GB 214 Marketing Exam
Markup Percentage on Price
(Selling Price - Cost )/Selling Price
Markup Percentage on Cost
(Selling Price - Cost)/Cost
Personal Selling
1-to-1 communication Customized, interactive, relationship building tool Add great value when product is complex Buyer can feel need to listen and respond Most expensive promo tool (high labor costs), salesperson consistency
Promotional Mix
1. Advertising - paid form of nonpersonal promotion of ideas, product or service by an identified sponsor 2. Public Relations - build favorable publicity with public (corp. image, unfavorable events) 3. Sales Promotions - Short-term incentives to encourage purchase 4. Direct Marketing - direct connection with targeted consumers for immediate response 5. Personal Selling - personal presentation by sales force to sell and build customer relationships 6. Digital Media - leverage traditional promotional tools with word of mouth and social networks
Personal and Psychological Influences on the Buyer
1. Age 2. Life cycle - student, young, professional, family, senior 3. Lifestyle - activities, interests, opinions 4. Occupation 5. Income 6. Personality - intro/extrovert, confidence level (VALS) 7. Motivation - internal state driving need satisfaction (Maslow's Hierarchy - physiological, safety, belonging, self-esteem, self-actualization) 8. Perception - select, organize, interpret info 9. Learning 10. Attitudes - likes/dislikes, beliefs
Marketing Channel Design Process
1. Analyze consumer needs 2. Set channel objectives Identify: * Service level want to provide * Functions want to perform * Where want product or service is sold Decisions based on: * Company goals/size * Product (requirements, PLC) * Economy/financial situation * Competition * Legal restrictions 3. Identify channel alternatives Evaluate channel types, number of channels desired and responsibilities of each Channel types:t retailers (warehouse clubs, department stores, franchises), sales agency, food brokers, distributors Multichannel, horizontal, Vertical Marketing System Coverage (intensive vs. selective), control (indirect vs. direct), cost (transportation, processing, packaging, handling) 4. Evaluate alternatives
Layers of the Product
1. Core Product - benefits 2. Actual Product (primary features)- packaging, brand name, design 3. Augmented Product (secondary features) - after-sale service, customer service, installation, payment terms, delivery, warranty
Pricing Strategy
1. Cost based (price floor) - covers product costs 2. Competition based - based on competitor strategies and pricing, marketing strategy/objectives/mix, nature of the market and demand
Sociocultural Influences on the Buyer
1. Culture - society, family, and institutions impart basic values, beliefs, customs → marketing tailor products to cultural values 2. Subculture: shared characteristics, common beliefs/experiences (religious/ethnic groups) 3. Micro-culture: ID based on a common activity or art form 4. Social Class: determined by wealth, education, occupation, income Membership Groups - direct influence and a group to which a person belongs Aspirational Groups -- groups an individual wishes to belong to Reference Groups - groups that form a comparison or reference in forming attitudes or behavior
Market Research Process
1. Define the problem - examine secondary research and set research objectives DATA AGES QUICKLY Assess currency, accuracy, relevance, and impartiality 2. Develop research plan - method and measurement 3. Implement plan - collect data (watch, ask, experiment) 4. Interpret/report findings - interpret statistical analysis and report in a usable format
Business Buying Behavior
1. Environmental stimuli - price, place, promotion, product, competitive, economic, technological, cultural, political 2. The buying center (interpersonal and individual influences) and the buying organization (organizational influence) 3. Buyer responses - product or service choice, supplier choice, order quantities, delivery and time, service terms, payment Complex buying decisions * Longer, more formalized procedures * Interactions among people at many level * Large sums of money * Technical and economic considerations Supplier networks: * Systematic development of partners * Buyer and seller more dependent on each other Business demand is derived from consumer demand
Customer Value Based Pricing
1. Every day low prices 2. High-low prices (coupons) 3. Value added pricing
Buying Behavior Process
1. How we buy - purchase decision process 2. Why and what we buy - influences
Promotional Planning
1. Identify target audience - knowledge of target market and clear marketing objectives help determine the promotional mix 2. Establish communications objectives Differentiate: * Position product to stand out, build brand image/relationships Inform/educate (new goods): * Establish awareness * Assists in buying decision Persuade: * Consumers to choose your brand * Influence perceptions * Change brand attitudes 3. Determine budget 4. Design promotional mix * What - target wants to hear/needs to hear (copy/content) Informational - how help improve target's life Emotional - satisfy emotional need * How - style, tone * Where - target wants/can to receive the message * When - target wants/can to receive the message Continuous or pulsing schedule 5. Evaluate effectiveness
