GB 214 Marketing Exam

Markup Percentage on Price

(Selling Price - Cost )/Selling Price

Markup Percentage on Cost

(Selling Price - Cost)/Cost

Personal Selling

1-to-1 communication Customized, interactive, relationship building tool Add great value when product is complex Buyer can feel need to listen and respond Most expensive promo tool (high labor costs), salesperson consistency

Promotional Mix

1. Advertising - paid form of nonpersonal promotion of ideas, product or service by an identified sponsor 2. Public Relations - build favorable publicity with public (corp. image, unfavorable events) 3. Sales Promotions - Short-term incentives to encourage purchase 4. Direct Marketing - direct connection with targeted consumers for immediate response 5. Personal Selling - personal presentation by sales force to sell and build customer relationships 6. Digital Media - leverage traditional promotional tools with word of mouth and social networks

Personal and Psychological Influences on the Buyer

1. Age 2. Life cycle - student, young, professional, family, senior 3. Lifestyle - activities, interests, opinions 4. Occupation 5. Income 6. Personality - intro/extrovert, confidence level (VALS) 7. Motivation - internal state driving need satisfaction (Maslow's Hierarchy - physiological, safety, belonging, self-esteem, self-actualization) 8. Perception - select, organize, interpret info 9. Learning 10. Attitudes - likes/dislikes, beliefs

Marketing Channel Design Process

1. Analyze consumer needs 2. Set channel objectives Identify: * Service level want to provide * Functions want to perform * Where want product or service is sold Decisions based on: * Company goals/size * Product (requirements, PLC) * Economy/financial situation * Competition * Legal restrictions 3. Identify channel alternatives Evaluate channel types, number of channels desired and responsibilities of each Channel types:t retailers (warehouse clubs, department stores, franchises), sales agency, food brokers, distributors Multichannel, horizontal, Vertical Marketing System Coverage (intensive vs. selective), control (indirect vs. direct), cost (transportation, processing, packaging, handling) 4. Evaluate alternatives

Layers of the Product

1. Core Product - benefits 2. Actual Product (primary features)- packaging, brand name, design 3. Augmented Product (secondary features) - after-sale service, customer service, installation, payment terms, delivery, warranty

Pricing Strategy

1. Cost based (price floor) - covers product costs 2. Competition based - based on competitor strategies and pricing, marketing strategy/objectives/mix, nature of the market and demand

Sociocultural Influences on the Buyer

1. Culture - society, family, and institutions impart basic values, beliefs, customs → marketing tailor products to cultural values 2. Subculture: shared characteristics, common beliefs/experiences (religious/ethnic groups) 3. Micro-culture: ID based on a common activity or art form 4. Social Class: determined by wealth, education, occupation, income Membership Groups - direct influence and a group to which a person belongs Aspirational Groups -- groups an individual wishes to belong to Reference Groups - groups that form a comparison or reference in forming attitudes or behavior

Market Research Process

1. Define the problem - examine secondary research and set research objectives DATA AGES QUICKLY Assess currency, accuracy, relevance, and impartiality 2. Develop research plan - method and measurement 3. Implement plan - collect data (watch, ask, experiment) 4. Interpret/report findings - interpret statistical analysis and report in a usable format

Business Buying Behavior

1. Environmental stimuli - price, place, promotion, product, competitive, economic, technological, cultural, political 2. The buying center (interpersonal and individual influences) and the buying organization (organizational influence) 3. Buyer responses - product or service choice, supplier choice, order quantities, delivery and time, service terms, payment Complex buying decisions * Longer, more formalized procedures * Interactions among people at many level * Large sums of money * Technical and economic considerations Supplier networks: * Systematic development of partners * Buyer and seller more dependent on each other Business demand is derived from consumer demand

Customer Value Based Pricing

1. Every day low prices 2. High-low prices (coupons) 3. Value added pricing

Buying Behavior Process

1. How we buy - purchase decision process 2. Why and what we buy - influences

Promotional Planning

1. Identify target audience - knowledge of target market and clear marketing objectives help determine the promotional mix 2. Establish communications objectives Differentiate: * Position product to stand out, build brand image/relationships Inform/educate (new goods): * Establish awareness * Assists in buying decision Persuade: * Consumers to choose your brand * Influence perceptions * Change brand attitudes 3. Determine budget 4. Design promotional mix * What - target wants to hear/needs to hear (copy/content) Informational - how help improve target's life Emotional - satisfy emotional need * How - style, tone * Where - target wants/can to receive the message * When - target wants/can to receive the message Continuous or pulsing schedule 5. Evaluate effectiveness

