Marketing exam 1

Promotion can take various forms. Various tools can be used individually or in combination. These include:

1. Advertising 2. Publicity 3. Sales Promotions 4. Personal Selling 5. Visual Presentations

The Marketing Era

1. After WW2, manufacturers turned from focusing on the war effort toward making consumer products. 2. Began to see more suburban communities with cars in every garage. 3. The shopping center began to replace cities' central business districts. 4. Some products, once in a limited supply, became plentiful. 5. US entered a buyers' market = customers became KING. 6. When consumers again had choices, they were able to make purchasing decisions on the basis of quality, convenience, and price. 7. Manufacturers and retailers began to focus on what consumers wanted and need BEFOREHAND. 8. It is during this era that firms discovered marketing.

3rd Step in Decision-Making Model: Evaluation of Alternatives

1. After obtaining information, consumers will attempt to process info in order to make a decision. 2. Marketer must understand which factors are the most important: - Product attributes - Existing consumer beliefs - Utility desired

2nd Step in Decision-Making Model: Search for Information and Alternatives

1. An aroused consumer tends to search for information and alternatives for the purpose of satisfying problem recognition. 2. This may result in 2 different search types: - Internal search: process of recalling PAST information - External search: seeking information from outside environment 3. Type of search depends on several factors: - Perceived benefits vs. costs of search process - Level of knowledge already available - Level of involvement - Perceived risk 4. Sources used for External search include: - personal sources - commercial sources - public sources - experimental sources

The Production Era

1. Around turn of 20th century, most firms were production-oriented and believed that a good product would sell itself. 2. "Customers can have any color they want as long as it's black" - Henry Ford 3. Manufacturers were concerned with product-innovation, not with satisfying the needs of individual consumers. 4. Retail stores were typically considered to be the places that held the merchandise until a consumer wanted to purchase it.

The Sales Era

1. Between 1920 and 1950, production and distribution techniques became more sophisticated AND the Great Depression/WW2 conditioned customers to consume less or manufacture items themselves. 2. As a result, manufacturers had the capacity to produce more than consumers really wanted/were able to buy. 3. Firms found an answer to their overproduction in becoming sales-oriented: they depended on personal selling and advertising.

2 Major Considerations for PLACE in 4 P's

1. Channels of Distribution 2. Physical Distribution

1st Step in Decision-Making Model: Problem Recognition

1. Consumer recognizes a difference between what they HAVE and what they DESIRE to have. 2. Marketers attempt to understand how consumers get in this mode. 3. Internal Influences - any psychological or physiological influence 4. External Influences - includes any and all outside influences 5. Marketing activities such as advertising, personal selling, etc. are potentially effective external influences that can trigger problem recognition.

Social Influences

1. Culture 2. Subculture 3. Social class 4. Group memberships

Internal Factors include:

1. Culture of the company 2. Intermediaries 3. Suppliers

The Four Macro Strategies that focus on aspects of the marketing mix to create/deliver value and to develop sustainable competitive advantage:

1. Customer Excellence 2. Operational Excellence 3. Product Excellence 4. Locational Excellence

The Three Pillars of the Marketing Concept

1. Customer Orientation 2. Integrated Marketing 3. Customer Satisfaction

Important Determinants in studying Consumer Behavior are:

1. Decision process 2. Individual factors 3. Situational influences 4. Social influences

Environmental Factor Categories

1. External/Internal Factors 2. Micro-Environmental/Macro-Environmental Factors

Re sellers

1. Firms that buy finished products and resell them in order to make a profit 2. EXs: retailers, wholesellers, distributors

Government

1. Includes the thousands of Federal, State, and Local agencies that buy products in order to satisfy the needs of constituents

To understand the consumer market, we must understand how consumers process information. Influences include:

1. Individual influences 2. Situational influences 3. Social influences

Organizations tend to practice group decision making in the organizational market:

1. Initiator 2. Influencer 3. Gatekeepers 4. Deciders 5. Purchaser 6. Users 7. Evaluators

Growth Strategies (4)

1. Market Penetration Strategy 2. Market Development Strategy 3. Product Development Strategy 4. Diversification Strategy

Evolution of Target Marketing

1. Mass Marketing: One product sold indiscriminately to any and all prospective customers. 2. Product Differentiated Marketing: Two or more differentiated forms of the same product sold indiscriminately to any and all prospective customers. 3. Target Marketing: Marketer distinguishes between different types of customers and then chooses one or a few to concentrate their efforts. They actually develop a marketing mix to appeal and cater to each specific segment chosen.

