Marketing Test #2
In evaluating different market segments, a firm should look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources. TRUE OR FALSE?
True
Psychographic segmentation:
divides buyers into different groups based on social class, lifestyle, or personality traits
Behavioral segmentation:
divides buyers into groups based on their knowledge, attitudes, uses, or response to a product o Occasions o Benefits sought o User status o Usage rate o Loyalty status
Cost based pricing
setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk o Cost-based pricing is product driven
Product life cycle strategies- Introduction
slow sales growth and profits are nonexistent
Product life cycle strategies- Maturity
slowdown in sales growth and profits level off or decline
Social classes
society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors -measured by a combination of occupation, income, education, wealth, and other variables
Fad
something that comes up fast but also fades quickly
Market Targeting
select the segment or segments to enter
Product mix- length
# of items within product line
Product mix- width
# of product lines
Product mix- depth
# of versions of each product in the line (Cherry, Strawberry, Vanilla)
A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?
25,000
Major Stages in New-Product Development- idea screening
: identify good ideas and drop poor ideas • R-W-W Screening Framework: o Is it real? o Can we win? o Is it worth doing?
Lifestyle
A person's pattern of living as expressed in his or her psychographics
Characteristics Affecting Consumer Behavior: Personal Factors
Age and life-cycle stage. Occupation affects the goods and services bought by consumers.
The Buyer Decision Process for New Products:
Awareness, Interest, Evaluation, Trial, Adoption
Psychological Factors Beliefs and Attitudes: Belief
Belief is a descriptive thought that a person has about something based on: knowledge, faith, and opinion
________ is the differential effect that knowing the brand name has on customer response to the product and its marketing.
Brand equity
Model Of Consumer Behavior
Consumer buyer behavior: the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption. Consumer market: all of the personal consumption of final consumers.
______ are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort.
Convenience products
Briefly describe monopolistic competition. Provide an example.
EXAMPLES: Bars/nightclubs, Coffee shops, Gas stations, Hotels. competitors provide products or services that are similar but can be differentiated from each othe. each company has a product or products that are similar to their competition but are not perfect substitutes. It's the small differences.
Characteristics Affecting Consumer Behavior: Social Factors
Family is the most important consumer-buying organization in society
Types of Buying Behavior: Complex buying behavior
High Involvment, significant differences between big brands. EX. HOUSE/CAR
Types of Buying Behavior: Dissonance-reducing buying behavior
High involvement, few differences between brands EX. DIAMOND RING
The Buyer Decision Process: Evaluation of Alternatives
How the consumer processes information to arrive at brand choices
Choosing a Differentiation and Positioning Strategy: Image
Image Differentiation is the particular image or 'personality' it acquires is created by its logo and other symbols, its advertising, its atmosphere, its events and personalities.
Choosing a Differentiation and Positioning Strategy: Channel
Indirect Marketing The Selling of Products Through a Distribution Channel That Includes Wholesaler & Retailers.
Types of Buying Behavior: Habitual buying behavior
Low involvement, Few Differences. EX. SALT AND PEPPER
Types of Buying Behavior: Variety-seeking buying behavior
Low involvement, significant difference. EX. cookies and crackers
Requirements for Effective Segmentation
Measurable, Accessible, Substantial, Differentiable, Actionable
When firms test that market...
New product with large investment • Simple line extension • Uncertainty about product or marketing program
Groups & Social Networks- word of mouth and buzz marketing
Opinion leaders are people within a reference group who exert social influence on others • Also called influential or leading adopters • Marketers identify them to use as brand ambassadors o Online social networks are online communities where people socialize or exchange information and opinions
Choosing a Differentiation and Positioning Strategy: People
People differentiation is important when consumers deal directly with employees.
The Buyer Decision Process: Information Search Sources of Information
Personal sources—family and friends ▪ Commercial sources—advertising, Internet ▪ Public sources—mass media, consumer organizations ▪ Experiential sources—handling, examining, using the product
A ________ is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price ranges.
Product Line
Choosing a Differentiation and Positioning Strategy: Product differentiation
Product differentiation determines what sets one product apart from other similar products, and it uses that difference to drive consumer interest.
When firms don't test the market...
Simple line extension • Uncertainty about product or marketing program • Copy of competitor product • Low costs • Management confidence
The Buyer Decision Process: Purchase Decision
The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors
Brand equity
The differential effect that knowing the brand name has on customer response to the product or its marketing. ▪ Powerful brand forms the basis for building strong and profitable customer relationships
The Buyer Decision Process: Post-Purchase Decision
The satisfaction or dissatisfaction that the consumer feels about the purchase
Market Differentiation
differentiate the market offering to create superior customer value
Product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
Factors Influencing Consumer Behavior: Personal
age & life cycle stage, occupation, economic situation, lifestyle, personality & self-concept
Consumer market
all of the personal consumption of final consumers
What is a product?
anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want
Psychological Factors Beliefs and Attitudes: Attitudes
describe a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea
To the extent that a company can differentiate and position itself as providing superior customer value, it gains
competitive advantage
Product mix
consists of all the products and items that a particular seller offers for sale.
