Chapter 9: Marketing providing value to customers

Identify the four Ps in the marketing mix and explain how it relates to the promotion mix.

(1)Product—developing a product that meets the needs of the target market. (2) Price—setting a price for the product. (3) Place—distributing the product or getting it to a place where customers can buy it. (4) Promotion—informing potential buyers about the product. As the term suggests, the promotion mix reflects efforts to perform the tasks entailed by the fourth P of the marketing mix. The four elements of the promotion mix are advertising, personal selling, public relations/publicity, and sales promotion. A well-rounded promotion mix is vital to the success of any marketing strategy.

Describe—in the order in which they're generally used—the two types of data sought by marketing researchers.

1. Marketers generally begin by looking at secondary data—information already collected, whether by the company or by others, that pertains to the target market. 2. Then, with secondary data in hand, they're prepared to collect primary data—newly collected information that addresses specific questions.

Describe the consumer buying process.

After experiencing need recognition, people then undertake an information search about the product. At this point, they evaluate the information that they've gathered. After they've purchased the product, they perform a postpurchase evaluation that may continue for some time.

What's the basic function of an advertising agency?

An advertising agency is a marketingconsulting firm that develops and executes promotional campaigns for clients. Agency professionals work on either the "creative" side or the business side.

Describe the babyboom generation.

Baby boomers began arriving in 1946 following World War II. Psychologists attribute to them such characteristics as "individuality, tolerance, and self-absorption." There are 70 million of them, and they're still a major marketing force.

What does distribution entail?

Distribution entails all activities involved in getting the right quantity of a product to your customers at the right time and at a reasonable cost.

How do marketing researchers use focus groups?

With a focus group, you can bring together a group of individuals familiar with a product or service and ask them questions. A trained moderator can come away with valuable information about customer responses to both a product and a marketing strategy.

As a form of promotion, the newspaper article is best characterized as _____. a. public relations/publicity b. community outreach c. personal selling d. advertising

a.

Lowfat or "light" dairy products are probably in the _____ stage of the product life cycle. a. introduction b. growth c. maturity d. decline

b.

Monthly contests constitute a _____ strategy. a. public relations/publicity b. sales promotions c. personal selling d. advertising

b.

Public relations and publicity, sales promotions, personal selling, and advertising are all part of Forever Yours' _____ mix. a. communityoutreach b. promotion c. marketing d. customerservice

b.

The clerks at Forever Yours contribute to promotion through _____. a. public relations/publicity b. sales promotions c. personal selling d. advertising

c.

The dairy industry still uses cow's milk as the base for its varied products. Over time, however, competition from other types of milk has forced changes in the traditional American taste for milk, ice cream, cheese, cottage cheese, yogurt, frozen yogurt, and sherbet. Currently, for example, soy milk and other related items are making inroads in this traditional market. _____ has driven the dairy industry to reduce milkfat content from whole milk to 2% to 1% to no-fat over the last few decades. a. Government pressure b. Foreign competition c. Consumer healthconsciousness d. Rising cost

c.

Whole or 4% milk is in either the _____ or _____ stage of the product life cycle. a. introduction / growth b. growth / maturity c. maturity / decline d. decline / moribund

c.

Buttermilk, for which today's younger market has a strong distaste, is in the _____ stage of the product life cycle. a. introduction b. growth c. maturity d. decline

d.

In this scenario, the product life cycle actually has _____. a. no significance b. no real application c. a basic application d. much relevance

d.

Roger Levin owns and manages Forever Yours Jewelers in a Midwestern city. Sales clerks are especially trained in meeting customer needs, and the Levin family itself is committed to promoting the image of the store and its products and services. Levin buys frequent spots on a local radio station, and holds monthly giveaway contests to give away $200 items of the winner's choice. Founded by Levin's grandfather, the familyowned business has been around for 65 years and enjoys an enviable reputation in the community. Recently, an article appeared in the local newspaper revealing Levin's contributions to local charities. Running radio commercials is a(n) _____ strategy. a. mediacontrol b. wordofmouth c. personalselling d. advertising

d.

The principle of satisfying customer needs while meeting organizational goals is called the strategic concept.

Fasle

What does just-in-time production mean?

Having adopted the practice of just-in-time production, a company typically requires suppliers to deliver materials to its facilities just in time to go into the production process. This strategy cuts the time and cost entailed by moving raw materials into and out of storage.

Explain the political and regulatory environment in which businesses operate.

The political and regulatory environment includes federal, state, and local bodies that set rules for or restrictions on the conduct of businesses. The purpose of regulation is to protect both consumers and businesses. Businesses favor some regulations (such as patent laws) while chafing under others (such as restrictions on advertising).

"Culture" refers to a set of accepted values.

True

A profit margin is the amount that a company earns on each unit sold.

True

Although current research shows the concept to be unfounded, members of Generation X were once thought of as "slackers."

True

Distribution entails all activities involved in getting the right quantity of your product to your customers at the right time and at reasonable cost.

True

Getting your product mentioned in the newspaper is free promotion.

True

If a product survives the growth stage, it will probably remain in the maturity stage for a long time.