Types of Competitive Markets

1. Monopoly 2. Oligopoly 3. Monopolistic Competition 4. Pure Competition

Organizational Customer Behavior

1. Organizational Market buys more LOGICALLY with intended use as the primary concern. 2. Common tendencies among organizational and business customers that DIFFER from consumers --> - Organizations purchase primarily in a goal-specific manner. - Group decision-making is more common. - Formal buying policies are used. - Derived Demand - Use of formal buying instruments - Buying decisions made on a much more logical basis. - Use of professionals - Inelastic demand with regard to price issues - Potential of larger quantity purchases

Institutional Customers

1. Organizations that achieve goals that may be different than ordinary businesses 2. EXs: Universities, civic clubs, unions, charitable organizations

Internal Influences

1. Perception 2. Motivation 3. Learning 4. Attitude 5. Personality 6. Age Groups 7. Lifestyle

Situational Influences

1. Physical environment 2. Time

The 3 Major Phases of the Marketing Plan

1. Planning 2. Implementation 3. Control

Consumer Buying Decision-Making Model (5 steps)

1. Problem recognition (arousal) 2. Search for information & alternatives 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase behavior

Types of Customers that make up the Organizational Market

1. Producers/Industrial Firms 2. Re sellers 3. Government 4. Institutional Customers

Producers/Industrial Firms

1. Purchase goods/services in order to produce other products 2. EXs: manufacturers, farmers, construction industry, transportation industry

Types of Consumer Decisions

1. Routine Response Behavior 2. Limited Problem Solving 3. Extensive Problem Solving

External Factors include:

1. Social Forces 2. Economic Conditions 3. Political and Legal 4. Technology 5. Nature and Natural Resources 6. Competition

Buying Situations:

1. Straight Re-buy 2. Modified Re-buy 3. New Task Buying

The Evolution of Marketing: Four Eras

1. The Production Era 2. The Sales Era 3. The Marketing Era 4. The Relationship Marketing Era

The Relationship Marketing Era

1. The most successful firms today are market-oriented, which means that they generally have transcended a production or selling orientation and attempt to discover and satisfy their customers' needs and wants. 2. Before turn of 21st century, better marketing firms recognized that there was more to good marketing than simply discovering and providing what consumers wanted/needed; to compete successfully, they would have to give their customers greater value than their competitors did. 3. Value reflects the relationship of benefits to cost, or what you get for what you give. 4. Customers seek a fair return in goods and/or services for their hard-earned money and scarce time.

Oligopoly

A FEW very large competitive organizations

Strategic Business Unit (SBU)

A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.

Marketing Strategy

A firm's target market, marketing mix, and method of obtaining sustainable competitive advantage.

Social Class

A group of people who are considered to be nearly equal in terms of status or community esteem.

Market Penetration Strategy

A growth strategy that employs the EXISTING marketing mix and focuses the firm's efforts on EXISTING customers.

Market Development Strategy

A growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international.

Product Development Strategy

A growth strategy that offers a new product or service to a firm's current target market.

Diversification Strategy

A growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve.

Unrelated Diversification

A growth strategy whereby a new business LACKS any common elements with the present business. For example, if Nike ventured into the child day care service industry, it would be an unrelated diversification because it is so different from its core business and therefore very risky.

Subculture

A homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. It can form as the result of a variety of possible characteristics... geographical, regional, nationality, religion, ethnic.

Monopolistic Competition

A large number of competitors that compete by differentiating their product offering.

Relative Market Share

A measure of the product's strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry.

The Marketing Plan

A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the 4 P's, action programs, and projected income statements.

3 Pillars of Marketing Concept: Integrated Marketing

ALL marketing activities need to be planned and coordinated.

Consumers

All individuals and households who buy and/or acquire goods and services primarily for personal, non-business use.

SWOT Analysis

Assesses the Strengths and Weaknesses of the INTERNAL environment Assesses Opportunities and Threats of the EXTERNAL environment

Physical Distribution Firms (intermediaries)

Assist firm in transporting products

New Task Buying

Buying a product for the FIRST time with very little familiarity or knowledge

Modified Re-buy

Buying familiar products with modifications desired in product features or terms of sale

Internal Factors are...?

Controllable to some extent

4th Step in Decision-Making Model: Purchase Decision

Decision is actually made to: 1. Purchase or 2. Not purchase or 3. Postpone

Environmental Scanning

Developing a formal system to monitor changes in the environment concerning key factors that might affect marketing plans.

Micro-Environmental Factors...?

Directly affect organizations marketing effort

Internal Factor: Intermediaries

Firms & individuals that aid in the promoting, selling, and distributing of goods and services to the firms buyers. Types to consider are: 1. Middlemen 2. Physical Distribution Firms 3. Marketing Service Agencies 4. Financial Intermediaries

STP (Segmentation, Targeting, Positioning)

Firms use these processes to identify and evaluate opportunities for increasing sales and profits.