Distribution Coverage

1. Intensive Distribution - product(s) in as many outlets as possible Examples: candy and toothpaste 2. Exclusive Distribution - limited number of dealers/retailers with exclusive rights Examples: luxury automobiles, high-end jewelry, prestige clothing 3. Selective Distribution - in wide range of outlets, but not all, to maintain some control Examples: television and home appliances

Macroenvironment

1. Legal 2. Demographic 3. Cultural 4. Economic 5. Natural 6. Technological 7. Political

Product Line Decisions

1. Line filling - add items to present range * Sizes, flavors, styles * Increases customer value * Block competitors 2. Line stretching - lengthen beyond current range * Downward: cater to lower-end segments * Upward: add prestige to existing products

Positioning Stages

1. Map competitor position - solve problems, provide benefits, deliver social meaning Perceptual map - based on consumers perceptions and identifies a spot that carves out a competitive position 2. Define competitive advantage - satisfy consumer needs better, superior image/service/brand personality Positioning statement: To (target segment and need), our (brand) is (concept) that (point of difference). 3. Finalize marketing mix - target market, positioning, 4P's 4. Evaluate and modify

Communication Models

1. One to One - personal selling, direct marketing 2. One to Many - advertisement, public relations, sales promotion 3. Many to Many - digital, word of mouth, brand ambassadors

Marketing Mix

1. Price 2. Product 3. Promotion 4. Place

Purchase Decision Process

1. Problem recognition 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post-purchase behavior

Consumer Purchase Decision Process

1. Problem recognition - perceive need Consumer sees a gap b/w current and desired state based on internal/external stimuli 2. Information search - seek value Internal search - scan memory for previous experience External search sources: * Personal: family/friends - persuasive * Commercial - controllable * Public: ratings, social networks 3. Evaluation of alternatives - access values Understand evaluation process: * Gut feel, research, other's opinions * Consideration sets: features/ benefits, brands, substitutes * Attribute rating: value, performance, design, price * Personality, perception 4. Purchase decision - buy value POP display, salespeople, in-store experiences to appeal to consumer senses, values, and emotions 5. Post-purchase behavior - determine value Customer satisfaction an customer dissonance Customers will be satisfied when their perceptions of actual performance exceeds the expected performance

Distribution Channel Functions

1. Provide time, place, and ownership utility 2. Provide logistics and/or physical distribution 3. Create efficiencies of the flow of goods from producer to customer and reducing the number of transactions

Influences on why and what we buy

1. Psychological influences 2. Sociocultural influences 3. Marketing mix influences 4. Situational influences

Consumer Buying Process

1. Purchase decision process - how we buy 2. Influences - why and what we buy Understand decision-making: 1. Approach to select, purchase, use products 2. Internal, situational, and social factors influence buyer responses (purchase/relationship behavior)

Situation Influences on the Buyer

1. Purchase task - how involving is it (technically, emotionally)? 2. Social surrounding - who is with you 3. Physical surrounding - calm/chaotic, loud/quiet, open/closed 4. Temporal - amount of time you have 5. Antecedent state - mood, hunger

Pricing Tactics

1. Single Product - odd/even, prestige, payment 2. Multiple Products - price bundling, captive pricing, product line pricing, loss leader pricing 3. Price Bundling 4. Captive Pricing

Price Planning

1. Understand Target Perceptions 2. Examine Pricing Environment Economy: Recession/Boom, Inflation, Interest Rates, Consumer Confidence Competition: Leader/Follower, Number of Players Competitive Actions Consumer Trends: Cultural, Demographic, Societal Changes Other Factors: Commodity, Raw Material Changes, Weather Changes 3. Set Pricing Objectives * Profit, sales, market share * Competitive effect * Customer satisfaction * Image enhancement 4. Estimate Demand * Elastic: price change has a large effect on amount demanded * Inelastic: price change little or no effect on amount demanded 5. Determine Costs * Variable Costs: production costs tied to units produced (raw materials, ingredients, packaging, parts, line labor) * Fixed Costs: production cost unchanged with # of units produced (rent, mortgage, equipment, utilities, salaries) * Average Fixed Cost: total fixed cost / # of units produced 6. Choose Pricing Strategy 7. Develop Pricing Tactics

Requirements for Building Relationships

1. Who are your customers? 2. What do customers value? 3. What do they want to buy? 4. How do they prefer to interact?

Multichannel Distribution Systems

A firm sets up two or more channels to reach customer segments Advantages: 1. Coverage expansion 2, Tailored to segment's needs Disadvantages: 1. Less control 2. Generates conflict

