business chapter 11

Behavioral Segmentation

*Behavioral variables* include mainly behaviors, such as heavy users, situation buyers (like holiday season), or specific purpose.

Demographic Segmentation

*Demographic variables* describe the populations by identifying traits such as age, income, etc.

Geo-Demographic Segmentation

*Geo-demographic variables* are a combination of geographic and demographic traits, and is becoming the most common.

Psychographic Segmentation

*Psychographic variables* such as lifestyles, interests, and attitudes can affect marketing.

Ways a firm can increase value

- Develop an entirely new product that performs better - Add a benefit of shopping conveinience - Offer price reductions - Offer information that explains how a product can be used in new ways

The Marketing Environment

- Political-Legal Environment: - Sociocultural Environment: - Technological Environment: - Economic Environment: - Competitive Environment:

Determinants of demand

1. Income 2. Consumer preference 3. Number of buyers 4. Prices in related goods 5. Expectation of future

Determinants of supply

1. Production cost 2. Technology 3. Number of sellers 4. Expectation for future prices

Brand extention

A company's use of a national brand on several additional related products.

Marketing plan

A detailed strategy for focusing marketing efforts on customers' needs and wants. It begins when a company identifies a customer need and develops a product to meet it.

Product

A product is a good, service, or idea that is designed to fill a customer's need or want. Producers often promote particular features of products in order to distinguish them. This is known as *product differentiation*, the creation of a feature or image that makes a product differ from existing products to attract customers.

Licensed brands

Brand-name product for whose name the seller has purchased the right from an organization or individual.

Private brands

Brand-name product that a wholesaler or retailer has commissioned from a manufacturer.

Branding

Branding is a process of using names and symbols to communicate the qualities of a particular product made by a particular producer.

Business marketing

Business marketing involves organizational or commercial markets that fall into 3 categories. Industrial market: The *industrial market* includes businesses that buy goods to be converted into other products or that are used during production. Re-seller market: *Re-seller markets* consist of intermediaries, including wholesalers and retailers, that buy and resell finished goods. Government and institutional market: The *institutional market* consists of NGOs such as hospitals, churches, etc. that use supplies and equipment for services. The *government market* consists of governmental items needed such as construction, services, etc.

Geographic Segmentation

Buying decisions can be affected by where people live. *Geographic variables* are the geographic units from countries to neighborhoods that might be considered in the segmentation strategy.

What Customers can Buy

Consumer Goods: Physical products purchased by consumers for personal use, tangible to you. Industrial Goods: Physical products purchased by companies to product other products Services: Products with intangible features, such as information, expertise, or an activity that can be purchased Ideas: Marketers also promote ideas

Differences between B2B and B2C Buyer-Seller relationships

Consumer-seller relationships are often impersonal, short-lived, and one time interactions. In contrast, B2B situations often involve frequent and enduring relationships.

Consumer product classifications

Convenience goods and services (consumed rapidly and regularly, inexpensive, requires little thought) Shopping good and services (purchased less often, a little more expensive, usually compared by customers) Specialty goods and services (purchased infrequently, expensive, consumer spends good deal of time to find perfect one)

Value

Customers buy products that offer the best value when it comes to meeting needs. The value of a product compares the product's benefits with its costs. It is given by the formula V=Benefits/Costs

Development Process

Developing a product can take years, due to approval processes for legal purposes such as the FDA. Speed to market is something important to consider with a product as well.

Differences between B2B and B2C

Differences between consumer and business purchasing - Industrial buyers buy in bulk. - B2B buyers negotiate purchase terms and reach formal contracts because of the high money at stake. - Industrial buyers are often experts in the products they buy.

Economic Environment

Economic conditions influence marketing plans for product offerings, pricing, and promotion strategies. For example, a company may market a specific product during the holiday season a lot more than during the summer.

Variables in market segmentation

Geographic Demographic Geo-Demographic Psychographic Behavioral

Marketing managers

Marketing managers are responsible for planning and implementing all activities that result in the transfer of goods or services to its customers

Stages in the PLC

Introduction: This stage begins when the product reaches the marketplace. Growth: If the new product attracts enough people, sales start to climb rapidly. Marketers lower price slightly to continue promotional expenditures to increase sales. Maturity: Sales growth starts to slow. Increased competition eventually forces price cutting, increasing of advertising, and promotional expenditures. Decline: Sales and profits continue to fall, as new products in the introduction stage take away sales. Advertising is ended, but the product may linger to provide some profits.

Product Mortality Rates

It is estimated that it takes 50 product ideas to generate one that hits the market. This is because of the high amount that are introduced every year; more than 180k new household, grocery, an drugstore items are brought to market annually. 9/10 new products will fail.

Competitive Environment

Marketers must convince buyers that they should purchase one company's products rather than those of some other sellers. In order to market this correctly, they must first understand which of these competition they face. - Substitute Product: Another product may not look alike, but can fulfill the same need. - Brand Competition: Occurs between similar products and is based on buyers' perceptions of the benefits of products offered by particular companies. For example, which search engine to use. - International Competition: Domestic markets versus foreign competitors.

