MKT 309 - Exam 1 Review

**What is "involvement" and how can it impact the consumer decision making process?

Involvement - How involved you are with a purchase and how important it is to you.

**What is "lifestyle"? Why are consumer lifestyles so important to marketers? What roles can products and brands play in consumer lifestyles?

Lifestyle - Mode of living that is identified by how people spend their time and resources, what they consider to be important, and how they view themselves and the world around them.

**Know—from pg 639-640 in the course textbook—the four "Generic Business Strategies." Specifically, understand how each one seeks to establish a competitive advantage for the firm/marketer.

1.) Cost leadership strategy - focuses on reducing expenses and in turn lowers product prices while targeting a broad array of market segments. 2.) Differentiation strategy - requires products to have significant points of difference while targeting a broad array of market segments. 3.) Cost focus strategy - involves controlling expenses and lowering product prices targeted at a narrow range of market segments. 4.) Differentiation focus strategy - requires products to have significant points of difference in order to target one or only a few market segments.

**What are the main factors that influence ethical decision-making in organizations? Do some tend to be more influential than others?

1.) Individual - Beliefs and moral values of an individual. Individual factors are seldom the primary cause of unethical behavior. 2.) Organizational - Set of acceptable behaviors in an organization. 3.) Opportunity - Some way to get ahead of competitors. Some organization's have a "cut corners" culture that can lead to legal issues.

What are the steps in the consumer decision making process?

1.) Problem recognition 2.) Information search 3.) Alternative evaluation 4.) Purchase decision 5.) Postpurchase behavior

**What are the four variables of the "marketing mix"? What, in general fashion, does each entail doing?

1.) Product - good, service, or idea to satisfy the customer's needs. 2.) Price - what is exchanged for the product? 3.) Promoting - targeting consumers to buy your product, and a means of communication between the seller and buyer. 4.) Place - location where people want to buy your product.

Know the four types of strategic business units in the Boston Consulting Group's Business Portfolio Analysis framework.

1.) Question Marks - Low share of a high growth market. 2.) Stars - High share of high-growth markets. 3.) Cash cows - Generate large amounts of cash. 4.) Dogs - Low share of slow-growth markets.

Understand the importance of "marketing stakeholders" in the context of ethics and social responsibility.

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What is a "marketing stakeholder"? Know basic stakeholder groups that marketers should be concerned about.

A stakeholder is any individual that has an interest in the success of an organization. Marketers should be concerned about employees, shareholders, board of directors, suppliers, government, local communities, customers, etc.

What is an "attitude" (from a marketing/consumer behavior perspective)? How can marketers best go about changing them?

Attitude - Learned predisposition to respond to an object in a favorable or unfavorable way.

What is a "barrier to (competitive) entry"? How can marketers create them?

Barrier to entry - Business practices or conditions that make it difficult for new firms to enter the market. Marketers can create them through capital requirements, advertising expenditures, distribution access, and product identity.

What is "brand loyalty"? How does it occur? What are the advantages of having many brand loyal customers?

Brand loyalty - Favorable attitude and consistent purchase of a brand overtime. It occurs from the positive reinforcement of previous actions.

What is "cause marketing" and how does it differ from—and what is its primary advantage over--"charitable giving"?

Cause marketing - When a company gets involved in a cause and gets its consumers to be involved as well. The amount of a donation is directly affected by consumers' purchases. Charitable donations - Contributed at the sole discretion of the firm.

What does the concept of "caveat emptor" entail? When did US legislation most significantly start to discourage its influence/practice?

Caveat emptor - Legal concept of "let the buyer beware" that started in business culture in the 1960s. In 1962, JFK outlined a consumer bill of rights that gave consumers the right to safety, to be informed, to choose, and to be heard.

What is a "Code of Ethics"? Why is having one important to marketers? Does merely having one entail highly ethical decision making?

Code of Ethics - Formal statement of ethical principles and rules of conduct. Having one is important because it is a good starting point to minimizing unethical decisions in an organization, however just having one won't completely eliminate unethical actions from happening.

Why is it important for marketers to understand that the consumer decision-making process does not end with the purchase being made? What, in this context, is "cognitive dissonance"? What are the marketing implications of "cognitive dissonance"?

Cognitive dissonance - Post purchase psychological anxiety (buyer's remorse).

**What is "consumer confidence"? Why is it important for marketers to understand and monitor? How does it work with the various levels of income to determine consumer spending?

Consumer confidence - refers to an individual's willingness and ability to buy items due to the current economic state.

