Marketing Test #2

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In evaluating different market segments, a firm should look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources. TRUE OR FALSE?

True

Psychographic segmentation:

divides buyers into different groups based on social class, lifestyle, or personality traits

Behavioral segmentation:

divides buyers into groups based on their knowledge, attitudes, uses, or response to a product o Occasions o Benefits sought o User status o Usage rate o Loyalty status

Cost based pricing

setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk o Cost-based pricing is product driven

Product life cycle strategies- Introduction

slow sales growth and profits are nonexistent

Product life cycle strategies- Maturity

slowdown in sales growth and profits level off or decline

Social classes

society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors -measured by a combination of occupation, income, education, wealth, and other variables

Fad

something that comes up fast but also fades quickly

Market Targeting

select the segment or segments to enter

Product mix- length

# of items within product line

Product mix- width

# of product lines

Product mix- depth

# of versions of each product in the line (Cherry, Strawberry, Vanilla)

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

25,000

Major Stages in New-Product Development- idea screening

: identify good ideas and drop poor ideas • R-W-W Screening Framework: o Is it real? o Can we win? o Is it worth doing?

Lifestyle

A person's pattern of living as expressed in his or her psychographics

Characteristics Affecting Consumer Behavior: Personal Factors

Age and life-cycle stage. Occupation affects the goods and services bought by consumers.

The Buyer Decision Process for New Products:

Awareness, Interest, Evaluation, Trial, Adoption

Psychological Factors Beliefs and Attitudes: Belief

Belief is a descriptive thought that a person has about something based on: knowledge, faith, and opinion

________ is the differential effect that knowing the brand name has on customer response to the product and its marketing.

Brand equity

Model Of Consumer Behavior

Consumer buyer behavior: the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption. Consumer market: all of the personal consumption of final consumers.

______ are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort.

Convenience products

Briefly describe monopolistic competition. Provide an example.

EXAMPLES: Bars/nightclubs, Coffee shops, Gas stations, Hotels. competitors provide products or services that are similar but can be differentiated from each othe. each company has a product or products that are similar to their competition but are not perfect substitutes. It's the small differences.

Characteristics Affecting Consumer Behavior: Social Factors

Family is the most important consumer-buying organization in society

Types of Buying Behavior: Complex buying behavior

High Involvment, significant differences between big brands. EX. HOUSE/CAR

Types of Buying Behavior: Dissonance-reducing buying behavior

High involvement, few differences between brands EX. DIAMOND RING

The Buyer Decision Process: Evaluation of Alternatives

How the consumer processes information to arrive at brand choices

Choosing a Differentiation and Positioning Strategy: Image

Image Differentiation is the particular image or 'personality' it acquires is created by its logo and other symbols, its advertising, its atmosphere, its events and personalities.

Choosing a Differentiation and Positioning Strategy: Channel

Indirect Marketing The Selling of Products Through a Distribution Channel That Includes Wholesaler & Retailers.

Types of Buying Behavior: Habitual buying behavior

Low involvement, Few Differences. EX. SALT AND PEPPER

Types of Buying Behavior: Variety-seeking buying behavior

Low involvement, significant difference. EX. cookies and crackers

Requirements for Effective Segmentation

Measurable, Accessible, Substantial, Differentiable, Actionable

When firms test that market...

New product with large investment • Simple line extension • Uncertainty about product or marketing program

Groups & Social Networks- word of mouth and buzz marketing

Opinion leaders are people within a reference group who exert social influence on others • Also called influential or leading adopters • Marketers identify them to use as brand ambassadors o Online social networks are online communities where people socialize or exchange information and opinions

Choosing a Differentiation and Positioning Strategy: People

People differentiation is important when consumers deal directly with employees.

The Buyer Decision Process: Information Search Sources of Information

Personal sources—family and friends ▪ Commercial sources—advertising, Internet ▪ Public sources—mass media, consumer organizations ▪ Experiential sources—handling, examining, using the product

A ________ is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price ranges.

Product Line

Choosing a Differentiation and Positioning Strategy: Product differentiation

Product differentiation determines what sets one product apart from other similar products, and it uses that difference to drive consumer interest.

When firms don't test the market...

Simple line extension • Uncertainty about product or marketing program • Copy of competitor product • Low costs • Management confidence

The Buyer Decision Process: Purchase Decision

The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors

Brand equity

The differential effect that knowing the brand name has on customer response to the product or its marketing. ▪ Powerful brand forms the basis for building strong and profitable customer relationships

The Buyer Decision Process: Post-Purchase Decision

The satisfaction or dissatisfaction that the consumer feels about the purchase

Market Differentiation

differentiate the market offering to create superior customer value

Product line

a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

Factors Influencing Consumer Behavior: Personal

age & life cycle stage, occupation, economic situation, lifestyle, personality & self-concept

Consumer market

all of the personal consumption of final consumers

What is a product?

anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want

Psychological Factors Beliefs and Attitudes: Attitudes

describe a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea

To the extent that a company can differentiate and position itself as providing superior customer value, it gains

competitive advantage

Product mix

consists of all the products and items that a particular seller offers for sale.

Shopping products:

consumer products and services that the customer compares carefully on suitability, quality, price, and style o Furniture, cars, appliances

Specialty products

consumer products and services with unique characteristics or brand identification for which a significant product of buyers is willing to make a special purchase effort o Medical services o Designer clothes o High-end electronics

Unsought products

consumer products that the consumer does not know about or knows about but does not normally think of buying o Life insurance o Funeral services o Blood donations

Factors Influencing Consumer Behavior: Culture

culture, subculture, social class

Style

different styles of music

Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________.

everyday low pricing

What is the most important consumer buying organization in society?

family

Psychographics

focus on the interests, affinities, and emotions of a group of people - exactly the things marketers need to understand to best position their product.

Groups & Social Networks-Aspirational Groups:

groups an individual wishes to belong to

Subcultures

groups of people within a culture with shared value systems based on common life experiences and situations -Hispanic American, African American, Asian American, Cross-Cultural

Groups & Social Networks- Reference Groups:

groups that form a comparison or reference in forming attitudes or behavior

Groups & Social Networks- Membership Groups

groups with direct influence and to which a person belongs

Which of the following consumer buying behaviors is related to conditions of low- consumer involvement and little significant brand difference?

habitual buying behavior

New-product development starts with ________.

idea generation

Demographics

includes the basics: age, gender, race, location, and profession.

Which of the following stages of the PLC is characterized with high promotional expenditures that result from an effort to create consumer awareness?

introduction

Major Stages in New-Product Development- business analysis

involves a review of the sales, costs, and profit projections to find out whether they satisfy the company's objectives

Major Stages in New-Product Development- product development

involves the creation and testing of one or more physical versions by the R&D or engineering departments • Requires an increase in investment • Shows whether the product idea can be turned into a workable product

Adoption process:

is the mental process an individual goes through from first learning about an innovation to final regular use.

When the size, purchasing power, and profiles of a market segment can be calculated, the market is ________.

measurable

When it first opened stores across the United States, Bateman's, an office supply chain store, had the best product selection, the best service, and the lowest prices compared to other office supply chain stores. As a result, Bateman's captured a significant chunk of the market in the short run. Which of the following positioning strategies did Bateman's most likely use?

more for less

Factors Influencing Consumer Behavior: Psychological

motivation, perception, learning, beliefs and attitudes

Major Stages in New-Product Development- concept development and testing

o Product idea: an idea for a possible product that the company can see itself offering to the market o Product concept: a detailed version of the idea stated in meaningful consumer terms o Product image: the way consumers perceive an actual or potential product o Concept testing refers to testing new-product concepts with groups of target consumers

The Buyer Decision Process: Need Recognition

occurs when the buyer recognizes a problem or need triggered by: ▪ Internalstimuli ▪ Externalstimuli

Choosing a Differentiation and Positioning Strategy: Service differentiation

ordering ease, delivery, customer training, customer consulting, installation

Market Positioning

position the market offering in the minds of target customers

Product life cycle strategies- Growth

rapid market acceptance and increasing profits

Factors Influencing Consumer Behavior: Social

reference groups, family roles & status

Major Stages in New-Product Development- marketing strategy development

refers to the initial marketing strategy for introducing the product to the market o Marketing strategy statement includes: • Description of the target market • Value proposition • Sales and profit goals

Product mix- consistency

relatedness of products

Creating Value for Target Customers- Market Segmentation

requires dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes

Product life cycle strategies- Product development

sales are zero and investments costs mount

Product life cycle strategies- Decline

sales fall off and profits drop

Convenience products and services

that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort o Newspapers, candy, fast food

What is a price?

the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.

Consumer buyer behavior

the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption

Major Stages in New-Product Development- commercialization

the introduction of the new product

What is Culture?

the learned values, perceptions, wants, and behavior from family and other important institutions and is the most basic cause of a person's wants and behavior

Target return pricing

the price at which the firm will break even or make the profit it's seeking

Break-even pricing

the price at which total costs are equal to total revenue and there is no profit

Major Stages in New-Product Development- test marketing

the stage at which the product and marketing program are introduced into more realistic marketing settings • Provides the marketer with experience in testing the product an entire marketing program before full introduction • When firms test market:

Major Stages in New-Product Development- idea generation

the systematic search for new-product ideas

Selective distortion

the tendency for people to interpret information in a way that will support what they already believe

Selective attention

the tendency for people to screen out most of the information to which they are exposed

Selective retention

the tendency to remember good points made about a brand they favor and forget good points about competing brands

Fashion

trends/ unqiue to you

value based pricing

using the buyers' perceptions of value, not the sellers cost, as the key to pricing o Value-based pricing is customer driven

Which of the following is the most likely circumstance for a company to decide to do little or no test marketing?

when the costs of developing and introducing the product are low


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