LAST CLASS TEST 1
Value
A customer's subjective assessment of benefits relative to costs in determining the worth of a product
Value-Driven Marketing
A customer's subjective assessment of benefits relative to costs in determining the worth of a product
value
A customer's subjective assessment of benefits relative to costs in determining the worth of a product
Delphi Technique
A decision-making technique in which group members do not meet face-to-face but respond in writing to questions posed by the group leader.
competitve advantage
A feature that makes a product more desireable than its competitors
time series analysis
A forecasting method that uses historical sales data to discover patterns in the firm's sales over time and generally involves trend, cycle, seasonal, and random factor analyses
Define what markets are and explain how they are generally classified.
A market is a group of people who, as individuals or as organizations, have needs for products in a product class and have the ability, willingness, and authority to purchase such products. Markets can be categorized as consumer markets or business markets, based on the characteristics of the individuals and groups that make up a specific market and the purposes for which they buy products. A consumer market, also known as a business-to-consumer (B2C) market, consists of purchasers and household members who intend to consume or benefit from the purchased products and do not buy products for the main purpose of making a profit. A business market, also known as business-to-business (B2B), industrial, or organizational market, consists of individuals or groups that purchase a specific kind of product for one of three purposes: resale, direct use in producing other products, or use in general daily operations.
heterogenous market
A market made up of individuals or organizations with diverse needs for products in a specific product class
quota sampling
A nonprobability sampling technique in which researchers divide the population into groups and then arbitrarily choose participants from each group
online survey
A research method in which respondents answer a questionnaire via e-mail or on a website
telephone survey
A research method in which respondents' answers to a questionnaire are recorded by an interviewer on the phone
shopping mall intercept interview
A research method that involves interviewing a percentage of individuals passing by "intercept" points in a mall
Discuss sales forecasting methods.
A sales forecast is the amount of a product the company actually expects to sell during a specific period at a specified level of marketing activity. To forecast sales, marketers can choose from a number of methods. The choice depends on various factors, including the costs involved, type of product, market characteristics, and time span and purposes of the forecast. There are five categories of forecasting techniques: executive judgment, surveys, time series analysis, regression analysis, and market tests. Executive judgment is based on the intuition of one or more executives. Surveys include customer, sales force, and expert forecasting. Time series analysis uses the firm's historical sales data to discover patterns in the firm's sales over time and employs four major types of analysis: trend, cycle, seasonal, and random factor. With regression analysis, forecasters attempt to find a relationship between past sales and one or more independent variables. Market testing involves making a product available to buyers in one or more test areas and measuring purchases and consumer responses to distribution, promotion, and price. Many companies employ multiple forecasting methods.
executive judgement
A sales forecasting method based on the intuition of one or more executives
In-home interview
A structured question-and-answer exchange conducted in the respondent's home
Hypothesis
A testable prediction, often implied by a theory
striated sampling
A type of probability sampling in which the population is divided into groups with a common attribute, and a random sample is chosen within each group
probability sampling
A type of sampling in which every element in the population being studied has a known chance of being selected for study
on-site computer interview
A variation of the shopping mall intercept interview in which respondents complete a self-administered questionnaire displayed on a computer monitor
Promotion
Advertising public relations personal selling emails
Stakeholders
All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
random factor analysis
An analysis attempting to attribute erratic sales variations to random, nonrecurrent events
cycle analysis
An analysis of sales figures for a three- to five-year period to ascertain whether sales fluctuate in a consistent, periodic manner
telephone depth interview
An interview that combines the traditional focus group's ability to probe with the confidentiality provided by telephone surveys
decentralized organization
An organization in which lower-level managers make important decisions
sales analysis
Analysis of sales figures to evaluate a firm's performance
SWOT analysis
Assessment of an organization's strengths, weaknesses, opportunities, and threats
Segmentation Variables
Characteristics of individuals, groups, or organizations used to divide a market into segments
Identify ethical and international issues in marketing research.
Eliminating unethical marketing research practices and establishing generally acceptable procedures for conducting research are important goals of marketing research. Both domestic and international marketing use the same marketing research process, but international marketing may require modifying data-gathering methods to address regional differences.
