Principles of Marketing Study Guide for Midterm 1

Secondary vs. Primary Research

- secondary: information that has already collected from other sources and usually is readily available - primary: data collected to address specific research needs Secondary research analyzes information that has already been collected for another purpose by a third party, such as a government agency, an industry association, or another company Other types of information need to from talking directly to customers about your research questions. This is known as primary research, which collects primary data captured expressly for your research inquiry. Marketing research projects may include secondary research, primary research, or both.

Elements of a Brand

1) A brand is an identifier: a name, sign, symbol, design, term, or some combination of these things that identifies an offering and helps simplify choice for the consumer. 2. A brand is a promise: the promise of what a company or offering will provide to the people who interact with it. 3. A brand is an asset: a reputation in the marketplace that can drive price premiums and customer preference for goods from a particular provider. 4. A brand is a set of perceptions: the sum total of everything individuals believe, think, see, know, feel, hear, and experience about a product, service, or organization. 5. A brand is "mind share": the unique position a company or offering holds in the customer's mind, based on their past experiences and what they expect in the future.

Perceptual Positioning Maps

1) Determine consumers' perceptions and evaluations in relation to competitors'. 2) Identify the market's ideal points and size. 3) Identify competitors' positions. 4) Determine consumer preferences 5) Select the position.

Marketing Research Process

1) Identify the Process 2) Develop a Research Plan 3) Conduct the Research 4) Analyze and Report Findings 5) Take Action

Definition of Marketing

1) Marketing is the process of aligning your offering with the customer's needs and communicating that to them. 2) Marketing is the process of creating and maintaining a customer relationship. Textbook: Marketing is a set of activities related to creating, communicating, delivering, and exchanging offerings that have value for others. In business, the function of marketing is to bring value to customers, whom the business seeks to identify, satisfy, and retain. Slides: The process by which companies create value for customers and build strong customer relationships in order to capture and build strong customer relationships in order to capture value from customers in return.

Consumer Buying Process Stages

1) Need Recognization: The first step of the consumer decision process is recognizing that there is a problem-or unmet need-and that this need warrants some action. Whether we act to resolve a particular problem depends upon two factors: (1) the magnitude of the difference between what we have and what we need, and (2) the importance of the problem. 2) Information Search: After recognizing a need, the prospective consumer may seek information to help identify and evaluate alternative products, services, experiences, and outlets that will meet that need. Information may come from any number of sources: family and friends, search engines, Yelp reviews, personal observation, Consumer Reports, salespeople, product samples, and so forth. 3) Evaluation of Alternatives: The next step is to evaluate these alternatives and make a choice, assuming a choice is possible that meets the consumer's financial and psychological requirements. Evaluation criteria vary from consumer to consumer and from purchase to purchase, just as the needs and information sources vary 4) The Purchase Decision: After much searching and evaluating (or perhaps very little), consumers at some point have to decide whether they are going to buy. Anything marketers can do to simplify purchasing will be attractive to buyers. For example, in advertising, marketers might suggest the best size of product for a particular use or the right wine to drink with a particular food. Sometimes several decision situations can be combined and marketed as one package. For example, travel agents often package travel tours, and stores that sell appliances try to sell them with add-on warranties 5) Postpurchase Behavior: However, a consumer's feelings and evaluations after the sale are also significant to a marketer, because they can influence repeat sales and what the customer tells others about the product or brand. It is normal for consumers to experience some postpurchase anxiety after any significant or nonroutine purchase.

Consumer Product Categories

1. Convenience Products 2. Shopping Products 3. Specialty Products 4. Unsought Products

Customer Persona

A representation of a customer's target market based on data collected from existing and target customers.

New Product Development Process

A seven-phase process for introducing products: idea generation, screening, concept testing, business analysis, product development, test-marketing, and commercialization

Positioning Statements

A statement that summarizes company or brand positioning using this form: to (target segment and need) our (brand) is (concept) that (point of difference)

Brand Equity

Brand equity is what exists in your mind (or doesn't yet exist) to help you recognize these branded images and phrases. Brand equity is also the set of positive, negative, or neutral thoughts, beliefs, and emotions you associate with each of the brands. Brand equity can manifest itself in consumer recognition of logos or other visual elements, brand language associations, consumers' perceptions of quality, and consumers' perceptions of value or other brand attributes. For any given product, service, or company, brand equity is considered a key asset because it gives meaning to the brand in the minds of its consumers

Close-ended response versus open-ended response

Close ended questions (also called structured questions) are easily tabulated, with a discrete set of answers such as yes/no, multiple choice, a scale rating, or "select all that apply." Open-ended questions (also called unstructured questions) ask for a verbal or textual response, such as "Why did you choose X?" While it may be tempting to include lots of open-ended questions in surveys, in fact it is best to use this type of question sparingly.