True

If the new line of furniture is of aboveaverage quality, prestige pricing might well work because customers will probably assume that it's of very high quality.

True

Marketers must keep abreast of technological advances to ward off threats to product profitability.

True

Marketing includes everything that organizations do to satisfy customer needs.

True

Prestige pricing sets prices artificially high to foster the impression of a high-quality product.

True

Psychographic segmentation classifies consumers on the basis of individual lifestyles as they're reflected in people's interests and values.

True

Psychological influences affect the way we select, organize, and interpret information when buying a product.

True

Sales promotions encourage customers to buy something quickly.

True

Setting a price for a product is a tool of the marketing mix.

True

Skimming pricing, which would also help Bilby recover some of his initial costs, is a viable option because Stevens has virtually no competition.

True

Supply chain management is the process of integrating all the activities entailed by the supply chain.

True

Technology optimists are those who embrace new technology.

True

The purpose of customer-relationship management is retaining customers.

True

The requirement that food labels reveal the trans-fat levels of foods reflects the influence of the political and regulatory environment.

True

The supply chain is the flow that begins with a company's purchase of raw materials and ends in the sale of its finished product to an end user.

True

The traditional practice of cost-based pricing is worth a try if Bilby thinks it important to establish a market for his ten stores.

True

To deliver high customer value, a company must monitor and improve its value chain.

True

When consumers prefer and insist upon buying Dell products, they're demonstrating brand loyalty.

True

When we identify a specific group of consumers that have particular interests in our product and the means to buy it, we've identified our target market.

True

When you buy something as a reflection of your economic status, you're acting under social influences.

True

When you're studying the information that you've gathered about a product, you're said to be in the evaluation step of the five-step consumer buying process.

True

Wholesalers are sometimes called "distributors."

True

With penetrating pricing, a company would initially charge a low price on a product to "get its foot in the door."

True

With skimming pricing, a company starts off with the highest price that keenly interested customers will pay.

True

Within the last ten years, the workforce has become more diverse.

True

Using demand-based pricing, you work backwards, figuring out how much consumers are willing to pay for a product and then subtracting an amount to cover your profit.

False

When a company does something negative, such as selling a prescription drug with unexpected side effects, the public relations department can do little to rectify the damage to the firm's image.

False

With odd-even pricing, marketers price a product according to its cost to the manufacturer plus a reasonable profit.

False

Describe the product life cycle.

During the introduction stage, most companies invest in advertising to make consumers aware of a product. In its growth stage, the company focuses on building sales. Sales eventually stabilize during the maturity stage, which usually lasts for a long time. As the product enters the decline stage, profits turn into losses.

A company's supply chain includes more activities than does its value chain.

False

A consumer market consists of buyers who want a product for use in making other products.

False

According to the U.S. Department of Transportation, trains are the transportation of choice for most goods.

False

Although repeat customers tend to spend less, they're much more likely to recommend a company to other people.

False

Automation is the process of physically moving or carrying goods during production, warehousing, and distribution.

False

Between the two types of data, marketers generally begin by looking at primary data—previously collected information pertaining to the target market.

False

Brand managers can control the competitiveness of a product.

False

Demographic segmentation divides a market into groups based on such criteria as values, interests, opinions, and lifestyles.

False

If a company has to store a large volume of its product over an extended period, it will probably store the product in a distribution center.

False

It appears that, at this point, penetration pricing is Bilby's best strategy.

False

Marketing is the business function that focuses on advertising and selling products.

False

Online surveys are easier to answer but get poorer response rates than telephone surveys.

False

Stevens Outdoor Furniture has just introduced a new line of products in the southeastern United States. Owner James Bilby discovered the new line, which includes outdoor furniture and other lawn items, on a recent vacation to California. The market is extremely promising because none of his main competitors stocks this type of furniture. He's concerned, however, about pricing because shipping costs will drive his prices higher than those charged by stores closer to the manufacturer's West Coast factory. Initial promotion and advertising costs, as well as warehousing expenses, are also on Bilby's mind. He's called a teleconference with his ten store managers to develop a pricing strategy that must take effect immediately. Demand-based pricing would never work in this situation.

False

The LEGO brand is moving through the product stage that marketers call the death stage.

False

The customer value triad consists of three factors: quality, service, and availability.

False

The first step in the fivestep consumer buying process is searching for information about a product.

False

The marketing mix is often regarded as the least important ingredient of marketing

False

The process of physically moving or carrying goods during production, warehousing, and distribution is called just-in-time automation.

False

Though once extremely important, the Baby Boomer generation is now declining as a major marketing force.

False

To prevent a competitor from introducing a product with the same name as its own product, a company must take out a patent by registering the name with the U.S. Patent and Trademark Office.

False

Your trademark consists of what you say about the product on your packaging, not only identifying the product but providing information about the contents of the package.

False

What is psychographic segmentation?

Psychographic segmentation classifies consumers on the basis of individual lifestyles as they're reflected in people's interests, activities, attitudes, and values.

How do sales promotions work?

Sales promotions include promotional giveaways such as free samples, contests, buyone / getone-free incentives, and money-off coupons. They can be cheaper than advertising and can encourage customers to buy something quickly.