Distribution Coverage
1. Intensive Distribution - product(s) in as many outlets as possible Examples: candy and toothpaste 2. Exclusive Distribution - limited number of dealers/retailers with exclusive rights Examples: luxury automobiles, high-end jewelry, prestige clothing 3. Selective Distribution - in wide range of outlets, but not all, to maintain some control Examples: television and home appliances
Macroenvironment
1. Legal 2. Demographic 3. Cultural 4. Economic 5. Natural 6. Technological 7. Political
Product Line Decisions
1. Line filling - add items to present range * Sizes, flavors, styles * Increases customer value * Block competitors 2. Line stretching - lengthen beyond current range * Downward: cater to lower-end segments * Upward: add prestige to existing products
Positioning Stages
1. Map competitor position - solve problems, provide benefits, deliver social meaning Perceptual map - based on consumers perceptions and identifies a spot that carves out a competitive position 2. Define competitive advantage - satisfy consumer needs better, superior image/service/brand personality Positioning statement: To (target segment and need), our (brand) is (concept) that (point of difference). 3. Finalize marketing mix - target market, positioning, 4P's 4. Evaluate and modify
Communication Models
1. One to One - personal selling, direct marketing 2. One to Many - advertisement, public relations, sales promotion 3. Many to Many - digital, word of mouth, brand ambassadors
Marketing Mix
1. Price 2. Product 3. Promotion 4. Place
Purchase Decision Process
1. Problem recognition 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post-purchase behavior
Consumer Purchase Decision Process
1. Problem recognition - perceive need Consumer sees a gap b/w current and desired state based on internal/external stimuli 2. Information search - seek value Internal search - scan memory for previous experience External search sources: * Personal: family/friends - persuasive * Commercial - controllable * Public: ratings, social networks 3. Evaluation of alternatives - access values Understand evaluation process: * Gut feel, research, other's opinions * Consideration sets: features/ benefits, brands, substitutes * Attribute rating: value, performance, design, price * Personality, perception 4. Purchase decision - buy value POP display, salespeople, in-store experiences to appeal to consumer senses, values, and emotions 5. Post-purchase behavior - determine value Customer satisfaction an customer dissonance Customers will be satisfied when their perceptions of actual performance exceeds the expected performance
Distribution Channel Functions
1. Provide time, place, and ownership utility 2. Provide logistics and/or physical distribution 3. Create efficiencies of the flow of goods from producer to customer and reducing the number of transactions
Influences on why and what we buy
1. Psychological influences 2. Sociocultural influences 3. Marketing mix influences 4. Situational influences
Consumer Buying Process
1. Purchase decision process - how we buy 2. Influences - why and what we buy Understand decision-making: 1. Approach to select, purchase, use products 2. Internal, situational, and social factors influence buyer responses (purchase/relationship behavior)
Situation Influences on the Buyer
1. Purchase task - how involving is it (technically, emotionally)? 2. Social surrounding - who is with you 3. Physical surrounding - calm/chaotic, loud/quiet, open/closed 4. Temporal - amount of time you have 5. Antecedent state - mood, hunger
Pricing Tactics
1. Single Product - odd/even, prestige, payment 2. Multiple Products - price bundling, captive pricing, product line pricing, loss leader pricing 3. Price Bundling 4. Captive Pricing
Price Planning
1. Understand Target Perceptions 2. Examine Pricing Environment Economy: Recession/Boom, Inflation, Interest Rates, Consumer Confidence Competition: Leader/Follower, Number of Players Competitive Actions Consumer Trends: Cultural, Demographic, Societal Changes Other Factors: Commodity, Raw Material Changes, Weather Changes 3. Set Pricing Objectives * Profit, sales, market share * Competitive effect * Customer satisfaction * Image enhancement 4. Estimate Demand * Elastic: price change has a large effect on amount demanded * Inelastic: price change little or no effect on amount demanded 5. Determine Costs * Variable Costs: production costs tied to units produced (raw materials, ingredients, packaging, parts, line labor) * Fixed Costs: production cost unchanged with # of units produced (rent, mortgage, equipment, utilities, salaries) * Average Fixed Cost: total fixed cost / # of units produced 6. Choose Pricing Strategy 7. Develop Pricing Tactics
