Midterm #2 Ch. 6-9
what is an external information search?
seeks information in the outside environment. there are 2 types: non marketing-controlled and marketing-controlled.
What is internal stimuli and what is external stimuli?
internal stimuli are occurrences you experience, such as hunger or thirst. You hear your stomach growl and then realize you're hungry. external stimuli are influences from an outside source such as someone's recommendation of a new restaurant, the color of an automobile, the design of a package, a brand name mentioned by a friend, or an advertisement on television or radio.
24. Marketers use demographic information to segment markets because it is widely available and often related to consumers' purchasing and consumption behavior. List five common bases used by marketers for demographic segmentation. For each base listed, give an example of a product specifically targeted to the needs and wants of the segment identified within the base.
1. Age: The Hallmark Channel, owned and operated by Crown Media (owned by Hallmark Cards), targets the baby boom generation because of their wealth and the fact that they are more engaged in TV than are members of other groups. 2. Gender: CoolStuffForDads.com targets online shoppers with a wide variety of gifts that men would enjoy. 3. Income: Walmart plans for more of its stores to offer financial services in "Money Centers" to its lower-income customers who do not have banks. These Money Centers will include services such as cashing checks, paying bills, and filling out tax forms. 4. Ethnic background: Amazon introduced the Software en Espanol Store that offers Spanish-language and bilingual software products. 5. Family life cycle: Singles- Norwegian Cruise Line's ship, the Epic, goes against the industry practice of not having single occupancy rooms, by offering 128 single-occupancy rooms with no extra fees.
15. Name and briefly describe five of the major differences between business and consumer markets.
1. Demand: business market is organizational and consumer market is individual. 2. Purchase volume: business customers buy in much larger quantities than consumers. 3. Number of customers: business marketers usually have far fewer customers than consumer marketers. 4. Location of buyers: business customers tend to be much more geographically concentrated than consumers who are typically dispersed. 5. Distribution structure: in the business market this is more direct and in consumer indirect. Many consumer products pass through the distribution system that includes the producer, one or more wholesalers, and a retailer. In business marketing, however, because of many of the characteristics already mentioned, channels of distribution are typically shorter. 6. Nature of buying: business market uses a more professional approach using trained professionals as compared to consumer market that is more personal. 7. Type of negotiations: business market is more complex as where consumer market is simpler. 8. Use of reciprocity: business market uses this as where consumer market does not.
14. Explain the four ways demand in business markets differs from demand in consumer markets.
1. Derived: the demand for business products because organizations buy products to be used in producing their customers' products. Because demand is derived, business marketers must carefully monitor demand patterns and changing preferences in final consumer markets, even though their customers are not in those markets. 2. Inelastic: means that an increase or decrease in the price of the product will not significantly affect demand for the product. 3. Joint: occurs when two or more items are used together in a final product. For example, a decline in the availability of memory chips will slow production of microcomputers, which will in turn reduce the demand for disk drives. 4. Fluctuating: demand for business products, particularly new plants and equipment, tends to be less stable than the demand for consumer products. A small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product. This is called the multiplier effect or accelerator principle. This multiplier effect produces highly fluctuating demand for business products.
22. To be useful, a segmentation scheme must produce segments that meet four basic criteria. Name and briefly describe each of these four criteria.
1. Substantiality: A segment must be large enough to warrant developing and maintaining a special marketing mix. 2. Identifiability and measurability: Segments must be identifiable and their size measurable. 3. Accessibility: The firm must be able to reach members of targeted segments with customized marketing mixes. Some market segments are hard to reach. 4. Responsiveness: Markets can be segmented using any criteria that seem logical. Unless one market segment responds to a marketing mix differently from other segments, however, that segment need not be treated separately.
18. Assume you are the vice-president of marketing in a medium-sized company that includes the following departments: marketing, finance, purchasing, data processing, and production. The sales force manager has mentioned to you that one of the salespersons thought a Web-based salesforce automation service would help the sales force become more efficient. The sales manager requests that this service be purchased. Illustrate the six buying decision roles that would take place for the purchase of this service.
