MKt 309 Final Exam

Purchasing Power is...

usually referred to as the cost of living.

Environmental Management is...

when a company implements strategies that attempt to shape the external environment within which it operates.

Individual Brand: Family Brand:

Using different brand names for different products. Family Brand: Marketing several different products under the same brand name.

Social Class (IMPACTS)

A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms. -Occupation -Income -Education -Wealth -Other variables (Indicates which medium to use for advertising ) (Helps determine the best distribution for products)

Target Market

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the need of that group, resulting in mutually satisfying exchanges.

Undifferentiated Targeting Strategy

A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix. Advantage: Potential savings on production and marketing costs Disadvantages: Unimaginative product offerings Company more susceptible to competition

80/20 Principle

A principle holding that 20 percent of all customers generate 80 percent of the demand.

Multisegment Targeting Strategy

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each. Advantage: Greater financial success Economies of scale Disadvantages: Higher costs Cannibalization

Concentrated Targeting Strategy

A strategy used to select one segment of a market for targeting marketing efforts. Advantage: Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning Disadvantages: Segments too small, or changing Large competitors may market to niche segment Niche : One segment of a market.

Simultaneous Product Development

A team-oriented approach to new-product development where all relevant functional areas and outside suppliers participate in the development process.

Advantages of Manufacturers' Brands: Advantages of Private Brands: Advantages of Captive Brands:

Advantages of Manufacturers' Brands: Heavy consumer ads by manufacturers Attract new customers Enhance dealer's prestige Rapid delivery, carry less inventory If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer Advantages of Private Brands: -Earn higher profits on own brand -Less pressure to mark down price -Manufacturer can become a direct competitor or drop a brand/reseller -Ties customer to wholesaler or retailer -Wholesalers and retailers have no control over the intensity of distribution of manufacturers' brands Advantages of Captive Brands: -No evidence of store's affiliation -Manufactured by third party -Sold exclusively at the chain -Can ask price similar to manufacturer's brands

Advertising Campaign: Advertising Objective:

Advertising Campaign: A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. Advertising Objective: Identifies the specific communication task that a campaign should accomplish for a specified target audience during a specified period.

Family Life Cycle

Age Marital Status Children

Buying Centers Roles in Buying Centers

All those people in an organization who become involved in the purchase decision. Roles in Buying Centers: 1. Initiator 2. Influencers 3. Gatekeepers 4. Decider 5. Purchaser 6. Users

Federal Legislation

Regulate competitive environment Regulate pricing practices Control false advertising

Bases for Segmentation

-Geography -Demographics 1. Age 2. Gender 3. Income 4. Ethnic background 5. Family life cycle -Psychographics Market segmentation on the basis of personality motives lifestyles geodemographics. -Benefits Sought The process of grouping customers into market segments according to the benefits they seek from the product. -Usage Rate Dividing a market by the amount of product bought or consumed.

The Importance of Market Segmentation

-Markets have a variety of product needs and preferences that can better define customer needs. Decision makers can define objectives and allocate resources more accurately.

Pricing Objectives

1-Status Quo -Maintain existing prices -Meet competition's prices 2-Sales-Oriented -Market Share 3-Sales Maximization ----Rather than strive for market share, sometimes companies try to maximize sales. ----------Uses a short-term objective to maximize sales ----------Ignores profits, competition, and the marketing environment -----------May be used to sell off excess inventory 4- Profit-Oriented: -Maximize Profits -Satisfactory Profits -Target Return on Investment

Demographic

1. Age 2. Gender 3. Income 4. Ethnic background 5. Family life cycle

Four Factors Influencing Buying Decisions

1. CULTURE -Value:An enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. -Language -Myths -Customs 2. INDIVIDUAL -Gender -Age/Family Life Cycle("young singles" and "young married with children.") -Personality, Self-Concept, and Lifestyle 3. SOCIAL -Reference Groups ---Direct-Face to Face ----Indirect -Opinion Leaders ---First to try new products and services out of pure curiosity. May be challenging to locate. -Family Members 4. PSYCHOLOGICAL -Perception -Motivation -Learning -Beliefs & Attitudes

Three Characteristics of a Market

1. Composed of people or organizations that have wants and needs that can be satisfied by particular product categories. 2. They have the ability to buy the products they seek. 3. They are willing to exchange their resources, usually money or credit, for desired products. A group of people that lacks any one of these characteristics is NOT a market.