List the five steps of the target market selection process.
In general, marketers employ a five-step process when selecting a target market. Step one is to identify the appropriate targeting strategy. Step two is determining which segmentation variables to use. Step three is to develop a market segment profile. Step four is evaluating relevant market segments. Finally, step five is selecting specific target markets. Not all marketers will follow all of these five steps in this order, but this process provides a good general guide.
Describe how marketing creates value.
Individuals and organizations engage in marketing to facilitate exchanges—the provision or transfer of goods, services, and ideas in return for something of value. Four conditions must exist for an exchange to occur. First, two or more individuals, groups, or organizations must participate, and each must possess something of value that the other party desires. Second, the exchange should provide a benefit or satisfaction to both parties involved in the transaction. Third, each party must have confidence in the promise of the "something of value" held by the other. Finally, to build trust, the parties to the exchange must meet expectations. Marketing activities should attempt to create and maintain satisfying exchange relationships.
Describe the tools, such as databases, big data, marketing analytics, and decision support systems useful to marketing decision making.
Many firms use computer technology to create a marketing information system (MIS), a framework for managing and structuring information gathered regularly from sources both inside and outside the organization. A database is a collection of information arranged for easy access and retrieval. Big data involves massive data files that can be obtained from both structured and unstructured databases. Marketing analytics is the use of tools and methods to measure and interpret the effectiveness of a firm's marketing activities. A marketing decision support system (MDSS) is customized computer software that aids marketing managers in decision making by helping them anticipate the effects of certain decisions. Online information services and the internet also enable marketers to communicate with customers and obtain information.
Explain why marketing is important to our global economy.
Marketing is important to our economy in many ways. Marketing costs absorb about half of each buyer's dollar. Marketing activities are performed in both business and nonprofit organizations. Marketing activities help business organizations to generate profits, and they help fuel the increasingly global economy. Knowledge of marketing enhances consumer awareness. New technology improves marketers' ability to connect with customers. Socially responsible marketing can promote the welfare of customers and society. Green marketing is a strategic process involving stakeholder assessment to create meaningful, long-term relationships with customers while maintaining, supporting, and enhancing the natural environment. Finally, marketing offers many exciting career opportunities.
Define marketing.
Marketing is the process of creating, pricing, distributing, and promoting goods, services, and ideas to facilitate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment. The essence of marketing is to develop satisfying exchanges from which both customers and marketers benefit. Organizations generally focus their marketing efforts on a specific group of customers called a target market. A target market is the group of customers toward which a company directs a set of marketing efforts.
build approach
Measuring company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period, multiplying the estimate by the number of potential buyers, and adding the totals of all geographic are considered
Promotion Variable
Relates to activities used to inform individuals or groups about the organization and its products
Price variable
Relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices
price variable
Relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices
Describe how to evaluate market segments.
Step four is evaluating relevant market segments. Marketers analyze several important factors, such as sales estimates, competition, and estimated costs, associated with each segment. Potential sales for a market segment can be measured along several dimensions, including product level, geographic area, time, and level of competition. Besides obtaining sales estimates, it is crucial to assess competitors that are already operating in the segments being considered. Without competitive information, sales estimates may be misleading. The cost of developing a marketing mix that meets the wants and needs of individuals in that segment must also be considered. If the firm's costs to compete in that market are very high, it may be unable to compete in that segment in the long run.
Compare three targeting strategies.
Step one of the target market selection process is to identify the appropriate targeting strategy. When a company designs a single marketing mix and directs it at the entire market for a particular product, it is using an undifferentiated targeting strategy. The undifferentiated strategy is effective in a homogeneous market, whereas a heterogeneous market needs to be segmented through a concentrated targeting strategy or a differentiated targeting strategy. Both of these strategies divide markets into segments consisting of individuals, groups, or organizations that have one or more similar characteristics and can be linked to similar product needs. When using a concentrated strategy, an organization directs marketing efforts toward a single market segment through one marketing mix. With a differentiated targeting strategy, an organization directs customized marketing efforts at two or more segments. Certain conditions must exist for market segmentation to be effective. First, customers' needs for the product should be heterogeneous. Second, the segments of the market should be identifiable and divisible. Third, the total market should be divided so segments can be compared with respect to estimated sales, costs, and profits. Fourth, at least one segment must have enough profit potential to justify developing and maintaining a special marketing mix for that segment. Fifth, the firm must be able to reach the chosen segment with a particular marketing mix.
