exam 2

When Doritos comes out with new flavors of its tortilla​ chips, what brand development strategy does it​ employ?

(Line extension) -Brand extension -Multibrand -Store brand -New brand

When a company lengthens a product line by adding more items beyond its current​ range, it is​ ________.

(stretching the line) -increasing the width of its product mix -filling the line -decreasing the width of its product mix -decreasing the depth of the line

Which of the following statements regarding socially responsible product decisions is​ correct?

-Companies can safely ignore patent laws. (The government may prevent companies from adding products through acquisitions if the effect threatens to decrease competition.) -Safety legislation has been passed to regulate chemical​ substances, drugs, and​ poisons, but not​ toys, automobiles, or fabrics. -Manufacturers are generally not concerned with product liability. -When companies drop​ products, they do not have any obligations to​ suppliers, dealers, and customers.

Which of the following statements regarding the business market is​ correct?

-In the business market buying​ process, buyers and sellers are less dependent on each other than in the consumer market. (Many sets of business purchases are made for one set of consumer purchases.) -The business market is not as large as the consumer market in terms of dollars spent and items purchased. -The business market has more buyers than the consumer market. -Business buying decisions are less complex than consumer buying decisions.

​________________ is one problem with​ business-to-business e-procurement.

-Increased paperwork requirements -Reduced purchasing efficiency -Increased time between order and delivery -Increased transaction costs (Suppliers being pitted against one another)

Which type of consumer products are frequently purchased with little​ planning, little comparison or shopping​ effort, and low customer​ involvement?

-Industrial products (Convenience products) -Specialty products -Shopping products -Capital products

The quality of services depends on who provides them as well as​ when, where, and how they are provided. Which characteristic of services does this​ describe?

-Intangibility -Perishability -Tangibility (Variability) -Inseparability

Which stage of the PLC is characterized by peak​ sales, low costs per​ customer, high​ profits, mainstream​ adopters, and a stable number of competitors that are beginning to​ decline?

-Introduction -Decline -Growth (Maturity) -Product development

Which of the following describes the process of arranging for a market offering to occupy a​ clear, distinctive, and desirable place relative to competing products in the minds of target​ consumers?

-Market segmentation -Mass marketing (Positioning) -Market targeting -Differentiation

Intuit​ Labs, a division of​ Intuit, the accounting and payroll software​ developer, follows a​ "Design for Delight​ (D4D)" development​ philosophy, which states that products should delight customers by providing experiences that exceed expectations. Which new product development approach is Intuit​ using?

-Marketing strategy development -Crowdsourcing ​(Customer-centered new product development) ​-Team-based new product development -Systematic new product development

​____________________ is a characteristic important in influencing an​ innovation's rate of adoption and described by the degree to which the innovation may be tried on a limited basis.

-Motivation -Complexity -Relative advantage -Communicability (Divisibility)

​______________________ protect consumers from harm and the company from liability by proactively ferreting out potential product problems.

-Ombudsmen (Product stewards) -Brand managers -Attorneys -Product managers

Which of the following is NOT a social factor influencing consumer buying​ behavior?

-Opinion leaders -Word of mouth (Cognitive dissonance) -Online social networks -Reference groups

Which of the following statements concerning new products is​ correct?

-Products that are merely improved in some way are not considered new. -A modified product is not considered a new product. (Modified and improved products are considered new.) -To be considered​ new, the product must be something consumers have not seen before. -Most new products succeed within two years of their introduction.

What is the first step of the buyer decision​ process?

-Purchase decision -Alternative evaluation (Need recognition) -Information search ​-Post-purchase behavior

Which of the following is a variable used to segment business buyers that is not used to segment consumer​ buyers?

-Situational factors -Personal characteristics -Psychographics (Operating characteristics) -Purchasing approaches

Nailit Cosmetics is advertising its newest line of nail​ polishes, made from a​ nontoxic, water-based nail polish with amazing summer colors. Nailit is selling the products in specially designed bottles that make application easier. Which of the following is a core customer value for​ Nailit's line of​ polishes?

-The Nailit brand -The​ products' revolutionary packaging (The desire to have beautiful nails) -The natural ingredients -The nontoxic properties of the products

​_________ refers to the practice of integrating ethnic themes and​ cross-cultural practices within a​ company's mainstream marketing.

-Viral marketing -Cause marketing -Guerilla marketing -Buzz marketing (Total market strategy)

Socially responsible target marketing would classify which of the following as an especially vulnerable target market for harmful or controversial​ products?

-Wealthy consumers -Baby boomers (Children) -Females -Single households

In the early​ 1970s, Gary Dahl sold Pet Rocks. The product had a​ short, temporary period of unusually high sales driven by consumer enthusiasm and immediate product​ popularity, but then sales declined very quickly. The PLC sales pattern for Pet Rocks is known as​ ________________.

-a fashion (a fad) -a style -a failure -a normal product life cycle curve

Adding a new product line to an existing portfolio means that the line has​ __________________.

-altered its product mix consistency -increased product support services -extended product line length -differentiated its product mix depth (increased product mix width)

After market strategy is​ developed, the next step of the new product development process is​ _______________.

-commercialization (business analysis) -concept development -idea generation -prototyping

Groups of​ __________________ products consist of materials and​ parts, capital​ items, and supplies and services.

-convenience (industrial) -unsought -shopping -specialty

Service​ _______ means that the quality of services depends on who provides them as well as​ when, where, and how they are provided.

-inseparability -perishability (variability) -intangibility -packaging

A purse​ company's ads feature the members of a popular housewives reality show. Product sales increase significantly among fans. From​ fans' viewpoint, the housewives reality show is a​ ______________.

-lagging adopter -​late-majority adopter (reference group) -membership group -family group

Dividing a market into smaller segments of buyers with distinct needs or behaviors that might require separate marketing strategies is known as​ ______________________.

-market targeting -positioning -mass marketing -differentiation (market segmenting)

Goldtone is a multinational communications and information technology corporation. Its principal products are mobile telephones and tablets. It recently announced on its website that customers can suggest ideas for its upcoming product model. Contributors of​ short-listed ideas will be adequately rewarded. In this​ case, Goldtone is using​ ________ to generate new product ideas.

-marketing strategy development -test marketing (crowdsourcing) -concept development -business analysis

Crowdsourcing is used in the​ _______________________ step of the new product development process.

-product development -idea screening (idea generation) -commercialization -marketing strategy development

If competitors cannot easily copy the benefit a company chooses to​ promote, that benefit is said to be​ _________.

-superior -affordable -profitable (preemptive) -distinctive

​H2Coast, an automobile​ manufacturer, produces​ fuel-efficient hybrid vehicles that are targeted toward​ high-end exotic-vehicle collectors with ample leisure time. H2Coast most likely segments the consumer market based on​ ________ variables.

-universal -behavioral -demographic -geographic (psychographic)

The marketing manager at Only Organic Delicatessen targets customers who are focused on​ organic, healthy food choices but who still want to dine out. The restaurant chain offers a wide variety of​ organic, low-fat, locally raised produce and foods. Only​ Organic's approach is best referred to as​ ________ segmentation.

-user status (psychographic) -geographic -benefit -age and​ life-cycle

​___________________ consists of many different people who play multiple roles in the buying process.

(The buying center) -Buying actors -The buying nucleus -Buying agents -The purchasing team

Munoz Specialty Foods groups its customers by regions in the United​ States, such as​ Midwest, Northeast, and Southwest. For each​ region, Munoz creates a different set of advertisements and promotions. On which of the following segmentation variables does the firm divide its​ market?

-Behavioral -Benefits sought -Demographic (Geographic) -Personality

Which of the following statements about new product development strategy is​ correct?

-New products are usually successful because consumers like new things. (Innovation can be very expensive and very risky.) -New products are not a major source of growth for companies. -Good advertising creates successful new products. -A new product will succeed as long as it is priced correctly.

Personal Factors

KitchenAid sells much more than just high performance kitchen appliances. It sells an entire cooking and entertainment lifestyle to "Kitchenthusiasts." KitchenAid cultivates "Kitchenthusiasts"—a lifestyle community of "hosts with the most" who thrive on cooking and entertainment challenges. Its Kitchenthusiast blog, Facebook pages, and 11 Pinterest boards are brimming with recipes, cooking challenges, tips and techniques, and coverage of the latest cooking lifestyle news and events by key contributors. KitchenAid's "There's So Much More to Make" marketing campaign highlights how the brand's appliances contribute to the lifestyles of passionate Kitchenthusiasts.

Managing Brands

Managing brands requires managing touch points. According to a former Disney executive: "A brand is a living entity, and it is enriched or undermined cumulatively over time, the product of a thousand small gestures."

Psychographic Segmentation

Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics.

Product Life-Cycle Strategies

Quaker Oats is a good example of managing the product life cycle. Thanks to the "Quaker Up" campaign, 137-year-old Quaker now has a more contemporary appeal as a lifestyle brand that helps give young families the fuel and energy needed to get through the day.

Market Targeting

An example of individual marketing is the PUMA factory sneaker customization Web site which lets customers tailor their PUMA shoes to taste. "You know what works—what styles, what textures, what colors. Customize your sneakers whatever way you want."

Customer-Centered New Product Development pt. 2

As an illustration of Customer-centered new product development: Financial software maker Intuit follows a "Design for Delight" philosophy that says products should delight customers by providing experiences that go beyond their expectations.

Brand Equity

Brands are a key element in a company's relationships with consumers. Brands represent consumers' perceptions and feelings about a product and its performance. A powerful brand has high brand equity. Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favorably than to an unbranded version.

Benefits and Problems of E-Procurement

Business-to-business e-procurement yields many benefits. First, it shaves transaction costs and results in more efficient purchasing for both buyers and suppliers. E-procurement reduces the time between order and delivery, and eliminates the paperwork associated with traditional requisition and ordering procedures. It helps an organization keep better track of all purchases. Finally, e-procurement frees purchasing people from a lot of drudgery and paperwork. However, the rapidly expanding use of e-procurement also presents some problems. At the same time that the Internet makes it possible for suppliers and customers to share business data and even collaborate on product design, it can also erode decades-old customer-supplier relationships. Buyers now use the power of the Internet to pit suppliers against one another and search out better deals, products, and turnaround times on a purchase-by-purchase basis.

