MKT Exam 2

Methods of segmenting consumer markets

(1) Geographic Segmentation (2) Demographic Segmentation (3) Psychographic Segmentation (4) Behavioral Segmentation

data mining

is the extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions

Business Marketing

is the marketing of good and services to (1) companies, (2) governments or (3) not-for-profit organizations for use in the creation of goods and services they can produce and market to others.

A dichotomous question

is the simplest form of a fixed alternative question that allows only a "yes" or "no" response.

when a foreign company and a local firm invest together to create a local business, it is called a

joint venture

Foreign Corrupt Practices Act (1997)

makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country

The Economic Espionage Act (1996)

makes the theft of trade secrets by foreign entities a federal crime in the United States

economic espionage act (1996)

makes theft a federal crime

Mass customization is the next step beyond build-to-order (BTO),

manufacturing a product only when there is an order from a customer

reverse auction

many sellers -> one buyer

an international firm

markets its products and services in other countries the same way they do in their home country

Primary data is more time-consuming and expensive, but

may be more specific to the problem.

indirect exporting

using an intermediary to assist in the exporting; easiest way to start, least commitment and risk, but also produces the least profit because some of it has to go to the intermediary

customs are

what is considered normal and expected about the way people do things in a specific country

licensing

when a company offers intellectual property for a fee -advantages: low risk, capital free entry -disadvantages: loss of control, profit reduction, little learning about foreign marketing

dumping

when a firm sells a product in a foreign country below its domestic price or below its actual cost

transnational firms

when marketers employ a global marketing strategy- the practice of standardizing marketing strategies when there are cultural similarities and adapting them when cultures differ

a significant development in organizational buying has been the creation of online trading communities, called E-MARKETPLACES

which bring together buyers and supplier organizations.

decision

a conscious choice from among two or more alternatives

product adaptation

changing a product in some way to make it more appropriate for a country's climate or consumer preferences

a dual adaptation strategy involves

changing both the product and the message to adapt to a particular culture

product repositioning

changing the place a product occupies in a consumer's mind relative to competitive products

tariffs are

government tax on goods or services entering a country, primarily serve to raise prices on imports

Behavioral Segmentation

(1) Product Features: Understanding what features are important to different customers is a useful way to segment markets because it can lead directly to specific marketing actions, such as a new product, an ad campaign, or a distribution system. (2) Usage rate is the quantity consumed or patronage—store visits—during a specific period. It varies significantly among different customer groups.

the economic infrastructure is a country's

(1) communications (2) transportation (3) financial, and (4) distribution systems- a critical consideration in determining whether to try to market to a country's consumers and organizations

good marketing involves 5 steps

(1) define the problem (2) develop the research plan (3) collect relevant data (4) develop the findings from that data (5) take marketing actions

effective market segmentation does two key things:

(1) forms meaningful groupings (2) develops specific marketing mix actions

buy classes consist of three types of organizational buying situations:

(1) new buy (2) straight re-buy (3) modified re-buy

the purchasing decision process in b2b situations

(1) problem recognition (2) information research (3) atternative evaluation (4) purchase decision (5) post-purchase behavior

independent e-marketplaces charge a fee for their service and exist in settings that have one or more of the following features

(1) thousands of geographically dispersed buyers and sellers (2) volatile prices caused by demand and supply fluctuations (3) time sensitivity due to perishable offerings and changing technologies (4) easily comparable offerings between a variety of sellers

The European Union consists of

-27 (or 28) member countries that have eliminated most barriers to the free flow of goods, services, capital and labor across their borders -common currency -greater uniformity in standards -removal of transportation & advertising restrictions

Segments of One: Mass Customization

-American marketers are rediscovering today what their ancestors running the corner general store knew a century ago: Each customer has unique needs and wants, and desires special tender loving care. -Economies of scale in manufacturing and marketing during the past century made mass-produced goods so affordable that most customers were willing to compromise their individual tastes and settle for standardized products

One Product and Multiple Market Segments

-When an organization produces only a single product or service and attempts to sell it to two or more market segments, it avoids the extra costs of developing and producing additional versions of the product. -In this case, the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. -This strategy is common with books and magazines

global grand

-a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs. -have the same product formulation or service concept, deliver the same benefits to consumers, and use consistent advertising across multiple countries/cultures.