Explain what market segment profiles are and how they are used.
Step three in the target market selection process is to develop market segment profiles. Such profiles describe the similarities among potential customers within a segment and explain the differences among people and organizations in different market segments. They are used to assess the degree to which the firm's products can match potential customers' product needs. Segments, which may seem attractive at first, may be shown to be quite the opposite after a market segment profile is completed.
first-mover advantage
The ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace
sales forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities
Marketing Environment
The competitive, economic, political, legal and regulatory, technological, and sociocultural forces that surround the customer and affect the marketing mix
Identify the factors that influence the selection of specific market segments for use as target markets.
The final step involves the actual selection of specific target markets. In this step, the company considers whether customers' needs differ enough to warrant segmentation and which segments to target. If customers' needs are heterogeneous, the decision must be made whether to enter the market at all and if so which segment to target. The firm's available resources, managerial skills, employee expertise, facilities, the firm's overall objectives, possible legal problems, conflicts with interest groups, and technological advancements must be considered when deciding which segments to target.
Briefly explore the marketing environment.
The marketing environment, which includes competitive, economic, political, legal and regulatory, technological, and sociocultural forces, surrounds the customer and the marketing mix. These forces can create threats to marketers, but they also generate opportunities for new products and new methods of reaching customers. These forces can fluctuate quickly and dramatically.
company sales potential
The maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product
Explore how a firm develops marketing objectives and strategies that contribute to overall objectives.
The next phase of strategic planning involves the development of marketing objectives and strategies. Marketing objectives state what is to be accomplished through marketing activities and should be consistent with both business-unit and corporate strategies. Marketing strategies, the most detailed and specific of the three levels of strategy, are composed of two elements: the selection of a target market and the creation of a marketing mix that will satisfy the needs of the target-market members. The selection of a target market serves as the basis for the creation of the marketing mix to satisfy the needs of that market. Marketing-mix decisions should also be consistent with business-unit and corporate strategies and be flexible enough to respond to changes in market conditions, competition, and customer needs. Different elements of the marketing mix can be changed to accommodate different marketing strategies.
market density
The number of potential customers within a unit of land area
Strategic Marketing Management
The process of planning, implementing, and evaluating the performance of marketing activities and strategies, both effectively and efficiently
Exchanges
The provision or transfer of goods, services, or ideas in return for something of value
customers
The purchasers of organizations' products; the focal point of all marketing activities
Identify the major segmentation variables.
The second step is determining which segmentation variables to use, which are the characteristics of individuals, groups, or organizations used to divide a total market into segments. The segmentation variable should relate to customers' needs for, uses of, or behavior toward the product. Segmentation variables for consumer markets can be grouped into four categories: demographic (e.g., age, gender, income, ethnicity, family life cycle), geographic (e.g., population, market density, climate), psychographic (e.g., personality traits, motives, lifestyles), and behavioristic (e.g., volume usage, end use, expected benefits, brand loyalty, price sensitivity). Variables for segmenting business markets include geographic location, type of organization, customer size, and product use.
market potential
The total amount of a product that customers will purchase within a specified period at a specific level of industry-wide marketing activity
Distinguish between exploratory and conclusive research.
There are two types of marketing research: exploratory research and conclusive research. When marketers need more information about a problem or want to make a tentative hypothesis more specific, they may conduct exploratory research. The main purpose of exploratory research is to better understand a problem or situation and/or to help identify additional data needs or decision alternatives. More organizations are starting customer advisory boards, small groups of actual customers who serve as sounding boards for new product ideas and offer insights into their feelings and attitudes toward a firm's products, promotion, pricing, and other elements of marketing strategy. Another common method for conducting exploratory research is through a focus group. A focus group brings together multiple people to discuss a certain topic in a group setting led by a moderator. Conclusive research is designed to verify insights through an objective procedure to help marketers make decisions. It is used when the marketer has one or more alternatives in mind and needs assistance in the final stages of decision making. Conclusive research can be descriptive or experimental. If marketers need to understand the characteristics of certain phenomena to solve a particular problem, descriptive research can aid them. Experimental research allows marketers to make causal deductions about relationships. Such experimentation requires that an independent variable (one not influenced by, or dependent on, other variables) be manipulated and the resulting changes in a dependent variable (one contingent on, or restricted to, one value or set of values assumed by the independent variable) be measured.
