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North American Industry Classification System

- a system for classifying orgs in Canada, Mexico, and US on basis of the major activity, good or services they provide. - a tiered system of numbers that provides an increasingly detailed description of what goods and services a company provides.

involvement decision making

- decision makers level of involvement refers to the personal, social, and economic significance of the purchase to the consumer. - the consumers level of involvement determines whether he or she goes thru each of the 5 steps of decision making

Decision making process

- problem-solving process, viewed form the standpoint of the consumer, the one making the consumption decision. Steps: 1. Problem recognition: - recognizing prob that cud be solved thru purchase of some good/service. 2. Information search: can be both internal and external. after this stage decision maker shud have set of alternatives for purchase decision - internal information search: coming up w info from memory, particularly our preferences. -external info search: gathering info from outside ones own memory 3. Alternative eval: - after the consumer has found a number of alternatives, he/she must evaluate them on a number of dimensions that are important to him/her. 4. Purchase - consumer acts on his/her decision and acc makes purchase 5. post ourchase consumption: - consumer acc consumes product After product is consumed, Feedback look comes into play providing gfeeback regarding info search or problem recognition steps. 1. feedback to info search: - consumer remembers their experience w decision alternative, informing future decisions. this loop means consumers are adaptive, learn ab brands, products, and stores form consumption experience 2. feedback tp prob recognition: completing one decision-making process might lead consumer into recognition of another prob, which could lead to cascading purchases.

Types of buying situations

- the # of ppl in the buying center and the length and complexity of the steps in the buying process largely depend on the specific buying situation. 1. Straight rebuy: LOW involvement - buyer reorders an existing product w/o even checking w users or influencers. - simplest type of purchase an org can make. - done on repeated basis. - always purchasing same items from same suppliers 2. Modified rebuy (INTERMEDIATE involvemnt) - something changes in org buying process that complicated what wud b a straight rebut. - emergence of a new vendor might persuade exec to consider them as an alt - development of new product 3. New buy (HIGH involvement) - a first-time buyer of a product or service. - required marketers to spend a lot of time and effort educating the org decision makers ab their products - mrketers have most influence on an org in a new buy sitch because company is inexperienced in this product class

marketing

- the activity of creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large. - heart of marketing is in making sure exchanges between people and orgs satisfy the objectives of both sides of the exchange. - seeks to serve both buyers and sellers by discovering and satisfying the needs and wants of prospective customers, as well as society overall.

Characteristics of organizational buying

- the decision-making process that organizations use to establish the need for products and services and to identify, evaluate, and choose from alt brands and suppliers. Features: 1. Derived demand: - demand for a product or service is based on the demand for the org's product or service. BECAUSE an orgs demand is a derived demand, marketers have to pay attention to trends in their organizational customer markets. - these trends will have a direct effect on the company's sales of its products and services to its org buyers 2. More formal decision process: - orgs use rigorous decision making methods that typically involve approvals, authorizations, and audits. - org decision makers r held more accountable, and more money is involved 3. Larger decision-making unit - org user's decision machining unit can be made up of lot of ppl, routine purchases r made based on needs n opinions of many ppl 4. More specific criteria - org purchases r made for specific reasons, so they need 2 fit a # of specific criteria. 5. Relationship marketing - altho relationship marketing can involve consumers, it originated in business-to-business marketing. - When an org buys goods or services from another org, its sometimes buying more than a product, its buying a relationship. ~ "Buying center" - decision-making unit that makes purchase decisions for an org. Not a specific physical location or office.

Organizational buyers

- those manufacturers, wholesalers, retailers, and govt agencies that buy goods and services for their own use or for resale. 3 Diff Markets 1. Industrial buyers: - buy a product to reprocess it and sell it to somebody else. 2. Resellers - wholesalers and retailers who buy products already made and resell them again w/o reprocessing; buy finished products to resell. 3. Govt buyers - fed, state, & local govt agencies that buy goods and services for the constituencies they serve

Market orientation/customer relationship era (1990s-)

-ALL departments are worried about providing customer value -completely customer-centric. -top management must embrace this philosophy for it to work. -continuously collecting info about customers' needs, sharing it across departments, and using it to create customer value

Personal moral philosophy

-a persons view of how he or she should behave ~is shaped by: 1. Societal culture and norms - refers to the norms we grow up w and are used to. The US has its own unique culture, which forms a broad context for our personal moral standards. 2. Business culture and practices: - businesses operate under a diff set of rules than other aspects of life, like science and education. People expect businesses to be more rough and tumblr and to use hard-line negotiating tactics 3. Organizational culture and expectations: - this internal influence is the most immediate influence on imdivid behavior. - the behavior of top mngmt and the corporate code of conduct shape an individs personal moral philosophy. Many companies display a code of ethics on the wall to try to influence organizational culture. ~ prominent personal moral philosophies that have a direct impact on marketing: 1. Moral idealism - individual rights and responsibilities are universal, regardless of the outcome. - things are either right or wrong, the ultimate "high road" - companies should avoid doing anything that might hurt someone 2. Utilitarianism - a cost-benefit trade-off that seeks to achieve the greatest good for the greatest number. - If the total benefits exceed the total costs, the behavior is ethical. if not, its unethical.

