MKTG 409 Chapter 1

You are advising a local nonprofit on strategy. The nonprofit supports cancer research and relies entirely on donations. You recommend that the nonprofit engage in marketing activities. The executive director tells you that because it is a nonprofit that does not engage in selling activities and has a small budget, the nonprofit has no use for marketing. You disagree and explain that marketing is not just for for-profit organizations. You explain the different ways the nonprofit can engage in marketing without changing its practices or the mission. Which of the following marketing activities would be most feasible for this nonprofit? A. Purchase an advertisement in a state newspaper that is popular in the local community about the nonprofit. B. Get volunteers to sell T-shirts and other items at the nonprofit's major events. C. Send out coupons for the organization's products in the local bulletin. D. Engage in extensive marketing research to determine what its contributors want. E. Use inexpensive digital marketing tools to inform the community about an upcoming fundraising event.

E. Use inexpensive digital marketing tools to inform the community about an upcoming fundraising event.

Relationship Marketing

Establishing long-term mutually satisfying buyer-seller relationships. Refers to "long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges."

Marketing Mix

Four marketing activities -- product, pricing, distribution, and promotion -- that a firm can control to meet the needs of customers within its target market.

Stakeholders

Include those constituents who have "stake", or claim, in some aspect of a company's products, operations, markets, industry, and outcomes; these include customers, employees, investors and shareholders, supplies, governments, communities, competitors, and many others.

Big Data

Massive data files that can be obtained from both structured and unstructured databases.

Customer Lifetime Value (CLV)

Predicts the net value (profit or loss) for the future relationship with the customer. A key measurement that forecasts a customer's lifetime economic contribution based on continued relationship marketing efforts.

The Product Variable (Marketing Mix)

Successful marketing efforts results in products that become part of everyday life. The product variable of the marketing mix deals with researching customers' needs and wants and designing a product that satisfies them. The product variable also involves creating or modifying brand names and packaging and may include decisions regarding warranty and repair services. Product variable decisions and related activities are important because they directly relate to customers' needs and wants. To maintain an assortment of products that helps an organization achieve its goals, marketers must develop new products, modify existing ones, and eliminate those that no longer satisfy enough buyers or that yield unacceptable profits.

Sharing Economy or "Gig Economy"

Technology has also enabled firms like Uber and Airbnb to create successful new product concepts by harnessing peer-to-peer power and sharing underutilized resources such as auto-mobiles, boats, and houses to earn income. This economic model is called the sharing economy. It is also referred to as the "gig economy" because firms specializing in peer-to-peer services are using independent contractors to provide services. These contractors essentially run their own businesses and take on service jobs, or "gigs", whenever they desire to earn income using their own resources. While some gig workers do this to earn extra income, more and more are pursuing this as a full-time job. This has led to a rise in independent contracting. This disruptive technology challenges traditional industries like taxis and hotels.

Marketing Environment

The competitive, economic, political, legal and regulatory, technological, and sociocultural forces that surround the customer and affect the marketing mix.

The Price Variable (Marketing Mix)

The price variable relates to decisions and actions associated with pricing objectives and policies and actual product prices. Price is a critical component of the marketing mix because customers are concerned about the value obtained in the exchange. Price is often used as a competitive tool, and intense price competition sometimes leads to price wars. Higher prices can be used competitively to establish a product's premium image. Other companies are skilled at providing products at prices lower than competitors. The marketing mix variables are often viewed as controllable because they can be modified. However, there are limits to how much marketing managers can alter them. Economic conditions, competitive structure, and government regulations may precent a manager from adjusting prices frequently or significantly. Making changes in the size, shape, or design of most tangible goods is expensive; therefore, such product features cannot be altered very often. In addition, promotional campaigns and methods use to distribute products originally cannot be rewritten or revamped overnight.

Marketing

The process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment.

The Promotion Variable (Marketing Mix)

The promotion variable relates to activities used to inform and persuade to create a desired response. Promotion can increase public awareness of the organization and of new or existing products. It can help create a direct response by including a link to access a website or order a product. Promotional activities can inform customers about product features. In addition, promotional activities can urge people to take a particular stance on a political or social issue, such as smoking or drug abuse. Promotion can also help to sustain interest in established products that have been available for decades. Many companies are using the Internet to communicate information about themselves and their products.

Exchanges

The provision or transfer of goods, services, or ideas in return for something of value. For an exchange to take place, four conditions must exist: 1. Two or more individuals, groups, or organizations must participate, and each must possess something of value that the other party desires. 2. The exchange should provide a benefit or satisfaction to both parties involved in the transaction. 3. Each party must have confidence in the promise fo the "something of value" held by the other. 4. To build trust, the parties to the exchange must meet expectations.