Classification of Consumer Products

Convenience: A convenience product is an inexpensive product that requires a minimum amount of effort on the part of the consumer in order to select and purchase it. Examples of convenience products are bread, soft drinks, pain reliever, and coffee. They also include headphones, power cords, and other items that are easily misplaced. Shopping: In contrast, consumers want to be able to compare products categorized as shopping products. Shopping products are usually more expensive and are purchased occasionally. The consumer is more likely to compare a number of options to assess quality, cost, and features. Although many shopping goods are nationally advertised, in the marketing strategy it is often the ability of the retailer to differentiate itself that generates the sale. If you decide to buy a TV at BestBuy, then you are more likely to evaluate the range of options and prices that BestBuy has to offer. It becomes important for BestBuy to provide a knowledgeable and effective sales person and have the right pricing discounts to offer you a competitive deal. Specialty: Specialty goods represent the third product classification. From the consumer's perspective, these products are so unique that it's worth it to go to great lengths to find and purchase them. Almost without exception, price is not the principle factor affecting the sales of specialty goods. Although these products may be custom-made or one349 Blizzcon attendees, 2014 of-a-kind, it is also possible that the marketer has been very successful in differentiating the product in the mind of the consumer. For example, some consumers feel a strong attachment to their hair stylist or barber. They are more likely to wait for an appointment than schedule time with a different stylist. Unsought: Unsought products are those the consumer never plans or hopes to buy. These are either products that the customer is unaware of or products the consumer hopes not to need. For example, most consumers hope never to purchase pest control services and try to avoid purchasing funeral plots. Unsought products have a tendency to draw aggressive sales techniques, as it is difficult to get the attention of a buyer who is not seeking the product.

Three Components of a Product

Core Customer Value: The core customer value to your business is immense, so the better you understand them the better the return on your investment. Every company should have a brand promise that it makes to its customers. The promise should differentiate you in your market and support the sales process by making it easier to close deals. Actual Product: The actual product is the item for sale, including the unique branding, design, and packaging that is attached to it. The actual product and its features must deliver on the core-product expectations that consumers want from the product. Associated Services: The non-physical attributes of the product including product warranties, financing, product support, and after-sale service (also called augmented product)

Competitive Environment

Core competencies: Main strategic advantages of a business-combo of pooled knowledge & technical capacities that allow a business to be competitive in marketplace Competitive Advantages: Conditions that allow company to produce a good or service at a lower price in a more desirable fashion for customers. Competitive barriers: High start up costs, obstacles that prevent new competitors from easily entering an industry-benefits existing firms in industry Competitive Intelligence: Collecting and analyzing info about competitors strengths and weaknesses in a legal and ethical manner to enhance business decision making-tactical: shorter term, capture market share , increase revenue Strategic: long term, key risks and opportunities facing the enterprise

Lifetime Customer Value

Customer lifetime value predicts how much profit is associated with a customer during the course of their lifetime relationship with a company. One-time customers usually have a relatively low customer lifetime value, while frequent, loyal, repeat-customers typically have a high customer lifetime value. Marketing applies a customer-oriented mindset and, through particular marketing activities, tries to make initial contact with customers and move them through various stages of the relationship—all with the goal of increasing lifetime customer value. 1) Meeting and Greeting Acquainted 2) Providing a Satisfying Experience 3) Sustain a Committed Relationship

BCG Model

Dog: A product or business with low market share in a mature industry is a dog. There is no room for growth, which suggests that no new funds should be invested in it. Cash Cow: A cash cow is a product or business that has high market share and is in a slow-growing industry. It's bringing in more money than is being invested in it, but it doesn't have much growth potential. The profits from a cash cow can be used to fund high-growth investments, but the cash cow itself warrants low investment. Question mark: A question mark is a product or business that has low market share currently, but in a growing industry. This case is trickier: the product/business is consuming financing and creating a low rate of return for now, but its direction isn't clear. A question mark has the potential to become either a star or a dog, so close monitoring is needed to determine its growth potential. Star: A star has high market share in a fast-growing industry. This kind of product or business is poised to bring strong return on the funds invested. It also has the potential to become a cash cow at the end of the product life cycle, which can fund future investments.

Segmentation

Geographic: organizes customers into groups on the basis of where they live. Demographics: groups consumers according to easily measured, objective characteristics such as age, gender, income, and education. Psychographic: allows people to describe themselves using characteristics that help them choose how they occupy their time (behavior) and what underlying psychological reasons determine these choices. Benefits: groups consumers on the basis of the benefits they derive from products or services. Behavioral: divides customers into groups based on how they use the product or service.

Growth Strategies

Market Penetration: A market penetration strategy employs the existing marketing mix and focuses the firm's efforts on existing customers. Market Development: A market development strategy employs the existing marketing offering to reach new market segments, whether domestic or international. Product development: A product development strategy offers a new product or service to a firm's current target market. Diversification: A diversification strategy introduces a new product or service to a new market segment that currently is not served by the company.