Vendor analysis

-a process companies use to analyze vendors from whom they are considering purchasing products. It has a broader focus than value analysis. -a formal multi-attribute model approach that compares vendors on a series of dimensions. ~Dimensions 1. Cost 2. Product Quality 3. After-sale service 4. Reliability 5. Terms of purchase -The vendor that receives the highest weighted score is chosen. ~ Sole source problem: - what firms generally work w a number of vendors to avoid. - prob arises when the firm uses just one vendor and something goes wrong w it. - if a firm uses a sole source for an important input, it may become overly dependent on that supplier. - if the vendor goes out of business, the firm has no alts ~ Bidder's list - to avoid sole source prob, firm generally uses at least a couple of diff firms form its bidders list - a list of qualified vendors the firm has preapproved. - like a consideration set

environmental scanning

-a process in which firms and individuals continually acquire information about outside events to identify and interpret potential trends -3 characteristics: 1) constraining 2) multi-level 3) current vs future environment

Value analysis

-a systematic appraisal of the design, quality and performance of a product to reduce purchasing costs. -what organizational buyers use to understand the expected cost savings to ecpect -often a seller will use this to persuade a buyer to switch to the seller's product. ~to persuade a buy, a vendor must: 1. understand how the customer uses the product - seller must have a firm understanding of what its potential customer does and how it would use the seller's products 2. Show cost savings: - the seller must show its potential buyer the monetary advantage of using this product focusing on one or several diff costs - initial purchase costs: what the buyer has to pay to acquire the product - switching costs: involved in switching form 1 product to another - operating costs: cost of using product, separate and apart from the initial purchasing costs (labor, electricity) - Life-cycle costs: all of the costs involved in using a product over its useful life, including the initial purchase costs, switching costs, and operating costs. = initial purchase, switching, oper costs.

Pinkwashing

-advertising for a philanthropic purpose and then not donating any money

Sales orientation (1920s-1950)

-after competitors entered market, S&D reach equilibrium -companies have to compete for market share and customers, so they sell more aggressively through advertising, coupons, and other promotions to get rid of inventory. -companies focus on selling and make heavy use of advertising to convince consumers that their product is better than the competitors' -inwardly focused. Produce product first then worry ab selling it -comapny is still focused on its own needs more than its focused on the needs of consumers. -wells fargo scandal shows potential dangers of this

Positioning

-after segmentation and targeting, marketers must position themselves int eh minds of target consumers -must send consumers message that establishes the company as a strong competitor in its segment -position itself in the mind of the consuemrs by telling them what the firm has to offer them.

Marketing Information System (MIS) classification

-an integrated, ongoing decision support system that organizes data used in decision making. 4 kinds of data are found in MIS. Two distinctions that create the 4 quadrants are: 1. Internal data vs external data: - internal data are gathered from within the organization (info form firms sales) - external data gathered from outside firm (surveys) 2. Secondary data vs primary data - secondary data: those that r pre-existing, originally gathered for a purpose other than the one at hand. - primary data: gathered specifically for the task at hand. 1. Internal, primary data: - fathered for a specific purpose within firm. - idea generated from a brainstorming session that a firm conducts w its own employees. 2. Interal, secondary - produced within the firm for reason other than marketing - customers purchase histories, used to recommend products or offer specific promotions and catalogs to imdivid customers - sales records 3. External, secondary - gathered by an external org for some reason other than a specific firm's marketing efforts. - SYNDICATED DATA: collected by outside companies for the specific purpose of organizing, repackaging, and selling the info to orgher firms. 4. External, primary - comes form classic marketing research firms use to gather info ab customers. - surveys, test markets, focus groups

Technological sector of the macroenvironment

-change in the technological environ is much faster and less predictable than the social environment. ~the Three screens: have achieved tremendous penetration in the US and world, the screens we look at for hours daily 1. Television: ads thru tv is effective to reach consumers. It provides the ultimate multitasking environment which is why ppl watch sm. However, as the status as an essential as well as the time spent watching traditional tv has dropped, and watching on smartphones has increased, marketers aren't able to reach consumers in younger age groups as well as they used to. 2. Computer/Internet: tremendous changes have occurred in the realm of computers and the internet over the past several decades. Internet has become a way of life for most americans and ppl worldwide. 3. Telephones: People are using a lot more. Significant trends: -shift from landlines to cell phones -smartphones (only 5% of use involves actual phone calls. 98% of users are mobile internet users) -Other technologies (phones incorporate lots of technology other than music, ringtones, and texting. Cell phones are putting reputations at risk because of camera) -Cell phone addiction: ppl are becoming emotionally attached and feel uneasy without them. Since the iPhone released, drop in the amount of time teens spent hanging out w friends, having sex, sleeping, dating less, more likely to feel lonely, less likely to get a drivers license. -Distracted driving: using a phone drastically decreases driving effectiveness. Ppl are dying and getting in crashes from this. ~Key issues in the tech enviro: technology rate of change and the fragmentation of media. 1. Media fragmentation: the explosion of ways in which consumers can spend their media viewing time. -splits customers into relatively discrete market segments; if marketers do research and use money wisely, they can use media fragmentation to their advantage. If they don't, its a threat instead of an opportunity. 2. Rate of change: technology is changing very quickly, and the rate of change is increasing as time passes. Marketers have to keep up. (digital downloads vs CDs, kodak vs digital camera) -Internet of things: critical emerging technology, everything from TV to shoes have become connected to the internet. These devices track data and give feedback to users. This help consumers keep track of daily activities, and also helps marketers learn more ab consumer preferences so that they can match those preferences when designing goods and services, campaigns and promotions, and customer-facing web and mobile applications. -Virtual Reality: being used more and more in marketing. walmart uses to create simulations to train employees. -3-D printing: opens the possibility of printing products at home. -Artificial Intelligence: is also on the rise. the process of gathering data, interpreting it, analyzing the trends, using that analysis for forecasting and decision making. Alexa from Amazon is an example. Netflix suggestions