Customized Targeting Strategy

A personalized approach

Three Part Targeting

A strategy to evaluate each market segment's potential and determine which are worthy of investment 1. Evaluate market segments - measurable, profitable, reachable, serviceable Increase knowledge to better satisfy wants/needs * Who they are * Where they live * What they buy * Where they shop * How to reach them (psychographics) * Estimate future potential 2. Develop target market segment profiles *Geographic *Psychographic *Demographic * Behaviors 3. Choose a targeting strategy * Undifferentiated * Differentiated * Concentrated * Customized

Targeting

A strategy to evaluate the potential for each segment and determine which ones are worthy of investing resources

Cost-plus (markup) Pricing

Adding a standard markup to product cost

Dynamic Pricing

Adjusting prices continually to meet the characteristics and needs of individual customers and situations Examples: online and surge pricing

Branding

An important asset Benefits (efficient & effective) * Lower MK costs * Facilitate shopping/short cut Association with: * Quality * Images * Emotions * Loyalty

Marketing

An organizational function & a set of processes for: 1. Creating, communicating & delivering value to customers 2. Managing customer relationships in ways that benefit the organization and its stakeholders Exchanges: * Transactional: short term, motivated by self-interest * Collaborative: long term supportive relationships (bond emotionally)

Customer Relationship Management

Analyze customer "touch points" from all sources Hyper-personalize each customer's experience to drive engagement, garner loyalty, boost revenue, drive costs down 1. Sales force contacts 2. Customer purchases 3. Service and support calls 4. Website visits 5. Satisfaction survey 6. Credit and payment interactions 7. Research studies

Price

Assignment of value and amount target consumer must exchange to receive product/service Capturing Value 1. Cost 2. Demand 3. Competition 4. Customer Wants/Needs 5. Product Life Cycle 6. Opportunity Cost 7. Substitution

Value of Targeting

Balance efficiency (same offer to all) with effectiveness (customized offer to meet individual needs) Drives the product's positioning MK/OM capabilities, PLC, market variability, competitors' strategies

Value Proposition

Benefits that the brand promises to deliver to satisfy consumer's needs 1. Superior to competition 2. Solve problems or improves target's situation Tailor value proposition to attract, engage, and delight Perceived customer value = total benefits/total costs

Causal Market Research

Cause/effect (experimental)

Place

Channel members partner to efficiently deliver product/service to the target customer when and where desired Delivering Value 1. Distribution Channels 2. Value Delivery Network 3. Market Coverage 4. Product Assortment 5. Locations 6. Inventory 7. Transportation

Marketing Medium

Communication vehicles that reach target audience TV, radio, social media, magazine, company website, billboard, coffee mug Challenges: 1. Target market exposure to medium 2. Does product fit/conflict with medium

Store Brands

Created & owned by a reseller of a product

Segmentation Variales

Demographics (who): 1. Age 2. Life 3. Gender 4. Ethnicity 5. Income 6. Education Pyschographics (why): 1. Personality 2. Motives 3. Lifestyles 4. Activities 5. Entertainment Geographic (where): 1. Region 2. Urban/suburban/rural 3. Market density 4. Climate Behavioral (how): 1. Volume usage (80/20) 2. Benefit expectations 3. Brand usage and loyalty 4. Price sensitivity

Positioning

Develop a MK strategy to influence how a particular market segment perceives a p/s in comparison to competition 1. Pricing Strategy 2. Promotion Strategy 3. Supply Chain Strategy 4. Product Strategy

Marketing Channel Length

Direct: company to consumer → greatest control and least complexity Indirect: one or more channel members between the company and the consumer → flow of ownership, payment information, and promotion

Paid Media

Display ads, sponsorships, paid key word searches Traditional advertising, less trusted by consumers

Value of Segmentation

Effectively satisfy like-minded consumers needs Efficiently manage customer relationship with tailored MK mix offering Dividing potential category users in different ways helps to see: 1. If there any needs not being met 2. If our products can meet a segment's needs better than competitors 3. Predictive purchasing behavior

Disintermediation

Eliminate channel intermediaries to sell/buy products direct

Advertising

Engage customers, change customer's perceptions, reaches masses of buyers at a low cost per exposure Longer term: build image Impersonal

