MKT 4500 Exam 2

Consumer Franchise's Attitude is influenced by

(Favorite Brand) -awareness -image -quality of promotion -media -behavior

Consumer Franchise's Behavior is influenced by

(Market share) -availability -price -merchandising -shelf space -attitude

B2B Customers

-more concentrated geographically -fewer, but bigger/higher spending buyers than B2C

Idea Screening

1. To eliminate ideas for new products that could not be profitably marketed by the firm 2. To expand viable ideas into full product concepts

In the maturity stage, if sales decline, the seller decides whether to:

1. drop product 2. alter the product 3. seek new uses for product 4. seek new markets 5. continue with more of the same

2 criteria products are classified under

1. end use or market 2. degree of processing or physical transformation

Why is multi-branding a good approach?

1. firm can distance products from other offerings it markets 2. image of one product is not associated with other products the company markets 3. the products can be targeted at a specific market segment 4. should the product fail, the probability of failure impacting on other company products is minimized

When mass marketing is smart:

1. market is so small that marketing to a portion of it is not profitable 2. heavy users make up such a large proportion of the sales volume that they are the only relevant target 3. the brand is the dominant brand in the market, and targeting to a few segments would not benefit sales and profits

Three important criteria on basing segmentation strategy

1. measurable: must be capable of measuring its size and characteristics (i.e. social class much harder to judge but income is much easier) 2. Meaningful: one that is large enough to have sufficient sales and growth potential to offer long-run profits 3. Marketable: one that can be reached and served by the firm in an efficient manner

Deletions

Companies are consistently removing products from the market at the same time they are introducing new products; result is too many products fighting for too little of shelf space

Price Influences

Extremely influential on whether customers will purchase an item at all and if so which competitive offering is chosen Different strategies are utilized for this influence based on the retailer and the kind of product/service being sold in order to differentiate a brand

Consumer Franchise

Franchise value (minus) value of customers goal is to build franchise and build loyalty

Product Life Cycle

Has the product reached a level of maturity and saturation in the market? Has new tech been developed that poses a threat to the product? Has the product outgrown its usefulness?

Product Development

If product ideas has been evaluated from all facets of company and approved, a final product is converted and tested; a development report to management is also required which labels: -results of studies by engineers -required plan design -production facilities design -tooling requirements -marketing test plan -financial program survey -estimated release date

Franchise extension/Family branding

a company attaches the corporate name to a product to enter either a new market segment or a different product class (i.e. Honda lawnmower)

Brand extension

a current brand name is used to enter a completely different product class (i.e. Jello pudding pops)

Fashions

accepted and popular products

Promotion Influences

advertising, salespeople, and publicity can influence what consumers think about products, what emotions they experience in purchasing and using them, and what behaviors they perform

Sole sourcing

all of a particular type of product is purchased from a single supplier; has become popular b/c organizational buyers have become more concerned with quality and timely delivery and less likely to purchase ONLY on the basis of price

Product Classification

an analytical device to assist in planning marketing strategy and programs

Post hoc segmentation

approach in which people are grouped into segments on the basis of research findings essentially, designating a segment AFTER research is done

Product Influences

attributes of a company's products including brand name, quality, newness, and complexity (can affect consumer behavior) Physical appearance and labeling information also play a part in this influence to differentiate a brand

VALS

best-known psychographic segmentation, developed in the 70's, has eight psychographic groups based on two dimensions

Consumer goods

can be divided into three classes: 1. convenience goods: such as food, which are purchased frequently with minimum effort; impulse goods as well 2. Shopping goods: such as appliances, which are purchased after some time and energy are spent comparing various offerings 3. Specialty goods: unique in some way so the consumer will make a special purchase effort to obtain them

Multibranding

choosing to assign different brand names to each product

The product audit

company's current offerings are reviewed to ascertain whether each product should be continued as is, improved, modified, or deleted

Self-expression (Experiencers and Makers)

consumers driven by a desire for social or physical activity, variety, and risk taking

Achievement (Achievers and Strivers)

consumers driven to demonstrate success to their peers are motivated primarily by this