core competencies
Things a company does extremely well, which sometimes give it an advantage over its competition
Big Data
a broad term for datasets so large or complex that traditional data processing applications are inadequate.
database
a collection of organized data that allows access, retrieval, and use of data
market opportunity
a combination of circumstances and timing that permits an organization to take action to reach a particular target market
market share
a company's product sales as a percentage of total sales for that industry
market segment
a group of consumers who respond in a similar way to a given set of marketing efforts
Homogenous Market
a market in which a large proportion of customers have similar needs for a product
undifferntiated targeting strategy
a marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix
Product Orientation
a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace
Sampling
a promotional program that allows the consumer the opportunity to try a product or service for free
mail survey
a research method in which respondents answer a questionnaire sent through the mail
Misson Statement
a short, specific written statement of the reason a business exists and what it wants to achieve
Marketing Objective
a statement of what is to be accomplished through marketing activities
relationship marketing
a strategy that focuses on keeping and improving relationships with current customers
differentiated targeting strategy
a strategy through which a firm targets several market segments with a different offering for each
concentrated targeting strategy
a strategy used to select one segment of a market for targeting marketing efforts
Strategic Business Unit (SBU)
a subgroup of a single business or collection of related businesses within the larger organization
Sample
a subset of the population
sales force forecasting survey
a survey of a firm's sales force regarding anticipated sales in their territories for a specified period
customer forecasting survey
a survey of customers regarding the types and quantities of products they intend to buy during a specific period
Marketing Plan
a written document that acts as a guidebook of marketing activities for the marketing manager
Consumer Market
all the individuals and households that buy or acquire goods and services for personal consumption
sustainable competitive advantage
an advantage that cannot be copied by the competition
seasonal analysis
an analysis of daily, weekly, or monthly sales figures to evaluate the degree to which seasonal factors influence sales
performance standard
an expected level of performance against which actual performance can be compared
Market Orientation
an organization wide commitment to researching and responding to customer needs
marketing cost analysis
analysis of costs to determine which are associated with specific marketing efforts
statistical interpretation
analysis of what is typical and what deviates from the average
regrssion analysis
characterizes the relationship between two or more variables and then uses this characterization to predict values of a variable
Reliability
consistency of measurement
marketing decision support system (MDSS)
customized computer software that aids marketing managers in decision making
experimental research
gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses
trend analysis
hypothetical extension of a past series of events into the future
primary data
information collected for the specific purpose at hand
single-source data
information provided by a single marketing research firm
secondary data
information that already exists somewhere, having been collected for another purpose
socially responsible investing
investing in companies that have met criteria for environmental or social sustainability
Crowdsourcing
inviting broad communities of people - customers, employees, independent scientists and researchers, and even the public at large - into the new product innovation process
market test
making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts
green marketing
marketing efforts to produce, promote, and reclaim environmentally sensitive products
Exploratory Research
marketing research to gather preliminary information that will help define problems and suggest hypotheses
breakdown approach
measuring company sales potential based on a general economic forecast for a specific period and the market potential derived from it
Marketing Information System (MIS)
people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights
4 P's of Marketing Mix
product, price, promotion, place
product
quality, packaging, design and brand
price
retail price discounts payments plans credit term
expert forecasting survey
sales forecasts prepared by experts outside the firm, such as economists, management consultants, advertising executives, or college professors
geographic segmentation
segmenting markets by region of a country or the world, market size, market density, or climate
Corporate Strategy
sets long-term direction for the total enterprise
research design
specifies which research questions must be answered, how and when the data will be gathered, and how the data will be analyzed
Marketing activities should attempt to create and maintain satisfying exchange relationships
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Micromarketing
tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing
marketing analytics
the analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance
Marketing Concept
the idea that the social and economic justification for an organization's existence is the satisfaction of customer wants and needs while meeting organizational objectives
Business Markets
the institutional buyers who purchase items to be used in other products and services or to be resold to other businesses or households
nonprobabilty sampling
the probability of any particular member of the population being chosen is unknown
Marketing
the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return
Strategic Planning
the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities
Market Segmentation
the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups
benefit segmentation
the process of grouping customers into market segments according to the benefits they seek from the product
Marketing Implementation
the process of marketing strategies into action
Marketing Mix
the set of tactical marketing tools - product, price, place, and promotion - that the firm blends to produce the response it wants in the target market
Marketing Research
the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
Marketing Environment
uncontrollable elements outside of any organization that may affect its performance
Customer Relationship Management (CRM)
using information about customers to create marketing strategies that develop and sustain desirable customer relationships
The marketing-mix variables—which include product, distribution, promotion, and price—
—which include product, distribution, promotion, and price—
focus group
A small group of individuals who are led in discussion by a professional consultant in order to gather opinions on and responses to candidates and issues.