1. Initiator: person who suggested the purchase. Sales force manager proposes purchase of Web-based sales force automation service to help sales force become more efficient. 2. Influencers/evaluators: people who influence the buying decision and often help define specifications and provide information for evaluating options. This would be the salesperson who first mentioned the service to the sales force manager. 3. Gatekeepers: the flow of information is regulated by purchasing. They will analyze the company's needs and recommend if it's something that should be purchased or not. 4. Decider: person who has informal or formal power to choose or approve the selection of the supplier or brand. This would be the vice-president and he would have power to approve or deny the service after getting advice from others. He will select the company and will buy the system. 5. Purchaser: person that negotiates the purchase. Purchasing agent negotiates terms of sale. 6. Users: members of the organization who will actually use the product. This will be used by all of the members of the organization because they will all be using the web-based salesforce automation service. All division employees use the computers.
8. List and briefly describe the five different roles various family members can play to influence the purchase decision-making process when deciding on a family vacation.
1. Initiators: Suggest, initiate, or plant the seed for the purchase process. This may be any member of the family. A sister might initiate the product search by asking to go on a family vacation this summer for her birthday. 2. Influencers: members of the family whose opinions are valued. Mom might function as a price-range watchdog, whose main role is to veto or approve price ranges. Brother may give his opinion on certain houses to rent for vacation. 3. Decision maker: family member who actually makes the decision to buy or not to buy. Mom or Dad is likely to choose the final house and company to rent the house from after seeking further information from Sister about things she wants to do or have on vacation, then imposing criteria of his or her own, such as safe neighborhoods and size. 4. Purchaser: probably Dad or Mom, the one who actually exchanges the money for the product. 5. Consumer: actual user—Sister in this case of it being her birthday.
16. Briefly define and describe each of the categories of business goods and services. Give two specific examples of goods or services that fit into each category.
1. Major equipment: includes capital goods such as large or expensive machines, mainframe computers, blast furnaces, generators, airplanes and buildings. These items are also commonly called installations. Major equipment is depreciated over time rather than charged as an expense in the year it is purchased. Also, often custom-designed for each customer. 2 examples are hospital generators and airlines' airplanes. 2. Accessory equipment: generally less expensive and shorter-lived than major equipment. 2 examples are power tools and portable drills. These are often charged as an expense in the year it is bought rather than depreciated over its useful life. 3. Raw materials: unprocessed extractive or agricultural products. 2 examples are wheat and corn. They become part of finished products. 4. Component parts: either finished items ready for assembly or products that need very little processing before becoming part of some other product. Examples are spark plugs and tires. 5. Processed materials: products used directly in manufacturing other products. Unlike raw materials they have had some processing. Examples are chemicals and plastics. 6. Supplies: consumable items that do not become part of the final product. Examples are pencils and paper. 7. Business services: expensive items that do not become part of a final product. Examples are janitors and maintenance services.
20. What are the four criteria that are necessary to define a market?
1. People or organizations with 2. Needs or wants and with 3. The ability and 4. The willingness to buy.
11. Briefly describe the four major categories of customers in business marketing. Give examples of companies or organizations in each category.
1. Producers: includes profit-oriented individuals and organizations that use purchased goods and services to produce other products, to incorporate into other products, or to facilitate the daily operations of the organization. Examples of producers would be construction, manufacturing, transportation, finance, real estate and food service firms. An example of a producer would be General Motors. 2. Resellers: includes retail and wholesale businesses that buy finished goods and resell them for a profit. A retailer sells mainly to final consumers; wholesalers sell mostly to retailers and other organizational customers. Example would be Coca-Cola and how they sell directly to large retailers and retail chains and through wholesalers to smaller retail units. 3. Governments: include thousands of federal, state and local buying units. They make up the largest single market for goods and services in the world. A state and local buying agency would be Stockton Unified School District. 4. Institutions: seek to achieve goals other than the standard business goals of profit, market share, and return on investment. This segment includes, schools, hospitals, colleges and universities, churches, labor unions, fraternal organizations, civic clubs, foundations, and other so-called nonbusiness organizations. An example would be Xerox and how they offer educational and medical institutions the same prices as government agencies and has a separate sales force that calls on these customers.