value analysis

-a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs. -factors may include price, durability, expected useful life, maintenance requirements, etc

direct investment - global entry

-actual full ownership of foreign subsidiary or division -usually done after trying other entry strategies -advantages: cost savings, increased understanding of local markets -disadvantages: financial investments and risk -examples: Nissan in Tennessee, Reebok in Russia, FedEx in China

join venture

-advantages: reduced resource requirements, easier entry to market -disadvantages: possible disagreements between partners -Ex: proctor & gamble, starbucks, general motors, frito-lay

Open ended questions

-allow respondents to express opinions, ideas, or behaviors in their own words without being forced to choose among alternatives that have been predetermined by a marketing researcher

Step 4: Develop findings

-analyze the data -present the findings

supply partnership

-buyer and seller work together to improve the product eventually delivered to consumer -example: some large retailers work with suppliers to create special packaging for large purchases by consumers, such as when Costco may get a food processor to produce a multi-pack of something that is typically sold as a single item

economic espionage

-clandestine collection of trade secrets or proprietary information about competitors -costs U.S. firms $250+ billion/year -23 nations routinely target U.S. firms

Global competition

-exists when firms originate, produce, and market their products worldwide -the automobile, pharmaceutical, apparel, electronics, aerospace and telecommunication fields represent well-known industries with sellers and buyers on every continent

new buy

-first time purchase of product/service -this involves greater risk, so more people enter into the decision process

sustainable procurement

-integrate environmental considerations into the buying process -goal is to reduce the impact on human health and the physical environment

Product differentiation

-involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products -the perceived differences may involves: physical features such as size or color and nonphysical features such as image or price

modified rebuy

-involves a repurchase with a change in the product specifications, price, delivery, schedule or supplier

a salesforce survey forecast

-involves asking the firm's salespeople to estimate sales during a coming period. -because these people are in contact with customers and are likely to know what customers like and dislike, there is logic to this approach.

The North American Free Trade Agreement (NAFTA)

-lifted many trade barriers between Canada, Mexico and the U.S. and created a marketplace with more than 450 million consumers -ex: Walmart to Mexico, Target to Canada

Step 5: Take marketing actions

-make action recommendations -implement action recommendations -evaluate results

Organizational buyers

-manufacturers, wholesalers, retailers and government agencies that buy goods and services for their own use or for resale. -all the buyers in a nation except the ultimate consumers

supplier development

-many organizational buyers today are transforming their buying criteria into specific requirements that are communicated to prospective suppliers -involves the deliberate effort by organizational buyers to build relationships to shape suppliers' product to better meet buyers' needs

why use NAICS codes?

-measure economic activity -determine market share -estimate market demand -standardize forecasting -determine industry growth -identify market opportunities

Step 3: Collect relevant information

-obtain secondary data: facts and figures that have already been recorded before the project at hand. Secondary data can be internal (such as sales figures or order requests) or external (such as the data available from the US Census). -obtain primary data: facts and figures that are newly collected for the project. The main types of primary data are observational (watching people mechanically, personally, or through neuromarketing methods), questionnaire, and other sources of data.

buying center

-participate in the buying process and share common goals, risks, and knowledge important to a purchase decision -the decision making unit or group of people influencing a B2B (business to business) purchase decision -when the buying center is more formalized, it's called a buying committee

what is marketing research?

-process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions.

Exploratory research

-provides ideas about a relatively vague problem. -it is a type of research conducted for a problem that has not been clearly defined.

closed-end or fixed alternative questions

-require respondents to select one or more response options from a set of predetermined choices. -examples of this type of question are the quiz questions you see at the beginning of each class.

product extension

-selling virtually the same product in other countries -it works well when and where consumers share the same desires, needs and uses for the product

Step 1: Define the problem

-set research objectives -identify possible marketing actions

Step 2: Develop the research plan

-specify constraints -identify data needed for marketing actions -determine how to collect data: *concepts: ideas about products or services *methods: the approaches that can be used to collect data to solve all or part of a problem

measuring organizational markets:

-the NAICS (North American Industry Classification System) provides common industry definitions for Canada, Mexico and the United States, which makes it easier to measure economic activity in the three member countries of the North American Trade Agreement (NAFTA). -organizations classified into a 6-digit number (sector, sub-sector, industry group, specific industry, and reserved for country coding) -replaced the Standard Industry Classification (SIC) system coding in the United States, a version of which has been in place for more than 50 years

derived demand means that

-the demand for industrial products and services is driven by, or derived from, demand for consumer products/services -the size of the purchase involved in organizational buying is typically much larger than that in consumer buying -the number of potential and actual customers is much smaller than for consumer products

causal research

-the most sophisticated, tries to determine the extent to which the change in one factor changes another one.

unintended meanings

-the number "13" means bad luck in North America, the number "4" is seen that way in Japan. -"thumbs up" is a positive sign in the U.S., however in Russia and Poland, this gesture has an offensive meaning when the palm of the hand is shown.

organizational buying criteria are

-the objective attributes of the supplier's products and services and the capabilities of the supplier itself. -the most commonly used criteria are: (1) price (2) ability to meet the quality specifications required for the item (3) ability to meet required delivery schedules (4) technical capability (5) warrantied and claim policies in the event of poor performance (6) past performance on previous contracts and (7) production facilities/capacity -suppliers that meet or exceed these criteria create customer value

an identical promotion message is used for

-the product extension and product adaptation strategies around the world. -Gillette uses the same global message for its men's toiletries: "Gillette, the Best a Man Can Get."

market segments

-the relatively homogeneous groups of prospective buyers that result from the market segmentation process -relatively similar to each other in terms of their consumption behavior, demographics, media behavior and other segmentation base/variables

Descriptive research

-used to describe the characteristics of a population or phenomenon being studied

buyer center roles

-users: the people in the organization who actually use the product -influencers: affect the buying decision, usually by helping define the specifications for what is bought. tech personnel who help develop specs and evaluate alternate products. -deciders: choose the products -buyers: have formal authority and responsibility to select the supplier and negotiate the terms of the contract -gatekeepers: control the flow of information in the buying center; typically purchasing personnel, technical experts and secretaries. buyers who deal directly with a vendor are gatekeepers.

Two important advantages of secondary data are

1) the tremendous time savings because the data has already been collected and published or exist internally and (2) the low cost, such as free or inexpensive Census reports

Emergence of a networked global marketplace

90% of global electronic commerce revenue arises form business-to-business transactions among a dozen countries in North America, Western Europe and the Asia/Pacific Rim region

80/20 rule

A concept that suggests 80 percent of a firm's sales are obtained from 20 percent of its customers.

market-product grid

A framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization.

Protectionism has declined over the past 50 years due in large part to the

General Agreement on Tariffs and Trade (GATT 1947)

because of the shortcomings of GATT, the major industrialized nations of the world formed the

World Trade Organization (WTO) in 1994, to address an array of world trade issues and replace GATT as the overseer of international trade

bidder's list

a list of firms believed to be qualified to supply a given item; this list is generated from the company's purchasing databank as well as from engineering inputs

quota

a restriction placed on the amount of a product allowed to enter or leave a country

product invention

alternatively, companies can invent totally new products designed to satisfy common needs across countries

make-buy decision

an evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself

Global strategic alliances

are agreements among two or more independent firms to cooperate for the purpose of achieving common goals, such as a competitive advantage or customer value creation

Demographic Segmentation

based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) of prospective customers

Geographic Segmentation

based on where prospective customers live or work (region, city size)

Multiple Products and Multiple Market Segments

common in the automobile industry where auto makers produce different lines of cars, trucks, and SUV's...each targeted to a different market.

global consumers

consist of consumer groups living in many countries or regions of the world who have similar needs or seek similar features/benefits from products and services

industrial demand is

derived

the biggest commitment a company can make when entering the global market is

direct investment (which entails a domestic firm actually investing in and owning a foreign subsidiary or division)

a communication adaptation involves

emphasizing different product attributes to different markets, depending on preferences in different locations

the trade feedback effect says that

exports lead to imports and imports lead to more exports

questionnaire data

facts and figures obtained by asking people about their attitudes, awareness, intentions and behaviors

communication strategies

identical message- exxon "put a tiger in your tank communication adaptation strategy dual adaptation strategy- adapt both product and promotion message

types of organizational buyers

industrial markets, government markets, wholesalers and retailers

market segmentation

involves aggregating prospective buyers into groups or segments that (1) have commons needs and (2) will respond similarly to a marketing action

A survey of buyers' intention forecast

involves asking prospective customers if they are likely to buy the product during some future time period.