Target Market
A specific group of customers on whom an organization focuses its marketing efforts
centralized organization
A structure in which top-level managers delegate little authority to lower levels
strategic performance evaluation
Establishing performance standards, measuring actual performance, comparing actual performance with established standards, and modifying the marketing strategy, if needed
Identify the importance of building customer relationships.
Relationship marketing involves establishing long-term, mutually satisfying buyer-seller relationships. Customer relationship management (CRM) focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships. Managing customer relationships requires identifying patterns of buying behavior and using that information to focus on the most promising and profitable customers. A customer's value over a lifetime represents an intangible asset to a marketer that can be augmented by addressing the customer's varying needs and preferences at different stages in his or her relationship with the firm. Customer lifetime value is a key measurement that forecasts a customer's lifetime economic contribution based on continued-relationship marketing efforts. Knowing a customer's potential lifetime value can help marketers determine how to best allocate resources to marketing strategies to sustain that customer over a lifetime.
Discuss how analyzing organizational resources and the marketing environment can help identify opportunities and create competitive advantage.
The marketing environment, including economic, competitive, political, legal and regulatory, sociocultural, and technological forces, can affect the resources available to a company to create favorable opportunities. Resources may help a firm develop core competencies, which are things that a company does extremely well, sometimes so well that it gives the company an advantage over its competition. When the right combination of circumstances and timing permits an organization to take action toward reaching a particular target market, a market opportunity exists. Strategic windows are temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a company competing in that market. When a company matches a core competency to opportunities it has discovered in the marketplace, it is said to have a competitive advantage. A marketer can use SWOT analysis to assess a firm's ability to achieve a competitive advantage. If marketers want to understand how the timing of entry into a marketplace can create competitive advantage, they can examine and compare first-mover and late-mover advantages.
random sampling
a form of probability sampling in which all units in a population have an equal chance of appearing in the sample, and the various events that can occur have an equal or known chance of taking place
product
a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value
market
a group of buyers and sellers of a particular good or service
Conclusive Research
research designed to verify insights through objective procedures and to help marketers in making decisions
Place
retail location distribution delivery downloads
At the most basic level, profits can be obtained through relationships in the following ways: by acquiring new customers, by enhancing the profitability of existing customers, and by extending the duration of customer relationships.
- by acquiring new customers - by enhancing the profitability of existing customers - by extending the duration of customer relationships.
personal interview survey
A research method in which participants respond to survey questions face-to-face
Population
A group of individuals that belong to the same species and live in the same area
market growth/market share matrix
A helpful business tool, based on the philosophy that a product's market growth rate and its market share are important considerations in determining its marketing strategy
Outline the development of a marketing plan.
A key component of marketing planning is the development of a marketing plan, which outlines all the activities necessary to implement marketing strategies. The plan fosters communication among employees, assigns responsibilities and schedules, specifies how resources are to be allocated to achieve objectives, and helps marketing managers monitor and evaluate the performance of a marketing strategy.
customer lifetime value
A key measurement that forecasts a customer's lifetime economic contribution based on continued relationship marketing efforts
Marketing Concept
A managerial philosophy that an organization should try to satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals
marketing strategy
A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market
Summarize the marketing concept.