Product Lines

Groups of associated items, such as those that consumers use together or think of as part of a group or similar products

Financial Intermediaries

Help finance and insure transactions

Marketing Service Agencies (intermediaries)

Helps firm target and promote

Related Diversification

In this type of diversification opportunity, the current target market and/or marketing mix SHARES something in common with the new opportunity. In other words, the firm might be able to purchase from EXISTING vendors, use the same distribution and/or management information system, or advertise in the same newspaper to target markets that are similar to their current consumers.

Macro-Environmental Factors...?

Indirectly affect organizations marketing effort and include things such as culture, demographics, social trends, etc.

The 4 Macro Strategies: Operational Excellence

Involves a firm's focus on efficient operations and excellent supply chain management.

The 4 Macro Strategies: Product Excellence

Involves a focus on achieving high-quality products; effective branding and positioning is key.

The 4 Macro Strategies: Customer Excellence

Involves a focus on retaining loyal customers and excellent customer service.

Positioning

Involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

The 4 Macro Strategies: Locational Excellence

Method of achieving excellence by having a strong physical location and/or internet presence.

Pure Competition

Numerous suppliers and numerous customers with no barriers to competition

Monopoly

ONE dominant competitor

The 4 P's of Marketing

PRODUCT, PLACE, PRICE, PROMOTION

Market Share

Percentage of a market accounted for by a specific entity

Straight Re-buy

Purchasing the SAME item using similar terms of sale.

4 P's: PLACE

Refers to HOW goods & services actually get to a prospective customer for sales consideration & eventual consumption.

4 P's: PRODUCT

Refers to WHAT the business or non-profit organization offers to its prospective customers or clients.

4 P's: PROMOTION

Refers to the NEED to communicate information to potential customers about a marketer's product offerings, in order to initially create awareness of... AND ultimately desire for a product.

4 P's: PRICE

Refers to the amount of consideration a buyer must exchange in order to purchase a product. Price ultimately determines whether a customer will purchase a product; and whether there is enough revenue generated for the organization to achieve a profit.

Integrated Marketing Communications (IMC)

Represents the promotion dimension of the four P's; encompasses a variety of communication disciplines - general advertising, personal selling, sales promotion, public relations, direct marketing, and electronic media - in combination to provide clarity, consistency, and maximum communicative impact.

Sustainable Competitive Advantage

Something the firm can persistently do better than its competitors. A competitive advantage acts like a wall that the firm has built around its position in a market. This wall makes it hard for outside competitors to contact customers inside.

Planning Phase

Step #1: Business mission and objectives Step #2: Situation analysis (SWOT)

Implementation Phase

Step #3: Identify opportunities using STP (segmentation, targeting, positioning) Step #4: Implement marketing mix (the four P's of marketing; product, place, price, promotion)

Control Phase

Step #5: Evaluate performance using marketing metrics

Market Growth Rate

The annual rate of growth of the specific market in which the product competes.

3 Pillars of Marketing Concept: Customer Orientation

The customer (NOT the product) should be the focal point of the planning process.

3 Pillars of Marketing Concept: Customer Satisfaction

The end result of a marketing effort should be two-fold --> profit for the organization AND a satisfied customer.

Target Marketing

The process of choosing a market segment or segments in order to concentrate marketing efforts.

Market Segmentation

The process of dividing a market (potential customers) into meaningful, relatively similar, identifiable subgroups that tend to exhibit similar tastes and buying tendencies.

Market Segmentation

The process of dividing the market into groups of customers with different needs, wants, or characteristics - who therefore might appreciate products or services geared especially for them.

Target Marketing or Targeting

The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market.

Definition of Marketing

The process of planning & executing the conception, pricing, promotion and distribution of ideas, goods, and services in order to create mutually beneficial exchanges to satisfy individual and organizational objectives.

Culture

The shared meanings, beliefs, morals, values, and customs of a group of people that determines what we consider to be normal and appropriate (tends to be country and region specific).

The Marketing Mix

The various ingredients that must be planned, and then executed in order to accomplish an effective marketing policy.

Black Box Theory

To understand consumer behavior, we must understand the consumer's mental process. 1. Marketing Stimuli --> - Controllable: Marketing Mix - Uncontrollable: Environmental Factors 2. Black Box --> - The MENTAL PROCESS 3. Buying Response --> - Buy - Not buy - Postpone

External Factors are...?

Typically uncontrollable

5th Step in Decision-Making Model: Post-Purchase Behavior

Whatever the decision, there is an outcome to the decision made. 1. Evaluation - Influenced by expectation a consumer develops before making the decision. Marketers must be careful not to create negative dis confirmed expectations. 2. Action - Outcome and evaluation will influence buyer behavior and future actions. -- Referrals/personal sources of information -- returning product -- loyalty/patronage

Middlemen (intermediaries)

Works with firm to find customers and make sales