The business buying process can be a complex and complicated process with eight basic stages. Which of the following is the first stage in this​ process?

(Problem recognition) -Proposal solicitation -General need description -Supplier search -Supplier selection

Geographic and Demographic Segmentation

Geographic segmentation calls for dividing the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. For example, many large retailers—from Target and Walmart to Kohl's and Staples—are now opening smaller format stores designed to fit the needs of densely packed urban neighborhoods not suited to their typical large suburban superstores. Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. Demographic factors are the most popular bases for segmenting customer groups. These factors are discussed in detail in the following slide.

Figure 6.4 - Possible Value Propositions

The full positioning of a brand is called the brand's value proposition. It refers to the full mix of benefits on which a brand is differentiated and positioned. This figure shows possible value propositions on which a company might position its products. The five blue cells on the top and right represent winning value propositions—differentiation and positioning that give the company a competitive advantage. The purple cells at the lower left, however, represent losing value propositions. The center green cell represents at best a marginal proposition.

Table 6.1 - Major Segmentation Variables for Consumer Markets

Geographic- Nations, regions, states, counties, cities, neighborhoods, population density (urban, suburban, rural), climate Demographic- Age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation Psychographic- Social class, lifestyle, personality Behavioral- Occasions, benefits, user status, usage rate, loyalty status

Which of the following is considered part of an augmented product rather than that of an actual product or core customer​ value?

-Design -Brand name -Packaging -Product features (Warranty)

Products, Services, and Experiences

A company's market offering often includes both tangible goods and services. At one extreme, the market offering may consist of a pure tangible good and at the other extreme a pure service. Between these two extremes, however, many goods-and-services combinations are possible. Today, as products and services become more commoditized, many companies are moving to a new level in creating value for their customers. To differentiate their offers, beyond simply making products and delivering services, firms are creating and managing customer experiences with their brands or companies.

Brand Equity

Ad agency Young & Rubicam's Brand Asset Valuator measures brand strength along four consumer perception dimensions: differentiation, relevance, knowledge, and esteem. Brands with strong brand equity rate high on all four dimensions. A brand with high brand equity is a very valuable asset. Brand value is the total financial value of a brand. High brand equity provides a company with many competitive advantages. A powerful brand enjoys a high level of consumer brand awareness and loyalty. A powerful brand forms the basis for building strong and profitable customer relationships. The fundamental asset underlying brand equity is customer equity. This refers to the value of customer relationships that the brand creates. The proper focus of marketing is building customer equity, with brand management serving as a major marketing tool. According to one estimate, the brand value of Google is a whopping $159 billion and Apple is at $148 billion.

Differentiation and Positioning

Beyond deciding which segments of the market it will target, the company must decide on a value proposition—how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments. A product position is the way a product is defined by consumers on important attributes—the place the product occupies in consumers' minds relative to competing products.

Which Differences to Promote

Each brand difference has the potential to create company costs as well as customer benefits. A difference is worth establishing to the extent that it satisfies the criteria of being important, distinctive, superior, communicable, preemptive, affordable, and profitable. •Important. The difference delivers a highly valued benefit to target buyers. •Distinctive. Competitors do not offer the difference, or the company can offer it in a more distinctive way. •Superior. The difference is superior to other ways that customers might obtain the same benefit. •Communicable. The difference is communicable and visible to buyers. •Preemptive. Competitors cannot easily copy the difference. •Affordable. Buyers can afford to pay for the difference. •Profitable. The company can introduce the difference profitably.

Figure 5.7 - Major Influences on Business Buying Behavior

Figure 5.7 illustrates that business buying behavior is influenced by a complex combination of environmental, organizational, interpersonal, and individual factors.

Psychological Factors

A motive (or drive) is a need that is sufficiently pressing to direct a person to seek satisfaction. Many companies employ teams of psychologists, anthropologists, and other social scientists to carry out motivation research. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective retention means that consumers are likely to remember good points made about a brand they favor and forget good points made about competing brands. Some consumers worry that they will be affected by marketing messages without even knowing it—through subliminal advertising. Learning describes changes in an individual's behavior arising from experience. The practical significance of learning theory for marketers is that they can build up demand for a product by associating it with strong drives by using motivating cues and providing positive reinforcement. A belief is a descriptive thought that a person holds about something. Marketers are interested in the beliefs that people formulate about specific products and services because these beliefs make up product and brand images that affect buying behavior. Attitudes put people into a frame of mind of liking or disliking things, of moving toward or away from them.

Evernote Positioning Statement

A positioning statement refers to a statement that summarizes a company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference). Here is an example using the popular digital information management application Evernote: "To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everyday life using your computer, phone, tablet, and the Web."

Product and Serices

A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Broadly defined, products include services, events, persons, places, organizations, and ideas, or a mixture of these. Services are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

Product Line Decisions

A product line 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 types of outlets, or fall within given price ranges. For example, Nike produces several lines of athletic shoes and apparel. The major product line decision involves product line length, which is the number of items in the product line. A company can expand its product line in two ways: line filling and line stretching. Line filling involves adding more items within the present range of the line. There are several reasons for product line filling. These reasons include reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors. Line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. A reason for downward product line stretching is to plug a market hole that would attract a potential competitor. The reason for upward product line stretching is to add prestige to the current product.

Managing Brands

Companies must manage their brands carefully. First, the brand's positioning must be continuously communicated to consumers. Major brand marketers often spend huge amounts on advertising to create brand awareness and build preference and loyalty. Today, customers come to know a brand through a wide range of contacts and touch points. These include advertising but also personal experience with the brand, word of mouth, social media, company Web pages, mobile apps, and many others. The brand's positioning will not take hold fully unless everyone in the company lives the brand. Therefore, the company needs to train its people to be customer centered. Many companies go even further by training and encouraging their distributors and dealers to serve their customers well. Finally, companies need to periodically audit their brands' strengths and weaknesses. The brand audit may turn up brands that need more support, brands that need to be dropped, or brands that must be rebranded or repositioned because of changing customer preferences or new competitors.

Test Marketing

Companies sometimes shorten or skip test marketing to take advantage of fast-changing market developments, as Starbucks did with its hugely successful mobile payments app. To take advantage of digital and mobile trends, Starbucks quickly introduced a less-than-perfect mobile payments app, then worked out the flaws during the six months after launch. The Starbucks app now accounts for 6 million transactions per week.

Figure 5.2 - Factors Influencing Consumer Behavior

Consumer purchases are influenced strongly by cultural, social, personal, and psychological characteristics, as shown in this figure. For the most part, marketers cannot control such factors, but they must take them into account. The following slides will discuss these characteristics in more detail.

Figure 7.2 - Individual Product and Service Decisions

Developing a product or service involves defining the benefits that it will offer. The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs is known as product quality, one of the marketer's major positioning tools. Total quality management (TQM) is an approach in which all of the company's people are involved in constantly improving the quality of products, services, and business processes. A product can be offered with varying features. Another way to add customer value is through distinctive product style and design. A brand is a name, term, sign, symbol, or design or a combination of these that identifies the maker or seller of a product or service. Consumers view a brand as an important part of a product, and branding can add value to a consumer's purchase. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency. Packaging involves designing the container or wrapper for a product. Increased competition means that packages must now perform many sales tasks—from attracting buyers to communicating brand positioning to closing the sale. Labels help to identify and describe the product or brand as well as promote the brand, support its positioning and engage customers. The first step in designing product support services is to survey customers periodically. Once the company has assessed the quality of various support services, it can take steps to fix problems and add new services that will both delight customers and yield profits to the company.

Social Factors

Groups that have a direct influence and to which a person belongs are called membership groups. Reference groups serve as direct or indirect points of comparison or reference in forming a person's attitudes or behavior. An aspirational group is one to which the individual wishes to belong. Word-of-mouth influence refers to the impact of the personal words and recommendations of trusted friends, associates, and other consumers on buying behavior. Rather than leaving it to chance, marketers can help to create positive conversations about their brands. An opinion leader is a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others. Opinion leaders are also referred to as influentials or leading adopters. Buzz marketing involves enlisting or even creating opinion leaders to serve as brand ambassadors who spread the word about a company's products. Online social networks are online communities where people socialize or exchange information and opinions. Family members can strongly influence buyer behavior. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. A person's position in each group can be defined in terms of both role and status. People usually choose products appropriate to their roles and status.

Differentiation and Positioning pt. 2

IKEA does more than just sell affordable home furnishings; it's the "Life improvement store."

Business Analysis and Product Development

Once management has decided on its product concept and marketing strategy, it can evaluate the business attractiveness of the proposal. Business analysis involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's objectives. If the projections satisfy the company objectives, the product can move to the product development stage. If the product concept passes the business test, it moves into product development. This refers to developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering. The R&D department will develop and test one or more physical versions of the product concept. R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted costs.

Postpurchase Behavior

Postpurchase customer satisfaction is a key to building profitable customer relationships. Most marketers go beyond merely meeting the customer expectations—they aim to delight customers.

7-3 Summary

Services are characterized by four key aspects: they are intangible, inseparable, variable, and perishable. Each characteristic poses problems and marketing requirements. Marketers work to find ways to make the service more tangible, increase the productivity of providers who are inseparable from their products, standardize quality in the face of variability, and improve demand movements and supply capacities in the face of service perishability. Good service companies focus attention on both customers and employees. They understand the service profit chain, which links service firm profits with employee and customer satisfaction. A services marketing strategy calls not only for external marketing but also for internal marketing to motivate employees and interactive marketing to create service delivery skills among service providers. To succeed, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity.

Customer-Centered New Product Development

Successful new product development begins with a thorough understanding of what consumers need and value. Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer-satisfying experiences.

Managing New Product Development

Successful new product development requires a customer-centered, team-based, and systematic effort. Each of these efforts are discussed in greater detail in the following slides.

5.5 Summary

The business buyer decision process itself can be quite involved, with eight basic stages: problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. Buyers who face a new task buying situation usually go through all stages of the buying process. Buyers making modified or straight rebuys may skip some of the stages. Companies must manage the overall customer relationship, which often includes many different buying decisions in various stages of the buying decision process. Recent advances in information and digital technology have given birth to "e-procurement," by which business buyers are purchasing all kinds of products and services online. Business marketers are increasingly connecting with customers online and through digital, mobile, and social media to engage customers, share marketing information, sell products and services, provide customer support services, and maintain ongoing customer relationships.

