Marketing Midterm Exam

PLC Stages and Characteristics

1. Product Development - begins when the company finds and develops a new product idea. During product development, sales are zero, and the company's investment costs mount. 2. Introduction - a period of slow sales growth as the product is introduced in the market. Profits are nonexsistent in this stage because of the heavy expenses of product introduction. 3. Growth - a period of rapid market acceptance and increasing profits. 4. Maturity - a period of slowndown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because increased marketing outlays to defend the product against competition. 5. Decline - the period when sales fall off and profits drop.

What is value?

AKA customer-perceived value, is the difference between a prospective customer's evaluation of the benefits and costs of one product when compared with others.

Target Market Strategies

BROAD TO NARROW - Undifferentiated (mass) marketing, differentiated (segmented) marketing, concentrated (niche) marketing, micromarketing (local or individual marketing).

Bases for Segmenting Consumer Markets

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

Steps in market research process

Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. The marketing research process has four steps: 1. Defining the problem and research objectives 2. Developing the research plan for collecting information 3. Implementing the research plan -- collecting and analyzing the data 4. interpreting and reporting the findings

Conditions Needed for Effective Segmentation

Measurable, accessible, substantial, differentiable, and actionable.

Company's Marketing Environment

Micro and Macro

Need Vs Want

Need - state of felt deprivation Want - the form human needs take as they are shaped by culture and individual personality

Types of Data Collection Methods

Observational Research - involves gathering primary data by observing relevant people, actions, and situations. Survey Research - the most widely used method for primary data collection, the approach best suited for gathering descriptive information. (Asks directly) Experimental Research - is best suited for gathering causal information. Experiments involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. (Cause-effect relationships)

Segmentation

involves dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate market strategies or mixes. Major groups: geographic, demographic, psychographic, behavioral.

Concept of Exchange

the act of obtaining a desired object from someone by offering something in return.

Marketing Concept

the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition does.

General Marketing

the process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return.

Maslow's Hierarchy of Needs

(FROM TOP OF PYRAMID) 1. Self-actualization needs: Self development and realization 2. Esteem needs: self-esteem, recognition, status 3. Social needs: sense of belonging, love 4. Safety Needs: security, protection 5. Physiological Needs: huger and thirst

Steps in Strategic Planning

1. Defining the company mission 2. Setting company objectives and goals 3. Designing the business portfolio 4. Planning marketing and other functional strategies

Types of Samples

1. Simple Random Sampling - random, or probability sampling, gives each member of the target population a known and equal probability of selection. 2. Systematic Sampling - sample members from a larger population are selected according to a random starting point and a fixed periodic interval. 3. Stratified Sampling - the researcher divides the population into separate groups, called strata. Then, a probability sample (often a simple random sample ) is drawn from each group. 4. Cluster Sampling - the researcher divides the population into separate groups, called clusters. Then, a simple random sample of clusters is selected from the population. The researcher conducts his analysis on data from the sampled clusters.

BCG Matrix & Recommendations

1. Stars - high-growth, high-share businesses or products. They often need investments to finance their rapid growth. Eventually their growth will slow down. 2. Cash Cows - low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce alot of cash that the company uses to pay its bills and support other SBUs that need investment. 3. Question Marks - low-share business units in high-growth markets. They require a lot of cash to hold their share let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out. 4. Dogs - low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

Defining a market oriented mission statement

A mission statement is a statement of the organization's purpose - what it wants to accomplish in the larger environment. Mission statements should be market oriented and defined in terms of satisfying basic customer needs. (2.1 Examples)

Product strategies

A product strategy is the foundation of a product lifecycle, and its execution plan for further development. As they develop their product strategy, product leaders zero in on target audiences and define key product and customer attributes. Strategy is comprised of three parts: Vision, Goals, and Initiatives.

Type's of Reference Groups

A reference group includes individuals or groups that influence our opinions, beliefs, attitudes and behaviors. They often serve as our role models and inspiration. Marketers view reference groups as important because they influence how consumers interpret information and make purchasing decisions. Reference groups influence what types of products you will purchase and which brand of product you choose.

Branding Strategies

Brand equity is the positive differential effect that knowing the brand name has on customer response to a product or the service. The most powerful brand positioning builds around strong consumer beliefs and values. Brand name selection involves finding the best brand name based on careful review of product benefits, the target market, and proposed marketing strategies. A manufacturer has four brand sponsorship options.: It can launch a national brand, market licensed brands, or join forces with another company to co-brand a product. A company also has four choices when it comes to developing new brands. It can introduce line extensions, brand extensions, multibrands, or new brands.

Product/Market Growth Matrix

Consists of... 1. Market Penetration - company growth by increasing sales of current products to current market segments without changing the product. 2. Market Development - Company growth by identifying and developing new market segments for current company products. 3. Product Development - company growth by offering modified or new products to current market segments. 4. Diversification - company growth through starting up or acquiring businesses outside the company's current products and markets.

Benefits of Segmentation

Cost reduction, product development, new markets, business focus.