Characteristics of the marketing environment

-constraining: the marketing environment constrains the decisions that marketers can make. Certain conditions either eliminate or necessitate specific decisions -Multi-level: the marketing environment is complex, w some broad and some narrow levels -current vs future environment: markets are characterized by change. Marketers must use what they know in the present to predict what their markets will be like in the future. Marketers need to anticipate change as best as they can, so they try to stay ahead of the curve by scanning the environment and saying on top of trends

Possession utility

-created by allowing customers to physically get hold of a product. -Primary way marketers create possession utility is through CREDIT, which allows people to possess a product now and pay for it later. -credit cards, student loans, tv, house (pay expensive items over time) -Airbnb, rent the runaway

Time utility

-created by getting the product to the customer when he or she wants it. -WHEN they want it, AS QUICKLY as they want it. -speed of delivery (fast food companies) -availability (vid game release, want the first day) -DHL --> delivers excellence and on-time delivery -Amazon - free 2-day shipping + same-day delivery

Place utility

-created by having the product WHERE the consumer wants it and providing the product in a POSITIVE atmosphere -convenient locations (arms everywhere) -atmospherics: the ambiance of the place where u buy the product adds value. (eating a hamburger at rainforest cafe is an experience, consuming an experience, which justifies the high prices) -delivering items to people's doors -Amazon Locker Delivery (service that provides a secure location for items to be delivered.

Form utility

-created by having the product in the form that is most USEFUL to the consumer -arises from the way a product is built, manufactured, packaged, or designed -not all customers derive the same amount of form utility from a particular product form (ex: age groups preferences of bar soap and shower gel) -think tide pods -think music industry --> music evolution from vinyl to streamed music

MarketING orientation (1950s-)

-dramatic shift from inward to outward focus. -comp focuses on the needs and wants of consumers as opposed to focusing on production and sales. "customer-centric" -ONLY marketing department worries about providing customer value 1. learn what customers want (market research) 2. produce it 3. market it (product development) 4. Sell customers what they want

Economic sector of the macroenvironment

-is important to marketers because it influences consumers willingness and ability to buy goods and services. Willingness to buy are influenced by consumer income and consumer expectations ab the future. ~Gross domestic product: measure of the value of all the goods and services produced within a country during a year. During the past few decades, our GDP has grown substantially. - stock prices indicate the value of companies that comprise our economy. The Dow Jones Industrial Average reflects the performance of the stock market and surged record-breakingly in 2017, which is worrisome to investors as the market can't increase indefinitely and will soon correct itself. - GDP has grown since the recession but not by much. There is an uneven recovery in diff parts of the country since the recession, the bottom 99 percent have only recovered 40% of the income they lost during the recession. ~Consumer Price Index: used to measure inflation, reps the increase in prices for goods and services. - inflation is important because it erodes the value of the dollar (devalues it) -CPI measures how the overall price of a typical "market basket" of goods changes over time to construct an index that gives us an indication of how far the dollar will go for the avg American family. ~ Consumer income: largely affects consumers' ability to buy goods and services. Has risen at a fairly steady rate through the years. -ways to express income: - Gross income: income before taxes. It's not "take-home pay" because income taxes are taken out of gross income. - Disposable income: the income a consumer has left to spend after taxes. - Discretionary income: the income a consumer has left to spend after paying for taxes and necessities. You use this for things you want to buy rather than things you have to buy. This is what marketers are primarily concerned w winning. ~Consumer expectations: expectations ab the future drive consumers' willingness to buy goods and services. Consumer expectations can be measured in a variety of ways, one of which is the index of consumer confidence. -Index of consumer confidence: measured independently by a number of different organizations that survey thousands of consumers on a monthly basis. It measures ppls attitudes toward the economy. The index tends to drop significantly during recessions. This is significant because consumer confidence tends to trend w consumer spending. -******it is difficult to predict elements of the economic environment. This is problematic because uncertainty and volatility keep consumers from making purchases and keep firms from expanding and investing.,

Robinson-Patman Act

-legislation that protects companies from each other by prohibiting arbitrary price discrimination in business to business transactions. -prevents manufacturers from arbitrarily charging retailers different prices for reasons other than differences in cost.

Sherman antitrust act

-legislation that protects companies from each other by prohibiting monopolies. -prevents major mergers between are companies in the same industries, because it creates a huge corporation which is bad for competition. -federal court blocked AT&T from buying mobile on antitrust grounds

Lanham act

-legislation that protects companies from other companies that might try to copy their brands, trademarks and packaging. -Lesser-known companies try to package their products similarly to well-known brands in an attempt to confuse consumers. -also protects TRADE DRESS: the way the package or item appears. You can't package your product in the same shape/color as another company does. This protects consumers from potentially dangerous lookalike products.

relationship marketing

-linking the company to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit -to maintain --> companies can leverage info and manufacturing technologies to better understand how to create value for customers