Model of Buyer Behavior

Environment: 1. Marketing stimuli - price, product, place, promotion 2. Economic 3. Social 4. Technological 5. Cultural Buyer's Black Box: 1. Buyer's characteristics 2. Buyer's decision process Buyer's Response: 1. Buying attitudes and preferences 2. Purchase behavior: what the buyer buys, when they buy, where the buyer buys, and how much the buyer buys 3. Brand and company relationship behavior

Product Life Cycle

Explains how market responds and marketing activities change over product's life 1. Introduction stage 2. Growth stage 3. Maturity stage 4. Decline stage

Marketing Intelligence

External data gathered through systematic collection and analysis of public info using monitoring data sources 1. Marketing commercial data: Neilsen, Mediamark 2. Employees 3. Internet, websites, blogs, reviews, social media 4. Newspapers, publications, and trade shows 5. Online databases: U.S. Census, SEC filings, Patent Office Secondary marketing information source (from existing data)

Segmenting Business Markets

Geographic characteristics 1. Region 2. Population density Demographic characteristics 1. National American Industry Classification System code 2. Size of the company 3. Annual sales 4. For profit or non-profit Benefits sought (product, service) Buying situations: type of buy and who buys

Marketing Information System (MIS)

Goal: Transform data (raw unorganized facts) into information (interpreted data) 1. Find the right information 2. Turn raw data into customer insight 3. Create customer value Companies gain a competitive advantage when they harness info from many sources Internal Data: company data External Data: marketing intelligence Primary Data: marketing research

Market Planning Process

Goal: Value creation First Step: Understand marketplace (macro and micro environment) and customer wants/needs Successful market planning depends upon good marketing information 1. Situation Analysis - Research and analyze internal/external environments 2. Marketing Objectives - Sales, market share, profit, ROI, etc. 3. Marketing Strategies - Segmenting, Targeting, Positioning, Marketing Mix (4Ps) Strategies 4. Implement and Revise

Introduction Stage

Goal: awareness and trial Product: basic product, narrow line Place: build selective distribution Price: high to recover costs or low to penetrate Promotion: gain awareness, inform, and educate Customers: innovators Competitors: few Innovation is critical for growth and is a continuous process Successful introductions are difficult because of high R&D costs, high slotting fees, and fast obsolescence rates

Growth Stage

Goal: grow market share and build loyalty Product: new versions, flavors, or sizes Place: build distribution and channels Price: promotional pricing to build share Promotion: aggressive and stresses value proposition Customers: early adopters Competitors: growing number Successful introductions are difficult because of cannibalization, getting shelf space, and positioning

Decline Stage

Goal: harvest profits, delete or sell brand, or assess to re-invigorate Product: core offerings and best-sellers Place: cut unprofitable outlets Price: cut price Promotion: decrease to protect profits Customers: laggards Competitors: declining number

Maturity Stage

Goal: maximize profits, defend loyalty, and innovate/extend Product: full product line to multiple markets Place: maintain and maximize Price: match or cut to defend share Promotion: reminder advertising and reward programs Customers: middle majority Competitors: stable

Exploratory Market Research

Helps define problem, suggest hypotheses (observational, focus groups, interviews) 1. Observation - ethnographic, eye-tracking 2. In-depth interview 3. Focus groups

Decoding

How consumers understand the communication, draw conclusions (lack of copy/text), use their existing perceptions Source and receiver need a mutual frame of reference

Sales Promotion

Incentives designed to build interest or encourage product purchase during a specified period Attract consumer attention Offer strong purchase incentives, rewards quick response Short-lived effects Can aim at both consumers (target small segments) and/or channel members Coupons, prizes, point of purchase

Promotion

Integrated Marketing Communications (IMC) are coordinated activities used to influence, inform, persuade and remind the target market Communicating Value 1. Sales Promotion 2. Advertising 3. Personal Selling 4. Word of Mouth 5. Public Relations 6. Direct Marketing 7. Interactive 8. Viral 9. Social Media

National Brands

Marketed under manufacturer's own name

Undifferentiated Targeting Strategy

Marketing mix designed for general needs of overall mass market Efficient → same offer to all

Concentrated Targeting Strategy

Niche offering targeted to needs of one segment

Supply Chain Partner Functions

Offer transaction expertise Efficiency (decreased cost, time, effort) Effectiveness (increased value, customer satisfaction) Help complete information, promotion, contact, and negotiation Help fulfill physical distribution, financing, risk taking, customer feedback, and returns

Value Delivery Network

Partnership that add value Improve the performance of entire system, optimize flows Integrate company, suppliers, distributors & customers Can deliver competitive advantage

Microenvironment

People/groups very close to the business, who have an impact on the customer experience 1. Customers 2. Suppliers 3. Marketing Intermediaries 4. Competitors

