Marketing Exam 1

Satisfaction does not always predict a company's performance

1) Customers have few or no other options as to whom they'll buy from 2) Customers have many options, BUT it's relatively difficult to switch from one to the other

Benefits of highly satisfied customers

1) Loyalty - likely to continue buying from you 2) Product champions - likely to recommend your product to others 3) Reduced costs - lower expenses to company 4) Larger share of wallet - more likely to buy your other products

5 steps of the marketing research process

1) Problem definition 2) Plan development 3) Data collection 4) Data analysis 5) Taking action

The consumer decision-making process

1) Problem recognition 2) Information search 3) Evaluating alternatives 4) Making the purchase 5) Post-purchase evaluation Marketers have varying degrees of influence in all 5 steps, but they might have the most influence in Steps 2 and 3 (although this is still up for debate).

3 factors unique to B2B marketing

1) Professional purchasing 2) Fewer buyers 3) Derived demand

Types of B2B products

1) Purely resold - mostly visible; intended to be passed to end-users 2) Component part - less likely to be visible to end-users 3) Support service - less tangible, more unrecognizable to end-users 4) Purely consumed - least likely to recognized by end-user

Quantitative primary data collection

1) Surveys 2) Experiments 3) Mathematical modeling

How companies measure customer satisfaction

1) Surveys where customers are asked to rate their level of satisfaction on a scale of 1 to 10. 2) ACSI scores

3 ways to describe market size

1) Total Sales Revenue 2) Total number of units sold 3) Total number of customers

Necessary conditions for effective marketing exchange

1) Two or more parties with unsatisfied needs, 2) A desire and ability on their part to be satisfied, 3) A way for the parties to communicate, 4) Something to exchange, 5) Prior to the exchange, both parties must expect to be better off as a result.

New buy

A buying situation in which a business customer is purchasing a product for the very first time. Decision process will likely be more extensive since it has little or no experience with the purchase.

Straight rebuy

A buying situation in which a business customer signals its satisfaction by agreeing to purchase the same product at the same price. Decision process will likely be very fast or almost nonexistent because the satisfied customer doesn't usually look for competing bids from other companies.

Modified rebuy

A buying situation in which the customer's needs change slightly or they are not completely satisfied with the product they purchased. Decision process may be more extensive due to negotiations for modifications or lower prices.

Reference group

A collection of people to whom a consumer compares himself or herself.

Marketing Mix

A combination of activities that represent everything a firm can do to influence demand for its good, service, or idea. Often referred to as the 4 Ps of marketing.

Mission statement

A concise affirmation of the firm's long-term purpose. Makes it easier for firms to establish quality objectives for the short and medium terms.

Surveys

A data collection tool that poses a sequence of questions to respondents. Pros: Relatively quick, inexpensive, efficient, can provide representative information about a population. Cons: Limited by researchers' questions, response rates can be low, possible respondent self-selection bias, resistance to giving sensitive information.

Wholesaler

A firm that sells goods to anyone other than an end-user consumer.

Retailer

A firm that sells mainly to end-user consumers.

Sales orientation

A marketing strategy in which personal selling and advertising are used to persuade consumers to buy new products and more of existing products. Especially important during the Great Depression-consumers didn't have much money and competition between firms was intense. Used from the mid-1920s until the end of World War II.

Product orientation

A marketing strategy in which the firm focused on efficient processes and production to create quality products and reduce unit costs. Believed that quality products would sell themselves. Used prior to the 1920s until the mid-1920s in the US.

Relationship marketing

A marketing strategy that focuses on attracting, maintaining, and enhancing customer relationships. Ex: Offering special discounts.

Marketing concept

A marketing strategy that reflects the idea that a firm's long-term success must include a company-wide effort to satisfy customer needs. Focuses on satisfying a consumer's needs (customer orientation). Continues to evolve with advancing technology and relationship marketing. Used from the early 1950s to the present.

Sample

A representative subset of the larger population.

Product

A specific combination of goods, services, or ideas that a firm offers to consumers. Goods - tangible products Services - activities provided by others Ideas - intangible products (patents, art, music, scholarly work, political platforms religious doctrine, etc.)

Simple random sampling

A type of probability sampling in which everyone in the target population has an equal chance of being selected.

Quota sampling

A type of sampling in which a certain number of participants is picked based on selection criteria such as demographics.

Snowball sampling

A type of sampling in which a set of participants is selected based on the referral of other participants who know they have some knowledge of the subject in question.

Probability sampling

A type of sampling in which every person in the target population has a chance of being selected. The probability of each person being selected is known.

Nonprobability sampling

A type of sampling that does not attempt to ensure that every member of the target population has a chance of being selected.