Segmentation

-marketplace is not uniform, its heterogenous. Its the search for relatively homogeneous clusters within a hetero market. -any specific market contains "submarkets" due to the inherent diffs among consumers -market segment is a relatively homogeneous group of existing and potential customers w common needs, values, and levels of responsiveness to marketing variables. -Responsiveness to marketing variables is one of the most important requirements for successful segmentation -process of segmentation includes identifying existing and potential customers in a market segment. -This is based on the belief that ppl in the same segment have the same kinds of needs and respond similarly to marketing variables, so individuals who are not yet customers can be converted into customers thru effective marking efforts. -can be segmented based on dimensions like age, region, gender SEGMENTATION CRITERIA: 1. Measurability (ease of assignment) - firms have to have some basis by which they can measure the ppl who fall into their markets so they can assign them to diff segments. - gender and age commonly used - consumer perceptions and psychographics can be used. 2. Reachability: - a marketers ability to communicate w and reach the segments once they are identified A. Selective targeting: firms can identify mechanisms whereby they can communicate w a specific target segment. They can select a particular target easily through a particular media vehicle or distribution outlet. B. Self Selection: marketers that rely on self-selection communicate to a mass audience and count on ppl in the target segment to respond differently than everyone else to the ads they see. 3. Profitability: - a trade-off between the cost of reaching a market segment and the revenues generated from doing so. 4. Differential response - ppl in diff marketing segments should respond diff to the controllable marketing variables a. price (concept of elasticity is ex of differential response to price) b. Product: ppl respond diff to diff versions of a product. some firms modify to reach diff segments. c. Promotion: ppl respond diff to diff kinds of promotion. d. Place: Ppl respond diff based on how product is distributed. Some consumers want products that r available in just a few high-end stores because they're exclusive SEGMENTATION BASES (MEASURABILITY) 1. General vs specific - this dimension describes how the variable relates to the class or brand. 2. Objective vs subjective - this dimension describes the degree to which the dimension is easily, quantifiably measurable. - Objective variables (age, sex, weight) can be objectively measured - subjective variables are internal psychological states (attitudes, beliefs, perceptions) that can't be overtly observed. 1. objective and general: demographics, socioeconomic status - not product specific and can be objectively measured. - age, sex, income, occupation, ethnicity, and region. - "starting points" marketers use when segmenting markets, not because they're the most powerful but because they're the most readily available. 2. subjective and general: activities, interests, opinions (lifestyle) - not product specific and can't be objectively measured. - marketers have 2 use surveys or questionnaires to turn subjective observations into concrete comparable data. - typical lifestyle study: includes all the categories of segmentation measures. a. activities, interests, and opinions b. product usage c. media usage: tells us how often diff consumers use diff media (newspapers, radio, tv) d. demographic/socioeconomic status: typical lifestyle study links objective, general variable w subjective, general variables 3. objective and specific: past purchases - product specific and can be objectively measured - heavy half: group of ppl who heavily use products in the product class. exhibit the 80/20 rule, 80% of first sales r obtained from 20% of its customers. - Brand loyalty: considers heavy use of the specific brand. 4. subjective and specific: benefits, brand ratings, importance weights - product specific and cannot be objectively measured. - benefit segmentation: segmenting markets based in various benefits that r important to diff customers. - usage situation (occasion-based): market can be segmented based on how consumers use the product.

Natural sector of the Microenvironment

-plays a big role in shaping the environment for firms in certain industries. -more concerned w long-term trends in climate than w small aberrations in weather patterns. ~Most significant areas: 1. Energy: because standards of living r improving, worlds popul is growing, worlds energy consumption is expected to increase. Since we tapped into new oil deposits, supply has been exceeding demand. So, price of petroleum has plummeted, making it more affordable and impacting consumption. a. Trends in energy consumption -fuel efficiency: use smaller cars, or electric vehicles as solution to high gas consumption (smart cars, Tesla). -other sustainable sources of energy: consumption of coal for electricity has decreased and natural gas/renewables have been rising. This will continue as cleaner sources of energy become more economical. -Global warming/climate change: business world is starting to take this srsly and is beginning to recognize that they have a responsibility to curb it. -Green marketing/sustainability: environmentally friendly marketing that protects the environment. Most companies that have made the commitment end up benefiting from it on the bottom line. -Greenwashing: when a company makes claims about its commitment to the environment that are not really true.

Production orientation (prior to 1920s)

-prevails during company's earliest stages -inwardly focused approach to running the business. -focuses on producing as much of the product as it can, as efficiently as possible. -the company's focus is producing the product, not selling it. -the product practically sells itself -this approach works when demand exceeds supply, but thats not sustainable competition will bring S&D into equilibrium

Multi attribute model

-psychological model of attitudes that is a fundamental approach to evaluating alternatives. - assumes that customer attitudes are built on multiple product attributes. -most often, evaluation is something consumers do implicitly ~ 2 components: 1. consideration set of brands: group of 3-5 brands a customer would consider buying. 2. Set of evaluative criteria (attributes): set of criteria consumers use to differntiate among brands in the product class. 1. Objective data: independently verified and quantified (screen size and res of a camera) 2. Subjective data: based on the consumers personal perceptions and can go beyond functional benefits. This drives consumer behavior HOW TO DO 1. create a matrix of ur consideration set and rate the evaluation criteria 1-10 2. Determine importance of each eval criteria 1-10 3. Multiply importance rate by each of the raw rates to find the weighted ratings 5. Sum each column to determine attitude measure. -this determines where imdivid will most likely go and why

Food and Drug Administration (FDA)

-put in place to protect consumers -approves all new pharmaceutical drugs and is in charge of the labeling of foods.