Three Types of Competitive Advantage

1. Cost ---Being the low-cost competitor in an industry while maintaining satisfactory profit margins. 2. Product Service/Differentiation ---When a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition. Examples include: -Brand names -Strong dealr network -Product reliability Image Service 3. Niche --A niche competitive advantage seeks to target and effectively serve a single segment of the market. A nice competitive advantage: Is used by small companies with limited resources May be used in a limited geographic market

External Environment Facing Global Marketers

1. Culture --The common set of values shared by its citizens that determine what is socially acceptable. ------1. Language and cultural idioms 2. Customs and traditions -----3. Values and expectations of sales presentations 2. Natural Resources ----Shortages in natural resources create: --International dependencies -Shifts of wealth -Inflation and recession -Export opportunities if resources are abundant -Stimulus for military intervention 3. Economic Development 4. Political Structure 5. Demographic Makeup --Population density --Urban or rural --Age-

The Marketing Research Process

1. Define Problem 2. Plan Design/Primary Data 3. Specify Sampling Procedure 4. Collect Data 5. Analyze Data 6. Prepare/Present Report 6. Follow up

Steps in Setting the Right Price on a Product

1. Establish pricing goals 2. Estimate demand, costs, and profits 3. Choose a price strategy ----A basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle. SKIMMING PENETRATION STATUS QUO PRICING 4. Fine-tune with pricing tactics --Discounts --Geographic pricing --Other pricing tactics

Goals and Tasks of Promotion

1. Informative Promotion: -Increase awareness -Explain how product works -Suggest new uses -Build company image 2. Persuasive Promotion: -Encourage brand switching -Change customers' perceptions of product attributes -Influence immediate buying decision -Persuade customers to call 3. Reminder Promotion: -Remind customers that product may be needed -Remind customers where to buy product -Maintain customer awareness

Consumer Decision-Making Process (Five-step process used by consumers when buying goods or services)

1. Need Recognition -Result of an imbalance between actual and desired states. (From External and Internal Stimuli) 2. Information Search ---Internal Information Search: Recall information in memory ---External Information search : -------Seek information in outside environment -----Nonmarketing-c nontrolled ------Marketing-controlled 3. Evaluation of Alternatives ---Analyze product attributes ---Use cutoff criteria ---Rank attributes by importance 4. Purchase --Ultimately, the consumer has to decide whether to buy or not to buy. 5. Post-purchase behavior

New-Product Development Process

1. New Product Strategy -A plan that links the new-product development process with the objectives of the marketing department, the business unit, and the corporation. 2. Idea Generation -Customers -Employees -Distributors 3. Idea Screening: The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's new-product strategy or are inappropriate for some other reason. 4. Business Analysis -Demand -Cost -Sales -Profitability 5. Development -Develop a prototype -Sketch a marketing strategy -Decide on packaging, branding, and labeling -Map out promotion, price, and distribution strategy -Examine manufacturing feasibility 6. Test Marketing: The limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. 7. Communication The process by which meanings are exchanged or shared through a common set of symbols. --Interpersonal Communication --Mass Communication NEW PRODUCT

Factors Determining the Level of Consumer Involvement

1. Previous Experience 2. Interest 3. Perceived Risk of Negative Consequences 4. Social Visibility

Major Categories of Business Customers

1. Producers 2. Resellers • Wholesalers • Retailers 3. Governments 4. Institutions • Schools • Hospitals • Colleges • Churches • Unions • Fraternal • Civic Clubs • Foundations • groups Nonbusiness organizations

Product and Promotion 1. Same Message/Change Product 2. Same Message/Change Product 3. Change Message/Same Product

1. Same Message/Change Product: PRODUCT ADAPTATION 2. Change Message/Same Product: PROMOTION ADAPTATION 3. Change Message/Change Product: PRODUCT INTERVENTION

Consumers can reduce dissonance by:

1. Seeking information that reinforces positive ideas about the purchase 2. Avoiding information that contradicts the purchase decision 3. Revoking the original decision by returning the product

Marketing is... American Marketing Association Definition of Marketing

An organizational activity, set of institutions, and processes. 1. philosophy 2. attitude 3. perspective 4. or a management orientation that stresses customer satisfaction. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Entails processes that focus on delivering value and benefits to customers, not just selling goods and services.