7. For marketers, reference groups have three important implications. Describe them.
1. They serve as information sources and influence perceptions: how consumers evaluate goods and services; look to others for similar situations as what we're going through; based on experience. 2. They affect an individual's aspiration levels: the goods and services they aspire to own; goals; building networking contacts. 3. Their norms either constrain or stimulate consumer behavior: when and where they buy; there are certain things members from a certain reference group do and do not do what: go with person who knows to get a suit for an event.
28. Name and describe the three targeting strategies. For each strategy, name one advantage and one disadvantage of using the strategy.
1. Undifferentiated targeting: a firm adopts a mass market philosophy, viewing the market as one big market with no individual segments. The firm uses one marketing mix for the entire market and assumes individual customers have similar needs. Advantage: potential for saving on production/marketing costs. Disadvantage: unimaginative product offerings have little appeal to anyone. 2. Concentrated targeting: firm selects a market niche (1 segment of a market) for targeting its marketing efforts. It can concentrate on understanding the needs, motives, and satisfactions of that segment's members and on developing and maintaining a highly specialized marketing mix. Advantage: can better meet the needs of a narrowly defined segment. Disadvantage: segments too small, or changing. 3.Multisegment targeting: firm chooses to serve 2 or more well-defined market segments and develops a distinct marketing mix for each. Advantage: greater financial success. Disadvantage: high costs.
What is the consumer decision-making process?
1. need recognition 2. information search 3. evaluation of alternatives 4. purchase
3 implications of reference groups for marketers
1. they serve as information sources and influence perceptions 2. they affect an individual's aspiration levels 3. their norms either constrain or stimulate consumer behavior
17. What is a buying center? What are some implications of buying centers to the marketing manager?
A buying center includes all those persons in an organization who become involved in a purchase decision. Some implications of buying centers to the marketing manager are: successful vendors realize the importance of identifying who is in the decision-making unit, each member's relative influence in the buying decision, and each member's evaluative criteria. Successful selling strategies often focus on determining the most important buying influences and tailoring sales presentations to the evaluative criteria most important to these buying-center members. As buying manager I need to identify the problems and how to meet that need.
31. What is product differentiation and how can it be achieved?
A positioning strategy that many firms use to distinguish their products from those of competitors. The distinctions can be either real or perceived. It can be achieved by convincing consumers that a particular brand is distinctive and that they should demand it over competing brands.
23. What is a segmentation base (or segmentation variable)? Name the common segmentation bases used by marketers to segment consumer markets.
A segmentation base is something marketers use which are characteristics of individuals, groups, or organizations, to divide a total market into segments. The choice of segmentation bases is crucial because an inappropriate segmentation strategy could lead to lost sales and missed profit opportunities. Markets can be segmented using a single variable, such as age group, or several variables, such as age group, gender, and education.
10. What is a strategic alliance? How is it linked to relationship marketing?
A strategic alliance is sometimes called a strategic partnership and is a cooperative agreement between business firms. They can take the form of licensing or distribution agreements, joint ventures, research and development consortia, and partnerships. They may be between different manufacturers, manufacturers and customers, manufacturers and suppliers, and manufacturers and channel intermediaries. It is linked to relationship marketing because for an alliance to succeed in the long term, it must be built on commitment and trust. The relationship commitment means that a firm believes that an ongoing relationship with some other firm is so important that it warrants maximum efforts at maintaining it indefinitely.
As increase in the price of Partac Peats's dirt will not affect the demand for the product because many groundskeepers believe there is no substitute for the product. Thus, demand for Partac Peat's secret mix is: a. inelastic b. intangible c. heterogeneous d. synergistic e. elastic
A. Inelastic demand means an increase or a decrease in price will not significantly affect product demand.
Refer to Mercedes-Benz. Which positioning base will Daimler be using if the company emphasizes the type of people who buy Mercedes-Benz automobiles in its promotional efforts? a. Product user b. Emotion c. Price and quality d. Attribute e. Use or application
A. Product user positioning focuses on a personality or type of user.
Refer to baseball dirt. Roger Bossard, the White Sox head groundskeeper, most likely did NOT assume which of the following buying center roles since he has the authority to buy whatever is needed to make the baseball field the best playing surface possible? a. Gatekeeper b. Decider c. Evaluator d. Influencer e. Initiator
A. Since he occupies most of the roles himself, he would not be restricting the flow of information to himself.
When someone makes a purchase of something they like and are craving, this represents which type of consumer buying decision? a. routine response behavior b. limited decision making c. extensive decision making d. situation convenience e. motivational response
A. The fact that Nelson is out of ice cream suggests it is a frequently purchased product, typically a routine response behavior.
Refer to Mercedes-Benz. Daimler plans to introduce the downsized luxury vehicles in major U.S. cities, such as LA, NY, Miami, Atlanta, Dallas, and Chicago, because market research has shown that these metropolitan areas have the greatest potential with respect to the consumers able to purchase a $30,000+ smaller luxury vehicle. Which type of psychographic segmentation does this represent? a. geodemographic b. personality c. benefit d. usage-rate e. demographic
A. The types of psychographic segmentation include personality, motives, lifestyles, and geodemographics. This is an example of geodemographics, which is segmenting potential customers into neighborhood lifestyle categories.
32. Define a marketing decision support system (DSS). Name and briefly describe the four characteristics of a true DSS.
An interactive, flexible, computerized information system that enables managers to obtain and manipulate information as they are making decisions. The 4 characteristics of a true DSS are: 1. Interactive: managers give simple instructions and see immediate results. The process is under their direct control; no computer programmer is needed. Managers don't have to wait for scheduled reports. 2. Flexible: a DSS can sort, regroup, total, average, and manipulate the data in various ways. It will shift gears as the user changes topics, matching information to the problem at hand. For example, the CEO can see highly aggregated figures, and the marketing analyst can view very detailed breakouts. 3. Discovery-oriented: managers can probe for trends, isolate problems, and ask "what if" questions. 4. Accessible: managers who aren't very skilled with computers and statistics can easily learn how to use a DSS. Novice users should be able to choose a standard, or default, method of using the system. They can bypass optional features so they can work with the basic system right away while gradually learning to apply its advanced features.
Refer to baseball dirt. The first time Roger Bossard purchased Partac Peat's secret mix, it was most likely an example of which type of buying situation? a. modified rebuy b. new buy c. habitual buying decision d. buying heuristics e. straight rebuy
B. A new buy is a situation requiring the purchase of a product for the first time.
Refer to Mercedes-Benz. One potential problem is that some of the purchasers of Daimler's downsized luxury vehicles could be consumers who would have purchased a larger, higher-priced Mercedes-Benz. This situation is called: a. subjugation b. cannibalization c. sabotage d. benefit transference e. marginal sales
B. Cannibalization is a situation that occurs when sales of a new product cut into sales of a firm's existing products.
When someone just started a diet and swore to it that they would limit ice cream consumption. They feel guilty as they purchase the ice cream. As they leave the store its hot and they work so hard they think they deserve it. They're experiencing: a. the observer-expectancy effect b. cognitive dissonance c. functional dynamics d. dissociative reference e. confirmation bias
B. Cognitive dissonance is the inner tension a consumer experiences after recognizing an inconsistency between behavior and values and opinions.
The fact that someone pays attention to the billboard is an example of what? a. selective perception b. selective exposure c. selective distortion d. selective retention e. selective discrimination
B. Selective exposure is the process whereby a consumer notices certain stimuli and ignores others.
Refer to Mercedes-Benz. Baby boomers have money to burn and will be the primary target for the downsized, luxury vehicles offered by Mercedes. Many of them will want this type of car to feel young again. This group is considered a(n) _____. a. consumer advocacy group b. income ready group c. market d. population e. market maven
C. A market is people (baby boomers) with needs (feeling young) and the ability and willingness to buy.
Because Partac Peat is a business product, the primary promotional method used for its sale is: a. trade promotions b. slotting allowances c. personal selling d. advertising in consumer magazines e. publicity
C. The sale of many business products requires a great deal of personal contact, so personal selling is the primary promotion tool.
5. What is the difference between culture and subculture? Why do marketing managers need to understand culture and subculture?
Culture is the essential character of a society that distinguishes it from other cultural groups. The underlying elements of every culture are the values, language, myths, customs, rituals, laws, and artifacts or products that are transmitted from one generation to the next. The most defining element of a culture is its values-the enduring beliefs shared by a society that a specific mode of conduct is personally or socially preferable to another mode of conduct. Culture can be divided into subcultures on the basis of demographic characteristics, geographic regions, national and ethnic background, political beliefs, and religious beliefs. Subcultures share elements of the overall culture as well as cultural elements unique to their own group. Marketing managers need to understand culture and subculture because people's culture and its accompanying values, as well as their subculture and social class, influence their buying behavior. A firm has little chance of selling products in a culture it does not understand.