Positioning Process

Positioning is our target market's perception of our perception of our product's key attributes product's key attributes (features & benefits) compared (features & benefits) compared to our competition.to our competition.Assess our product's Assess our product's competitive advantage competitive advantage and and position ourselves in the consumer's minds to be position ourselves in the consumer's minds to be the more attractive option in these categories.

Primary versus Secondary Packaging

Primary: Packaging material which comes directly in contact with the product. Consumer uses. Secondary: Packaging for transportation, warehousing, storage, retailing, labeling, scanner code.

Product Mix and Product Line Decisions

Product mix, also known as product assortment or product portfolio, refers to the complete set of products and/or services offered by a firm. Product Line Decisions: A product line is a group of related products all marketed under a single brand name that is sold by the same company. ... Companies often expand their offerings by adding to existing product lines because consumers are more likely to purchase products from brands with which they are already familiar.

Marketing Mix (4 P's)

Product, price, place, and promotion—the controllable set of activities that a firm uses to respond to the wants of its target markets. Product: creating value. the goods and services offered Price: capturing value. ensuring fair value in the transaction Place: delivering value. distribution or delivery. Promotion: communicate value. communication and information

Qualitative versus quantitative research

Qualitative: Qualitative research explores ideas, perceptions, and behaviors in depth with a relatively small number of research participants. It aims to answer questions with more complex, open-ended responses such as, "What does this mean to you . . . ?" or "Why do you believe . . . ?" or "How do you like to . . . ?" Qualitative research doesn't yield data that are easily tabulated and translated into tidy percentages. Instead, provides information that can help marketers understand the big picture of how customers perceive or experience something. Quantitative: In contrast, quantitative research collects information that can easily be counted, tabulated, and statistically analyzed. When organizations need to understand (or quantify) the exact percentage of people who believe or act in a certain way, quantitative research is necessary. Quantitative methods allow researchers to test and validate a hypothesis or what they believe is the best course of action. These methods collect enough data to provide statistically valid results, and managers use them to inform the choices they make.

Repositioning

Redoing a product's position to respond to marketplace changes Repositioning involves changing the market's perceptions of an offering so that it can compete more effectively in its present market or in other target segments. Generally, it is good to consider repositioning when you see the need or opportunity to improve demand for the offering. Perhaps sales have slowed down, your target segment is getting smaller, or you've developed a new innovation you'd like to introduce to the product. Eefers to a strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences.

SWOT

Strengths: (internal) Strengths describe the positive attributes, tangible and intangible, of your organization. These are within your control. Weaknesses: (internal) Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. Opportunities: (external) Opportunities are external attractive factors that represent reasons for your business to exist and prosper. Threats: (external) Threats are external factors beyond your control that could put your business at risk. You may benefit from having contingency plans for them. Strengths and weaknesses include the resources and capabilities within the organization now. Since the company has the most control over internal factors, it can craft strategies and objectives to exploit strengths and address weaknesses. Examples of internal factors include the following: Financial resources, Technical resources and capabilities, Human resources, Product lines. External factors include opportunities and threats that are outside of the organization. These are factors that the company may be able influence—or at least anticipate—but not fully control. Examples of external factors include the following: Technology innovations and changes, Competition, Economic trends, Government policies and legislation, Legal judgments, Social trends

How does marketing create value for customers?

The role of marketing is to identify, satisfy, and retain customers. 1) First you must identify a want or need that you can address, as well as the prospective customers who possess this want or need. 2) Next, you work to satisfy these customers by delivering a product or service that addresses these needs at the time customers want it. The key to customer satisfaction is making sure everyone feels they benefit from the exchange. Your customer is happy with the value they get for what they pay. You are happy with the payment you receive in exchange for what you provide. 3) Effective marketing doesn't stop there. It also needs to retain customers by creating new opportunities to win customer loyalty and business.

Value Proposition

Value = Benefits - Cost = Benefits A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.

Branding

Value to Customers: Brands help simplify consumer choices. Brands help create trust, so that a person knows what to expect from a branded company, product, or service. Effective branding enables the consumer to easily identify a desirable company or product because the features and benefits have been communicated effectively. Positive, well-established brand associations increase the likelihood that consumers will select, purchase, and consume the product. Value to Marketers: For companies and other organizations that produce goods, branding helps create loyalty. It decreases the risk of losing market share to the competition by establishing a competitive advantage customers can count on. Strong brands often command premium pricing from consumers who are willing to pay more for a product they know, trust, and perceive as offering good value. Branding can be a great vehicle for effectively reaching target audiences and positioning a company relative to the competition. Working in conjunction with positioning, brand is the ultimate touchstone to guide choices around messaging, visual design, packaging, marketing, communications, and product strategy Branding Strategies: Branded House, House of Brands, Competitive Multi-brand

Packaging

Various types: Value to Customers: Attracts consumer attention, can create convenience Value to Marketers: function, attraction, promotion, facilitates purchase decision, differentiation Value to intermediaries: