -customers: value satisfaction -company: profits
3. Designing the business portfolio
Multi-business firms: Minimizes risk, differentiated. -United Airlines has passengers and freight. -FedEx has packages and logistics. -IU has different schools (bus, SPEA, nursing, etc)
ex of mission statement
Nike product oriented: "we sell shoes" market oriented: "to bring inspiration and innovation to every athlete in the world"
Positioning products to target segments
Once target segments identified, the firms needs to describe the product to target customers relative to competing products -Positioning is designed to achieve a competitive advantage for the product in that segment. -Positioning is the place the product occupies in target consumers' minds relative to competing products. -Positioning creates a perception about a product. Perceptions need not match reality to be effective.
What kind of firms would prefer to report unit share? dollar share?
Premium brands - dollar share Discount brands - unit share
4 Ps
Product, Price, Place, Promotion
Fiat, an Italian automobile manufacturer, is known for its small and stylish city cars. However, it recently introduced a new line of tractors for agricultural use in the African nation of Lesotho. Fiat tractors still have a small market share, but the tractor market is Lesotho is growing rapidly. By definition, where would Fiat tractors be placed on the growth share matrix?
Question mark
Steps in Segmenting and Targeting the Market
Step 1: Define the Market (describe all possible customers) ex: people who consume sports drinks in USA Step 2: Use variables to divide market into segments ex: young men and women Step 3: Select segments to target ex: female athletes 16-34 yrs old Step 4: Use the 4 P's to Position and build the performance ex: TV and print ADs
Product
The features, appearance, parts, etc. ex: Warranty is included in the product
routine decision making
Used when a person needs little information about a product ex: soda, candy, milk
Happiness4U.com, a small packaging materials company, knows customers engage in routine problem solving for most purchases made with the firm. This knowledge indicate customers are
Using little new information when making a purchase
1. Problem Recognition: perceiving a need
a problem is determined when the consumer perceives a difference between his/her current product outcomes and the consumer's desired outcomes. There is a gap that is perceived as a need or problem.
extended problem solving
a purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives; often occurs when the consumer perceives that the purchase decision entails a lot of risk ex: automobiles, house, college
Positioning is
a ranging for a market offering to occupy a clear, distinctive, and desirable place relative to a competing products in the minds of target consumers ex: J&J's shampoo - gentle cleanser
consideration set
a small group of products being evaluated, like three cars. Usually much smaller than the total number of products available for purchase
1. Mission statement
a statement of the organization's purpose - what it wants to accomplish in the larger environment
Suzy is driving home in her new Ford fusion car. She used some subjective information to make her purchase. Which piece of information below is an example of subjective information Suzy might have used? a. miles per gallon b. the power of the ford brand c. the price of the car d. the availability of a certain color
b. The power of the ford brand (i.e. brand image)
5. Postpurchase behavior: value in consumption or use
consumer expectations vs perceived quality and performance = satisfied customer or dissatisfied customer
You are interested in getting something to drink between lunch and dinner while at work. Which is best suited to identify competing solution for your thirst problem?
customer choice analysis
market oriented mission
defines the business in terms of satisfying customer needs
Talbots targets customers who are college educated woman between 35-55 years old with average household income of 75,000 or more. Talbots is describing its market us a _____ segmentation approach
demographic
product development strategy
develop new products for existing customers (i.e., new products, but same customers) ex: changing menu frequently
Estee Lauder owns different cosmetics brands such as Estee Lauder, Clinique, origins, MAC, LA Mer, Aveda, etc. Estee lauder use the different brands to pursue
differentiated segmentation strategy
Can a firm increase dollar share at the same time its unit share decreases? if so how?
