Marketing Exam 2

What is the difference between a consumer product and a B2B product?

-Consumer product- purchased for personal or household use. -B2B Product- purchased for use in the operations of a business or for resale.

-----Boomerang Kids

young adults who move back home with their parents.

What is Subliminal Perception? Identify examples

"Perception below the threshold of awareness". Examples include skittles and pepsi ads.

INCOME: Regarding income, what are the divisions that distinguish "upper income", "lower income", and "middle income"?

- upper income are the highest 20% of incomes - lower income are the lowest 20% of incomes - middle incomes are the middle 60%

---Mature Consumers "The Silent Generation" (approximate size, distinguishing characteristics in consumer behavior, etc.)

-28 million -89% of senior citizens have email and use it regularly

---Generation X (approximate size, distinguishing characteristics in consumer behavior, etc)

-66 million -responsible for 30% of U.S. income earned -self-reliant, value-oriented -very brand loyal -heavy users of loyalty programs -many were the first "latch-key children" and this made them independent-minded

---Baby Boomers (approximate size, distinguishing characteristics in consumer behavior, etc.)

-75 million -frequent online shoppers -facebook is their go-to social media site -75% are more likely to purchase a product if they have a coupon -Many are part of a "Sandwich Generation" -Many are grandparents -Multigenerational families

What is the 80/20 Rule as it applies to Behavioral Segmentation?

-80% of sales come from 20% of customers -heavy, medium, and light users and nonusers of a product -examples: books, beer, coffee, tobacco, soft drinks, fast food restaurants

What is meant by "Geodemogrpahy"?

-Combines demographics with geography -PRIZM provides detailed segment profiles by zip code based on geodemography and lifestyle.

What is the difference between a durable good and a nondurable good?

-Durable- consumer products that provide benefits over a period of months, years, or even decades. -Nondurable- consumed over the short term.

What is meant by Geotargeting?

-Geographically customized web advertising that feeds local ads to users. -Underscores much paid search advertising on Google and other search engines

RACE & ETHNICITY: How is the demographic makeup of American society changing along race and ethnicity groups? How are RACE & ETHNICITY used to segment margins?

-Hispanics make up 18% of US population -Hispanics are responsible for 50% of US population growth since 2000 -By 2050, its predicted that non-Hispanic whites will make up just less than 50% of US population

Who originated the concept of "The Tipping Point"? What does this concept mean? Be able to apply the concept to examples in the marketing of new products.

-Malcolm Gladwell -the point when a product's sales price from a slow climb to an unprecedented new level. -change occurs quickly when the process reaches the "moment of critical mass"; the moment when an epidemic of demand sweeps through a population life a contagious virus.

What is the Long Tail Concept? (apply examples).

-New approach to segmentation -Potential for success by marketing products that only a few people want -Works well for Internet Marketers that do not need to stock all the items they sell in a traditional retail store -Examples: Amazon.com and Netflix.com

What is product positioning? Repositioning? How are perceptual maps used to identify product positions?

-Product Positioning- is the process by which marketers seek to influence how particular product is perceived in the minds of customers relative to competing offerings. -Repositioning- commonly used to change the brand image. Establishes a new position in response to market changes. -Perceptual Maps- visually describes product positioning

SOCIAL CLASS: what variables are used to rank society by SOCIAL CLASS? How is SOCIAL CLASS used to segment markets?

-Variables include income, occupation, education, family, background, etc. -Many consumers buy according to an image they'd like to portray, not their actual level -Aspiration Reference Groups

What is a product in generic terms?

-a "bundle of consumer benefits" -can be an item, a service, an idea, a person, or a place.

How does the FTC define a "new product"

-a product must be entirely new or changed significantly to be called "new" -a product may be called "new" for only 6 months.

What is an AIO Inventory?

-activities, interests, and opinions

What are the determining factors of social class?

-family background -occupation -education -income

FAMILY LIFE CYCLE: How is FAMILY LIFE CYCLE used to segment markets? What is meant by "consumer socialization" as it pertains to family influences consumer behavior?