Requirements for Building Relationships
1. Who are your customers? 2. What do customers value? 3. What do they want to buy? 4. How do they prefer to interact?
Multichannel Distribution Systems
A firm sets up two or more channels to reach customer segments Advantages: 1. Coverage expansion 2, Tailored to segment's needs Disadvantages: 1. Less control 2. Generates conflict
Customized Targeting Strategy
A personalized approach
Three Part Targeting
A strategy to evaluate each market segment's potential and determine which are worthy of investment 1. Evaluate market segments - measurable, profitable, reachable, serviceable Increase knowledge to better satisfy wants/needs * Who they are * Where they live * What they buy * Where they shop * How to reach them (psychographics) * Estimate future potential 2. Develop target market segment profiles *Geographic *Psychographic *Demographic * Behaviors 3. Choose a targeting strategy * Undifferentiated * Differentiated * Concentrated * Customized
Targeting
A strategy to evaluate the potential for each segment and determine which ones are worthy of investing resources
Cost-plus (markup) Pricing
Adding a standard markup to product cost
Dynamic Pricing
Adjusting prices continually to meet the characteristics and needs of individual customers and situations Examples: online and surge pricing
Branding
An important asset Benefits (efficient & effective) * Lower MK costs * Facilitate shopping/short cut Association with: * Quality * Images * Emotions * Loyalty
Marketing
An organizational function & a set of processes for: 1. Creating, communicating & delivering value to customers 2. Managing customer relationships in ways that benefit the organization and its stakeholders Exchanges: * Transactional: short term, motivated by self-interest * Collaborative: long term supportive relationships (bond emotionally)
Customer Relationship Management
Analyze customer "touch points" from all sources Hyper-personalize each customer's experience to drive engagement, garner loyalty, boost revenue, drive costs down 1. Sales force contacts 2. Customer purchases 3. Service and support calls 4. Website visits 5. Satisfaction survey 6. Credit and payment interactions 7. Research studies
Price
Assignment of value and amount target consumer must exchange to receive product/service Capturing Value 1. Cost 2. Demand 3. Competition 4. Customer Wants/Needs 5. Product Life Cycle 6. Opportunity Cost 7. Substitution
Value of Targeting
Balance efficiency (same offer to all) with effectiveness (customized offer to meet individual needs) Drives the product's positioning MK/OM capabilities, PLC, market variability, competitors' strategies
Value Proposition
Benefits that the brand promises to deliver to satisfy consumer's needs 1. Superior to competition 2. Solve problems or improves target's situation Tailor value proposition to attract, engage, and delight Perceived customer value = total benefits/total costs
Causal Market Research
Cause/effect (experimental)
Place
Channel members partner to efficiently deliver product/service to the target customer when and where desired Delivering Value 1. Distribution Channels 2. Value Delivery Network 3. Market Coverage 4. Product Assortment 5. Locations 6. Inventory 7. Transportation
Marketing Medium
Communication vehicles that reach target audience TV, radio, social media, magazine, company website, billboard, coffee mug Challenges: 1. Target market exposure to medium 2. Does product fit/conflict with medium
Store Brands
Created & owned by a reseller of a product
Segmentation Variales
Demographics (who): 1. Age 2. Life 3. Gender 4. Ethnicity 5. Income 6. Education Pyschographics (why): 1. Personality 2. Motives 3. Lifestyles 4. Activities 5. Entertainment Geographic (where): 1. Region 2. Urban/suburban/rural 3. Market density 4. Climate Behavioral (how): 1. Volume usage (80/20) 2. Benefit expectations 3. Brand usage and loyalty 4. Price sensitivity
Positioning
Develop a MK strategy to influence how a particular market segment perceives a p/s in comparison to competition 1. Pricing Strategy 2. Promotion Strategy 3. Supply Chain Strategy 4. Product Strategy
Marketing Channel Length
Direct: company to consumer → greatest control and least complexity Indirect: one or more channel members between the company and the consumer → flow of ownership, payment information, and promotion
Paid Media
Display ads, sponsorships, paid key word searches Traditional advertising, less trusted by consumers
Value of Segmentation
Effectively satisfy like-minded consumers needs Efficiently manage customer relationship with tailored MK mix offering Dividing potential category users in different ways helps to see: 1. If there any needs not being met 2. If our products can meet a segment's needs better than competitors 3. Predictive purchasing behavior
Disintermediation
Eliminate channel intermediaries to sell/buy products direct
Advertising
Engage customers, change customer's perceptions, reaches masses of buyers at a low cost per exposure Longer term: build image Impersonal
Model of Buyer Behavior