Customers

They are the purchasers of the products that organizations develop, distribute, promote, and price. The focal point of all marketing activities.

The Distribution Variable (Marketing Mix)

To satisfy customers, products must be available at the right time and in appropriate locations. In dealing with the distribution variable, a marketing manager makes products available in the quantities desired to as many target-market customers as possible, keeping total inventory, transportation, and storage costs as efficient as possible. A marketing manager also may select and motivate intermediaries (wholesalers and retailers), establish and maintain inventory control procedures, and develop and manage transportation and storage systems. All companies must depends on intermediaries to move their final products to the market. The advent of the Internet and electronic commerce also has dramatically influenced the distribution variable. Companies now can make their products available throughout the world without maintaining facilities in each country (ex. Spotify).

Customer Relationship Management (CRM)

Using information about customers to create marketing strategies that develop and sustain desirable customer relationships.

The Evolution of the Marketing Concept The Sales Orientation

While sales have always been needed to make a profit, during the first half of the 1900s competition increased and businesses realized that they would have to focus more on selling products to many buyers. Businesses viewed sales as the major means of increasing profits, and this period came to have a sales orientation. Businesspeople believed that the most important marketing activities were personal selling, advertising, and distribution. Today, some people incorrectly equate marketing with sales orientation. Some firms still use sales orientation.

80/20 Rule

80 percent of business profits come from 20 percent of customers. The goal is to asses the worth of individual customers and thus estimate their lifetime value to the company.

Value

A customer's subjective assessment of benefits relative to costs in determining the worth of a product (customer value = customer benefits - customer costs).

Product

A good, service, or an idea.

Marketing Concept

A managerial philosophy that an organization should try to satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals.

Target Market

A specific group of customers on whom an organization focuses its marketing efforts.

Good

A type of product. A physical entity you can touch. Examples: Sunglasses, Cars, Phones.

Idea

A type of product. Concepts, philosophies, images, and issues. Examples: A marriage counselor, for a fee, gives spouses ideas to help improve their relationship. Other marketers of ideas include political parties, churches, and animal protective groups.

Service

A type of product. The application of human and mechanical efforts to people or objects to provide intangible benefits to customers. Examples: Air travel, education, insurance, banking, health care, day care.

Which stakeholder is the focal point of all marketing activities? A. Customer B. Regulators C. Supplier D. Community E. Employee

A. Customer

Joseph works at a small electronics retailer. He has two customers in particular that he sees regularly. One customer, Mr. Johnson, comes in frequently asking about new deals. However, he rarely buys anything, and when he does buy something it is usually small. The other customer, Mr. Montoya, comes in a little less frequently. He does not purchase products all the time, but when he does the products are expensive. Joseph recognizes that Mr. Montoya is a more valuable customer over time than Mr. Johnson. He has therefore worked hard to develop a strong relationship with Mr. Montoya. What marketing method is Joseph most likely using to direct his actions? A. customer lifetime value B. the marketing concept C. a sales orientation D. customer feedback E. a customer loyalty program

A. Customer Lifetime Value

During the Christmas season, a stuffed animal modeled after the popular cartoon character Garfield was in high demand. In fact, demand was so high at a local Walmart that it quickly sold out. When Walmart tried to order more, it learned that the suppliers had so many orders to fill that it would not be able to fill Walmart's order for two weeks. What type of marketing mix variable does this problem involve? A. Distribution B. Prodcut C. Pricing D. Promotion E. Exchange

A. Distribution

The essence of marketing is to develop satisfying ___________ from which both customers and marketers benefit. A. Exchanges B. Value C. Marketing Mixes D. Target Markets E. Environmental Factors

A. Exchanges

The Evolution of the Marketing Concept The Market Orientation

Although marketing history reveals that some firms have always produced products that consumers desired, by the 1950s, both business and academics developed new philosophies and terminology to explain why this approach is necessary for organizational success. This perspective emphasized that marketers first need to determine what customers want and then produce those products rather than making the products first and then trying to persuade customers that they need them. As more organizations realized the importance of satisfying customers' needs, U.S. business entered the marketing era, called the market orientation.

Market Orientation

An organization-wide commitment to researching and responding to customers needs. Requires the "organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it."

Which of the following equations describes customer value? A. Customer value= customer benefits - opportunity costs B. Customer value= customer benefits - customer costs C. Customer value= customer benefits - price D. Customer value= customer costs - customer benefits E. Customer value= income - price

B. Customer value = customer benefits - customer costs.

Which of the following sentences is true about a marketing exchange? A. Products in an exchange must be traded for money. B. It requires four conditions to take place. C. Seeing an advertisement is an example of an exchange. D. An exchange will always take place if four conditions are met. E. An exchange only needs to provide a benefit to one party.