-family needs change over time -different product categories ascend or descend in importance over the life cycle -Consumer socialization takes place within the family

How are usage occasions applied to Behavioral Segmentation (apply examples).

-online shopping- only 8% of internet users account for 85% of online advertising "clickthroughs"

---Millennials or Generation Y: I-n addition to the general characteristics, also study the following:

-over 75 million -first generation to group up with a computer -heavily influenced by social media, user generated content, mobile coupons and content marketing -more ethnically and racially diverse than older generations -prefer experiences over possessions -by 2020, they will be responsible for 30% of all retail sales -they are on course to be the most educated generation

What is a slotting fee? A failure fee?

-slotting fee- fee paid to the retailer by the producer to get the new product on the retail shelf. -failure fee- penalty fee paid to the retailer by the producer if the new product does not produce the sales it promised.

What is VALS? (You do not need to the know the 8 categories but understand in general how this tool is used for psychographic segmentation).

-values and lifestyles -ideals, achievements, and self-expression

---Generation Z

1. Children- influential in family-related purchases of over $1.2 trillion/year 2. Tweens- this group, along with teens spend nearly $5000/year of their own money on cosmetics, fast foods, entertainment, etc. 3. Teens- reachable through social media, content marketing, on-demand services, Internet.

What are the 2 types of Behavioral Learning concepts covered in class as it pertains to marketing? (Be able to define and apply each learning concept to actual marketing examples).

1. Classical Conditioning- the pairing of an unconditional stimulus (that evokes a natural response) with a neutral stimulus (that does not elicit a response). In time, after repetitive pairings, the neutral stimulus will evoke the same response as the unconditioned stimulus. Examples include a girl on the beach with a beer. 2. Operant Conditioning- the learning that occurs as the result of rewards or punishments.

What are the 3 types of product innovations? (Be able to apply examples).

1. Continuous- modification to existing products like Aleve 2. Discontinuous- must create mar change in the way people live. Customers have to learn a great deal in order to use it right. 3. Dynamically Continuous- modification to an existing product

What are the 4 types of consumer products? (Be able to describe their characteristics and apply examples.)

1. Convenience Products- typically nondurable goods or services bought frequently with minimal effort. Consumers are not brand loyal to convenience products. Milk, bread, impulse products, gum 2. Shopping Products- Goods and services for which consumers purchase less frequently and will spend time and effort to gathers information on price, produce, attributes, and product quality. Computers, TVs, appliances 3. Specialty Products- have unique characteristics that are important to buyers at almost any price. Very brand loyal. 4. Unsought Products- goods and services for which a consumer has little awareness or interest until a need arises. Retirement plans, life insurance for the young.

What are the 3 layers of the product concept? (Be able to apply examples to each layer>)

1. Core product- basic benefits the product will provide. (basic benefits, cars (transportation, carrying cargo). 2. Actual product- physical good or delivered service that supplies the benefits. (features, package, brand, engine size, color, interior design). 3. Augmented product- actual product plus supporting features such as warranty, repair, installation, customer support. (warranty, delivery, credit, customer problem policies, free oil changes).

Social influences on consumer decisions: Be able to distinguish between culture, subculture and microculture. Apply examples to consumer decisions.

1. Culture- represents the shared values, beliefs, customs, and tastes produced or practiced by a group of people (weddings an funerals). 2. Subculture- a group that coexists with other groups within a larger culture. Members share a distinctive set of beliefs, characteristics, or common experience. (Religions) 3. Microcultures- groups of individuals who identify based on a common activity or art form (games of thrones, candy crush)

What are the 5 types of B2B products (apply examples),

1. Equipment- is used in daily operations. 2. Maintenance, Repair, and Operating- goods are consumed relatively quickly 3. Raw Materials- are products of fishing, lumber, agricultural, and mining industries used to manufacture finished goods. 4. Processed Materials and Special Services- produced by firms when they transform raw materials from their original state. Those which are essential to the organization buy are not a part of the actual production of a product. 5. Component Parts- manufactured goods or subassemblies of finished items that firms need to complete their own goods.