Consumer Product Safety Commission (CPSC)

-put in place to protect consumers -in charge of product safety - researches which products are unsafe for children and adults. Also regulates recalls, which have increased over the past 20 years.

Federal Trade Commission (FTC)

-put in place to protect consumers -regulates the kinds of communication customers receive from companies; monitors all advertising and ensures that those ads are truthful -They can force companies to run corrective advertising to correct the false claims made in prior ads -Now monitoring blogs, insta, and twitter to enforce a rule that says an imdivid getting paid to promote a product must disclose that info

Marketing management

-set of activities that facilitates the exchange of value. -marketing managers facilitate exchange by using the marketing mix (4 P's)

The internal environment

-the parts of the firm not directly involved in marketing. Three major groups are: 1. top management - successful companies have top mngmt w a strong market orientation designed to deliver as much value as possible. - top mgmnt must embrace this as a meaningful way to make decisions. A Ceo who has an understanding of the marketing org will be able to see beyond the bottom line. 2. Front-line personnel - Ultimately the ones who implement plans. They must appreciate what the company is trying to accomplish, especially in service organizations. 3. Other departments - finance, production, research & development, HR, and other dpts have to base their functions around the marketing strategy. - Everyone in an org must be on board for the objectives to be achieved, and everyone must embrace the importance of customer value.

MACROenvironment

-the social, economic, technological, regulatory, and natural sectors make up the overall macro environment. -social forces include a population's cultural and demographic characteristics. -Economic trend is more volatile and difficult to docents than trends in the demographic sector. Two key economic indicators are GDP and Consumer Price Index -Technological Sector is extremely unpredictable because changes occur rapidly. -Regulatory sector consists of federal and state legal restrictions on businesses w regard to their conduct. -Natural sector plays a big role in shaping the environment for firms in certain industries. more concerned w long-term trends in climate than w small aberrations in weather patterns.

Exchange

-the trading of things of value btwn a buyer and seller so that each is better off after the trade --key is discovering needs and wants -marketing creates customer value through the process of exchange -buyer trades goods, services, cash, or credit for products (goods, services, etc.) from the SELLER -BARTER --> when buyer and seller exchange goods and services (value that is not money), the exchange (less common)

Decision making Unit (DMU)

-the typical decision making unit is the household. -roles in DMU 1. Info gatherer - either passively or actively brings info into decision making unit - gets info on places to go on fam vacation 2. Influencer - anyone who doesn't have decision-making authority but attempts to influence in some way. 3. Decision maker - person who acc makes decision ab what to buy. 4. Purchaser" - person who executes the transaction and makes the purchase. 5. User - anyone who acc uses the product

Customer value

-the unique combo of benefits received by targeted buyers that includes quality, price, convenience, on-tome delivery, and before/after-sale service. -synonyms are utility and satisfaction -the ratio of perceived benefits to price value= (perceived benefits)/price

Market share

-used to evaluate the success of a MARKETING PROGRAM -the ratio of firms sales rev to total sales rev of the industry (firms sales rev)/(total industry sales) *can be measured in unit sales or sales revenue *some firms with low-cost items have higher volume MS vs. high-cost items have higher revenue MS

Reasons for increased attention to ethics

1. Diverse societal value systems: because our society is becoming more diverse and fragmented into micro cultures, theres an increasing number of viewpoints. So one thing one group might think is ethical another might think is unethical 2. Increased public scrutiny: the internet has given the ppl a forum to publicize unethical activity more easily than ever before 3. Increased expectations: its becoming more apparent that consumers want companies to act ethically. Consumers no longer r content w companies that do the min amnt necessary when it comes to ethical conduct 4. Perceived drop in ethical conduct: because of more scrutiny on corporate america, more ppl perceive unethical behavior in business.

Categories of decision makers

1. Low involvement: - leads to routine problem solving. The decision maker doesn't go thru each of the steps in the decision- making process. - The steps in the decision making process are compressed or skipped all togrether. 2. Moderate involvement: - leads to limited problem solving - the consumer has purchased the item many times before, but something in the marketplace has thrown us off our routine - decision maker does some info search and evaluation, but he/she doesn't go thru each of the dteps of the decision making process. 3. High involvement - leads to extended problem solving - the decision maker would go through each of the five steps of the decision-making process if the decision were a high-involvement one. - buying a house, etc

Understanding COnsumer behavior

1. Marcro Lifestyle trends: related to leisure consumption - Fantasy adventure: ppl want to become someone else for short period and seek expert that allow them to simulate real-world adventure and excitement. - Being alive: ppl try to make most out of day, desire to live life w lot of enthusiasm plays into consumers purchases of experiences - 99 lives: growing trend toward multitasking - Cashing out: the counter-trend to 99 lives. exit fast lane, get rid of stress involved w work and multitasking to spend more time w families and engage in leisure activities 2. Leisure trends (micro) - aging boomers: fastest growing recreational segment so comps r adapting to accommodate needs of old ppl - Hybrid sports: consist of a combo of other sports (snowboarding, foot golf) - Cross-participation: ppl who participate in one sport are more likely to participate in certain others. 3. Time usage

Managing customer satisfaction

1. Measurement - systematically measure customer satisfaction w market surveys and market research - informal measurements like comment cards are great because customers feels like company really cares about them - hiring market research firm like JD Power and Assoc - NET PROMOTER SCORE= % promoters -% detractors A. Add up all the detractors and promoters, divide by # of surveys given to find % of each, then subtract to find net promoter score a. Promoters are ppl who rate 9 or 10 b. Detractors vote 0-6 2. Service after the sale: - company's responsibility to the customer does not end when it sells the product; it ends when the customer is satisfied. - one of the best ways to improve customer satisfaction - 800 #s, websites, and social media are mechanisms firms can provide customers w service after the sale. 3. CCO (chief customer officer) - reps the voice of the customer in the company's decision making - formal position in many orgs - adds customer-centricity to the org and plays critical role in moving company from marketing orientation to a market orientation.