B. It requires four conditions to take place.

The marketing concept is based upon the idea that an organization should try to provide products that satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals. During which orientation (time period) are marketers most likely to adopt the marketing concept? A. exchange orientation B. market orientation C. promotion orientation D. production orientation E. sales orientation

B. Market Orientation

Procter & Gamble is using social media to ask consumers about the qualities they desire in deodorant. The firm hopes to develop a new type of deodorant based on the feedback it receives. Which marketing mix variable is Procter & Gamble addressing? A. Distribution B. Product C. Pricing D. Promotion E. Exchange

B. Product

Sherrell works at Southwest Airlines as a digital marketer. A major part of her job is communicating with customers, answering questions and letting them know about how the airline offers them the best in customer value. Sherrell is working to create long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges with customers. This is an example of ________________. A. customer loyalty programs B. relationship marketing C. the marketing mix D. customer lifetime value E. a sales orientation

B. Relationship Marketing

Customers choose to go to Olive Garden based upon the value they place on the total product—including the food, service, atmosphere of the restaurant, and more. The process consumers use to determine value is highly _______________. A. Scientific B. Subjective C.Detailed D. Objective E. Narrow

B. Subjective

Samuel spent $500 on a new television set. How much of this price is likely to go toward marketing expenses? A. about $450 B. about $250 C. about $100 D. between $100 and $200 E. $500

B. about $250

Fill in the blank. Marketing environmental forces are often ______________. A. controllable B. non-influential C. interdependent D. easy to predict E. stable

C. Interdependent

Kroger decided to introduce a new product that appeals to Hispanic consumers. While the product is highly successful among Hispanic consumers, other ethnic groups seem to like the product as well. For this product, Hispanic consumers comprise Kroger's... A. Exchange B. Marketing Environment C. Target Market D. Community E. Marketing Mix

C. Target Market

Toyota is developing a new luxury vehicle. After performing some market tests, it realized that it was pricing its vehicles too high, even for the luxury market. Toyota had to make some changes in its marketing mix. Unfortunately, it made the mistake of launching its product right when a recession hit. As unemployment rose, sales of luxury products such as Toyota's new luxury vehicle tend to decrease. In this case, the pricing of its vehicle is a(n) _____________ force for Toyota, while the economic downturn is a(n) _____________ factor. A. stable; unstable B. uncontrollable; controllable C. unpredictable; predictable D. controllable; uncontrollable E. predictable; unpredictable

D. Controllable; Uncontrollable

What is the first step for marketers in implementing the marketing concept? A. Modify a communication system that allows information to be disseminated throughout the organization. B. Engage in personal selling or advertising to promote products that customers desire. C. Modify existing products to meet customer needs more effectively. D. Establish an information system to discover customers' real needs. E. Develop a feedback system so customers can describe their thoughts about a product.

D. Establish an information system to discover customers' real needs.

Which of the following is a major benefit of marketing? A. Marketing prevents the sale of harmful products. B. Marketing activities do not take up much time. C. Marketing activities are relatively low in cost. D. Marketing knowledge enhances consumer awareness. E. Marketing is the most important function of a business.

D. Marketing knowledge enhances customer awareness.

Vera loves her mom's recipes for gourmet chocolate candies, and she assumes everyone else will too. She starts a gourmet chocolate business. Vera views promotion, such as advertising and personal selling, as the most important activities needed to sell her product. She figures that consumers only have to learn about her product before becoming loyal and steadfast customers. What type of orientation does Vera seem to embrace? A. market orientation B. exchange orientation C. promotion orientation D. sales orientation E. production orientation

D. Sales Orientation

The Evolution of the Marketing Concept The Production Orientation

During the second half of the 1800s, the Industrial Revolution was in full swing in the United States. Electricity, rail transportation, division of labor, assembly lines, and mass production made it possible to produce goods more efficiently. With new technology and new ways of using labor, products poured into the marketplace, where demand for manufactured goods was strong. Although mass markets were evolving, firms were developing the ability to produce more products, and competition was becoming more intense.

POM Wonderful released advertisements saying that its pomegranate products have certain health benefits. The Federal Trade Commission filed a lawsuit against POM Wonderful, saying that it has not been proven that pomegranates have these positive impacts on a person's health. What type of marketing mix variable is involved in this situation? A. Distribution B. Pricing C. Exchange D. Product E. Promotion

E. Promotion