19. Why is customer service an important factor in business marketing?
Customer service is an important factor in business marketing because these companies understand that keeping current customers satisfied is just as important as attracting new ones, if not more so. By giving the most valuable customers superior service, a firm is more likely to keep them happy, hopefully increasing retention of these high-value customers and maximizing the total business value they generate over time.
Some dirt sold by Partac Peat is used to make clay tennis court surfaces. As the number of people playing tennis increases so does the demand for new clay courts and, therefore, the demand for Partac Peat. This occurs because the demand for Partac Peat is: a. inelastic b. intangible c. heterogeneous d. derived e. elastic
D. As consumers demand more space to play tennis, the demand for the materials to make new tennis courts increase.
25. Describe psychographic segmentation and discuss why marketers use the basis for segmenting markets. List the four psychographic variables commonly used as segmentation bases.
Demographics provide the skeleton, but psychographics add meat to the bones. Market segmentation on the basis of the following variables: 1. Personality: reflects a persons traits, attitudes, and habits. 2. Motives: Emotional, rational and status-related motives. 3. Lifestyles: divides people into groups according to the way they spend their time, the importance of the things around the, their beliefs, and socioeconomic characteristics such as income and education. 4. Geodemographics: geodemographic segmentation clusters potential customers into neighborhood lifestyle categories. It combines geographic, demographic, and lifestyle segmentations.
27. What is usage-rate segmentation? What is the 80/20 principle, and how does it apply to usage-rate segmentation?
Divides a market by the amount of product bought or consumed. Categories vary with the product, but they are likely to include some combination of the following: former users, potential users, first-time users, light or irregular users, medium users and heavy users. Enables marketers to focus their efforts on heavy users or develop multiple marketing mixes aimed at different segments. The 80/20 principle holds that 20 percent of all customers generate 80 percent of the demand. The needs of heavy users differ from the needs of other usage-rate groups. They have intense needs for product and service selection and a variety of types of information, as well as an emotional attachment to the product category.
When someone sees a billboard this is an example of a(n) _____ information source. a. experimental b. nonmarketing-controlled c. internal d. unbiased e. marketing-controlled
E. Marketing-controlled information sources originate with marketers promoting the product.
When a person realizes they are out of ice cream at home, which stage of the consumer decision-making process is this? a. evaluation of alternatives b. information search c. purchase d. post purchase behavior e. need recognition
E. Need is the first state in the process and it is the result of an imbalance between actual and desired states.
What type of business product would Partac Peat's dirt be since it is used in the making of baseball fields? a. equipment b. accessory equipment c. capital item d. processed materials e. component parts
E. The dirt is purchased from Partac Peat because it needs to be used in the construction of the baseball fields. The dirt receives no further processing.
Refer to Mercedes-Benz. Mercedes-Benz's baby boomers are a useful segment because they meet certain criteria. Which of the following do the baby boomers meet? a. substantiality b. identifiability and measurability c. accessibility d. responsiveness e. all of these
E. The successful criteria for market segmentation include substantiality, identifiability, measurability, accessibility, and responsiveness.
According to Maslow's hierarchy of needs model, which need was someone trying to satisfy when they purchase the ice cream? a. self-actualization b. esteem c. safety d. social e. physiological
E. Thirst is a physiological need on Maslow's hierarchy.
4. What is extensive decision making? Discuss the purchase of a product that you would use extensive decision making when purchased for the first time and would require limited decision making in subsequent purchases.
Extensive decision making is something consumers practice when they are buying an unfamiliar, expensive product or an infrequently bought item. This is the most complex type of consumer buying decision and is associated with high consumer involvement. These people want to make the right decision, so they want to know as much as they can about the product category and available brands. Something I would use extensive decision making for would be finding different toys my puppy likes. After I find out which ones she likes, the purchase no longer requires extensive evaluation and will become more of a limited decision making process or even a routine decision making process.