What are some important recent changes and trends in the "social" environment? Focus on "the aging of the US population" and trends in ethnic and cultural composition.

Currently, there are more than 49 million people aged 65 and older in the United States, and by 2050 this age group is predicted to include 85 million people. Another notable trend is the changing racial and ethnic composition in the U.S. One in three U.S. residents are African American, Native American, Asian American, or Pacific Islander.

What are "demographics"?

Demographics - Describing a population according to selected characteristics.

Know the difference between "direct" and "indirect" competition. Should marketers be concerned only about "direct" competitors?

Direct competition - Two or more businesses offering the same products or services to the same target market. Indirect competition - Occurs when another business offers a different product that could substitute your product and satisfy your customers' needs and goals.

**What is a "diversification analysis"? What are the four strategies involved in it? Know what each strategy entails doing.

Diversification Analysis - Technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. 1.) Market Penetration - Increase sales of current products in current markets. 2.) Market Development - Sell current products to new markets. 3.) Product Development - Sell new products to current markets. 4.) Diversification - develop new products to sell in new markets.

**What is an "ethical issue"? Why are they so potentially problematic? How should marketing managers approach them?

Ethical issue - When an employee has to make a decision and does not know what is right and wrong in a particular situation.

Know the difference between ethics and the law. In this regard, if a given marketing act is legal, it is necessarily also then ethical (and something the marketer should do)?

Ethics - Moral principles and values that govern decisions of an individual or group. Laws - Formal, deal with standards of conduct and behavior that are written in code. If a given marketing action is legal, it is not necessarily also ethical to take.

What is a "generational cohort"? Why are they of importance to marketers? How should marketers strategically approach cohorts? Pay particular attention to the "Baby Boomer" cohort (as discussed in class).

Generational Cohort - A group of people who went through similar experiences as they grew up. They are important to marketers because the "baby boomer" cohort is one of the wealthiest generations in U.S. history and accounts for an estimated 50 percent of all consumer spending. Companies that target boomers need to respond to their interest in health, fitness, retirement housing, and financial planning.

What are goals/objectives? Should they always be stated only in terms of "market share" or "profit"?

Goals - Statements of an accomplishment of a task to be achieved, often by a specific time. Goals can be stated in terms of profit, sales, market share, quality, customer satisfaction, employee well-being, and social responsibility

**How should marketers strategically approach "high involvement" and "low involvement" products/purchase situations differently?

High involvement - Typically have at least one of three characteristics: the product is expensive, can have serious personal consequences, or could reflect one's social image. Consumers engage in research, consider alternatives, and word of mouth communication. Low involvement - Low involvement purchases don't require extensive research or others opinions.

Know key changes in US Household Structure that have occurred over the course of the last several decades.

In 1960, 75 percent of all households consisted of married couples. Today that type of household is 48 percent. For the first time, the number of 18-34 year olds living with their parents exceeds the number living with a spouse or partner. 20 percent of households are married couples with children, and 10 percent are houses with working fathers and stay at home mothers.

Know what is meant by "market segmentation" (and why is it done)? What is a "target market"?

Market segment - Homogeneous group of prospective buyers who have common needs and will respond similarly to a marketing action. Target market - One or more groups of potential customers toward which an organization directs its marketing program.

How should marketers use technology? Know--in particular--how marketers can use it to increase customer value.

Marketers should use advancements in technology to enhance consumer value. The cost of technology is decreasing, which allows marketers to focus on quality, service, and relationships.

**How should marketers seek to understand the variables of the "marketing environment"? What should their focus be when monitoring this environment?

Marketers should use environmental scanning, or the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends in the marketing environment. Marketers should be focused on social, economic, technological, competitive, and regulatory trends in a market.

What is a "mission statement"? What should it address? What purpose should it serve?

Mission statement - A specific statement that serves as a company's purpose for making products.

Know the difference between the two forms of "personal moral philosophy" discussed in class.

Moral idealism - Considers certain individual rights and duties as universal, regardless of the outcome. Moral Utilitarianism - Focuses on the greatest good for the greatest number by assessing the costs and benefits of ethical behavior.

Know the importance of knowing and meeting customer needs, wants, and expectations in the context of customer satisfaction and building customer relationships.

One of the main goals of the marketer is to understand customer needs, wants, and expectations so they can market those products to consumers and build lasting relationships.

What is "opinion leadership" and why is it such a powerful influencer of consumer behavior?

Opinion leadership - Individuals who exert direct or indirect social influence over others.

What is "organizational culture"? What does it include?