Head-to-head positioning

involves competing directly with competitors on similar product attributes in the same target market. Using this strategy, Dollar rental car competes directly with Avis and Hertz.

A direct forecast:

involves estimating the value to be forecast without any intervening steps. examples appear daily: How many quarts of milk should I buy? How much money should I get out of the ATM?

Differentiation positioning

involves seeking a less-competitive, smaller market niche in which to locate a brand. McDonald's tried to appeal to the health-conscious segment when it introduced the low-fat McLean Deluxe hamburger to avoid competing directly with Wendy's and Burger King.

A lost-horse forecast

involves starting with the last known value of the item being forecast, listing the factors that could affect the forecast, assessing whether they have a positive or negative impact, and making the final forecast

Cross-cultural analysis

involves the study of similarities and differences among consumers in two or more nations/societies

reciprocity

is an industrial buying practice in which two organizations agree to purchase each other's products and services -discouraged/disapproved by the Department of Justice because it restricts the free market -ex: long term contracts & approved vendor lists

A perceptual map

means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands, as well as its own product or brand.

cannibalization

new product simply take away sales from existing products

back translation

occurs when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors

traditional auction

one seller -> many buyers

The Word Trade Organization sets rules governing trade between its members through

panels of trade experts who decided on trade disputes between nations and issue binding decisions

exporting is

producing goods in one country and selling them in another country

Product positioning

refers to the place a product occupies in consumers' minds on important attributes relative to competitive products.

a sales forecast

refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts

straight rebuy

reorder an existing product or service from known supplier

a society's values

represent personally or socially preferable modes of conduct or states of existence that tend to persist over time

wholesalers and retailers that buy physical products and resell them again without any reprocessing are

resellers

direct exporting

selling products in other countries without using an intermediary

mass customization

tailoring goods or services to the tastes of individual customers on a high-volume scale

organization buying behavior is

the decision making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers

balance of trade is

the difference between the monetary value of a nation's exports and imports

governmental units are

the federal, state, and local agencies that buy goods and services for the constituents they serve

The key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer's individual wants and achieving organizational synergy:

the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently.

Gross Domestic Product (GDP) is

the monetary values of all goods and services produced in a country during one year

protectionism

the practice of shielding one or more industries within a country's economy from foreign competition through the use of tariffs or quotas

countertrade

the practice of using barter rather than money for making global sales

cultural symbols are

things that represent ideas and concepts; they play an important role in cross-cultural analysis bc different cultures attach different meanings to things

organizations buy products and services for one main reason:

to help them achieve their objectives, which include: -profit -efficiency -environment/sustainability -women, minority owned suppliers/vendors

when a nation's imports exceed its exports, it has a

trade deficit

when a nation's exports exceed its imports, it has a

trade surplus

multinational firms

use a multi-domestic marketing strategy, which means that they have as many different product variations, brand names, and advertising programs as countries in which they do business

Ways to Segment Organizational (Business) Markets

• Geographic segmentation: Statistical area. Firms located in a metropolitan statistical area might receive a personal sales call, whereas those in a micropolitan statistical area might be contacted by telephone. • Demographic segmentation: NAICS code. Firms categorized by the North American Industry Classification System code as manufacturers that deal with customers throughout the world might have different document printing needs than do retailers or lawyers serving local customers. • Demographic segmentation: Number of employees. The size of the firm is related to the volume of digital documents produced, so firms with varying numbers of employees might be specific target markets for different Xerox copier systems. • Behavioral segmentation: Usage rate. Similar to this segmentation variable for consumer markets, features are often of major importance in organizational markets.