Shopping products:
consumer products and services that the customer compares carefully on suitability, quality, price, and style o Furniture, cars, appliances
Specialty products
consumer products and services with unique characteristics or brand identification for which a significant product of buyers is willing to make a special purchase effort o Medical services o Designer clothes o High-end electronics
Unsought products
consumer products that the consumer does not know about or knows about but does not normally think of buying o Life insurance o Funeral services o Blood donations
Factors Influencing Consumer Behavior: Culture
culture, subculture, social class
Style
different styles of music
Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________.
everyday low pricing
What is the most important consumer buying organization in society?
family
Psychographics
focus on the interests, affinities, and emotions of a group of people - exactly the things marketers need to understand to best position their product.
Groups & Social Networks-Aspirational Groups:
groups an individual wishes to belong to
Subcultures
groups of people within a culture with shared value systems based on common life experiences and situations -Hispanic American, African American, Asian American, Cross-Cultural
Groups & Social Networks- Reference Groups:
groups that form a comparison or reference in forming attitudes or behavior
Groups & Social Networks- Membership Groups
groups with direct influence and to which a person belongs
Which of the following consumer buying behaviors is related to conditions of low- consumer involvement and little significant brand difference?
habitual buying behavior
New-product development starts with ________.
idea generation
Demographics
includes the basics: age, gender, race, location, and profession.
Which of the following stages of the PLC is characterized with high promotional expenditures that result from an effort to create consumer awareness?
introduction
Major Stages in New-Product Development- business analysis
involves a review of the sales, costs, and profit projections to find out whether they satisfy the company's objectives
Major Stages in New-Product Development- product development
involves the creation and testing of one or more physical versions by the R&D or engineering departments • Requires an increase in investment • Shows whether the product idea can be turned into a workable product
Adoption process:
is the mental process an individual goes through from first learning about an innovation to final regular use.
When the size, purchasing power, and profiles of a market segment can be calculated, the market is ________.
measurable
When it first opened stores across the United States, Bateman's, an office supply chain store, had the best product selection, the best service, and the lowest prices compared to other office supply chain stores. As a result, Bateman's captured a significant chunk of the market in the short run. Which of the following positioning strategies did Bateman's most likely use?
more for less
Factors Influencing Consumer Behavior: Psychological
motivation, perception, learning, beliefs and attitudes
Major Stages in New-Product Development- concept development and testing
o Product idea: an idea for a possible product that the company can see itself offering to the market o Product concept: a detailed version of the idea stated in meaningful consumer terms o Product image: the way consumers perceive an actual or potential product o Concept testing refers to testing new-product concepts with groups of target consumers
The Buyer Decision Process: Need Recognition
occurs when the buyer recognizes a problem or need triggered by: ▪ Internalstimuli ▪ Externalstimuli
Choosing a Differentiation and Positioning Strategy: Service differentiation
ordering ease, delivery, customer training, customer consulting, installation
Market Positioning
position the market offering in the minds of target customers
Product life cycle strategies- Growth
rapid market acceptance and increasing profits
Factors Influencing Consumer Behavior: Social
reference groups, family roles & status
Major Stages in New-Product Development- marketing strategy development
refers to the initial marketing strategy for introducing the product to the market o Marketing strategy statement includes: • Description of the target market • Value proposition • Sales and profit goals
Product mix- consistency
relatedness of products
Creating Value for Target Customers- Market Segmentation
requires dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes
Product life cycle strategies- Product development
sales are zero and investments costs mount
Product life cycle strategies- Decline
sales fall off and profits drop
Convenience products and services
that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort o Newspapers, candy, fast food
What is a price?
the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.
Consumer buyer behavior
the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption
Major Stages in New-Product Development- commercialization
the introduction of the new product
What is Culture?
the learned values, perceptions, wants, and behavior from family and other important institutions and is the most basic cause of a person's wants and behavior
Target return pricing
the price at which the firm will break even or make the profit it's seeking
Break-even pricing
the price at which total costs are equal to total revenue and there is no profit
Major Stages in New-Product Development- test marketing
the stage at which the product and marketing program are introduced into more realistic marketing settings • Provides the marketer with experience in testing the product an entire marketing program before full introduction • When firms test market:
Major Stages in New-Product Development- idea generation
the systematic search for new-product ideas
Selective distortion
the tendency for people to interpret information in a way that will support what they already believe
Selective attention
the tendency for people to screen out most of the information to which they are exposed
Selective retention
the tendency to remember good points made about a brand they favor and forget good points about competing brands
Fashion
trends/ unqiue to you
value based pricing
using the buyers' perceptions of value, not the sellers cost, as the key to pricing o Value-based pricing is customer driven
Which of the following is the most likely circumstance for a company to decide to do little or no test marketing?
when the costs of developing and introducing the product are low