dollar share can increase while unit share decreases, when a firm goes through price increase successfully. This is the case typically for inelastic products (water)
possession value
enhancing the ability of the customer to acquire and use the product over time ex: samples, testings, give aways
objective attributes
facts about the product ex: price, gas mileage, store capactiy
subjective attributes
influenced by personal feelings, taste, and opinions ex: brand image
One step in the consumer purchase decisions process may involve consumers asking their friends for insights on whether to purchase a particular product. This step is called
information search
Customer Choice Analysis
is based on how the customer defines competing solutions or alternatives. This offers a more market oriented approach -takes into situational, contextual, and application factors -the resulting array of competitors may include firms with very different offerings
market growth rate
is the "market" (product category) growing in sales volume? examples: 3D TV and PSP player is growing faster than Black & white tv or a cassette
Marketing
is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
marketing growth
is the increase or decrease in the size of a market for a product or service over time. It is typically measured as the percentage change in total sales in one industry or product category (vertical axis)
Consumer Behavior
is the process of individuals or groups selecting, purchasing, using, and disposing of goods, services, ideas, or experiences, to satisfy needs and desires
How could current/potential players in the market use a perceptual map to their advantage?
it lets brands find out where there is less competition
Fabriz plans to conduct marketing research on who is buying its new product by gather information on age, gender, where the purchaser lives, how much and how frequently they bought. Which segmentation base is not being explored in the market research?
lifestyle
3. alternative evaluation: assessing value
looking at your options and different brands (consideration set). Consumers evaluate both objective and subjective attributes of a product when comparing and deciding what to purchase
time-loss risk
maintenance time or time required to return the product to the place of purchase may be excessive (Maserati dealership is in Indianapolis and you need an oil change)
time value
making the product available when the customer needs it ex: Kroger is open 24 hours
place value
making the product available where the customer needs it ex: Chase has hundreds of bank branches throughout the US
is mission statement market or product oriented?
market oriented
Sondra Celli, a skilled dressmaker, works from her home and makes elaborated dresses that are very popular at the weddings and birthday parties of Romanian gypsies who are currently located in southern indy. She wants to develop a marketing strategy that will target female Romanian gypsies in the area. In order to maximize the money, she spends on marketing, Sondra should implement what type of marketing strategy when promoting her line of dresses?
niche marketing
limited problem solving
occurs during a purchase decision that calls for, at most, a moderate amount of effort and time ex: clothing, dinner, cosmetics
When Duracell reminds customers to change the batteries in their smoke detectors, the firm is practicing a
penetration strategy
**perceptional positioning maps show consumer
perceptions of their brands vs. competitive brands on crucial dimensions
On the way to his media appearance, tom tripped, fell, and scrapped his knee while wearing UGGs. As a result, which type of risk might he be more concerned about eh next time he goes to buy boots?
physical risk
service value
providing excellent service on an ongoing basis, even after the customer makes the purchase ex: Offering a website or toll-free number for customers to call
information value
providing relevant information about the product (review descriptions) ex: Amazon.com offers lots of information about their products on the website
Marketers can _____ existing products if needed
reposition ex: bayer aspirin original position: pain reliever new position: reduce heart attack risk ex: Marlboro original: a mild cigarette for women current: there's nothing manlier than a marlboro
market share equation
specific product unit sales or revenues/total market unit sales or revenue ex: Burger King sold 40 million hamburgers in 2009. All firms in the fast food business sold 200 million. Hence BK's unit share is 40/200=20%
financial risk
the buyer may lose money, pay too much, or miss buying something else (opportunity cost)
2. Information search: seeking value
the consumer searches for information to make a decision -internal search: memory -marketing sources (external): media & internet -personal sources (external): friends' reccomendations
involvement
the level of involvement in the purchase decision affects the speed and degree of attention paid to the five steps
Place
the point where the products are made available to customers and is convenient
marketing share
the portion of a market controlled by a particular company or product (horizontal axis)
Market Segmentation
the process of dividing the total market for a product into several relatively homogenous groups using factors, such as demographics, psychographics, and geography
physical risk
the product may be harmful to the user's health, it may cause injury (buying cigs)
performance risk
the product may not perform well; it may break down (buying a used car)
Can a firm increase its unit share at the same time its dollar share decreases? if so, how?
unit share can increase at the expense dollar share when a firm starts aggressively selling based on price
form value
utility provided by changing raw materials into a finished product ex: Ford manufacturers automobiles, creating form value for consumers
Growth-share matrix
vertical: marketing attractiveness/market growth horizontal: marketing strength/market share