Cultural Factors

To raise perceptions of AT&T as an innovative and preferred brand among Asian-American youth, key influencers in its tech markets, AT&T created an engaging crowd-sourced, boy-meets-girl Web series called "Away We Happened."

Products, Services, and Experiences pt. 2

Verizon's redesigned Smart Stores don't just sell phones. they create lifestyle experiences—a kind of "rec room for geeks" in which customers can hang around and experience the wonders of mobile technology.

Psychographic Segmentation

For example, VF Corporation offers a closet full of more than 30 premium lifestyle brands, each of which "taps into consumer aspirations to fashion, status, and well-being" in a well-defined segment.

​__________________ segments are those segments that are conceptually distinguishable and respond differently to different marketing mix elements and programs.

(Differentiable) -Accessible -Measurable -Substantial -Actionable

In determining product​ quality, what are the two dimensions of quality marketers must decide​ upon?

(Level and consistency) -Level and conformance -Consistency and packaging -Level and price -Consistency and conformance

To create successful new​ products, a company must​ _______.

(understand its​ consumers, markets, and competitors and develop products that deliver superior value to customers) -cut costs to keep the price of new products low while delivering acceptable quality -obtain successful products through acquisitions instead of doing internal development -spend more on research and development​ (R&D) than its competitors and understand its consumers -focus its new product development efforts only on consumers and deliver value

Which of the following lists the five steps of the buyer decision process in the correct​ order?

-Purchase​ decision, need​ recognition, information​ search, evaluation of​ alternatives, and​ post-purchase behavior -Need​ recognition, evaluation of​ alternatives, information​ search, purchase​ decision, and​ post-purchase behavior -Need​ recognition, purchase​ decision, information​ search, evaluation of​ alternatives, and​ post-purchase behavior -Need​ recognition, information​ search, purchase​ decision, evaluation of​ alternatives, and​ post-purchase behavior (Need​ recognition, information​ search, evaluation of​ alternatives, purchase​ decision, and​ post-purchase behavior)

When Subaru of America allows Outback buyers to customize cars to meet their exact needs and​ preferences, it is practicing which type of​ marketing?

-Segmented marketing -Concentrated marketing -Differentiated marketing (Micromarketing) -Undifferentiated marketing

Personal Factors

A buyer's decisions also are influenced by personal characteristics of the buyer. A person's occupation affects the goods and services bought. Marketers try to identify the occupational groups that have an above-average interest in their products and services. A company can specialize in making products needed by a given occupational group. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle. One of the leading life-stage segmentation systems is the Nielsen PRIZM Lifestage Groups system. PRIZM classifies every American household into one of 66 distinct life-stage segments, which are organized into 11 major life-stage groups. A person's economic situation will affect his or her store and product choices. Marketers watch trends in spending, personal income, savings, and interest rates. Lifestyle is a person's pattern of living as expressed in his or her psychographics. It involves measuring consumers' major AIO dimensions - activities, interests, and opinions. The lifestyle concept can help marketers understand changing consumer values and how they affect buyer behavior. Personality refers to the unique psychological characteristics that distinguish a person or group. It can be useful in analyzing consumer behavior for certain product or brand choices. A person's self-concept is also made use of by marketers. The idea is that people's possessions contribute to and reflect their identities.

International Product and Services Marketing

A good example of global product adaptation is Frito-Lay's chips. Lay's famously funky Chinese chip flavors include cucumber (a best-seller), iced lemon tea, "Numb & Spicy Hot Pot," and "Sha LaChui," a concoction that tastes like a baked salad.

Figure 5.3 Maslow's Hierarchy of Needs

Abraham Maslow sought to explain why people are driven by particular needs at particular times. Why does one person spend a lot of time and energy on personal safety and another on gaining the esteem of others? Maslow's answer is that human needs are arranged in a hierarchy, from the most pressing at the bottom to the least pressing at the top. They include physiological needs, safety needs, social needs, esteem needs, and self-actualization needs.

Business-to-Business Digital and Social Media Marketing

B-to-B marketers are now using a wide range of digital and social media marketing approaches—from Web sites, blogs, mobile apps, e-newsletters, and proprietary online networks to mainstream social media such as Facebook, LinkedIn, YouTube, Google+, and Twitter—to engage customers and manage customer relationships anywhere, any time. Compared with traditional media and sales approaches, digital and social media can create greater customer engagement and interaction. B-to-B marketers know that they aren't really targeting businesses, they are targeting individuals in those businesses who affect buying decisions. Today's business buyers are always connected via their digital devices—whether it's PCs, tablets, or smartphones.

Major Brand Strategy Decisions

Brands are powerful assets that must be carefully developed and managed. As this figure suggests, building strong brands involves many challenging decisions. This figure shows that the major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship, and brand development. Brand positioning: Attributes, Benefits, Beliefs and values Brand name selection: Selection, Protection Brand sponsorships: Manufacturer's brand, Private brand, Licensing, Co-branding Brand development: Line extensions, Brand extensions, Multibrands, New brands

7-1 Summary

Broadly defined, a product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include physical objects but also services, events, persons, places, organizations, ideas, or mixtures of these entities. Services are products that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotels, tax preparation services, and home-repair services. Products and services fall into two broad classes based on the types of consumers who use them. Consumer products—those bought by final consumers—are usually classified according to consumer shopping habits (convenience products, shopping products, specialty products, and unsought products). Industrial products—those purchased for further processing or for use in conducting a business—include materials and parts, capital items, and supplies and services. Other marketable entities—such as organizations, persons, places, and ideas—can also be thought of as products.

Business Buyer Behavior

Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. Business-to-business (B-to-B) marketers must do their best to understand business markets and business buyer behavior. Then, like businesses that sell to final buyers, they must engage business customers and build profitable relationships with them by creating superior customer value. The business buying process is the decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands.

Types of Decisions

Business buyers usually face more complex buying decisions than do consumer buyers. Business purchases often involve large sums of money, complex technical and economic considerations, and interactions among people at many levels of the buyer's organization.

Commercialization

Commercialization refers to introducing the new product into the market. If a company goes ahead with commercialization, it will face high costs. A company launching a new product must first decide on introduction timing. If the new product will eat into the sales of other company products, the introduction may be delayed. If the product can be improved further, or if the economy is down, the company may wait until the following year to launch it. However, if competitors are ready to introduce their own competing products, the company may push to introduce its new product sooner. The company must also decide where to launch the new product, whether in a single location, a region, the national market, or the international market. Some companies may quickly introduce new models into the full national market. Companies with international distribution systems may introduce new products through swift global rollouts.

Nature of the Buying Unit

Compared with consumer purchases, a business purchase usually involves more decision participants and a more professional purchasing effort. Business buying is done by trained purchasing agents who spend their working lives learning how to buy better. Buying committees composed of technical experts and top management are common in the buying of major goods. B-to-B marketers now face a new breed of higher-level, better-trained supply managers. Therefore, companies must have well-trained marketers and salespeople to deal with these well-trained buyers.

Identifying Possible Value Differences and Competitive Advantages

Competitive advantage refers to an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices. To find points of differentiation, marketers must think through the customer's entire experience with the company's product or service. Through product differentiation, brands can be differentiated on features, performance, or style and design. Some companies gain services differentiation through speedy, convenient service. Firms that practice channel differentiation gain competitive advantage through the way they design their channel's coverage, expertise, and performance. Companies can also gain a strong competitive advantage through people differentiation that is, hiring and training better people than their competitors. Even when competing offers look the same, buyers may perceive a difference based on company or brand image differentiation. A company or brand image should convey a product's distinctive benefits and positioning.

Concept Testing

Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or physically. Many firms routinely test new product concepts with consumers before attempting to turn them into actual new products. For some concept tests, a word or picture description might be sufficient. A more concrete and physical presentation of the concept will increase the reliability of the concept test. After being exposed to the concept, consumers then may be asked to react to it by answering questions. The answers to such questions will help the company decide which concept has the strongest appeal.

Segmenting Business Markets

Consumer and business marketers use many of the same variables to segment their markets. Business buyers can be segmented geographically, demographically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status. Yet, business marketers also use some additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Figure 7.1 - Three Levels of Product

Core customer value deals with what is bought by the customer. For example, people who buy an Apple iPad are buying much more than just a tablet computer. They are buying entertainment, self-expression, productivity, and connectivity with friends and family—a mobile and personal window to the world. At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, a design, a quality level, a brand name, and packaging. For example, the iPad is an actual product. Its name, parts, styling, operating system, features, packaging, and other attributes have all been carefully combined to deliver the core customer value of staying connected. Finally, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits. For example, when consumers buy an iPad, Apple and its resellers also might give buyers a warranty on parts and workmanship, quick repair services when needed, and a Web site to use if they have problems or questions. Apple also provides access to a huge assortment of apps and accessories.

Types of Buying Situations

Delivering a fun and safe experience for Six Flags guests requires careful and effective management of thousands of park assets across its 19 regional theme parks. IBM works hand in hand with Six Flags to provide not just software but a complete solution.

8-3 Summary

Each product has a life cycle marked by a changing set of problems and opportunities. The sales of the typical product follow an S-shaped curve made up of five stages. The cycle begins with the product development stage in which the company finds and develops a new product idea. The introduction stage is marked by slow growth and low profits as the product is distributed to the market. If successful, the product enters a growth stage, which offers rapid sales growth and increasing profits. Next comes a maturity stage in which the product's sales growth slows down and profits stabilize. Finally, the product enters a decline stage in which sales and profits dwindle. The company's task during this stage is to recognize the decline and decide whether it should maintain, harvest, or drop the product. The different stages of the PLC require different marketing strategies and tactics.

Major Brand Strategy Decisions pt. 2

Nickelodeon has developed a stable full of hugely popular characters—such as SpongeBob Square Pants—that generate billions of dollars of retail sales each year through licensing.

Test Marketing

If the product passes both the concept test and the product test, the next step is test marketing, the stage at which the product and its proposed marketing program are introduced into realistic market settings. Test marketing gives the marketer experience with marketing a product before going to the great expense of full introduction. It lets the company test the product and its entire marketing program—targeting and positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels. However, test marketing costs can be high, and testing takes time that may allow market opportunities to slip by or competitors to gain advantages.

International Product and Services Marketing

International product and services marketers face special challenges. First, they must figure out what products and services to introduce and in which countries. Then they must decide how much to standardize or adapt their products and services for world markets. On the one hand, companies would like to standardize their offerings. Standardization helps a company develop a consistent worldwide image. It also lowers the product design, manufacturing, and marketing costs of offering a large variety of products. On the other hand, markets and consumers around the world differ widely. Today, service firms are no longer simply following their manufacturing customers. Instead, they are taking the lead in international expansion.

Crowdsourcing

Many companies are now developing crowdsourcing or open-innovation new product idea programs. Crowdsourcing invites broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the innovation process. For example, Victorinox used third-party crowdsourcing network jovoto to capture creative designs for limited fashion editions of its venerable Swiss Army Knife. The crowdsourced designed models had 20 percent better sales success than any previous internally created limited editions.

Choosing the Right Competitive Advantages

Many marketers think that companies should aggressively promote only one benefit to the target market. A company should develop a unique selling proposition (USP) for each brand and stick to it. Each brand should pick an attribute and tout itself as "number one" on that attribute. Other marketers think that companies should position themselves on more than one differentiator. Today, in a time when the mass market is fragmenting into many small segments, companies and brands are trying to broaden their positioning strategies to appeal to more segments.

8-1 Summary

Many new product ideas stem from firm's own research and development efforts. Companies also track competitors' offerings and obtain ideas from distributors and suppliers who are close to the market and can pass along information about consumer problems and new product possibilities. Perhaps the most important sources of new product ideas are customers themselves. Companies observe customers, invite them to submit their ideas and suggestions, or even involve customers in the new product development process. Many companies are now developing crowdsourcing or open-innovation new product idea programs, which invite broad communities of people—customers, employees, independent scientists and researchers, and even the general public—into the new product innovation process. Truly innovative companies do not rely only on one source for new product ideas.

Product and Service Decisions

Marketers make product and service decisions at three levels: individual product decisions, product line decisions, and product mix decisions. Each of these decisions is discussed in greater detail in the following slides.

Product Decisions and Social Responsibility

Marketers should carefully consider public policy issues and regulations regarding acquiring or dropping products, patent protection, product quality and safety, and product warranties. Regarding new products, the government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. Companies must also obey U.S. patent laws when developing new products. A company cannot make its product illegally similar to another company's established product. Manufacturers must comply with specific laws regarding product quality and safety. For example, various acts provide for the inspection of sanitary conditions in the meat-and poultry-processing industries. Safety legislation has been passed to regulate fabrics, chemical substances, automobiles, toys, drugs and poisons. If consumers have been injured by a product with a defective design, they can sue manufacturers or dealers. Some companies are now appointing product stewards, whose job is to protect consumers from harm and the company from liability by proactively ferreting out potential product problems.

Characteristics Influencing an Innovation's Rate of Adoption

Relative advantage is the degree to which the innovation appears superior to existing products. The second characteristic is compatibility, which is the degree to which the innovation fits the values and experiences of potential consumers. The third characteristic is complexity, which refers to the degree to which the innovation is difficult to understand or use. The fourth characteristic is divisibility, which is the degree to which the innovation may be tried on a limited basis. The fifth characteristic is communicability. This refers to the degree to which the results of using the innovation can be observed or described to others. Other characteristics that influence the rate of adoption include initial and ongoing costs, risk and uncertainty, and social approval.

Figure 7.4 - Three Types of Services Marketing

Services marketing requires more than just traditional external marketing using the four Ps. This figure shows that services marketing also requires internal marketing and interactive marketing. Internal marketing means that the service firm must orient and motivate its customer-contact employees and supporting service employees to work as a team to provide customer satisfaction. For example, Zappos starts by hiring the right people and carefully orienting and inspiring them to give unparalleled customer service. Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. In services marketing, service quality depends on both the service deliverer and the quality of delivery. All new hires at Zappos —at all levels of the company—complete a four-week customer-loyalty training regimen.

Service Profit Chain

Successful service companies focus their attention on both their customers and their employees. They understand the service profit chain, which links service firm profits with employee and customer satisfaction. This chain consists of five links: internal service quality, satisfied and productive service employees, greater service value, satisfied and loyal customers, and healthy service profits and growth. For example, the supermarket chain Wegmans believes that happy, superbly trained employees create a superior customer experience.

Business Markets

The business market is huge and involves more dollars and items than do consumer markets. Business markets differ from consumer markets in terms of market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

Consumer buyer behavior & Consumer market

The buying behavior of final consumers who are the individuals and households that buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market.

Team-Based and Systematic New Product Development

To get their new products to market more quickly, many companies use a team-based and systematic new product development approach. Under this approach, company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness. In this approach, if one area hits snags, it works to resolve them while the team moves on. The team-based approach does have some limitations, however, for it sometimes creates more organizational tension and confusion than the more orderly sequential approach. Finally, the new product development process should be holistic and systematic rather than compartmentalized and haphazard. Otherwise, few new ideas will surface, and many good ideas will sputter and die. To avoid these problems, a company can install an innovation management system to collect, review, evaluate, and manage new product ideas. The innovation management system approach yields two favorable outcomes. First, it helps create an innovation-oriented company culture. Second, it will yield a larger number of new product ideas, among which will be found some especially good ones. The good new ideas will be more systematically developed, producing more new product successes.

6-1 Summary

A customer value-driven marketing strategy begins with selecting which customers to serve and determining a value proposition that best serves the targeted customers. It consists of four steps. Market segmentation is the act of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes. Once the groups have been identified, market targeting evaluates each market segment's attractiveness and selects one or more segments to serve. Differentiation involves actually differentiating the market offering to create superior customer value. Positioning consists of positioning the market offering in the minds of target customers. A customer value-driven marketing strategy seeks to build the right relationships with the right customers.

New Product Development Strategy

A firm can obtain new products in two ways. One is through acquisition—by buying a whole company, a patent, or a license to produce someone else's product. The other is through the firm's own new product development efforts. New products are original products, product improvements, product modifications, and new brands that the firm develops through its own research and development efforts. To create successful new products, a company must understand its consumers, markets, and competitors and develop products that deliver superior value to customers.

E-Procurement and Online Purchasing

Advances in information technology have dramatically affected the face of the B-to-B buying process. Online purchasing, often called e-procurement, refers to purchasing through electronic connections between buyers and sellers—usually online. Companies can do e-procurement in any of several ways. They can conduct reverse auctions, in which they put their purchasing requests online and invite suppliers to bid for the business. They can engage in online trading exchanges, through which companies work collectively to facilitate the trading process. Companies also can conduct e-procurement by setting up their own company buying sites. Companies can also create extranet links with key suppliers.

Product Concept

An attractive idea must then be developed into a product concept. It is important to distinguish between a product idea, a product concept, and a product image. A product idea is an idea for a possible product that the company can see itself offering to the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product.

Segmenting International Markets

Companies can segment international markets using one or a combination of several variables. Geographic segmentation assumes that nations close to one another will have many common traits and behaviors. For example, some U.S. marketers lump all Central and South American countries together. World markets can also be segmented based on economic factors. Countries might be grouped by population income levels or by their overall level of economic development. For example, many companies are now targeting the BRIC countries - Brazil, Russia, India, and China - which are fast-growing developing economies with rapidly increasing buying power. Countries can also be segmented by political and legal factors such as the type and stability of government, receptivity to foreign firms, monetary regulations, and amount of bureaucracy. Cultural factors can also be used by grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns. Using intermarket segmentation (also called cross-market segmentation), marketers form segments of consumers who have similar needs and buying behaviors even though they are located in different countries.

Choosing a Targeting Strategy

Companies need to consider many factors when choosing a market-targeting strategy. Which strategy is best depends on the company's resources. When the firm's resources are limited, concentrated marketing makes the most sense. The best strategy also depends on the degree of product variability. The product's life-cycle stage also must be considered. When a firm introduces a new product, it may be practical to launch one version only, and undifferentiated marketing or concentrated marketing may make the most sense. In the mature stage of the product life cycle, however, differentiated marketing can be useful. Another factor is market variability. If most buyers have the same tastes, buy the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate. Finally, competitors' marketing strategies are important. When competitors use differentiated or concentrated marketing, undifferentiated marketing can be suicidal.

Developing a Positioning Statement

Placing a brand in a specific category suggests similarities that it might share with other products in the category. But the case for the brand's superiority is made on its points of difference. A positioning statement refers to a statement that summarizes a company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference). An example using the popular digital information management application, Evernote, is shown on the next slide.

Behavioral Segmentation pt. 2

User status segments markets into nonusers, ex-users, potential users, first-time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential users group are consumers facing life-stage changes who can be turned into heavy users. Usage rate segments markets into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. A market can also be segmented by loyalty status. Consumers can be loyal to brands, stores, and companies. Highly loyal customers promote the brand through personal word of mouth and social media. In contrast, by studying its less-loyal buyers, a company can detect which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and take actions to correct them.

5.2 Summary

When making a purchase, the buyer goes through a decision process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. During need recognition, the consumer recognizes a problem or need that could be satisfied by a product or service. Once the need is recognized, the consumer moves into the information search stage. With information in hand, the consumer proceeds to alternative evaluation and assesses brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the final stage of the buyer decision process, postpurchase behavior, the consumer takes action based on satisfaction or dissatisfaction. The marketer's job is to understand the buyer's behavior at each stage and the influences that are operating.

The​ Ritz-Carlton has carefully created a strong and distinctive differentiation​ strategy, which is supported by everything the company​ says, is, and does. Which type of differentiation is​ this?

(Image differentiation) -People differentiation -Channel differentiation -Services differentiation -Product differentiation

Which of the following statements regarding packaging is​ correct?

(Innovative packaging can give a company an advantage over competitors and boost sales.) -Companies can say anything they want on product packaging. -Product strategy does not include packaging as an important consideration. -Product safety is not impacted by packaging. -Packaging should change every few months.

When​ Coca-Cola saw the growth of the​ bottled-water category, it launched DASANI​Ò​, its brand of bottled water. Which brand development strategy did​ Coca-Cola use in launching​ DASANI?