Direct Marketing

Phone, catalog, (e-) mail, often combined w/coupons, ads Target to individual with personal message Measurable: response rates Test with small scale (less visible to competition) Build long-term relationships Personalized, interactive Less interactive, "junk mail"

Brand Name

Portray an image or describes how product works Symbolism to imply product contains beneficial characteristics Easy to say, spell, read, remember Fit target, product benefits, customer culture, legal requirements

Strong Brand

Position brand clearly in target's mind Strong brand identity - name, logo, packaging, personality Product strategies/offerings managed during PLC Engage on emotional level

Market Research

Primary data collected for a specific purpose - asking about attitudes, awareness, intentions, behaviors Data collected by firm when a company needs to make a specific decision May include demographics, psychological info, awareness, attitudes, and opinions 1. Exploratory - help define problem, suggest hypotheses (observational, focus groups, interviews) 2. Descriptive - questions on attitudes, preferences, buying behavior 3. Causal research - cause/effect (experimental)

Vertical Marketing System

Produce, wholesaler, and retailer are unified 1. Corporate VMS - common single ownership 2. Contractual VMS - contracts of independent firms (franchises) 3. Administered VMS - one member wields leverage/power over other channel member for total channel cooperation

Product

Products and services developed to satisfy a target consumer's need or want Creating Value 1. Name 2. Branding 3. Assortment 4. Quality 5. Features and Benefits 6. Design 7. Packaging 8. Sizes 9. Services 10. Warranties

Goal of Marketing

Provide value to the right consumer: 1. Create the right product 2. Communicate the right promotion 3. Deliver the right place and the right price

Descriptive/Survey Market Reserach

Questions on attitudes, preferences, buying behavior Used to describe market potential or demographics and attitudes of consumers 1. Survey

Marketing Distribution Channel

Route product or service follows from producer to final consumer that consists of firms (functions) that help make product or service available to the user Upstream: raw material suppliers Downstream: retailers/wholesalers Distribution channel functions increase efficiency of the flow of goods from producer to customer: 1. Breaking bulk 2. Creating assortment 3. Transportation and storage 4. Facilitating functions 5. Risk taking functions 6. Communication and transaction functions

Product Line

Same brand name: * Well established brand known for high quality * Group of products w/ similar function * Same target market * Marketed through same outlets * Similar price ranges Benefits: market synergy and competitive

Internal Data Sources

Secondary marketing information source (from existing data) Internal information is usually: 1. accessed more cheaply and quickly than other information sources 2. is usually insufficient for making marketing decisions

Break even (target return) Pricing

Setting a price to break-even on costs of making and marketing the product

Brand Personalities

Should reflect the positioning strategy 1. Sincere - down-to-earth, honest, wholesome 2. Excitement - daring, spirited 3. Sophistication -upper class, charming 4. Competence - reliable, intelligent 5. Ruggedness - outdoorsy, tough

Differentiated Targeting Strategy

Target two or more segments with distinct marketing mix that meet target's needs

Digital Media

Targeted, interactive, immediate & personalized 1. WOM: un/paid product promotion 2. Buzz MK: attention stunt 3. Viral MK: create entertaining/informative message in hopes shared consumer to consumer 4. Guerrilla MK: unexpected message placement 5. Social Media 6. Mobile Apps and Geospatial Platforms

Marketing Message

The actual communication content that source transmits to receiver Forms: 1. Advertising 2. Sales promotion 3. A salesperson's pitch 4. Infomercial 5. Word of mouth

Segmentation

The process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics 1. Demographics 2. Pyschographics 3. Behavioral

Public Relations

Timely info about p/s, people, companies placed in media (news, magazines) Build good relations with stakeholders (employees) Enhance company reputation (link to corp. strategy) Growing importance: media costs, consumers more skeptical about MK

Product Mix

Total set of all product lines a firm offers

Horizontal Marketing System

Two or more companies at one level join together for new marketing opportunity

Co-branding

Use established brand names of two different companies on same product Two brands form partnership to market new product Creates more value andrecognition

Licensing

Use names and symbols created by other companies for a fee Delivers instant brand name recognition and is proven to appeal to target

Integrative Marketing Communications

Using different tools in the promotional mix to influence target's attitudes/behaviors Media choice to match target's habits 4Cs: consistent, clear, compelling, coordinated

Owned Media

Websites, blogs, social media accounts Company controlled, effective relationship building

Earned Media

Word of mouth, buzz on social media Most credible to consumers, no company control