Relationship Marketing

Marketing strategy that emphasizes building lasting relationships with customers and suppliers. Stronger relationships can result in greater satisfaction, loyalty, and retention.

Types of utility

Marketing strives to provide four kinds of utility - Form utility: Marketing has a voice in designing products with features that customers want - Time utility: Marketing creates a time utility by providing products when customers will want them - Place utility: Marketing creates a place utility by providing products where customers will want them - Possession utility: Marketing creates a possession utility by transferring product ownership to customers by setting selling prices, setting terms for customer credit payments, and providing ownership documents

National brands

National brands are produced by, widely distributed by, and carry the name of the manufacturer. These brands are often widely recognized by customers because of national advertising campaigns.

Technological Environment

New technologies create new goods and services. New products coming to existence usually make old products obsolete. This change in lifestyle must be marketed.

Marketing

Organizational function and a set of process for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders

Customer Relationship Management

Organized methods that a firm uses to build better information connections with clients, so that stronger company-client relationships are developed. Two methods for CRM are data warehousing, and data mining.

Packaging

Physical container in which a product is sold, advertised, or protected.

Place

Place refers to distribution, which is concerned with getting products from producers to consumers. Producing a product in the proper outlet, for example, requires decisions about activities. Firms must make decisions about the *channels* through which they distribute products.

Political Legal Environment

Political activities have profound effects on marketing. For example, the emergence of alternative energy has influenced companies to market themselves as green.

The consumer buying process

Problem recognition: Process begins when consumer recognizes a problem or need. Information seeking: Consumers seek information on their problem. Consumers develop an *evoked set* *(consideration set)* which is the group of products they will consider buying Evaluations of alternatives: By analyzing product attributes (price, quality, etc.), consumers compare products before deciding on the one to purchase. Purchase decision: Consumers' buying decisions are usually based on rational motives, emotional motives, or both. *Rational motives* involve the logical evaluation of product attributes, cost, quality, and usefulness. *Emotional motives* involve nonobjective factors which include sociability, imitation of others, and aesthetics. Post purchase evaluation: What happens after the sale is important, marketers want customers to be happy after buying products so they are more inclined to buy them again.

Inexpensive ways to gain brand awareness

Product Placement: A promotional tactic for brand exposure in which characters in TV, film, music, magazines, or video games use a real product with a brand visible. Buzz Marketing: Relies on the word-of-mouth to spread 'buzz' about a particular product or idea. Viral marketing: New form of buzz marketing which relies on social networking on the Internet to spread information like a virus from person to person. *Corporate blogs* are now being used to spread messages that stimulate chat about products to target markets.

Product lines

Product line refers to the group of products that are *closely related* because they function in a similar manner or are sold to the same customer group

Product positioning

Product positioning refers to the process of fixing, adapting, and communicating the nature of the product itself.

Organizational product classifications

Production items (goods or services used in production process) ex. tea for manufacturing tea bags Expense items (goods or services consumed within a year by firms producing other goods or supplying other services) ex. oil, building maintenece Capital items (permanent goods and services, life expectancy more than a year, purchased infrequently) ex. buildings, equipment, etc

Marketing mix

The marketing mix consists of Product Price Promotion Place

Promotion

Promotion refers to the techniques for communicating information about products. This includes advertising, sales promotions, etc.

The influences on consumer behavior

Psychological: Motivations, perceptions, ability to learn, attitudes. Personal: Lifestyle, personality, and economic status. Social: Family, opinion leaders, and groups of friends. Cultural: Way of life

Target markets

The emergence of marketing concepts and customers' needs has made marketers think in terms of target markets. Target markets are groups of people or organizations with similar wants and needs who can be expected to show interest in the same products.

Sociocultural Environment

Social values force companies to develop and promote new products. For example, organic foods are in growing demand and stores have started to market their foods as organic.

Brand loyalty

Some consumers exhibit high brand loyalty, the purchase of products because they are satisfied with their performance.

Brand Awareness

Successful branding leads to brand awareness - the brand name that first comes to mind when you consider a particular product category. The costs of establishing a brand mean that many others will fail.

Market segmentation

Target marketing requires market segmentation, the process by which you divide a market into categories of customer types.

Product mix

The group of products a firm makes available is known as the product mix

Pricing

The pricing of a product is the best price at which to sell it. The prices must support a variety of costs, but also attract customers.

Value package

The product marketed as a bundle of value-adding attributes, including a reasonable cost.

Product features

The qualities, tangible and intangible, that a company builds into its products.

Speed to Market

The quicker a product moves from the lab to the marketplace, the more likely it is to survive. Speed to market refers to the strategy of introducing new products to respond quickly to customer or market changes.

Consumer behavior

The study of the decision process by which people buy and consume products.

Integrated marketing strategy

These 4 P's blended together is an integrated marketing strategy, which ensures that they blend together so they are compatible with one another and the company's non-marketing activities.

Product life cycle

When a product reaches market, it enters the product life cycle; a series of stages through which it passes during its commercial life.

Utility

the ability of a product to satisfy a human want or need.