(New brand) -Multibranding -Line extension -Licensing -Brand extension

Which of the following would make a segment less attractive to​ enter?

(New entrants finding it easy to enter the segment) -A lack of aggressive competitors -Suppliers with weak bargaining power -Very few substitute products -Buyers with weak bargaining power

Which of the following is a personal characteristic influencing a​ consumer's buying​ behavior?

(Occupation) -Motivation -Social networks -Family -Status

​________________ is the service characteristic to which marketers need to pay close attention when there are fluctuations in demand.

(Perishability) -Intangibility -Inseparability -Tangibility -Variability

Which of the following needs in​ Maslow's hierarchy is generally satisfied​ first?

(Physiological needs) -Safety needs -Esteem needs -Social needs ​-Self-actualization needs

Which of the following describes the process of dividing markets into groups based on​ consumers' knowledge,​ attitudes, uses, or​ responses?

-Demographic segmentation (Behavioral segmentation) -Geographic segmentation -Psychographic segmentation -Economic segmentation

Which of the following statements regarding the important decisions in the development and marketing of individual products is​ correct?

(Product attributes that communicate and deliver benefits to the consumer include​ quality, features, and style and design.) -How a product is branded is separate from the development and marketing of individual products. -Product labeling is no longer subject to legal regulation. -Packaging decisions are not an important part of developing individual products. -Determining product support services is not part of the development of individual products.

​______________________ is the step of the new product development process during which a physical product is first developed.

(Product development) -Idea generation -Test marketing -Concept development and testing -Marketing strategy development

Amazon is now promising​ same-day pick-up of goods as well as local secure​ pick-up points. What point of differentiation is​ this?

(Services differentiation) -Product differentiation -People differentiation -Image differentiation -Channel differentiation

Which of the following would be an appropriate strategy during the growth stage of the product life​ cycle?

(Spend a lot of money on product​ improvement, promotion, and distribution.) -Use promotional spending to inform consumers and get them to try the product. -Produce basic versions of the product and focus on selling to those buyers who are the most ready to buy. -Shift some advertising from building product awareness to building product conviction and purchase. -Modify the​ market, product​ offer, and marketing mix.

Which of the following statements is true regarding product life cycle​ curves?

(The sales of a typical product follow an​ S-shaped curve made up of five stages.) -Once a product reaches the decline​ stage, it cannot be recycled back to growth. -Marketing strategies do not change for different life cycle stages. -Managing products through their life cycle is an easy task. -All products follow the traditional​ five-stage PLC model.

According to the model of buyer​ behavior, what is in a​ buyer's "black​ box"?

(The​ buyer's characteristics and decision process) -The​ buyer's purchase and​ post-purchase behavior -The​ buyer's wants,​ needs, and preferences -The​ buyer's economic and social preferences -The​ buyer's attitudes and preferences

Which of the following is a pure tangible​ good?

(Toothpaste) -A spa treatment -Financial advice -A medical checkup -A meal at a restaurant

Kidcomp, an American​ computer-manufacturing firm, targets children younger than age 10 by providing free games and applications. The​ firm's marketing approach is reflective of​ ________ segmentation.

(age and​ life-cycle) -gender -geographic -income -lifestyle

Firms that manufacture seasonal products target their consumers primarily through​ ________ segmentation.

(occasion) -demographic -psychographic -age and​ life-cycle -income

Dividing buyers into groups based on social​ class, lifestyle, or personality characteristics is called​ ________ segmentation.

(psychographic) -geographic -age and​ life-cycle -user status -behavioral

Installing an innovation management system to​ collect, review,​ evaluate, and manage new product ideas represents​ a(n) ______________ approach to new product development.

(systematic) ​-customer-centered -crowdsourced -sequential -intrapreneurial

Which of the following is often considered a key business marketing strategy for winning and holding​ accounts?

(systems selling) -straight rebuy -buying decision -new task -modified rebuy

When Dr. Lawncare developed his revolutionary new​ solar-powered lawnmower, he expected that during the growth stage of the product life cycle​ ___________.

(the company would see rising profits) -there would be high costs per customer -there would be lagging adopters -the company could anticipate customers as innovators -there would few competitors

When marketers aggressively promote only one benefit to the target​ market, the benefit promoted is known as the product or​ service's _____________________.

(unique selling proposition) -unique position proposition -unique benefit proposition -unique difference proposition -unique product proposition

Which of the following correctly defines a​ product?

-A product is not a part of the overall market offering. -Products have two​ levels: the actual product and the augmented product. -Products are only tangible objects offered to a market to satisfy a want or need. -Products include tangible objects and services but not events or people. (A product is anything offered to a market that might satisfy a need or want.)

At one​ time, Miller Beer was known as the​ "champagne of bottled​ beer." It was targeted at an elite class of customers.​ Later, to increase​ sales, Miller was repositioned to attract members of the working middle class. What is this segmentation method​ called?

-Behavioral -Usage rate -User status (Psychographic) -Benefit

_____________________ is the value of customer relationships that a brand creates.

-Brand differentiation (Customer equity) -Customer value -Brand value -Brand equity

What is the nature of demand in business​ markets?

-Business market demand is independent of consumer market demand. -Demand in business markets fluctuates less than in consumer markets. (Demand in business markets is derived demand.) -Demand in business markets does not fluctuate. -Demand in business markets is elastic.

When we see Hello Kitty on​ children's clothing, Disney characters on​ lunchboxes, and SpongeBob SquarePants on breakfast​ cereals, which form of brand sponsorship is being​ used?

-Co-branding (Licensing) -Store branding -National branding -Private branding

Which of the following is likely to slow the adoption of a new​ technology?

-Communicability -Compatibility -Relative advantage -Divisibility (Conceptual complexity)

Which of the following is NOT a product life cycle​ (PLC) stage?

-Decline -Growth -Introduction -Maturity (Commercialization)

Which stage of the product life cycle normally lasts longer than the others and poses great challenges to marketing​ management?

-Decline -Introduction -Product development (Maturity) -Growth

The website leftyslefthand.com markets products to​ left-handed consumers only. Which targeting strategy does this​ represent?

-Differentiated marketing (Concentrated marketing) -Segmented marketing -Micromarketing -Undifferentiated marketing

​__________________ represent an internal source of new product ideas for a company.

-Distributors -Suppliers -Competitors -Customers (Intrapreneurial programs)

Which of the five characteristics identified has an inverse relationship with an​ innovation's rate of​ adoption, meaning as this characteristic​ increases, the rate of adoption is​ slower?

-Divisibility -Compatibility -Communicability -Relative advantage (Complexity)

Which of the following refers to the degree to which an innovation fits the values and experiences of potential​ consumers?

-Divisibility -Relative advantage -Communicability -Complexity (Compatibility)

Which of the following statements is correct concerning service marketers going​ global?

-Due to the nature of their​ business, professional service firms cannot expand their business to foreign markets. -Compared with product​ marketers, service marketers do not face any additional challenges when going global. -The growth of global service companies is expected to decline in the near future. (The trend toward growth of global service companies is expected to continue in the near future.) -One industry that still has not globalized is retailing.

Which of the following are​ tradition-bound, suspicious of​ changes, and adopt the innovation only when it has become something of a tradition​ itself?

-Early adopters (Lagging adopters) -Early mainstream -Late mainstream -Innovators

Which of the following is NOT one of the typical advantages of​ e-procurement systems?

-Eliminating paperwork -Reducing time between order and delivery (Improving​ customer-supplier relationships) -Allowing buyers to focus on more strategic issues -Finding better supplier resources

​Kroger, headquartered in​ Cincinnati, Ohio, is one of the​ nation's largest grocery chains. It owns several brands sold in its​ stores, including Private​ Selection, Heritage​ Farm, and Simple. These brands represent which type of brand​ sponsorship?

-Generic brands (Private brands) ​-Co-brands -Private labels ​-Manufacturer's brand

​______________________ determines if a buyer is satisfied or dissatisfied with a purchase.

-How others feel about the purchase (The relationship between the​ consumer's expectations and the​ product's perceived performance) -The number of alternatives considered in the purchase decision -The amount of information gathered in the​ decision-making process -Whether or not the buyer experiences cognitive dissonance

Which of the following statements about service marketing is​ correct?

-Service marketers do not need to differentiate their offerings. -Due to the variability of​ services, top service companies set modest​ service-quality standards. (Training current employees better and hiring new ones with more skills can increase service productivity.) -It is easier to define service quality than product quality. -Companies should strive to streamline services to increase efficiency.

Which of the following statements regarding managing service quality is​ correct?

-Service recovery is unimportant in managing service quality. -Service quality is easier to define and judge than product quality. -Setting standards is not important in delivering service quality (Unlike product​ quality, service quality will always vary.) -Customer retention is not related to service quality.

Which of the following incorporates the advantage of brands operating in different categories with the combined brands creating broader consumer appeal and greater brand​ equity?

-Store branding -Distributor branding -Private branding -National branding ​(Co-branding)

Consumers obtain information from numerous sources. Which of the following involves dealer and manufacturer​ websites, packaging, and​ displays?

-The internet -Public sources -Media sources (Commercial sources) -Personal sources

Heeltoe, a boutique that caters to the footwear needs of​ women, manufactures two different lines of footwear based on the purchasing power of its customers. One product line caters to the needs of​ affluent, middle-aged​ women, and the other line targets younger professionals and homemakers. Heeltoe most likely segments the consumer market based on​ ________ variables.

-demographic -geographic -psychographic -universal (behavioral)

The type of segment characteristic in which the​ size, purchasing​ power, and profiles of the segments can be quantified is known as​ _______________________

-differentiable (measurable) -substantial -actionable -accessible

Mi Rancho Supermarkets is a chain grocer that locates stores in neighborhoods with large Hispanic populations. Their stores carry a greater selection of Hispanic and Latin foods. The type of marketing that Mi Rancho uses is an example of​ ________.

-differentiated marketing -undifferentiated marketing (micromarketing) -concentrated marketing -target marketing

When a product is in the maturity stage of the​ PLC, the company tries to increase consumption by finding new users and new market segments for its brands. This attempt to increase consumption is known as​ ______________________.

-harvesting the market (modifying the market) -market maintenance -market stimulation -milking the market

When marketers want to promote their products and services through​ word-of-mouth marketing​ programs, they typically begin by​ ________.

-identifying and targeting late adopters (generating​ person-to-person brand conversations) -pushing​ one-way commercials at customers -developing print and radio advertisements -withdrawing from online social networks

A service firm must orient and motivate its​ customer-contact employees and supporting service people to work as a team to provide customer satisfaction. This process is known as​ _________________________.

-interactive marketing -external marketing -supplier and vendor marketing (internal marketing) -service differentiation

The type of segmentation that forms segments of consumers who have similar needs and buying behaviors even though they are located in different countries is known as​ _________.

-lifestyle segmentation -geographic segmentation -behavioral segmentation (intermarket segmentation) -demographic segmentation

A company can obtain new products by buying a whole​ company, a​ patent, or a license to produce someone​ else's product through​ _______________________.

-new product development (acquisition) -new product brands -product improvements -product enhancements

The three functions of​ __________ include​ identifying, describing, and promoting the product.

-product design -innovation (labeling) -product lines -packaging

Ad agency Young​ & Rubicam's BrandAsset Valuator measures brand strength along four consumer perception dimensions. Brand​ ___________ is defined in terms of how highly consumers regard and respect the brand.

-relevance -knowledge -equity -differentiation (esteem)

New product commercialization takes much thought and planning. The first critical step in the commercialization process is​ ____________________.

-revenue goals -the value proposition (introduction timing) -market share goals -the target market

Marketers of brands understand that they must figure out how to reach​ ___________________ that can exert social influence on others.

-social groups -baby boomers -cultural segments (opinion leaders) -Millennials

A manufacturer of​ half-ton pickup trucks creates a positioning map for the U.S.​ half-ton pickup market. The position of each circle on the map indicates the​ brand's perceived positioning on two​ dimensions: price and orientation​ (economy versus​ performance). The size of each circle indicates the​ brand's relative market share. This is an example of a​ ________________.

-target segment map (perceptual positioning map) -competitive map -competitively positioned map -psychographic map

Brand Sponsorship

A manufacturer has four sponsorship options: National brands or manufacturers' brands are marketed under the manufacturer's own name. The Samsung Galaxy tablet or Kellogg's Frosted Flakes are examples of national brands. An increasing numbers of retailers and wholesalers have created their own store brands or private brands To compete with store brands, national brands must sharpen their value propositions, especially when appealing to today's more frugal consumers. Some companies license names or symbols previously created by other manufacturers, the names of well-known celebrities, or characters from popular movies and books. For a fee, licensing any of these can provide an instant and proven brand name. For example, consider the Kodak brand with its familiar red and yellow colors, which has retained its value even after the company went bankrupt and discontinued its consumer products. Co-branding occurs when two established brand names of different companies are used on the same product. Because each brand dominates in a different category, the combined brands create broader consumer appeal and greater brand equity. For example, Taco Bell and Doritos teamed up to create the Doritos Locos Taco.

Product Mix (or Product Portfolio)

An organization with several product lines has a product mix. A product mix (or product portfolio) consists of all the product lines and items that a particular seller offers for sale. For example, The Clorox Company is best known for its CLOROX bleach. But, in fact, Clorox is a $5.6 billion firm that makes and markets a full product mix consisting of dozens of familiar lines and brands. Clorox divides its overall product mix into five major lines: Cleaning, Household, Lifestyle, Professional, and International. Each product line consists of many brands and items.

Test Marketing

As an alternative to extensive and costly standard test markets, companies can use controlled test markets or simulated test markets. In controlled test markets, new products and tactics are tested among controlled panels of shoppers and stores. Using simulated test markets, researchers measure consumer responses to new products and marketing tactics in laboratory stores or simulated online shopping environments. Both controlled test markets and simulated test markets reduce the costs of test marketing and speed up the process.

Product Line Decisions pt. 2

As an illustration of product line stretching and filling, Samsung's bulging Galaxy mobile devices line now offers a size for any need or preference, including smartphones, "phablets," tablets, and even a wristwatch-like wearable smartphone, the Galaxy Gear.

Product and Service Classifications

Consumer products are bought by final consumers for personal consumption. Consumer products include convenience products, shopping products, specialty products, and unsought products. These products differ in the ways consumers buy them and, therefore, in how they are marketed. This is explained by the table on the next slide. Industrial products are those products purchased for further processing or for use in conducting a business. The three groups of industrial products and services are materials and parts, capital items, and supplies and services. Materials and parts include raw materials as well as manufactured materials and parts. Raw materials consist of farm products and natural products. Manufactured materials and parts consist of component materials and parts. Capital items are industrial products that aid in the buyer's production or operations, including installations and accessory equipment. Installations consist of major purchases such as buildings and fixed equipment. The final group of industrial products is supplies and services. Supplies include operating supplies and repair and maintenance items. Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison.

Cultural Factors

Culture is the most basic cause of a person's wants and behavior. Culture is the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. A subculture is a group of people with shared value systems based on common life experiences and situations. A total market strategy integrates ethnic themes and cross-cultural perspectives within a brand's mainstream marketing, appealing to consumer similarities across subcultures rather than differences. A social class is the relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. It is measured as a combination of occupation, income, education, wealth, and other variables.

Figure 5.8 - Stages of Business Buying Behavior

Figure 5.8 lists the eight stages of the business buying process. The buying process begins with problem recognition. Problem recognition can result from internal or external stimuli. Having recognized a need, the buyer next prepares a general need description that describes the characteristics and quantity of the needed items or solutions. Once the buying organization has defined the need, it develops the item's technical product specifications, often with the help of a value analysis engineering team. Product value analysis is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production. In the next buying process step, the buyer conducts a supplier search to find the best vendors. In the proposal solicitation stage, the buyer invites qualified suppliers to submit proposals. The buyer next reviews the proposals and selects a supplier or suppliers. During supplier selection, the buyer will consider many supplier attributes and their relative importance. The buyer now prepares an order-routine specification. It includes the final order with the chosen supplier or suppliers. Many large buyers now practice vendor-managed inventory, in which they turn over ordering and inventory responsibilities to their suppliers. The final stage of the business buying process is the supplier performance review, in which the buyer reviews the supplier performance. The seller's job is to monitor the same factors used by the buyer to make sure that the seller is giving the expected satisfaction.

Types of Buying Situations

In a straight rebuy, the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers. A company buying a product or service for the first time faces a new task situation. The marketer not only tries to reach as many key buying influences as possible, but also provides help and information. The buyer makes the fewest decisions in the straight rebuy and the most in the new task situation. Systems selling (or solutions selling) refers to buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation.

Figure 6.1 - Designing a Customer Value-Driven Market Strategy

In the first two steps, the company selects the customers that it will serve. Market segmentation involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Market targeting (or targeting) consists of evaluating each market segment's attractiveness and selecting one or more market segments to enter. In the final two steps, the company decides on a value proposition. Differentiation involves actually differentiating the firm's market offering to create superior customer value. Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place, relative to competing products in the minds of target consumers.

7-2 Summary

Individual product decisions involve product attributes, branding, packaging, labeling, and product support services. Product attribute decisions involve product quality, features, and style and design. Branding decisions include selecting a brand name and developing a brand strategy. Packaging provides many key benefits, such as protection, economy, convenience, and promotion. Package decisions often include designing labels, which identify, describe, and possibly promote the product. Companies also develop product support services that enhance customer service and satisfaction and safeguard against competitors. Most companies produce a product line rather than a single product. A product line is a group of products that are related in function, customer-purchase needs, or distribution channels. All product lines and items offered to customers by a particular seller make up the product mix. The mix can be described by four dimensions: width, length, depth, and consistency. These dimensions are the tools for developing the company's product strategy.

Market Targeting

Market segmentation reveals the firm's market segment opportunities. The firm has to evaluate the various segments and decide how many and which segments it can serve best. In evaluating different market segments, a firm must look at three factors. First, a company wants to select segments that have the right size and growth characteristics. Second, the company needs to examine major structural factors that affect long-run segment attractiveness like strong and aggressive competitors or if it is easy for new entrants to come into the segment. The existence of actual or potential substitute products, the relative power of buyers, and powerful suppliers also affects segment attractiveness. Finally, the company must consider its own objectives and resources. Some attractive segments can be dismissed quickly because they do not mesh with the company's long-run objectives. Or, the company may lack the skills and resources needed to succeed in an attractive segment. After evaluating different segments, the company must decide which and how many segments it will target. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Market targeting can be carried out at several different levels.

8-4 Summary

Marketers must consider two additional product issues. The first is social responsibility. This includes public policy issues and regulations involving acquiring or dropping products, patent protection, product quality and safety, and product warranties. The second involves the special challenges facing international product and services marketers. International marketers must decide how much to standardize or adapt their offerings for world markets.

Brand Positioning and Brand Name Selection

Marketers need to position their brands clearly in target customers' minds. They can position brands at any of three levels. At the lowest level, they can position the brand on product attributes. At the next level, a brand can be better positioned by associating its name with a desirable benefit. In the final level, the strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values and engage customers on a deep, emotional level. Finding the best brand name begins with a careful review of the product and its benefits, the target market, and proposed marketing strategies. There are a number of desirable qualities for a brand name. It should suggest something about the product's benefits and qualities, and it should be easy to pronounce, recognize, and remember. The brand name should be distinctive, be extendable, translate easily into foreign languages, and be capable of registration and legal protection.

Figure 6.3 - Positioning Map: Large Luxury SUVs

Marketers prepare perceptual positioning maps that show consumer perceptions of their brands versus those of competing products on important buying dimensions to plan their differentiation and positioning strategies. This figure shows a positioning map for the U.S. large luxury SUV market. The position of each circle on the map indicates the brand's perceived positioning on two dimensions: price and orientation (luxury versus performance). The size of each circle indicates the brand's relative market share.

Multiple Segmentation Bases

Marketers rarely limit their segmentation analysis to only one or a few variables. Rather, they often use multiple segmentation bases in an effort to identify smaller, better-defined target groups. One of the leading consumer segmentation systems is Experian's Mosaic USA system. It classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence, based on specific consumer demographics, interests, behaviors, and passions. For example, the Birkenstocks and Beemers group is located in the Middle Class Melting Pot level of affluence and consists of 40- to 65-year-olds who have achieved financial security and left the urban rat race for rustic and artsy communities located near small cities. Such segmentation helps companies identify and better understand key customer segments, reach them more efficiently, and tailor market offerings and messages to their specific needs.