Multiple levels of the marketing environment

1. macroenvironment: consists of broad environmental forces that affect all of the firms in all of the businesses in a country. -include social, economic, technological, regulatory, and natural forces. -IMPOSSIBLE TO CONTROL 2. Microeconomic: focused on a particular field or industry or on a specific firm or region. (SOME CONTROL) 3. Internal environment: the level INSIDE the firm that includes departments other than marketing, such as research and development and finance. These departments are internal to the firm but external to the marketing department; FIRMS generally have FULL CONTROL OVER THIS.

Promotion of marketing mix

A means of communication between the seller and the buyer (sales promotion, ads,, PR, direct marketing, e-com) -marketing is broader than just advertising and PR, which is only a PART of PROMOTION

Culture social trend of macroenvironemnt

CULTURE is a social force that incorporates the core set of values, beliefs, ideas, and attitudes that the members of a group learn and share. It is slow-moving and characterized by trends that can be anticipated or projected to an extent. -values of US culture: 1. individualism: we place a lot of value on individual achievements and the importance of individuals as opposed to groups. We don't encourage collectivism. This is driving a trend towards mass customization since people want to buy products they can customize and make their own. Mass individualism trending. 2.Present and future time orientation: Americans typically haver present and future-orientations. We spend a lot of time thinking about how to improve our lives in the future (going to college for a better job in the future). We tend to spend our money now because we want goods and services now. Which is represented by the high number of auto and credit card debt in the US. Americans are so obsessed w having products when they want them that they spend money they don't actually have by using credit. 3. Extraordinary materialism (lots of credit card debt) 4. Pursuit of youthfulness --> look young, healthy & active lives; women spend an avg of 15k on cosmetics each yr. -Microcultures (subcultures): groups within our society that differ from the overall culture in meaningful ways. Can be based on religion, region, lifestyle, language, and geography. Most important in our society are race and ethnicity. -Diversity (results in different values, beliefs, and ways of communicating, which marketers must consider in order to reach target consumers successfully)

Demographic trends of social trends of microenvironment

Demographic trends: describe the population according to select characteristics, such as age, gender, geographic location, ethnicity, income and household composition. These trends demonstrate there is no dominant household composition, which is a challenge to marketers as they have to use market research to be sure they effectibely communicate to target customers. -demographic trends that are significant in the marketing environment: 1. Aging of america: the baby boomers are getting older. Since they're going to die soon, marketers shouldn't spend a ton of $$$ targeting them. 2. geographic trends: more people are moving to urban from rural areas, 60% of americans live in south and in west. These trends have implications on where firms should locate distribution centers, retail stores, etc. 3. Household composition: diverse composition of households is reflected in Americans cultural beliefs. Attitudes ab gender roles have changed rapidly, as mens and women shares have been trending towards converging in the labor force, management positions, and housework. Baby boomers have grown, driven by financial issues. Multi-generational homes are increasing, so builders are building houses w independent/private entrances to appeal to this trend.

Microenvironment

Includes factors that exclusively influence and affect a specific industry, company, or region. -you'd consider the state index of consumer confidence when analyzing the microenvironment as opposed to the national index of consumer confidence for the macroenvironment. ~factors in the microenvironment: 1. Customers: the people marketers ultimately want to satisfy. - Customers are becoming more demanding because of increasing choices and media fragmentation, they expect superior performance, quality, and value, but they want more than that- they want delightful experiences. - Changing consumer preferences can have a big impact on the types and quantities of products sold. 2. Competitors: need to monitor competitors. firm can't make marketing decisions in a vacuum, should take its competitors' marketing efforts into consideration when determining the appropriate strategy. - Reverse engineering: buying a competitors product and taking it apart to see how its made. This is not economic espionage. Similar to mystery shopping, where competitors send ppl to other stores to observe how things are done. 3. Stakeholders: simply any individual or group who has some kind of stake/interest in how a company performs or is affected in some way by the company/is affected in some way by the company. 4. Suppliers: the organizations that supply the raw materials, component parts, and labor needed to conduct business. 5. Channels: the ppl (including wholesalers and retailers) who help a firm distribute its product. - to successfully market their goods, firms need to have strong bonds w Both their suppliers and channels thru which they distribute their output.