1. You have decided to work all summer to save money for the ultimate $2,000 high-definition television with surround sound. Trace the steps of your decision process for purchasing your new television.
First, recognize the need for the high definition television with surround sound. This happens when the stimuli triggers awareness of the unfulfilled want for the tv and surround sound. Engage in internal or external information search. For internal, I would think back to any previous experiences I've had with any TV's or surround sounds. This way I would be able to tell which brands I had a good or bad experience with. For external, I would ask friends and family members for the personal experiences with products. Maybe they will recommend a specific product to me. I might even check online for reviews on different products. Next, evaluate the additional information and establish purchase guidelines. Finally, a purchase decision is made.
12. Describe the reseller market. Why do businesses use the services of business product distributors?
Made up of wholesalers and retailers that buy finished goods and resell them for a profit. Businesses use the services of business product distributors because they are the wholesalers that buy business products and resell them to business customers. Because they may want to buy smaller quantities; local buyers.
33. What is marketing research? Name and briefly describe the three functional roles of marketing research.
Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision. The results of this analysis are then communicated to management. Thus, it is the function that links the consumer, customer, and public to the marketer through information. It provides decision makers with data on the effectiveness of the current marketing mix and also with insights for necessary changes. It's a main data source for both management information systems and DSS. The findings of a marketing research project become data in a DSS. The 3 functional roles: 1. Descriptive: gathering and presenting factual statements. Ex: what is the historic sales trend in the industry? What are consumers' attitudes toward a product and its advertising? 2. Diagnostic: explaining data. Ex: what was the impact on sales of a change in the design of the package? 3. Predictive: to address "what if" questions. Ex: how can the researcher use the descriptive and diagnostic research to predict the results of a planned marketing decision.
29. Compare and contrast traditional mass marketing and one-to-one marketing. What is the primary goal for companies that adopt the one-to-one marketing approach?
Most businesses today use a mass-marketing approach designed to increase market share by selling their products to the greatest number of people. For many businesses, however, it is more efficient and profitable to use one-to-one marketing to increase share of customer- in other words, to sell more products to each customer. The primary goal for companies that adopt the one-to-one marketing approach is to reduce costs through customer retention and increase revenue through customer loyalty. The difference between one-to-one marketing and the traditional mass-marketing approach can be compared to shooting a rifle and a shotgun. If you have a good aim, a rifle is the more efficient weapon to use. A shotgun, on the other hand, increases your odds of hitting the target when it is more difficult to focus. Instead of scattering messages far and wide across the spectrum of mass media (the shotgun approach), one-to-one marketers look for opportunities to communicate with each individual customer (the rifle approach).
2. Assume you have decided to purchase a new automobile. Describe your internal information search. Then name the two types of external information sources. For each source, give two specific examples of information sources you might use.
My internal information search was thinking back to high definition TV's I have had and which brands I was pleased with. Next, I thought back to living at my parents house and the surround sound system my parents had. I thought it was a good sound system, and was called Bose, so I would probably look into that brand for the surround system. Two types of external information sources are nonmarketing-controlled and marketing-controlled information sources. Examples of nonmarketing-information sources I might use would be personal sources such as family or friends, and public sources such as rating organizations that comment on different products.
9. Define perception and describe the three types of selective perception. Use personal examples in your discussion.
Perception: the process by which we select, organize, and interpret these stimuli(any unit of input affecting one or more of the 5 senses: sight, smell, taste, touch, and hearing) into a meaningful and coherent picture. This is how we see the world around us and how we recognize that we need some help in making a purchasing decision. The 3 types of selective perception are: 1. Selective exposure: deciding which stimuli to notice and which to ignore. For example: I go to the mall and smell numerous good smelling foods. I only notice the foods I personally like eating and that smell good to me. I ignore the rest of the smells. 2. Selective distortion: occurs when consumers change or distort information that conflicts with their feelings or beliefs. For example, this happened to me when American Airlines, the company I always flew with, had that horrible crash a little while ago. Since then, although they fixed it and were my favorite airline, I always fly with Southwest. 3. Selective retention: this is remembering only information that supports personal feelings or beliefs and the consumer forgets all information that may be inconsistent. For example, when the Jehovah's witnesses come bring pamphlets to my house I act nice and take the pamphlet and skim through it and thank them. After they leave, I have no idea what I just read because it is inconsistent with my beliefs, as I am a Catholic.