Communicating value

Advertising the value of your product.

Promotion

All the activities that communicate the value of a product and persuade customers to buy it. What most people think of when asked what marketing is. Advertising, PR, personal selling, and sales promotion are effectively integrated to communicate a product's value in a successful firm's promotional strategy.

Exchange

An activity that occurs when a buyer and seller trade things of value so that each is better off as a result. Firms exchange their products with consumers for money.

Marketing (Hunt & Mello definition)

An organizational function and set of processes for creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its employees, customers, investors, and society as a whole.

Fewer buyers

B2B marketing appeals to far ______ buyers than consumer marketers. But each customer and purchase is larger and more essential to the firm's success because there are ______ business buyers.

Professional purchasing

B2B purchasing typically involves _________ managers who are experienced in the policies and procedures necessary to make a large deal.

Product attributes

Characteristics of a particular product on which marketers may distinguish their offering among a group of similar offerings. Most likely in Step 3 of decision-making process. Companies connect attributes to customer benefits by linking their product to something of personal importance to the target customer.

External information search

Consumers seek information beyond their personal knowledge and experience to support them in their buying decision. Associated with Step 2 of decision-making process. Typical sources: Advertisements, product website, the Internet, social media, friends and family. Most important sources: friends and family.

Internal information search

Consumers use their past experiences with items from the same brand or product class as sources of information. Associated with Step 2 of decision-making process.

Secondary data

Data collected for purposes other than answering the firm's research questions. Previously collected information that may be useful to the current problem. Advantages: Cheaper, faster to access. Disadvantages: May not be relevant, may be outdated, many not fit the current research issue.

Primary data

Data collected specifically for the research problem at hand. Newly collected information. Advantages: Exact information you need for the research problem. Disadvantages: May be difficult to find willing participants, costly, time-consuming.

Positioning

Defines how the firm would like customers to perceive the product. What aspects of the product will be emphasized to the consumers to communicate value?

Delivering value

Delivering your product to countless places.

Product in a marketing strategy

Detailed description of the offered product.

Collection methods for primary data

Examples: Focus groups, surveys, observations, data gathered by equipment, in-depth personal interviews.

Collection methods for secondary data

Examples: Literature reviews, online electronic searches, company records, marketing information systems, private research companies, boundary spanners (ex: salespeople).

Plan development decisions

Examples: Primary or secondary data; exploratory, descriptive, or causal research; probability or non probability sampling.

Perceived risk

Fear of the unknown; consumer anxiety about consumption outcomes that are not known prior to purchase, and are feared to be negative.

Industrial firms

Firms that reprocess a good or service in some way before selling it again to another buyer.

Unit of analysis

Focal entity to which data are assigned for hypothesis testing and statistical analysis.

Target markets

Gives a detailed description of the group of customers towards which marketers have decided to direct their efforts. The targeted consumers. Individuals, households, firms, etc.

Place in a marketing strategy

How a firm plans to make its products available to targeted consumers.

Opinion leaders

Individuals who exert an unequal amount of influence on the decisions of others because they are considered knowledgeable about particular products. Ex: Celebrities, bloggers.

Low-involvement products

Inexpensive products that can be purchased without much forethought and that are purchased with some frequency. Inexpensive, frequently purchased, requires little foresight, and limited risk.

Promotion in a marketing strategy

Key strategies for communicating value of the product to targeted consumers.

B2B relationships

Long-term and highly relational.

Difference between needs and wants

Marketers focus on fulfilling customers' wants, which in turn satisfy their underlying needs. Ex: Luxury car satisfies customer's want to transport his/herself comfortably, which in turn satisfies the underlying need for transportation.

Business-to-business marketing

Marketing to organizations that acquire goods and services in the production of other goods and services that are then sold or supplied to others. Also called B2B marketing.

Key elements of a Marketing Strategy

Mission Statement Quality Objectives Target Markets Positioning Marketing Mix

Measuring customer loyalty

Question: "How likely is it that you would recommend our company to a friend or colleague?" Numbering scale: 9-10 Promoters 7-8 Passively Satisfied 0-6 Detractors

Basic research

Research conducted to expand the boundaries of knowledge about GENERAL issues that affect many different companies.

Applied research

Research undertaken to answer questions about issues that are COMPANY-SPECIFIC.

Reseller

Retailers and wholesalers who buy finished goods and resell them for a profit.

Creating value

Satisfying a perceived marketplace demand.

Business-to-customer marketing

Selling goods and services to end-user customers. Also called B2C marketing.

High-involvement products

Significant purchases that carry a greater risk to consumers if they fail. Expensive, seldom purchased, requires research, and risky.