Environment: 1. Marketing stimuli - price, product, place, promotion 2. Economic 3. Social 4. Technological 5. Cultural Buyer's Black Box: 1. Buyer's characteristics 2. Buyer's decision process Buyer's Response: 1. Buying attitudes and preferences 2. Purchase behavior: what the buyer buys, when they buy, where the buyer buys, and how much the buyer buys 3. Brand and company relationship behavior
Product Life Cycle
Explains how market responds and marketing activities change over product's life 1. Introduction stage 2. Growth stage 3. Maturity stage 4. Decline stage
Marketing Intelligence
External data gathered through systematic collection and analysis of public info using monitoring data sources 1. Marketing commercial data: Neilsen, Mediamark 2. Employees 3. Internet, websites, blogs, reviews, social media 4. Newspapers, publications, and trade shows 5. Online databases: U.S. Census, SEC filings, Patent Office Secondary marketing information source (from existing data)
Segmenting Business Markets
Geographic characteristics 1. Region 2. Population density Demographic characteristics 1. National American Industry Classification System code 2. Size of the company 3. Annual sales 4. For profit or non-profit Benefits sought (product, service) Buying situations: type of buy and who buys
Marketing Information System (MIS)
Goal: Transform data (raw unorganized facts) into information (interpreted data) 1. Find the right information 2. Turn raw data into customer insight 3. Create customer value Companies gain a competitive advantage when they harness info from many sources Internal Data: company data External Data: marketing intelligence Primary Data: marketing research
Market Planning Process
Goal: Value creation First Step: Understand marketplace (macro and micro environment) and customer wants/needs Successful market planning depends upon good marketing information 1. Situation Analysis - Research and analyze internal/external environments 2. Marketing Objectives - Sales, market share, profit, ROI, etc. 3. Marketing Strategies - Segmenting, Targeting, Positioning, Marketing Mix (4Ps) Strategies 4. Implement and Revise
Introduction Stage
Goal: awareness and trial Product: basic product, narrow line Place: build selective distribution Price: high to recover costs or low to penetrate Promotion: gain awareness, inform, and educate Customers: innovators Competitors: few Innovation is critical for growth and is a continuous process Successful introductions are difficult because of high R&D costs, high slotting fees, and fast obsolescence rates
Growth Stage
Goal: grow market share and build loyalty Product: new versions, flavors, or sizes Place: build distribution and channels Price: promotional pricing to build share Promotion: aggressive and stresses value proposition Customers: early adopters Competitors: growing number Successful introductions are difficult because of cannibalization, getting shelf space, and positioning
Decline Stage
Goal: harvest profits, delete or sell brand, or assess to re-invigorate Product: core offerings and best-sellers Place: cut unprofitable outlets Price: cut price Promotion: decrease to protect profits Customers: laggards Competitors: declining number
Maturity Stage
Goal: maximize profits, defend loyalty, and innovate/extend Product: full product line to multiple markets Place: maintain and maximize Price: match or cut to defend share Promotion: reminder advertising and reward programs Customers: middle majority Competitors: stable
Exploratory Market Research
Helps define problem, suggest hypotheses (observational, focus groups, interviews) 1. Observation - ethnographic, eye-tracking 2. In-depth interview 3. Focus groups
Decoding
How consumers understand the communication, draw conclusions (lack of copy/text), use their existing perceptions Source and receiver need a mutual frame of reference
Sales Promotion
Incentives designed to build interest or encourage product purchase during a specified period Attract consumer attention Offer strong purchase incentives, rewards quick response Short-lived effects Can aim at both consumers (target small segments) and/or channel members Coupons, prizes, point of purchase
Promotion
Integrated Marketing Communications (IMC) are coordinated activities used to influence, inform, persuade and remind the target market Communicating Value 1. Sales Promotion 2. Advertising 3. Personal Selling 4. Word of Mouth 5. Public Relations 6. Direct Marketing 7. Interactive 8. Viral 9. Social Media
National Brands
Marketed under manufacturer's own name
Undifferentiated Targeting Strategy
Marketing mix designed for general needs of overall mass market Efficient → same offer to all
Concentrated Targeting Strategy
Niche offering targeted to needs of one segment
Supply Chain Partner Functions
Offer transaction expertise Efficiency (decreased cost, time, effort) Effectiveness (increased value, customer satisfaction) Help complete information, promotion, contact, and negotiation Help fulfill physical distribution, financing, risk taking, customer feedback, and returns
Value Delivery Network
Partnership that add value Improve the performance of entire system, optimize flows Integrate company, suppliers, distributors & customers Can deliver competitive advantage
Microenvironment
People/groups very close to the business, who have an impact on the customer experience 1. Customers 2. Suppliers 3. Marketing Intermediaries 4. Competitors