Stimulus Evoked Set

Any unit of input affecting one or more of the five senses: -Sight -Smell -Taste -Touch -Hearing Group of Brands, from an information search, from which a buyer can choose

Business Products

Are used to manufacture other products Facilitate an organization's operations Are resold to other customers

SWOT ANALYIS

Assessment of the organization's strengths, weaknesses, opportunities and threats

Basic Research Applied Research

Basic Research: Pure research that aims to confirm an existing theory or to learn more about a concept phenomenon. Applied Research: An attempt to develop new or improved products

Cost Competitive Advantage

Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

Brand Name: Brand Mark: Brand Equity: Global Brand

Brand Name: That part of a brand that can be spoken, including letters, words, and numbers Brand Mark: The elements of a brand that cannot be spoken Brand Equity: The value of company and brand names Global Brand: A brand where at least a third of the earnings come from outside its home country

Boston Consulting Group Portfolio Matrix

Build Hold Harvest Divest

Export Intermediaries: Buyer for Export Export Broker

Buyer for Export: -Assumes all ownership risks and sells globally for its own account. Export Broker: -Plays the traditional broker's role by bringing buyer and seller together. Export Agent: -Acts like a manufacturer's agent for the exporter in the foreign market.

Repositioning Why reposition established brands?

Changing consumers' perceptions of a brand in relation to competing brands. Why reposition established brands? 1. Changing Demographics 2. Declining Sales 3. Changes in Social Environment

Concept Test:

Concept Test: A test to evaluate a new-product idea, usually before any prototype has been created. Often successful for line extensions.

Continuous Media Schedule: Flighted Media Schedule: Pulsing Media Schedule: Seasonal Media Schedule:

Continuous Media Schedule: Advertising is run steadily throughout the period. Flighted Media Schedule: Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule: Advertising combines continuous scheduling with flighting. Seasonal Media Schedule: Advertising is run only when the product is likely to be used.

Types of Reference Groups

Direct-Face to Face -Primary, small informal group -Secondar, large formal group Indirect -Aspirational Group that someone would like to join Non aspirational Group which someone wants to avoid being identified with

Risk Levels for Five Methods of Entering the Global Marketplace

EXPORT: Sell domestically produced products to buyers in other countries LICENSING AND FRANCHISING:Legal process allowing use of manufacturing/patents/knowledge CONTRACT MANUFACTURING: Private-label manufacturing by a foreign country JOINT VENTURE: Domestic firm buys/joins a foreign company to create new entity DIRECT INVESTMENT: Active ownership of a foreign company/manufacturing facility

Public Relations

Evaluates public attitudes, identifies areas within the organization that public may be interested in, and executes a program to earn public understanding. Maintain a positive image Educate the public about the company's objectives Introduce new products Support the sales effort Generate favorable publicity

What Is a Product?

Everything, both favorable and unfavorable, that a person receives in an exchange. - Tangible Good - Service - Idea

Experiential Conceptual

Experiential: An experience changes behavior Conceptual: Not learned through direct experience

Countertrade

Form of trade: Part of payment for goods/services in the form of other goods or services

Environmental Scanning six major environmental forces:

Helps identify opportunities and threats. 1. Social -Attitudes -Values -Beliefs 2. Demographic -relate to buyer behavior -Demographic cohorts have their own needs, values, and consumption patterns. 3. Economic -Consumers' Income -Purchasing Power -Inflation -Recession 4. Technological 5. Political/Legal 6. Competitive

Competitive Factors

How many competitors? How big are competitors? How interdependent is the industry?

Marketing Implications of Perception

Important attributes Price Brand names Quality and reliability Threshold level of perception Product or repositioning changes Foreign consumer perception Subliminal perception

Primary Data

Information collected for the first time. Used for solving the particular problem under investigation.

Types of Co-branding

Ingredient Branding Cooperative Branding Complementary Branding

Categories of Adopters

Innovators Early Adopters Early Majority Later Majority Laggards

Major Types of Advertising Institutional Advertising: Product Advertising:

Institutional Advertising: Enhances a company's image rather than promote a particular product. Product Advertising: Touts the benefits of a specific good or service.