Ideals (Thinkers and Believers)

customers driven by knowledge and principles are primarily motivated by this

Time (situational influence)

dimension of situations that may be specified in units ranging from a moment of day to season of year; may be measured relative to some past or future event for the situational participant also includes length since last purchase, how long it's been or until payday, and other constraints

Pyschographic Segmentation

focuses on consumer lifestyles; consumers are grouped on the basis of similarity of their lifestyles and the way they respond to things relating to their AIO: -Activities (work, hobbies, vacation) -Interests (family, job, community) -Opinions (about social issues, politics, business)

Product mix

full set of products offered for sale by the organization

Differentiated (when speaking of segments)

going after any/all segments but positioning your product in a unique way

Agricultural and raw materials

goods grown or extracted from the land or sea, such as iron ore, wheat, and sand. Overall, these products are fairly homogenous, sold in large volume, and have low value per unit

Rugby or relay planning approach

groups in different areas of the company are simultaneously working on the project

product lines

groups of products that share common characteristics, distribution channels, customers, or uses

Sales trends

how have sales moved over time? what has happened to market share? why have sales declined?

Geodemographic Segmentation

identifies specific households in a market by focusing on local neighborhood geography (zip codes) to create classifications of actual, addressable, mappable neighborhoods where consumers live and shop Nielsens PRIZM

Perceived risk

may be either functional (related to financial and performance considerations) or psychosocial (related to whether the product will further one's self-or reference-group's image)

Customer migration patterns

if the product is deleted, will customers of this product switch to other substitute products marketed by our firm?

Buying center

in organizational buying, purchases are commonly cross-functional with representatives from different functional departments playing various roles in the process

Vertical market

in organizational goods: 1. Narrow buying channel b/c customers are restricted to a few industries 2. it is deep, meaning that a large percentage of the producers in the market use the product

Horizontal market

in organizational goods: means that the goods are purchased by all types of firms in many different industries

Task features (situational influence)

include an intent or requirement to select, shop for, or obtain information about a general or specific purchase; this feature may reflect different buyer and user roles anticipated by the individual (i.e. buying a gift is dif than buying something for personal use)

Product Life Cycle stages

introduction, growth, maturity, decline

Straight Rebuy

involves routinely ordering a product from the same suppler that it had been purchased from in the past; in many cases, organizations use automatic reordering certain commonly used products fast and requires relatively few employees

Strategic Risk (risk in idea screening)

involves the risk of not matching the role or purpose of a new product with a specific strategic need or issue of the organization

Current conditions (situational influence)

make up a final feature that characterizes a situation; such as momentary moods or momentary circumstances (such as cash on hand, fatigue, and illness) rather than chronic individual traits

Limited decision making

more moderate but still involves some time and effort searching for and comparing alternatives

Routine decision making

most common type of decision making and the way consumers purchase most packaged goods

Physical Features (situational influence)

most readily apparent features of a situation, including: geographical, institutional location, decor, sounds, aroma, lighting, weather, and visible configurations of merchandise

Project Planning

new product proposal is evaluated further and responsibility for the project is assigned to a project team; production, marketing and financials are all analyzed regarding the process; the product is designed in a rough form all leading to the top management giving a no or go decision

Alternative Search

once a need is recognized, the individual then searches for substitutes for satisfying the need

Concentrated (when speaking of segments)

only going after one group of people (a very specific segment)

Internal risk (risk in idea screening)

risk that a new product won't be developed within the desired time and budget. Up front, management must decide the level of commitment it will extend in terms of time and budgetary expenditures to adequately ensure the completion of specific projects

Vendor analysis (organizational buying process)

process by which organizational buyers rate each potential supplier on various performance measures such as product quality, on-time delivery, price, payment terms, etc. forming a list of purchase criteria and weighing each variable in order to select the most optimal vendor

Test Marketing

product is tested with general plans for launching the product in full; is a controlled experiment in a limited geographical area to test the new product and aspects of the marketing strategy main goal is to evaluate and adjust the general marketing strategy to be used and the appropriate marketing mix