What are the 5 requirements for successful segmentation?

1. Have members with similar product needs/wants who are different from members of other segments 2. Be measurable in size and purchasing power 3. Be large enough to be profitable 4. Be reachable by marketing communications 5. Have needs the marketer can adequately serve

What are the 4 methods that marketers use to classify products?

1. How long products last 2. Intended use of the product 3. How consumers buy products 4. How business buy products

What are the 7 phases of New Product Development? (Know the phases in order, and know what happens during each phase)

1. Idea Generation- marketers use a variety of sources to come up with ideas for new products. 2. Product Concept Development and Screening- product ideas are tested for technical and commercial success. 3. Marketing Strategy Development- developing a plan including identifying the target market and developing strategies for the four Ps. 4. Business Analysis- the product's commercial viability is assessed. 5. Technical Development- Engineers work to develop and refine a working prototype. 6. Test Marketing- complete marketing plan is tested in a small geographic area similar to the larger market or via a simulated market test. 7. Commercialization- new product is launched into the market

What are the 5 categories of the Product Diffusion Process? (Know the correct sequence of adopters, the characteristics of each consumer category, the percentages for each category, and at what stage of the product life cycle each consumer group is usually purchasing.)

1. Innovators- 2.5%; extremely adventurous, risk takers, well-educated, younger, higher income. 2. Early Adopters-13.5%; concerned about social acceptance, more are opinion leaders or influencers, responsible for the long-range success of a product. 3. Early Majority- 34%; signals a general acceptance of the innovation 4. Late Majority- 34%; older, conservative, lower than average education and income. 5. Laggards- 16%; price conscious, suspicious of change, lower education/income

Know and understand the 3 types of reference group? Which two are more influential in consumer behavior than the third?

1. Membership 2. Aspiration 3. Dissociative

Be able to apply marketing examples in each level of Maslow's Hierarchy of Needs.

1. Physiological- Quaker Oat Bran- "Its the right thing to do." 2. Safety- Allstate Insurance- "You're in good hands with Allstate" 3. Belongingness- Pepsi- "You're in the Pepsi generation." 4. Ego Needs- Royal Salute Scotch- "What the rich give the wealthy" 5. Self-Actualization- U.S. Army- "Be all you can be."

Know 5 steps of Consumer Decision-Making Process in order

1. Problem Recognition 2. Information Search 3. Evaluation of Alternatives 4. Product Choice 5. Post-purchase Evaluation

Be able to identify the 5 factors that affect the rate of product adoption among consumers. How does each of these factors relate to FASTER product adoption?

1. Relative Advantage- if consumers perceive superior benefits, there will be faster adoption. 2. Compatibility- if a product is consistent with existing cultural values, practices, and norms, there will be faster adoption. 3 Complexity- If a product is difficult to understand and use, thee will be slower adoption. 4. Trialability- if the product can be sampled easily with no cost, there will be faster adoption. 5. Observability- A more visible product will drive more word-of-mouth communication and therefore lead to faster adoption.

What are the 3 steps in the Target Marketing Process in order?

1. Segmentation 2. Targeting 3. Positioning

What are the 4 methods of choosing a targeting strategy. (Be able to define each strategy and apply each one to examples) THIS IS IMPORTANT

1. Undifferentiated Targeting- appealing to a broad spectrum of people. 2. Differentiated Targeting- developing different products that appeal to different and separate customer groups. 3. Concentrated Targeting- offering one or more products to a single segment. 4. Custom Marketing Strategy- tailors specific products to individual customers.

How has time poverty as a situational influence among American consumers led to marketing opportunities( (Examples)

A sense of time poverty has led marketers to fulfill a consumer need: - 1-hour photo labs - drive-thru pharmacies - "Faster download times" - fast food restaurants - shopping online

What is a target market?

Consumer group with similar needs to which a company focuses its marketing plan.

What are the 3 major ways that marketers segment markets?

Demographics, psychographics, and behavior

Which of the 5 categories of Adopters include MOST opinion leaders or influencers?