How Services Differ from Goods Intangible: Inseparable: Heterogeneous Perishable

Intangible: No physical object makes it hard to communicate benefits. Inseparable: Production and consumption are simultaneous, meaning the consumer takes part in production. Heterogeneous: Services depend on their employees for quality, which makes consistency difficult to achieve. Perishable: Services cannot be saved, and it is challenging to synchronize supply and demand.

Stages in the Product Life Cycle

Introductory stage: Price is high Growth stage: Price stabilizes Maturity stage: Price decreases Decline stage: Price decreases

Involvement Consumer Buying Decisions and Consumer Involvement

Involvement: The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.

Product Items: Lines: Mixes:

Items:A specific version of a product that can be designated as a distinct offering among an organization's products. Lines: A group of closely-related product items. Mixes: All products that an organization sells.

Labeling: Persuasive

Labeling: Persuasive -Focuses on promotional theme -Consumer information is secondary Labeling: Informational: -Helps make proper selections -Lowers cognitive dissonance

Marketing Channel: Channel Members:

Marketing Channel: A set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer. Channel Members: Negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer.

Components of Service Quality Reliability: Responsiveness: Assurance: Empathy: Tangibles:

Reliability: The ability to perform the service right the first time. Responsiveness: The ability to provide Assurance: The knowledge and courtesy of employees. Empathy: Caring, individualized attention to customers. Tangibles: The physical evidence of the service.

Marketing Research Problem: Marketing Research Objective: Management Decision Problem:

Marketing Research Problem: Determining what information is needed and how that information can be obtained efficiently and effectively. Marketing Research Objective: The specific information needed to solve a marketing research problem; the objective should be to provide insightful decision-making information. Management Decision Problem: A broad-based problem that uses marketing research in order for managers to take proper actions.

American Marketing Association Definition of Marketing

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Steps in Segmenting Markets

Markets are dynamic, so it is important that companies proactively monitor their segmentation strategies over time.

The AIDA Concept

Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message. Attention - The consumer becomes aware of a category, product or brand (usually through advertising) ↓ Interest - The consumer becomes interested by learning about brand benefits & how the brand fits with lifestyle ↓ Desire - The consumer develops a favorable disposition towards the brand ↓ Action - The consumer forms a purchase intention, shops around, engages in trial or makes a purchase

Negatives of Trade and Globalization Benefits of Globalization

Negatives ---Americans lost jobs ---Fear losing jobs --Outsourcing if workers don't accept pay cuts -Vulnerability to operations moving offshore Benefits -Expands economic freedom -Spurs competition -Raises productivity and living standards -Offers access to foreign capital, global export markets, and advanced technology -Promotes higher labor and environmental standards -Acts as a check on government power

Buying Situations: New to Buy: Modified Rebuy: Straight Rebuy:

New to Buy: Purchase of a product for the first time. Modified Rebuy: Purchaser wants some change in the original good or service. Straight Rebuy: Purchaser reorders the same goods/services with ought looking for new information or investigating other supplies

Categories of New Products

New-to-the-World New Product Lines Product Line Additions Improvements or Revisions Repositioned Products Lower-Priced Products

CRM Trends Product Differentiation:

One-size-fits all marketing no longer relevant Product Differentiation: A positioning strategy that some firms use to distinguish their products from those of competitors.

The Marketing Mix is...

PROUCT -Tangible goods -Ideas -Services -Everything, both favorable and unfavorable, that a person receives in an exchange. Business Product:A product used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other customers Consumer Product: A product bought to satisfy an individual's personal wants PRICE -Price is what a buyer must give up to obtain a product. --(SELLER) Price is Revenue --(CONSUMER) Cost of Something -The most flexible of the "4 Ps"—quickest to change -Competitive weapon PLACE -Product availability where and when customers want them -All activities from raw materials to finished products -Ensure products arrive in usable condition at designated places when needed PROMOTION -Role is to bring about exchanges with target markets by: -Informing -Educating -Persuading -Reminding Promotional Strategy: Advertising Public Relations Personal Selling: Planned presentation to one or more prospective buyers for the purpose of making a sale. ---Traditional Selling: persuade the buyer into a specific point of view; creates a win-lose outcome. ---Relationship Selling: Long-term relationships; creates a win-win outcome. Sales Promotion: Marketing activities—other than personal selling, advertising, and public relations—that stimulate consumer buying and dealer effectiveness. ---TRADE: Activities targeting a marketing channel member, such as a wholesaler or retailer. ----CONSUMER: Activities targeting the ultimate consumer. Social Media: Promotion tools used to facilitate conversations among people online.