Consumer decision making

Influences: 1. marketing mix - the 4 controllable variables: product, price, promotion, and place. - attempt to use these variables to control consumer decision making 2. psychological - consumers psychological process, such as perception, learning, motivation, and personality, affect his/her decision making/ 3. sociocultural - society's effects upon us - influence of our parents, family, peers, social groups - customer socialization: the process by which young ppl learn how to be consumers. 4. situational factors - the context in which an individual operates - most the time consumer is unaware of situational influences Basic Concepts 1. Consumer behavior is goal-directed. - consumers make purchases to reach a particular consumption goal. (buy toothpaste to make breath fresh) 2. Consumers exhibit bounded rationality: - consumers are not completely rational about every purchase decision they make. - there are limits on how much ppl can think ab a purchase decision and who much info they can absorb ab it - pricing has an affect, ppl react 4 tims more negatively to paying more than receiving a little less 3. Many of our daily purchase decisions are low-involvement decisions - involvement: how motivated ppl r to make a great decision - ppl dont spend lot of time on low-involvement decision they perceive as unimportant (grocery shopping decisions, which toilet paper to use) - ppl spend lot of time thinking ab high involvement decisiosns which they perceive to be important (which college to go to) 4. Consumers exhibit selective perception - consumers selectively pick and choose what they pay attention to. - causes us to filter out some info and focus on other info. - helps us decide which products to buy. We zero in on brands we know ab or have experience w and everything else becomes a blur in the background. selective processes enable consumers to make decisions without becoming overwhelmed. 5. Consumer decision making is adaptive - consumers learn through trial and error, esp for low ticket categories. if they like product they'll buy again. - adaptivity works to correct consumers bounded rationality. Bc consumers are adaptable and can make changes as needed, its not crucial that their initial purchase decisions be the best ones. - if consumer makes poor decision at beginning, he/she can change that decision next time he/she goes to store to buy low tix item

Marketing research

Set of activities that provides info for marketing decision making. -uses of marketing research 1. Demand forecasting; gives firm an idea of how much of a product it will sell. 2. Market segmentation 3. Market tracking: follows sales over time to see how a product is selling and to determine if adjustments are needed. 4. New product testing 5. Ad pretesting

environmental forces

The UNCONTROLLABLE factors that affect a marketing decision, which consist of social, economic, technological, competitive, and regulatory forces. -forward-looking companies can influence some enviro forces---due to recent studies

Product of marketing mix

a good, service, or idea that satisfies consumer needs (variety, quality, design, features, brand name, packaging, services, and warranties)

Place of marketing mix

a means of getting the product to the consumer (channels, locations, inventory, transportation, atmospherics)

Marketing program

a plan that integrates the marketing mix to provide a product, service or idea to prospective customers. -the set of decisions that encompasses each of the four P's

organizational buyers

are manufacturers, wholesalers, retailers, and government agencies that buy products and services for their own use or for resale.

ultimate consumers

are the people who use the goods and services purchased for a household

STP marketing

at the heart of modern marketing, the process of identifying groups in the marketplace and then serving them. -includes segmentation, targeting, and positioning

Ethics

moral principles and values that govern the actions and decisions of an individual or group

Targeting

once marketers have identified diff market segments, they must decide which segments deserve their focus. -Large firms might focus on many segments, small firms might pick one or two

Halo Awards

recognize well crafted cause marketing campaigns.

real income

reflects his or her real purchasing power after income is taken into account.

Laws

societal standards and values that are enforceable in a court of law. Just because an action is legal doesn't mean its ethical

Functional magnetic resonance imaging (fMRI)

technique used 2 track blood flow and electrical activity in the brain, part of euro,arketing.

Utility

the benefit of satisfaction, or customer value, received by users of a product. -4 types: time, place, form, and possession

Marketing mix

the four CONTROLLABLE marketing factors (the 4 P's): product, price, place, promotion. -used by marketing managers to deliver value to customers

societal marketing concept

the idea that a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests

Constraints on marketing environment

the marketing environment puts certain constraints on businesses that they may or may not be able to overcome. -these constraints determine how much CONTROL a firm has on the overall marketing environment. -firms have 2 choices on how to position themselves w respect to environment: 1. adapt to environment (most common) 2. modify environment (hard to do, so few do) ------some engage in lobbying to influence potential changes and shape legislation and other companies may try to lead broad consumer change (collectively as an industry, impossible to do alone)

Strategic environmental scanning

the process by which an org gets info about the environment to incorporate into its decision making. - in order to be successful, orgs have to have a systematic process for continuous environmental scanning to identify and act on important trends in the marketplace. Involves the 4 components: 1. Sectors: the portions of the macroenvironment, microenvironment, and internal environments that we want to monitor. 2. Actors: the key players within the sectors. legislators/regulators are actors in the legal/regulatory sector. Groups of consumers w diff tastes are actors in the customer sector. 3. Sources: the places from which we get our info. Newspapers, magazines, tv are traditional sources, the Wall Street Journal, Advertising Age are online sources. 4. Interpretation: what marketers do w the info they get. When performing strategic environmental scanning, marketers have to be able to actually do something w the info.

Customer Relationship Management (CRM)

the process of identifying prospective buyers, understanding them intimately and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace -foundation is CUSTOMER EXPERIENCE! - internal response customers have to all aspects of a company & its offerings --> depends on customer's direct contacts w/ the company (buying products, using them, etc.) & indirect contacts with the com[any (word of mouth, reports)

Social Audit

the systematic assessment of a firms objectives, strategies, and performance in the domain of social responsibility. ~Five steps 1. Recognition of responsibility: a firm must recognize that it has the responsibility to do good things for society 2. Identification of a mission: the firm has to determine how it wants to contribute to society. 3. Determination of priorities: the firm then has to determine what it wants to accomplish for the cause it supports. 4. Specification of resources: the firm must decide which resources its willing to commit to the program. 5. Evaluation of results: the firm must periodically re-evaluate its contribution to society. An investment in social causes must be justified by results.