30. Explain what is meant by positioning and describe the bases marketers use to position products and services.
Process that influences potential customers' overall perception of a brand, product line, or organization in general. The development of any marketing mix depends on positioning. Marketers use the fact that consumers compare products on the basis of important features. Marketers assess the positions occupied by competing products, determining the important dimensions underlying these positions, and choosing a position in the market where the organization's marketing efforts will have the greatest impact.
13. A Brazilian manufacturer of solar cells used as a renewable source of energy in all types of structures would like to begin distribution and sales in the United States, Canada, and Mexico. The manufacturer has hired you to investigate NAICS data for such products in North America. What is the NAICS system? What other helpful kinds of information can be found in this source?
The NAICS system is an industry classification system introduced in 1997 to replace the standard industrial classification system (SIC). NAICS is a system for classifying North American business establishments. It provides a common industry classification system for the North American Free Trade Agreement partners. It tells you not only what industry, but how many in that industry. We would get a handle onto how many manufacturers there already are in that particular industry. This is also extremely a valuable tool for business marketers engaged in analyzing, segmenting, and target markets. The number, size, and geographic dispersion of firms can also be identified. This can then be converted to market potential estimates, market share estimates, and sales forecasts. It can also be used for identifying potential new customers. The first 2 digits designate a major economic sector such as agriculture or manufacturing, the third digit designates an economic subsector such as crop production or apparel manufacturing, the fourth digit designates an industry group such as grain and oil seed for farming or fiber, yarn and thread mills, the fifth digit designates the NAICS industry such as wheat farming or broad-woven fabric mills, and the sixth digit, when used, identifies subdivisions of NAICS industries that accommodate user needs in individual countries.
26. What is benefit segmentation? For toothpaste, list six benefits that might be sought by consumers. For each benefit, give an existing brand name that best exemplifies segmentation according to that benefit.
The process of grouping customers into market segments according to the benefits they seek from the product. Most types of market segmentation are based on the assumption that this variable and customers' needs are related. Benefit groups potential customers on the basis of their needs or wants rather than some other characteristic, such as age or gender. 6 benefits of toothpaste are: 1. Whitening- Crest 3D White toothpaste 2. SLS free-Sensodyne toothpaste 3. All Natural-Tom's of Maine toothpaste 4. Gentle (kids)- Aquafresh kids toothpaste 5. Sensitivity- Arm and Hammer toothpaste 6. Fresh breath- Colgate fresh mint toothpaste
6. Marketers are interested in social class for two main reasons. What are they? Give a real-world example for each.
The two main reasons are: 1. Social class often indicates which medium to use for advertising. Depending on the social class, advertising may change. For example, if a company wants to sell to middle-class families it might advertise during the local evening news because middle class families tend to watch more television than other classes do. If they want to sell more to upscale individuals, it might place a print ad in a business publication such as The Wall Street Journal. 2. Knowing what products appeal to which social classes can help marketers determine where to best distribute their products. Industry analysts are seeing shares of discount chains faring better than their full-priced and upscale counterparts. They say that these days big box and discount retailers' greatest challenge has been courting consumers who fall in the middle-income level. This results in a fiercely competitive retail environment where discount retailers have focused less on their core, low-income consumers, who are most impacted by rising housing and gas costs. This is all because more affluent customers traded down to obtain more value for their money.
3. Assume you have gone to the corner convenience store to pick up your usual brand of potato chips. What type of decision making will take place? How would this differ from the decision making that would take place if the store was out of your regular brand?
The type of decision-making that will take place would be routine response behavior. This requires very little decision effort as the item is frequently purchased, and the routine response behavior is characterized by brand loyalty. This would differ from the decision making that would take place if the store was out of my brand because if the store was out of my brand, the decision making taking place would be limited decision making. This is because I have previous product experience, I am just unfamiliar with the current brands available. This is a lower level of involvement, but is still higher than the routine decision I would make if they had my brand available. Basically, I will evaluate several other brands based on maybe their promotional claims.
21. What is a market segment? Define market segmentation and discuss why market segmentation is important to the well-being of most companies.