Organization culture - Set of values, ideas, attitudes, and norms of behavior that are learned and shared among the members of an organization.

Understand the relationship between "perceived risk" and involvement. Know that risk can take multiple forms; not just "financial."

Perceived risk - The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences.

What is "perception"? What is "selective perception"? Why are both important to marketers?

Perception - How an individual interprets information to create a meaningful picture of the world. Selective perception - A filtering of exposure, comprehension and retention.

What are "psychographics" and how can they be used to segment markets?

Psychographics - Catchall label used to describe a variety of segmentation approaches such as those based on behaviors, attitudes, activities, and social values.

Be able to distinguish between the four different types of competitive structure found in industries. Note that the course text refers to these as "alternative forms of competition."

Pure competition - Many sellers with similar products. Monopolistic competition - Many sellers with substitutable products in a price range. Oligopoly - Few sellers control a majority of industry sales. Pure monopoly - Only one seller for a product.

What is a "reference group"? What types exist? How do they influence consumer behavior?

Reference group - People to whom an individual looks as a basis for self-appraisal or as a source of personal standards.

**Understand the difference between "transactional marketing" and "relational/relationship marketing."

Relational marketing - main goal in this form of marketing is to form relationships with consumers and understand their needs, wants, and expectations. Transactional marketing - emphasizes short-term benefits like increased sales and profitability.

**What is a "SWOT Analysis"? What does each of letter in SWOT stand for? When—in the strategic planning process—should this analysis be done?

SWOT Analysis - Analysis that involves an organization assessing it's strengths, weaknesses, opportunities, and threats. A SWOT Analysis should be conducted in step 1 of the planning phase in the strategic marketing process.

Know, in a basic sense, how laws and regulations in the United States can protect both consumers and marketers. What laws in this country discourage monopolistic firm activities?

Sherman Antitrust Act - Forbids contracts or conspiracies in restraint of trade and attempts to monopolize any part of trade or commerce. Clayton Act - Forbids certain actions that are likely to lessen competition. Robinson Patman Act - Makes it unlawful to discriminate in prices charged to different purchasers of the same product.

What is a "social audit"? Why are they done?

Social audit - Systematic assessment of a firm's objectives, strategies, and performance in terms of social responsibility. They are done to monitor a company's social responsibility efforts.

**What does it mean for a firm to be "socially responsible"? What are its three basic components/responsibilities?

Social responsibility - Organizations are part of a larger society and are accountable to that society for their actions. 1.) Profit responsibility - Maximize profits for stockholders. 2.) Stakeholder responsibility - Focuses on the obligations an organization has to those who can affect achievement of its objectives. Societal responsibility - Obligations that organizations have to the environment and general public.

In a general sense, what is "strategy"? In this regard, know the difference between strategic planning and strategic implementation. Also understand that the strategic planning process occurs at multiple levels within the firm.

Strategy - An organization's long term course of action designed to deliver a unique customer experience while achieving its goals.

**Understand recent "economic" trends in the US economy. Focus on inflation and its impact on the various forms of income—and overall consumer spending--discussed in class.

The current U.S. economic environment is characterized by relatively high inflation. This means that the cost to produce and buy goods and services escalates as prices increase. This will cause consumer spending for luxury and high end items to decrease since consumers have less discretionary income.

What is the "marketing environment"? Why should marketers be concerned about it?

The marketing environment consists of various forces that are generally beyond the control of the marketer, but should be constantly monitored. 1.) Social - What consumers need and want 2.) Economic - Whether the economy is expanding or contracting. 3.) Technological - Changing technology. 4.) Competitive - Actions competitors take. 5.) Regulatory - Government restrictions and regulations.

Know the following terms: Triple Bottom Line; Sustainable Marketing; Green Marketing; Greenwashing.

Triple Bottom Line - A company's responsibility to benefit people, generate profit, and improve the state of the planet. Sustainable Marketing - Seeks to meet today's economic, environmental, and societal needs without compromising the opportunity for future generations to meet theirs. Green Marketing - Marketing efforts to produce, promote, and reclaim environmentally sensitive products. Greenwashing - Making misleading claims about the environmental benefits of a product, service, or technology.

**Understand the concept of "value" and know how marketers can best provide it to customers/clients.

Value - what a consumer gives for a product vs. what they receive, which includes quality, convenience, delivery, and service at a specific price.

**What is "word-of-mouth communication" and why is it such a powerful influencer of consumer behavior? Understand how it is related to customer satisfaction.

Word-of-mouth communication - The influencing of people during conversations.