According to the marketing concept, an organization should try to provide products that satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals. Customer satisfaction is the marketing concept's major objective. The philosophy of the marketing concept emerged in the United States during the 1950s after the production and sales eras. Organizations that develop activities consistent with the marketing concept become market-oriented organizations. To implement the marketing concept, a market-oriented organization must establish an information system to discover customers' needs and use the information to create satisfying products. It must also coordinate all its activities and develop marketing mixes that create value for customers in order to satisfy their needs.
Understand the importance of a firm's mission statement and corporate and business-unit strategy.
An organization's goals should align with its mission statement—a long-term view, or vision, of what the organization wants to become. A well-formulated mission statement gives an organization a clear purpose and direction, distinguishes it from competitors, provides direction for strategic planning, and fosters a focus on customers. An organization's goals, which focus on the end results sought, guide the remainder of its planning efforts. Corporate strategy determines the means for using resources in the areas of production, finance, research and development, human resources, and marketing to reach the organization's goals. Business-unit strategy focuses on strategic business units (SBUs)—divisions, product lines, or other profit centers within the parent company used to define areas for consideration in a specific strategic marketing plan. The Boston Consulting Group's market growth/market share matrix integrates a company's products or SBUs into a single, overall matrix for evaluation to determine appropriate strategies for individual products and business units. Based on its analysis, a firm may choose one or more competitive strategies: market penetration, market development, product development, and/or diversification.
Identify what is necessary to manage the effective implementation of marketing strategies.
Marketing implementation is the process of putting marketing strategies into action. Through planning, marketing managers provide purpose and direction for an organization's marketing efforts. Marketing managers must understand the problems and elements of marketing implementation before they can effectively implement specific marketing activities. The marketing unit must have a coherent internal structure in order to organize marketing efforts. In a centralized organization, top-level managers delegate very little authority to lower levels, whereas in decentralized organizations, decision-making authority is delegated as far down the chain of command as possible. Marketing managers must also be able to effectively coordinate marketing activities. This entails both coordinating the activities of the marketing staff within the firms and integrating those activities with the marketing actions of external organizations that are also involved in implementing the marketing strategies. Proper communication should move both down (from top management to the lower-level employees) and up (from lower-level employees to top management). Marketing managers learn marketing employees' needs and develop different methods to motivate those employees to help the organization meet its goals. Finally, successful marketing implementation requires that a timetable be established. Establishment of an implementation timetable involves several steps and ensures that employees know the specific activities for which they are responsible and the timeline for completing each activity. Completing all activities on schedule requires tight coordination among departments. Many organizations use sophisticated computer programs to plan the timing of marketing activities.
Explain the different variables of the marketing mix
Marketing involves developing and managing a product that will satisfy customer needs, making the product available at the right place and at a price acceptable to customers, and communicating information that helps customers determine if the product will satisfy their needs. These variables—product, distribution, promotion, and price—are known as the marketing mix because marketing managers decide what type of each element to use and in what amounts. Marketing managers strive to develop a marketing mix that matches the needs of customers in the target market. Before marketers can develop a marketing mix, they must collect in-depth, up-to-date information about customer needs. The product variable of the marketing mix deals with researching customers' needs and wants and designing a product that satisfies them. A product can be a good, a service, or an idea. In dealing with the distribution variable, a marketing manager tries to make products available in the quantities desired to as many customers as possible. The promotion variable relates to activities used to inform individuals or groups about the organization and its products. The price variable involves decisions and actions associated with establishing pricing policies and determining product prices. These marketing-mix variables are often viewed as controllable because they can be changed, but there are limits to how much they can be altered.
Define marketing research and its importance to decision makers.
Marketing research is the systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities. It is a process for gathering information not currently available to decision makers. Marketing research can help a firm better understand market opportunities, ascertain the potential for success for new products, and determine the feasibility of a particular marketing strategy. The value of marketing research is measured by improvements in a marketer's ability to make decisions.