Price in a marketing strategy

Specific price points for both the goods and services that make up the product. General strategies for price development over time.

Quality objectives

State the goal or intention of the firm over a certain period of time, usually 1-5 years. Must be specific, measurable, and realistic.

Needs

States of felt deprivation. Consumers feel deprived when they lack something useful or desirable like food, clothing, shelter, transportation, and safety. Marketers DO NOT create needs; they are a basic part of being human.

Elements of the marketing mix

The 4 Ps: Product Price Place Promotion

Marketing research

The act of collecting, interpreting, and reporting information concerning a clearly defined marketing problem. Benefits: 1) Develop products consumer need and want at a price that maximizes demand, 2) Develop products at the appropriate amounts depending on location, 3) Effectively advertise them to consumers.

Place

The activities a firm undertakes to make its product available to potential consumers. Companies must be able to distribute products to customers where they can easily buy and consume them (location).

Price

The amount of something- money, time, or effort- that a buyer exchanges with a seller to obtain a product. One of the most important strategic decisions a firm faces - depends on the value consumers place on the product. Easiest marketing element to change.

Evaluative criteria

The attributes a consumer considers important about a certain product. Marketers ensure potential buyers view the benefits of their good or service as important. Not all consumers have the same criteria for a given product.

Passively Satisfied

The customer who is satisfied enough to buy your product, but is not enthusiastically loyal. Neutral. Can easily buy other brands. 7-8 on the scale.

Customer loyalty (Levens)

The degree to which a customer will select a particular brand when a purchase from that product category is being considered. BUT loyal customers are not always to most profitable - they may stock up because of promotional deals, or they may require additional company resources.

Customer satisfaction

The degree to which a product meets or exceeds customer expectations. Associated with Step 5 of decision-making process.

SWOT Analysis

The evaluation of a firm's strengths, weaknesses, opportunities, and threats. S - Strengths W - Weaknesses O - Opportunities T - Threats

Wants

The form that human needs take as they are shaped by personality, culture, and buying situation. Marketing matches a need with a want. Influenced by numerous things, like family, job, and background.

Membership reference group

The group to which a consumer actually belongs. Ex: School clubs, fraternities and sororities, and the workplace.

Customer orientation

The idea that everyone in a firm, from salespeople to accountants to human resource managers to administrative assistants, should assess, then satisfy, a consumer's needs.

Aspirational reference group

The individuals a consumer would like to emulate. Ex: Professional athletes.

Detractors

The least enthusiastic customer who is likely to say bad things about your company. 0-6 on the scale.

Cognitive dissonance

The mental conflict that people undergo when they acquire new information that contradicts their beliefs or assumptions. Usually last 6-12 months after purchase. Associated with Step 5 of decision-making process. Firms may offer free trials of popular features and more during this time to reduce the effect.

Comparison of marketing definitions

The modern definition focuses on building and maintaining long-term relationships with customers; the 1985 definition just focuses on making sales.

Promoter

The most enthusiastic customer who is likely to say good things about your company. 9-10 on the scale.

Net Promoter Score

The net amount of promoters for your company. Calculated by subtracting the percentage of promoters by the percentage of detractors. Associated with a company's revenue growth rate. Does not predict company outcomes in all industries; irrelevant in some.

Dissociative reference group

The people that the individual would not like to be like. Ex: People who have traditional cable television or bad breath.

Customer value

The perceived benefits, both monetary and non monetary, that customers receive from a product compared to the cost associated with obtaining it.

Market share

The percentage of an industry or market's total sales that is earned by a particular company over a specific period of time.

Involvement

The personal, financial, and social significance of the decision being made.

Customer lifetime value

The present value of all profits expected to be earned in the future from a customer. Measured by the amount of profit generated by a customer in a specified period of time.

Marketing (1985 AMA definition)

The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Sampling

The process of selecting a subset of the population that is representative of the population as a whole.

Problem recognition

The stage of the buying process in which consumers recognize they have a need to satisfy. Step 1 of decision-making process 2 Important Things: 1) Marketers must understand all aspects of consumers' problems, even less obvious ones. 2) If the consumer is not aware a problem or unsatisfied need, he or she is unlikely to engage in the decision-making process.

Difference between S & W and O & T components

The strengths and weaknesses components focus on the firm's internal characteristics. The opportunities and threats components focus on external factors a firm must consider.

Consumer behavior

The way in which individuals and organizations make decisions to spend their available resources, such as time or money.

Customer loyalty (Reichheld)

The willingness of someone to make an investment or personal sacrifice in order to strengthen a relationship.

Purpose of an Executive Summary

To convey the most valuable information of the marketing plan.

Derived demand

When demand for one product occurs because of demand for a related product.