Within a market, a market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. At one extreme, we can define every person and every organization in the world as a market segment because each is unique. At the other extreme, we can define the entire consumer market as one large market segment and the business market as another large segment. It is important to the well-being of most companies because nearly all markets include groups of people or organizations with different product needs and preferences. It helps marketers define customer needs and wants more precisely.
stimulus generalization
a form of learning that occurs when one response is extended to a second stimulus similar to the first (ex: Jell-O frozen pudding pops rely on the familiarity of Jell-O gelatin)
stimulus discrimination
a learned ability to differentiate among similar products (ex: some consumers prefer Coca-Cola and others prefer Pepsi. Many insist they can taste a difference between the two brands)
cognitive dissonance
an inner tension people tend to feel when they recognize inconsistency between their values or opinions and their behavior
what is a marketing controlled information source?
biased toward a specific product because it originates with marketers promoting that product. Include mass-media advertising, sales promotions, salespeople, product labels and packaging, and the Internet.
role of your sister is the ultimate user of the bike
consumer
factors that affect the consumer decision-making process
cultural factors (culture and values, subculture, social class), social factors (reference groups, opinion leaders, family), individual factors (gender, age and family, life-cycle stage, personality, self-concept, and lifestyle), psychological factors (perception, motivation, learning, beliefs and attitudes).
role of dad or mom is likely to choose the final brand and model of bike to buy after seeking further information from your sister about cosmetic features such as color, and imposing additional criteria of his or her own, such as durability and safety.
decision maker
2 types of reference groups: direct and indirect
direct is face to face membership and is either primary (small, informal group) or secondary (large, often formal groups. indirect is nonmembership and is either aspirational (group that someone would like to join) or non-aspirational (group that someone wants to avoid being identified with)
role of a sister who might ask for a new bike as a birthday present. person who plants the seed for the purchase
initiator
routine response behavior
frequently purchased, low-cost goods and services. low-involvement products because consumers spend little time on search and decision before making the purchase. short time, low cost, internal only information search, 1 number of alternatives
change in self concept is gradual or drastic?
gradual
conceptual learning
not acquired through direct experience. someone told you that diet drinks leave an aftertaste so you choose a different drink. you have learned that you would not like this new diet drink without ever trying it.
what is nonmarketing-controlled information source?
not associated with marketers promoting a product. these include personal experiences, personal sources, and public sources and other rating organizations that comment on products and services.
experiential learning
occurs when an experience changes your behavior. like a cold medicine doesn't relieve your symptoms, you may not buy that brand again
selective distortion
occurs when consumers change or distort information that conflicts with their feelings or beliefs
maslow's hierarchy of needs model
physiological needs, to safety needs, to social needs, to esteem needs, up to self-actualization needs
factors determining the level of consumer involvement
previous experience, interest, perceived risk of negative consequences, social visibility,
selective retention
remembering only information that supports personal beliefs or feelings
what perception process is this: business travelers who fly often may discount information about airplane crashes because they must use air travel constantly in their jobs
selective distortion
what perception process is this: after reading a pamphlet that contradicts one's political beliefs, a person may forget many of the points outlined in it
selective retention
marketers consider what important because it helps explain the relationship between individuals' perceptions of themselves and their consumer behavior
self-concept
culture
the essential character of a society that distinguishes it from other societal groups. the underlying elements of every culture are the values, language, myths, customs, rituals, and laws that shape the behavior of the people, as well as the material artifacts, or products, of that behavior as they are transmitted from one generation to the next.
what is an internal information search?
the person recalls information stored in the memory.
what is selective exposure
the process whereby a consumer notices certain stimuli and ignores others
limited decision making
typically occurs when a consumer has previous product experience but is unfamiliar with the current brands available. associated with lower levels of involvement because consumers do expend moderate effort in searching for information or in considering various alternatives. low to moderate involvement, short to moderate time, low to moderate cost, mostly internal information search, few number of alternatives.
values
what represent what is most important in people's lives
extensive decision making
when buying an unfamiliar, expensive product or an infrequently bought item. this is the most complex type of consumer buying decision and is associated with high involvement on the part of the consumer. people usually experience the most cognitive dissonance when buying high-involvment products. long time, high cost, internal and external information search, many number of alternatives.