Early Adopters

What are the 4 variations of the Consumer Decision-Making Process? (Be able to identify examples of each.)

Extended, Limited, Habitual, and Impulse

What are the 6 stages of the Product Adoption Process? Know the stages in order and know the typical marketing strategies that occur during each stage).

From base to top: 1. Awareness- massive advertising 2. Interest- may use teaser advertising 3. Evaluation- provide information to customers about how the product can benefit them 4. Trial- demonstrations, samples, trial-size packages 5. Adoption- make the product available, provide product use information 6. Confirmation- reinforce the customer's choice through advertising, sales promotion, and other communications

Know the 5 levels of Maslow's Hierarchy of Needs in order.

From base to top: 1. Physiological 2. Safety 3. Belongingness 4. Ego Needs 5. Self-Actualization

What is meant by the term "psychographics"?

Groups people according to psychological and behavioral similarities.

What is the difference between Internal and External Search during the Information Search?

Internal Search- consumers search memory and environment for information. External Search- If information is inadequate, consumers seek out additional sources.

What is Cognitive Dissonance as it pertains to Step 5 (Post-purchase Evaluation)?

It is common after a purchase, a consumer may feel doubt or anxiety about the purchase decision.

What is Cognitive Learning? (Be able to apply this to marketing example).

Learning that stresses the importance of internal mental processes and that views people as problem solvers. (More thinking involved).

How is the study of lifestyle used in marketing?

Lifestyle reflects a pattern of living. Marketers seek to describe people according to activities, interests, and opinions. AIO Inventory.

Gender: How is GENDER used to segment markets?

Many products appeal to one sex or the other. Changing roles of men and women in society. Examples include SHE beer specifically targets female brew drinkers.

What is Sensory Marketing?

Marketing techniques that link distinct sensory experiences such as unique fragrance with a product or service.

What are the conclusions that have been drawn regarding subliminal perception use and effectiveness/ineffectiveness in marketing?

Most consumer behavior experts have concluded that such methods aren't effective.

Be able to identify examples of psychographic segmentation.

NIKE's ad that says (We are all witnesses." -"We sell to passions and states of mind, not by age, address or ethnicity."

What is meant by the term Heuristics? Be able to identify examples of common heuristics used by consumers during Step 4 (Product Choice).

Rules of thumb (mental shortcuts) used by individuals to arrive at good decision with less mental effort. Examples include price equals quality, brand loyalty, and country of origin.

What is VALS?

Segments US adults into 8 distinct types- or mindsets- using a specific set of psychological traits and key demographics that drive consumer behavior.

What is meant by the term "Influencer Marketing"? Why is this type of marketing on the rise today?

These consumers look at each other and their favorite personalities who have huge followings on social media.

What is an AIO Inventory?

activities, interests, and opinions

What is an innovation?

anything that customers perceive as new and different

What are the advantages and disadvantages of test marketing (during Phase 6)?

costly, lose confidentiality to competition, and jamming the test

-----User-generated Content (UGC)

includes the millions of product-related comments, reviews, photos, images, and videos posted online by consumers mainly (but not entirely) through social media sites.

-----Content Marketing

involves marketing products through the creation of valuable and relevant content to appeal to a specific target market. In essence, the product becomes part of the story (content) instead of an advertiser that sponsors the story.

What is a national rollout?

most products are introduced into the country gradually, a little at a time, and not overnight.

What is an opinion leader/influencer in consumer behavior and marketing?

people who influence others' attitudes or behaviors because other perceive them as possessing expertise about the product. -they have high interest in product category -impart both positive and negative product information -are among the first to buy new products -celebrity spokespersons are one form of opinion leaders

Be able to identify examples of geographic segmentation

peoples preferences often vary by their geographic location -IKEA, teams, cracker barrel, sun glasses

What is meant by the terms "convergence" as a dynamically continuous innovation? (Be able to apply examples of this).

the coming together of two or more technologies to create a new system

What is meant by "jamming the test" in a test market?

when a competitor tries to sabotage a company test market