Marketing Strategy Development

Marketing strategy development involves designing an initial marketing strategy for introducing a new product to the market. The marketing strategy statement consists of three parts: The first part describes the target market; the planned value proposition; and the sales, market-share, and profit goals for the first few years. The second part of the marketing strategy statement outlines the product's planned price, distribution, and marketing budget for the first year. The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and marketing mix strategy.

Winning Value Propositions

More-for-more positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. With a more-for-the-same value proposition, companies can attack a competitor's more-for-more positioning by introducing a brand offering comparable quality at a lower price. Offering the same for less can be a powerful value proposition, as it is a good deal. Discount stores offer many of the same brands as department stores and specialty stores but at deep discounts based on superior purchasing power and lower-cost operations. Less-for-much-less positioning involves meeting consumers' lower performance or quality requirements at a much lower price. For example, Family Dollar and Dollar General stores offer more affordable goods at very low prices. The winning value proposition would be to offer more for less. Companies find it very difficult to sustain such best-of-both positioning. Offering more usually costs more, making it difficult to deliver on the "for-less" promise. Companies that try to deliver both may lose out to more focused competitors.

Idea Generation

New product development starts with idea generation, which is the systematic search for new product ideas. Major sources of new product ideas include internal sources and external sources. Beyond a company's internal R&D process, a company can pick the brains of its own people. Many companies have developed successful internal social networks and intrapreneurial programs that encourage employees to develop new product ideas. Companies can also obtain good new product ideas from any of a number of external sources, such as distributors and suppliers, competitors, and customers themselves.

5.3 Summary

The product adoption process is made up of five stages: awareness, interest, evaluation, trial, and adoption. New product marketers must think about how to help consumers move through these stages. With regard to the diffusion process for new products, consumers respond at different rates, depending on consumer and product characteristics. Consumers may be innovators, early adopters, early mainstream, late mainstream, or lagging adopters. Each group may require different marketing approaches. Marketers often try to bring their new products to the attention of potential early adopters, especially those who are opinion leaders.

Behavioral Segmentation

Occasion segmentation divides the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. This segmentation can help firms build up product usage. Companies try to boost consumption by promoting usage during nontraditional occasions. For example, most consumers drink orange juice in the morning, but orange growers have promoted drinking orange juice as a cool, healthful refresher at other times of the day. Benefit segmentation divides the market into segments according to the different benefits that consumers seek from the product. For example, to meet varying benefit preferences, Schwinn makes affordable, quality bikes in seven major benefit groups: cruisers, hybrid, bike path, mountain, road, urban, and kids.

6-4 Summary

Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy. The differentiation and positioning task consists of three steps: identifying a set of possible differentiations that create competitive advantage; choosing advantages on which to build a position; and selecting an overall positioning strategy. The brand's full positioning is called its value proposition—the full mix of benefits on which the brand is positioned. In general, companies can choose one of five winning value propositions on which to position their products: more for more, more for the same, the same for less, less for much less, or more for less. Company and brand positioning are summarized in positioning statements that state the target segment and need, the positioning concept, and specific points of difference. The company must then effectively communicate and deliver the chosen position to the market.

Communicating and Delivering the Chosen Position

Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers. All the company's marketing mix efforts must support the positioning strategy. Companies often find it easier to come up with a good positioning strategy than to implement it. Once a company has built the desired position, it must take care to maintain the position through consistent performance and communication. It must closely monitor and adapt the position over time to match changes in consumer needs and competitors' strategies. A product's position should evolve gradually as it adapts to the ever-changing marketing environment.

Other Market Offerings

Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images. Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people. The skillful use of marketing can turn a person's name into a powerhouse brand. For example, The Food Network's celebrity chef, Rachael Ray, is a one-woman marketing phenomenon, with her own daytime talk show, cookware and cutlery brands, dog food brand, and even her own brand of EVOO (Extra Virgin Olive Oil.) Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places. Ideas can also be marketed. We will narrow our focus to the marketing of social ideas. This area has been called social marketing, which consists of using traditional business marketing concepts and tools to create behaviors that will create individual and societal well-being. Social marketing involves much more than just advertising. It involves a broad range of marketing strategies and marketing mix tools designed to bring about beneficial social change.

Figure 5.5 - Adopter Categories Based on Relative Time of Adoption of Innovations

People can be classified into the adopter categories shown in Figure 5.5. The curve illustrates that after a slow start, an increasing number of people adopt the new product. The five adopter groups have differing values. Innovators try new ideas at some risk. Early adopters are opinion leaders in their communities and adopt new ideas early but carefully. Early mainstream adopters adopt new ideas before the average person. Late mainstream adopters adopt an innovation only after a majority of people have tried it. Finally, lagging adopters adopt the innovation only when it has become something of a tradition itself.

Marketing Tasks for Service Companies

Service companies face three major marketing tasks: They want to increase their service differentiation, service quality, and service productivity. In these days of intense price competition, service marketers often complain about the difficulty of differentiating their services from those of competitors. The solution to price competition is to develop a differentiated offer, delivery, and image. For example, Dick's Sporting Goods' customers can sample shoes on Dick's indoor footwear track, test golf clubs with an on-site golf swing analyzer and putting green, shoot bows in its archery range, and receive personalized fitness product guidance from an in-store team of fitness trainers. A service firm can differentiate itself by delivering consistently higher quality than its competitors provide. Service providers need to identify what target customers expect in regard to service quality. As hard as they may try, even the best companies will have an occasional late delivery, burned steak, or grumpy employee. However, good service recovery can turn angry customers into loyal ones. With their costs rising rapidly, service firms are under great pressure to increase service productivity. They can do so in several ways. They can train current employees better or hire new ones who will work harder or more skillfully. Or they can increase the quantity of their service by giving up some quality. Finally, a service provider can harness the power of technology. However, companies must avoid pushing productivity so hard that doing so reduces quality. For example, many airlines in their attempts to improve productivity, have mangled customer service.

Figure 7.3 - Four Service Characteristics

Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, buyers look for signals of service quality. They draw conclusions about quality from the place, people, price, equipment, and communications that they can see. Service inseparability means that services cannot be separated from their providers, whether the providers are people or machines. Customer coproduction makes provider-customer interaction a special feature of services marketing. Both the provider and the customer affect the service outcome. Service variability means that the quality of services depends on who provides them as well as when, where, and how they are provided. For example, within a Marriott hotel, one registration-counter employee may be cheerful and efficient, whereas another standing just a few feet away may be grumpy and slow. Service perishability means that services cannot be stored for later sale or use. Some doctors charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up.

7-4 Summary

Some analysts see brands as the major enduring asset of a company. Brands are more than just names and symbols; they embody everything that the product or the service means to consumers. Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or the service. A brand with strong brand equity is a very valuable asset. In building brands, companies need to make decisions about brand positioning, brand name selection, brand sponsorship, and brand development. The most powerful brand positioning builds around strong consumer beliefs and values. Brand name selection involves finding the best brand name based on a careful review of product benefits, the target market, and proposed marketing strategies. A manufacturer has four brand sponsorship options: it can launch a national brand (or manufacturer's brand), sell to resellers that use a private brand, market licensed brands, or join forces with another company to co-brand a product. A company also has four choices when it comes to developing brands. It can introduce line extensions, brand extensions, multibrands, or new brands. However, brands are not maintained by advertising but by customers' brand experiences.

Demographic Segmentation

Some companies use age and life-cycle segmentation, offering different products or using different marketing approaches for different age and life-cycle groups. For example, Kraft's Oscar Mayer brand markets Lunchables, convenient prepackaged lunches for children. To extend the substantial success of Lunchables, however, Oscar Mayer later introduced Lunchables Uploaded for teenagers and an adult version, P3 (Portable Protein Pack). Gender segmentation divides a market into different segments based on gender, and has long been used in marketing clothing, cosmetics, toiletries, toys, and magazines For example, the men's personal care industry has exploded, and many cosmetics brands that previously catered mostly to women, now successfully market men's lines. Income segmentation involves dividing a market into different income segments. For example, many retailers—such as the Dollar General, Family Dollar, and Dollar Tree store chains—successfully target low- and middle-income groups. The core market for such stores is represented by families with incomes under $30,000. With their low-income strategies, dollar stores are now the fastest-growing retailers in the nation.

Socially Responsible Target Marketing

Target marketing sometimes generates controversy and concern. The biggest issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products. In target marketing, the issue is not really who is targeted but rather how and for what. Controversies arise when marketers attempt to profit at the expense of targeted segments—when they unfairly target vulnerable segments or target them with questionable products or tactics. Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company but also the interests of those targeted.

Figure 8.3 - Styles, Fashions, and Fads

The PLC concept also can be applied to what are known as styles, fashions, and fads. This figure shows their special life cycles. A style is a basic and distinctive mode of expression. For example, styles appear in homes (colonial, ranch, transitional), clothing (formal, casual), and art (realist, surrealist, abstract). A style may last for generations, passing in and out of vogue. A style has a cycle showing several periods of renewed interest. A fashion is a currently accepted or popular style in a given field. For example, the more formal "business attire" look of corporate dress of the 1980s and 1990s gave way to the "business casual" look of the 2000s and 2010s. Fashions tend to grow slowly, remain popular for a while, and then decline slowly. Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. A fad may be part of an otherwise normal life cycle. Or the fad may comprise a brand's or product's entire life cycle. Pet Rocks are a classic example.

Stages in the Adoption Process

The adoption process is the mental process through which an individual passes from first learning about an innovation to final adoption. Consumers go through five stages in the process of adopting a new product, which is a good, service, or idea that is perceived by some potential customers as new. The first stage is awareness. In this stage the consumer becomes aware of the new product but lacks information about it. The second stage is interest, which involves the consumer seeking information about the new product. The third stage is evaluation, where the consumer considers whether trying the new product makes sense. The fourth stage is trial. In this stage, the consumer tries the new product on a small scale to improve his or her estimate of its value. The final stage is adoption where the consumer decides to make full and regular use of the new product.