Fads

products that experience an intense but brief period of popularity

Skunkworks planning

project team works in relative privacy away from the rest of the organization

Social Features (situational influence)

provide additional depth to a description of a situation, including: other persons present in situation, their characteristics, their apparent roles and interpersonal interactions

Organizational goods

purchased by business firms for the purpose of producing other goods or for running the business includes: -raw materials and semifinished goods -major and minor equipment, such as basic machinery, tools, and other processing facilities -parts or components, which become an integral element of some other finished goods -supplies or items used to operate the business but that do not become part of the final product

Marketing dimensions

refer to things such as as price, promotion strategy, and channels of distribution

Structural Influences

refers to the design of the organizational environment and how it affects the purchasing process

Extensive decision making

requires the most time and effort since purchase typically involves a high complexity or expensive product that is important to the consumer

Private label/store brands

retail firms producing or marketing their products under this to compete with national brands; marketed as value brands, products that are equivalent to national brands but are priced much lower (i.e. Walmart's equate, Publix green wise, JCPenney Arizona brand) these create loyalty to a specific retailer

Market risk (risk in idea screening)

risk that a new product won't meet a market need in a value-added, differentiated way; management must be able to shift its new product efforts to keep pace with change

depth

the average number of products in each line

Benefit segmentation

the benefits people are seeking in consuming a given product are the basic reasons for the existence of true market segments i.e. toothpaste companies use this kind of segmentation

Quality

the degree of excellence or superiority that an organization's product possesses

Time to market

the elapsed time between product definition and product availability companies who bring their products to market first enjoy a competitive advantage of profits and market share

Commercialization

the launching step in which the firm commits to introducing the product into the marketplace heavy emphasis is placed on the organization structure and management talent is needed to implement the marketing strategy

trademark

the legal term for brand

width

the number of product lines handled by the organization

Brand equity

the set of assets (or liabilities) linked to the brand that add (or subtract) value

Idea Generation

the systematic search for new product ideas: -lowest cost in product planning and development process -As many as 60 to 70 ideas are necessary to yield one successful product

Cognitive dissonance

there is often a lack of consistency or harmony among an individual's various cognitions, or attitudes and beliefs, after a decision has been made -- that is, the individual has doubts and second thoughts about the choice made

Dual branding (or joint or cobranding)

two or more branded products are integrated (i.e. Beyer's Reese's Cup ice cream, US Airways and Bank of America Visa credit card)

Line extension

uses a brand name to facilitate entry into a new market segment (i.e. Nabisco already has cookies --> adds another cookie)

Profit contribution

what has been the profit contribution of the product to the company? If profits have declined, how are these tied to price? Does the product require excessive management time and effort?

Value

what the customer gets in exchange for what the customer gives

Place influences

when consumers are seeking low-involvement products, ready availability with this influence is important. In addition, what outlet the product is being sold out of can impact the image of the brand in the consumers mind (i.e. Nordstrom's products are assumed to be high-quality)

New Task Purchase

when organizations purchase some products only occasionally, especially in the case of large investments such as machinery, equipment, and real estate involves extensive search for information and a formal decision process, as well as a large number of decision makers who consider many alternatives, b/c the cost of a mistake is so great

Modified Rebuy

when some aspects of the buying situation are unfamiliar; involves considering a limited number of alternatives before making a selection organizational buyers follow this approach when a routine purchase changes in some way

A priori segmentation

when the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on a market essentially, designating a segment BEFORE research is conducted

Influencers (purchasing role)

who affect the buying decision usually by helping define the specifications for what is needed i.e. information systems manager would be a key player in the purchase of a new computer system

Users (purchasing role)

who are the people in the organization who actually use the product i.e. an assistant who would use a new word processor

Gatekeepers (purchasing role)

who control the flow of information in the buying center

Buyers (purchasing role)

who have the formal authority and responsibility to select the supplier and negotiate the terms of the contract i.e. the purchasing agent would purchase ink cartridges

Deciders (purchasing role)

who have the formal or informal power to select or approve the supplier that receives the contract i.e. for important technical purchases, they may come from R&D, engineering, or quality control

Initiators (purchasing role)

who start the purchasing process by recognizing a need or problem in the organization i.e. an executive might see a need for faster computers