Deceptive research
Research conducted to clarify the characteristics of certain phenomena to solve a particular problem
customer advisory boards
Small groups of actual customers who serve as sounding boards for new-product ideas and offer insights into their feelings and attitudes toward a firm's products and other elements of its marketing strategy
Describe the four major elements of strategic performance evaluation.
Strategic performance evaluation consists of establishing performance standards, analyzing actual performance, comparing actual performance with established standards, and modifying the marketing strategy when needed. When actual performance is compared with performance standards, marketers must determine whether a discrepancy exists and, if so, whether it requires corrective action, such as changing the performance standard or improving actual performance. Two possible ways to evaluate the actual performance of marketing strategies are sales analysis and marketing cost analysis. Sales analysis uses sales figures to evaluate a firm's current performance. It is the most common method of evaluation because sales data are a good indication of the target market's reaction to a marketing mix. Marketing cost analysis breaks down and classifies costs to determine which are associated with specific marketing efforts. Marketing cost analysis helps marketers decide how to best allocate the firm's marketing resources.
Explain the strategic planning process.
Through the process of strategic planning, a company identifies or establishes an organizational mission and goals, corporate strategy, marketing objectives, marketing strategy, and a marketing plan. To achieve its marketing objectives, an organization must develop a marketing strategy, which includes identifying a target market and creating a plan of action for developing, distributing, promoting, and pricing products that meet the needs of customers in that target market. The strategic planning process ultimately yields the framework for a marketing plan, a written document that specifies the activities to be performed for implementing and controlling an organization's marketing activities.
Name the five basic steps in conducting marketing research, including the two types of data and four survey methods.
To maintain the control needed to obtain accurate information, marketers approach marketing research as a process with logical steps: locating and defining problems or issues, designing the research project, collecting data, interpreting research findings, and reporting research findings. The first step in launching a research study, the problem or issue definition, focuses on uncovering the nature and boundaries of a situation or question related to marketing strategy or implementation. When a firm discovers a market opportunity, it may need to conduct research to understand the situation more precisely so it can craft an appropriate marketing strategy. In the second step, marketing researchers design a research project to obtain the information needed to address it. This step requires formulating a hypothesis and determining what type of research to employ to test the hypothesis so the results are reliable and valid. A hypothesis is an informed guess or assumption about a problem or set of circumstances. Marketers conduct exploratory research when they need more information about a problem or want to make a tentative hypothesis more specific; they use conclusive research to verify insights through an objective procedure. Research is considered reliable if it produces almost identical results in repeated trials; it is valid if it measures what it is supposed to measure. For the third step of the research process, collecting data, two types of data are available. Primary data are observed and recorded or collected directly from respondents; secondary data are compiled inside or outside the organization for some purpose other than the current investigation. Sources of secondary data include an organization's own database and other internal sources, periodicals, government publications, unpublished sources, and online databases. Methods of collecting primary data include sampling, surveys, observation, and experimentation. Sampling involves selecting representative units from a total population. In probability sampling, every element in the population being studied has a known chance of being selected for study. Nonprobability sampling is more subjective than probability sampling because there is no way to calculate the likelihood that a specific element of the population being studied will be chosen. Marketing researchers employ sampling to collect primary data through mail, telephone, online, or personal interview surveys. A carefully constructed questionnaire is essential to the success of any survey. In using observation methods, researchers record respondents' overt behavior and take note of physical conditions and events. In an experiment, marketing researchers attempt to maintain certain variables while measuring the effects of experimental variables. To apply research data to decision making, marketers must interpret and report their findings properly—the final two steps in the marketing research process. Statistical interpretation focuses on what is typical or what deviates from the average. After interpreting the research findings, the researchers must prepare a report on the findings that the decision makers can understand and use. Researchers must also take care to avoid bias and distortion.
customer value = customer benefits - customer costs
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Strategic Window
temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a company competing in that market
late-mover advantage
the ability of later market entrants to achieve long-term competitive advantages by not being the first to offer a certain product in a marketplace
Sales Orientation
the belief that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits
Validity
the extent to which a test measures or predicts what it is supposed to