Direct Marketing
Phone, catalog, (e-) mail, often combined w/coupons, ads Target to individual with personal message Measurable: response rates Test with small scale (less visible to competition) Build long-term relationships Personalized, interactive Less interactive, "junk mail"
Brand Name
Portray an image or describes how product works Symbolism to imply product contains beneficial characteristics Easy to say, spell, read, remember Fit target, product benefits, customer culture, legal requirements
Strong Brand
Position brand clearly in target's mind Strong brand identity - name, logo, packaging, personality Product strategies/offerings managed during PLC Engage on emotional level
Market Research
Primary data collected for a specific purpose - asking about attitudes, awareness, intentions, behaviors Data collected by firm when a company needs to make a specific decision May include demographics, psychological info, awareness, attitudes, and opinions 1. Exploratory - help define problem, suggest hypotheses (observational, focus groups, interviews) 2. Descriptive - questions on attitudes, preferences, buying behavior 3. Causal research - cause/effect (experimental)
Vertical Marketing System
Produce, wholesaler, and retailer are unified 1. Corporate VMS - common single ownership 2. Contractual VMS - contracts of independent firms (franchises) 3. Administered VMS - one member wields leverage/power over other channel member for total channel cooperation
Product
Products and services developed to satisfy a target consumer's need or want Creating Value 1. Name 2. Branding 3. Assortment 4. Quality 5. Features and Benefits 6. Design 7. Packaging 8. Sizes 9. Services 10. Warranties
Goal of Marketing
Provide value to the right consumer: 1. Create the right product 2. Communicate the right promotion 3. Deliver the right place and the right price
Descriptive/Survey Market Reserach
Questions on attitudes, preferences, buying behavior Used to describe market potential or demographics and attitudes of consumers 1. Survey
Marketing Distribution Channel
Route product or service follows from producer to final consumer that consists of firms (functions) that help make product or service available to the user Upstream: raw material suppliers Downstream: retailers/wholesalers Distribution channel functions increase efficiency of the flow of goods from producer to customer: 1. Breaking bulk 2. Creating assortment 3. Transportation and storage 4. Facilitating functions 5. Risk taking functions 6. Communication and transaction functions
Product Line
Same brand name: * Well established brand known for high quality * Group of products w/ similar function * Same target market * Marketed through same outlets * Similar price ranges Benefits: market synergy and competitive
Internal Data Sources
Secondary marketing information source (from existing data) Internal information is usually: 1. accessed more cheaply and quickly than other information sources 2. is usually insufficient for making marketing decisions
Break even (target return) Pricing
Setting a price to break-even on costs of making and marketing the product
Brand Personalities
Should reflect the positioning strategy 1. Sincere - down-to-earth, honest, wholesome 2. Excitement - daring, spirited 3. Sophistication -upper class, charming 4. Competence - reliable, intelligent 5. Ruggedness - outdoorsy, tough
Differentiated Targeting Strategy
Target two or more segments with distinct marketing mix that meet target's needs
Digital Media
Targeted, interactive, immediate & personalized 1. WOM: un/paid product promotion 2. Buzz MK: attention stunt 3. Viral MK: create entertaining/informative message in hopes shared consumer to consumer 4. Guerrilla MK: unexpected message placement 5. Social Media 6. Mobile Apps and Geospatial Platforms
Marketing Message
The actual communication content that source transmits to receiver Forms: 1. Advertising 2. Sales promotion 3. A salesperson's pitch 4. Infomercial 5. Word of mouth
Segmentation
The process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics 1. Demographics 2. Pyschographics 3. Behavioral
Public Relations
Timely info about p/s, people, companies placed in media (news, magazines) Build good relations with stakeholders (employees) Enhance company reputation (link to corp. strategy) Growing importance: media costs, consumers more skeptical about MK
Product Mix
Total set of all product lines a firm offers
Horizontal Marketing System
Two or more companies at one level join together for new marketing opportunity
Co-branding
Use established brand names of two different companies on same product Two brands form partnership to market new product Creates more value andrecognition
Licensing
Use names and symbols created by other companies for a fee Delivers instant brand name recognition and is proven to appeal to target
Integrative Marketing Communications
Using different tools in the promotional mix to influence target's attitudes/behaviors Media choice to match target's habits 4Cs: consistent, clear, compelling, coordinated
Owned Media
Websites, blogs, social media accounts Company controlled, effective relationship building
Earned Media
Word of mouth, buzz on social media Most credible to consumers, no company control