Decision Process

The business buying process tends to be longer and more formalized. Large business purchases usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval. In the business buying process, the buyer and seller are often much more dependent on each other. In the short run, sales go to suppliers who meet buyers' immediate product and service needs. In the long run, however, business-to-business marketers keep customers by meeting current needs and by partnering with them to help solve their problems. Supplier development refers to the systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

5.4 Summary

The business market is composed of all organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit. Compared with consumer markets, business markets usually have fewer, larger buyers who are more geographically concentrated. Business demand is derived demand, and the business buying decision usually involves more and more professional buyers. Business buyers make decisions that vary with the three types of buying situations: straight rebuys, modified rebuys, and new tasks. The decision-making unit of a buying organization—the buying center—can consist of many different persons playing many different roles. The business marketer needs to know the following: Who are the major buying center participants? In what decisions do they exercise influence and to what degree? What evaluation criteria does each decision participant use? The business marketer also needs to understand the major environmental, organizational, interpersonal, and individual influences on the buying process.

Market Structure and Demand

The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. Even in large business markets, a few buyers often account for most of the purchasing. Further, business demand is derived demand. It ultimately derives from the demand for consumer goods. Finally, many business markets have inelastic and more fluctuating demand. The total demand for many business products is not much affected by price changes, especially in the short run.

Participants in the Business Buying Process

The buying center consists of all the individuals and units that play a role in the purchase decision-making process. This group includes the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information. The buying center is not a fixed and formally identified unit within the buying organization. It is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center will vary for different products and for different buying situations.

5.1 Summary

The consumer market consists of all the individuals and households that buy or acquire goods and services for personal consumption. A simple model of consumer behavior suggests that marketing stimuli and other major forces enter the consumer's "black box." This black box has two parts: buyer characteristics and the buyer's decision process. Once in the black box, the inputs result in buyer responses, such as buying attitudes, preferences, and purchase behavior. Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural, social, personal, and psychological. Understanding these factors can help marketers to identify interested buyers and to shape products and appeals to serve consumer needs better. Culture is the most basic determinant of a person's wants and behavior. People in different cultural, subcultural, and social class groups have different product and brand preferences. Social factors, such as small groups, social networks, and family influences, strongly affect product and brand choices, as do personal characteristics, such as age, life stage, occupation, economic circumstances, lifestyle, and personality. Finally, consumer buying behavior is influenced by four major sets of psychological factors—motivation, perception, learning, and beliefs and attitudes. Each of these factors provides a different perspective for understanding the workings of the buyer's black box.

Choosing a Differentiation and Positioning Strategy

The differentiation and positioning task consists of three steps, which include identifying a set of differentiating competitive advantages on which to build a position, choosing the right competitive advantages, and selecting an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market. The following slides discuss each of these steps in greater detail.

Product Mix Decisions

The mix width refers to the number of different product lines the company carries. Product mix length refers to the total number of items a company carries within its product lines. Product mix depth refers to the number of versions offered for each product in the line. Finally, the consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other aspect. A company can increase its business in four ways. It can add new product lines, widening its product mix. The company can lengthen its existing product lines to become a more full-line company. It can add more versions of each product and thus deepen its product mix. Finally, the company can pursue more product line consistency or less depending on whether it wants to have a strong reputation in a single field or in several fields. Finally, a company can pursue more product line consistency—or less—depending on whether it wants to have a strong reputation in a single field or in several fields.

8-2 Summary

The new product development process consists of eight sequential stages. The process starts with idea generation. Next comes idea screening, which reduces the number of ideas based on the company's own criteria. Ideas that pass the screening stage continue through product concept development, in which a detailed version of the new product idea is stated in meaningful consumer terms. This stage includes concept testing, in which new product concepts are tested with a group of target consumers to determine whether the concepts have strong consumer appeal. Strong concepts proceed to marketing strategy development, in which an initial marketing strategy for the new product is developed from the product concept. In the business-analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to determine whether the new product is likely to satisfy the company's objectives. With positive results here, the ideas become more concrete through product development and test marketing and finally are launched during commercialization. New product development involves more than just going through a set of steps. Companies must take a systematic, holistic approach to managing this process. Successful new product development requires a customer-centered, team-based, systematic effort.

Idea Screening

The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to reduce that number. Many companies require their executives to write up new product ideas in a standard format that can be reviewed by a new product committee. The write-up describes the product, value proposition, the target market, and the competition. It also estimates market size, product price, development time and costs, manufacturing costs, and rate of return. The committee then evaluates the idea against a set of general criteria. R-W-W, that is, "real, win, worth doing," refers to a new product screening framework that asks three questions: First, Is it real? Is there a real need and desire for the product and will customers buy it? Is there a clear product concept and will such a product satisfy the market? Second, Can we win? Does the product offer a sustainable competitive advantage? Does the company have the resources to make such a product a success? Finally, Is it worth doing? Does the product fit the company's overall growth strategy? Does it offer sufficient profit potential? The company should be able to answer yes to all three R-W-W questions before developing the new product idea further.

6-2 Summary

There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. In geographic segmentation, the market is divided into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. In demographic segmentation, the market is divided into groups based on demographic variables, including age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral segmentation, the market is divided into groups based on consumers' knowledge, attitudes, uses, or responses concerning a product. Business marketers use many of the same variables to segment their markets. But business markets also can be segmented by business demographics (industry, company size), operating characteristics, purchasing approaches, situational factors, and personal characteristics. The effectiveness of the segmentation analysis depends on finding segments that are measurable, accessible, substantial, differentiable, and actionable.

Figure 7.6 - Brand Development Strategies

This figure illustrates the four choices that a company has when it comes to developing brands. It can introduce line extensions, brand extensions, multibrands, or new brands. Line extensions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. A company might introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, use excess capacity, or command more shelf space from resellers. A brand extension extends an existing brand name to new or modified products in a new category. It gives a new product instant recognition and faster acceptance. But an extension may also confuse the image of the main brand. Multibranding offers a way to establish different features that appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share. A major drawback of multibranding is that each brand might obtain only a small market share, and none may be very profitable. A company might believe that the power of its existing brand name is waning, so a new brand name is needed. Or, it may create a new brand name when it enters a new product category for which none of its current brand names are appropriate. For example, Toyota created the separate Lexus brand aimed at luxury car consumers and the Scion brand, targeted toward Millennial consumers.

Figure 8.2 - Sales and Profits over the Product's Life from Inception to Decline

This figure shows a typical product life cycle (PLC), the course that a product's sales and profits take over its lifetime. The PLC has five distinct stages. 1.Product development begins when the company finds and develops a new product idea. During product development, sales are zero, and the company's investment costs mount. 2.Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. 3.Growth is a period of rapid market acceptance and increasing profits. 4.Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. 5.Decline is the period when sales fall off and profits drop.

Figure 6.2 - Market-Targeting Strategies

This figure shows that companies can target very broadly, very narrowly, or somewhere in between. Undifferentiated (or mass marketing) refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Differentiated (or segmented marketing) refers to a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. Concentrated (or niche marketing) refers to a market-coverage strategy in which a firm goes after a large share of one or a few smaller segments or niches. Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Rather than seeing a customer in every individual, micromarketers see the individual in every customer. Micromarketing includes local marketing and individual marketing. Local marketing involves tailoring brands and marketing to the needs and wants of local customer segments like cities, neighborhoods, and even specific stores. Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers. Mass customization is the process by which firms interact one to one with masses of customers to design products, services, and marketing programs tailor-made to individual needs.

Figure 5.1 - Model of Buyer Behavior

This figure shows that marketing and other stimuli enter the consumer's "black box" and produce certain responses. Marketers must figure out what is in the buyer's black box. The whats, wheres, and whens of consumer buying behavior can be measured. But it's very difficult to figure out the whys of buying behavior (that's why it's called the black box). Marketers spend a lot of time and money trying to figure out what makes customers tick.

Figure 5.4 - Buyer Decision Process

This figure shows that the buyer decision process consists of five stages. The first stage is need recognition. The need can be triggered by internal stimuli when one of the person's normal needs rises to a level high enough to become a drive. A need can also be triggered by external stimuli. The second stage is information search. Consumers can obtain information from several sources like personal, commercial, public, and experiential sources. The third stage is the evaluation of alternatives, that is, how consumers process information to choose among alternative brands. The fourth stage is the purchase decision. Two factors can come between the purchase intention and the purchase decision: the attitudes of others and unexpected situational factors. The last stage is postpurchase behavior. Determining if the consumer is satisfied or dissatisfied with the purchase lies in the relationship between the consumer's expectations and the product's perceived performance. However, all major purchases result in cognitive dissonance, or discomfort caused by postpurchase conflict.

Figure 8.1 - Major Stages in New Product Development

This figure shows the eight major steps in the new product development process. New product development starts with good new product ideas. A company typically generates hundreds or even thousands of ideas to find a few good ones. The remaining steps reduce the number of ideas and develop only the best ones into profitable products.

Concept Development

This is Tesla's initial all-electric roadster. Later, more-affordable mass-market models will travel more than 300 miles on a single charge, recharge in 45 minutes from a normal 120-volt electrical outlet, and cost about one penny per mile to power. Suppose a car manufacturer has developed a battery-powered, all-electric car. Its initial prototype is a sleek, sporty roadster convertible that sells for more than $100,000. The marketer's task is to develop this new product into alternative product concepts, find out how attractive each concept is to customers, and choose the best one. It could introduce more affordable, mass-market versions, such as a family car, a sporty compact for young couples and singles, a "green" car that appeals to the environmentally conscious, and even a high-end midsize utility vehicle.

Requirements for Effective Segmentation

To be useful, the size, purchasing power, and profiles of market segments should be measurable. The market segments must be accessible - effectively reached and served. The market segments should be substantial - large or profitable enough to serve. They should be differentiable, which means they are conceptually distinguishable and respond differently to different marketing mix elements and programs. Finally, the segments should be actionable, which means that effective programs can be designed for attracting and serving the segments.

6-3 Summary

To target the best market segments, the company first evaluates each segment's size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four market-targeting strategies—ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing. This involves mass producing, mass distributing, and mass promoting the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing—developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on one or a few market segments only. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on company resources, product variability, product life-cycle stage, market variability, and competitive marketing strategies.