Price of marketing mix

what is exchanged for the product (list price, discounts, allowances, payment period, and credit terms)

targeting

~ 4 strategies: 1. Mass marketing: - using one particular approach to sell a single product to whoever wants to buy it. - a one size fits all approach. 2. Market concentration "niche marketing" - focusing on a single, specific segment of the market. - effective approach for start-up firms or firms that dont have a lot of resources 3. Multi-segment: - targeting multiple segments of the market. - doesn't necessarily pursue all the segments the company identifies - common for most large corps, requires firms to develop products and marketing strategies that fit each segment 4. Mass customization: - latest trend in targeting - serves customers efficiently and uniquely. - idea is to treat consumers as "segment of 1" - successful because provides highest amt of form utility possible. ~ important considerations in deciding which market segments to target 1. Expected size and growth: - two things that make a particular segment profitable is how big it is and whether it is growing 2. Competition - must consider competition within the segment. - they'll probs be going after the most profitable segments as well - Majority fallacy: occurs when a firm blindly pursues the largest market segment, thinking this will result in the greatest potential profit. It doesn't always work because firms often face the most competition when targeting the largest segment. - firms shouldn't choose segments that that have strong, entrenched competitors. - may be more profitable for a firm to pursue one or two of the smaller segments instead of the largest segment. 3. Cost: - targeting a particular segment costs money, all firms have resource constraints. - firms must weigh the potential revenues from targeting a segment against the cost of doing so. 4. Compatibility: - even a segment thats identified as appearing attractive might not fit w the firms strengths, its capabilities, or its image in the marketplace.

Indexing

~ marketers use this to measure the preferences of one region relative to those of other regions. - involves the creation of an index number that can be used to compare a specific region w the national average for a characteristic. Index number= ((% of customers in the designated market area)/(% of customers in the united states))*100 - index # below 100 means that the region is below the national avg and a number above 100 means its above the national average.

Product positioning

~ takes place after a firm has identified the market segments it wants to target. ~ a products position is the location that a brand occupies, relative to competitors, in the minds of consumers on a perceptual map. - attempts to place a brand in the mind of the consumer so it aligns w the ppl who are being targeted. ~ Product positioning map (perceptual map) - a way of representing what consumers think of the marketplace. - reposition: when companies change the pace their products or services occupy in consumers minds/ ~2 concepts 1. Points of parity: features or benefits deemed necessary by consumers for a brand to be a viable entry into a product category. These are things that a product needs to have in order to be a real competitor, the BASIC FEATURES a product needs. Marketers often use points of parity to position new brands in the market. 2. Points of difference: unique and desirable brand features or benefits that differentiate a single product from competitors in the products category. Primarily focus on points of difference when positioning their products in the minds of consumers

Regulatory sector of the macroenvironment

~Regulatory sector consists of federal and state legal restrictions on businesses w regard to their conduct. They're put in place to protect companies, competition, and consumers. -Is the only sector that contains rules marketers have to follow -the one sector marketers have the most ability to control and influence (through lobbying) ~Protecting competition 1. sherman antitrust act: 2. Robinson-Patman Act 3. Lanham Act ~Protecting consumers: 1. Federal Trade Commission 2. Food and Drug Administration 3. Consumer Product Safety Commission ~Political pressure in the marketing environment is an indirect kind of regulation. It has a real effect on the activities of marketers specifically and businesses in general. 1. Consumerism: a grassroots movement by individual consumers who act as watchdogs and take it upon themselves to get companies to engage in better business practices. -Ralph Nader is the father of the modern consumerism mvmt. 2. Media attention: the media reach the general public and can therefore bring attention to a company's bad practices. -Shows like 60 minutes and 20/20 often report on companies' bad business practices in hopes that media exposure may lead to regulation or an internal change in those practices. -Most the time comps self regulate and ensure they're engaging in good business practices out of fear that consumerist mvmts or media will expose them.

Corporate social responsibility

~organizations are part of a larger society to which they are accountable for their actions. Can adopt three main views of social responsibility: profit responsibility, stakeholder responsibility, and societal responsibility. 1. Profit responsibility - the view that companies have a simple duty: to maximize profits for owners or shareholders. - As long as the company is behaving legally, it is fulfilling its social responsibility by operating as profitably as possible. - A narrow but legit view held by "radical" believers in free market economics. 2. Stakeholder responsibility - focuses on the obligations an org has to all of those whom it affects. - Includes customers, employees, suppliers, distributors, community in general. 3. Societal responsibility: - the broadest view of how an organization can contribute to society. - According to this view, corporations should do more than just earn a profit for shareholders and treat immediate stakeholders well; they should also be a positive force in society. - two forms include green marketing and cause marketing - greeen marketing" operating sustainably and environmentally friendly - cause marketing: a marketing appraoch in which a firm ties its business practices to a particular societal cause. This might increase the firms sales. - Social entrepreneurship: involves using business to solve social problems.

Measuring customer satisfaction

~we have to compare customer perception before and after pouches of product to asses satisfaction 1. Before purchase and use of a product/service - what are their expectations regarding product performance? - expectations drive customer value 2. After purchase and use of a product/service - What are perceptions of acc performance? - Did they match up to expectations? - When theres a discrepancy between the two were either delighted or dissatisfied ~ Consumers assess their own satisfaction by comparing their expectations (E) and the perceived performance (P) 1. P <E : dissatisfaction (leads 2 neg word of mouth, more likely to tell others ab their experience than satisfied) 2. P =E : satisfaction (leads 2 relatively happy n satisfied customers) 3. P >E : delight (positive word of mouth)