Types of Research Designs

Exploratory Research - to gather preliminary information that will help define the problem and suggest hypotheses. Descriptive Research - describe things, such as market potential for a product or the demographics and attitudes of consumers who buy the product. Casual Research - test hypotheses about cause-and-effect relationships.

Product terminology/Product levels

Level 1: Core Customer Value Adresses the question, "what is the buyer really buying?" Marketers must define the core, problem solving benefits or services consumers seek. Level -2: Actual Product Marketers must develop product and service features, a design, a quality level, a brand name, and packaging. Level 3: Augmented Product Product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits.

Four Major Characteristics of Services

Intangibility: services cannot be seen, tasted, felt, heard, or smelled before purchase. Variability: quality of service depends on who provides them and when, where, and how. Inseperability: Services cannot be seperated from their providers. Perishability: services cannot be stored for later use or sale.

Differences Between Business and Consumer Markets

Main differences are in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

Factors Effecting Adoption

People differ greatly in their readiness to try new products.

4 P's

Price, Product, Promotion, Place

Industrial goods classification

Products purchased for further processing or for use in conducting a business. The three groups of industrial products and services are materials and parts, capital items, and supplies and services.

Consumer Buying Situations

Straight Rebuy - the buyer reorders something without any modifications. Modified Rebuy - the buyer wants to modify product specifications, prices, terms, or suppliers. New Task - a company buying a product or service for the first time. In this case, the greater the cost or risk, the larger the number of decision participants and the greater the greater to collect information.

B2B Buying Situations

Straight Rebuy - the buyer reorders something without any modifications. Modified Rebuy - the buyer wants to modify product specifications, prices, terms, or suppliers. New Task - a company buying a product or service for the first time. In this case, the greater the cost or risk, the larger the number of decision participants and the greater the greater to collect information.

Bases for Segmenting B2B Markets

SAME AS CONSUMER MARKETS, BUT ALSO... operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Model of Consumer Behavior

The Environment - Marketing Stimuli: Product, Price, Place, Promotion Other: Economic, Technological, Social, Cultural . Buyer's Black Box: Buyer's characteristics, buyer's decision process. Buyer Responses: buying attitudes and preferences, purchase behavior (what the buyer buys, when where, and how much), brand engagements and relationships.

Buying Center

The decision-making unit of a buying organization is called a Buying Center. It consists of all of the individuals and units that play a role in the business purchase decision-making process.

Adoption Process

The mental process through which an individual passes from first learning about an innovation to final adoption. (Adoption is the decision by an individual to become a regular user of the product) Stages 1. Awareness - consumer becomes aware of the new product but lacks information about it. 2. Interest - the consumer seeks information about the new product. 3. Evaluation - the consumer considers whether trying the new product makes sense. 4. Trial - The consumer tires the new product on a small scale to improve his or her estimate of its value. 5. Adoption - the consumer decides to make full and regular use of the new product.

Diffusion Process

The process by which a new idea or new product is accepted by the market. The rate of diffusion is the speed with which the new idea spreads from one consumer to the next.

Buying Roles

Users- members of the organization who will use the product or service. In many cases, users initiate the buying proposal and help define product specifications. Influencers - often help define specifications and also provide information for evaluating alternatives. Technical personnel are particularly important influencers. Buyers - have formal authority to select the supplier and arrange terms of purchase.Buyers may help shape product specifications, but their major role is in selecting vendors and negotiating. Deciders - have formal or informal power to select or approve the final suppliers. In routine buying, the buyers are often deciders, or at least the approvers. Gatekeepers - control the flow of information to others, For example, purchasing agents often have authority to prevent salespersons from seeing users or deciders.

Steps In Business Buying Decision Process

When making a purchase, the buyer goes through a decision making process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. During need recognition, the consumer recognizes a problem or need hat could be satisfied by a product or service in the market. Once the need is recognized, the consumer is aroused to seek more information and moves into the information stage. With information in hand, the consumer proceeds to alternative evaluation, during which the information is used to evaluate brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the . final stage, postpurchase behavior, the consumer takes action based on satisfaction or dissatisfaction.

Consumer-Decision Making Process

When making a purchase, the buyer goes through a decision making process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. During need recognition, the consumer recognizes a problem or need hat could be satisfied by a product or service in the market. Once the need is recognized, the consumer is aroused to seek more information and moves into the information stage. With information in hand, the consumer proceeds to alternative evaluation, during which the information is used to evaluate brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the final stage, postpurchase behavior, the consumer takes action based on satisfaction or dissatisfaction.

Target Market

consists of a set of buyers who share common needs or characteristics that a company decides to serve.Companies can target very broadly (undifferentiated marketing), very narrowly (micromarketing), or somewhere in between (differentiated or concentrated marketing).

Positioning

consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.

Secondary Data

consists of data that already exists somewhere, having been collected for another purpose.

Primary Data

consists of information collected for the specific purpose at hand.

Microenvironment

consists of the actors close to the company that affect its ability to engage and serve it's customers - the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

Macroenvironment

consists of the larger societal forces that affect the microenvironment - demographic, economic, natural, technological, political, and cultural forces.

Consumer goods classification

products and services bought by final consumers for personal consumption. These products include convenience products, shopping products, specialty products, and unsought products.