Product Advertising Pioneering: Competitive: Comparative:

Pioneering: Stimulates primary demand for new product or category. Used in the PLC introductory stage. Competitive: Influences demand for brand in the growth phase of the PLC. Often uses emotional appeal. Comparative: Compares two or more competing brands' product attributes. -Used if growth is sluggish, or if competition is strong.

Positioning: Effective Positioning:

Positioning: Positioning: Developing a specific marketing mix to influence potential customers' overall perception or a brand, product line, or organization in general. Effective Positioning: 1. Assess the positions occupied by competing products 2. Determine the dimensions underlying these positions 3. Choose a market position where marketing efforts will have the greatest impact

Fixed Cost Contribution=

Price - AVC

Routine Response Behavior Limited Decision Making Extensive Decision Making

Routine Response Behavior: Little involvement in selection process Frequently purchased low cost goods May stick with one brand Buy first/evaluate later Quick decision Limited Decision Making: 1. Low levels of involvement 2. Low to moderate cost goods 3. Evaluation of a few alternative brands 4. Short to moderate time to decide Extensive Decision Making: 1. High levels of involvement 2. High cost goods Evaluation of many brands 3. Long time to decide May experience cognitive dissonance

General Electric Model

SBUs are split into Invest/Grow, Cautiously Invest, and Harvest/Divest Categories. These divisions are based on the Attractiveness of the Market and Business Position (How well positioned the org is to take advantage of market opportunities). Then SBUs with lower attractiveness are avoided unless already being served by company, middle attractiveness would be selectively maintained, and highly attractive SBUs are invested in.

When Services are Assessed: Search quality: Experience quality: Credence quality:

Search quality: More often applied to goods, assessed before purchase Experience quality: Assessed after purchase Credence quality: Assessed only with appropriate knowledge.

Selective Exposure

Selective Exposure: Consumer notices certain stimuli and ignores others Selective Distortion: Consumer changes or distorts information that conflicts with feelings or beliefs Selective Retention: Consumer remembers only that information that supports personal beliefs

Profit Maximization

Setting prices so that total revenue is as large as possible relative to total costs.

Alternatives to Test Marketing

Single-source research using scanner data Simulated (laboratory) market testing Online test marketing

Integrated Marketing Communications

The careful coordination of all promotional messages to assure the consistency of messages at every contact point where a company meets the consumer.

Public Relations-

The element in the promotional mix that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance.

Component Lifestyles

The practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle.

Diffusion

The process by which the adoption of an innovation spreads. Word of Mouth Direct from Marketer

Dumping

The sale of an exported product at a price lower than that charged for the same or a like product in the "home" market of the exporter. Dumping may occur as a result of exporter business strategies that include: 1. Trying to increase an overseas market share 2. Temporarily distributing products to overseas markets to offset slack demand at home 3. Lowering unit costs by exploiting large-scale production Attempting to maintain stable prices during periods of exchange rate fluctuations

Influences of Reference Groups

They serve as information sources and influence perceptions. They affect an individual's aspiration levels. Their norms either constrain or stimulate consumer behavior.

Transactional Functions: Logistical Functions: Facilitating Functions:

Transactional Functions: -Contacting/Promotion -Negotiating -Risk Taking Logistical Functions: -Physically Distributing -Storing -Sorting Facilitating Functions: -Researching -Financing

Product/Service Differentiators

When a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition. Examples include: -Brand names -Strong dealer network -Product reliability Image Service

measured by comparing income to the relative cost of a standard set of goods and services in different geographic areas, usually referred to as the cost of living.

a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.

Understanding Consumer Behavior

consumers make purchase decisions consumers use and dispose of product

Innovation Matrix

core-changes that use existing assets to provide added convenience