marketing final
External factors that influence consumers decision making.
(Chapter 5 - Consumer Behavior) External Factors - What influences external factors is purchase task, social surroundings, physical surroundings, temporal effects, antecedent states. These are called situational influences. Purchase task - Is the reason for engaging in the decision Social surroundings - Is the other people present when you are making your decision Physical surroundings - decor, music, etc. Is essentially what is around you when you purchase the object Temporal effects - time of day or amount of time available Antecedent state - consumers mood or money on hand
What is cognitive dissonance? Discuss an example of when this might occur.
(Chapter 5 - Consumer Behavior) Often a consumer is faced with highly attractive alternatives, you might think, "Which one should I have purchased" This feeling of postpurchase psychological tension or anxiety is called cognitive dissonance. eg.: when you buy a car (like Audi, you will consider should I buy BMW or Benz?) this feeling is cognitive dissonance. It will occur after you buy a product.
What are Porter's generic strategies? Identify a firm that uses each strategy.
1. What are Porter's generic strategies? Identify a firm that uses each strategy. Competitive Scope Cost Differentiation Broad Cost Leadership Strategy USPS, McDonald's, Costco, Campbell Soup Differentiation strategy Fedex, Wendy's, Starbucks, Southwest Airlines, Microsoft, General Mills Narrow Cost Focus Strategy Spirit Airlines, IKEA Differentiation focus strategy Subaru, Whole Foods, Maytag, Chobani Cost leadership strategy → focuses on reducing expenses and in return lowering product prices while targeting a broad array of market segments Campbell Soup has sophisticated product development well as supply chain systems which has lead to huge cost savings Differentiation strategy → requires products to have significant points of difference in product offerings, brand image, higher quality, advanced technology, advanced technology or superior service to charge a higher price while targeting a broad array of market segments General Mills stresses its nutritious, high-quality brands in reaching a diverse array of customer segments Cost focus strategy → involves controlling expenses and in turn lowering product prices targeted at a narrow range of market segments. IKEA sells self-assembly furniture to cost-conscious customers Differentiation focus strategy → requires products to have significant points of difference in order to target one or only a few market segments Chobani → healthy, high-quality yogurt reached the small but now exploding segment of consumers who favor Greek-style yogurt
What is the difference between secondary and primary data? Provide an example of each source.
2nd facts an figues already recorded primarly newly collected -observation data -questionnaire data
What does customer value proposition mean?
A cluster of benefits that an organization promises customers to satisfy their needs. It describes why a customer should buy a product or use a service. Consists of the total benefit a customer will receive from buying a product. (ex' walmart- everyday low prices) (BMW-the ultimate driving machine)
What is a demand curve? What is the difference between movement along and shift of a demand curve? What are some causes of each?
A demand curve is a graphical representation of the consumer demand of a product or service. A movement along the demand curve is caused by a change in product price. For example, if the price of bread increased, the demand would decrease, resulting in a movement along the curve. A shift of a demand curve is caused when another external factor besides price changes, such a change in price of a competitive product or service or an increase or decrease of consumers incomes.
What are needs and wants? How are they different?
A need occurs when a person feels physiologically deprived of basic necessities such as food, clothing, and shelter. A want is a felt need that is shaped by a person's knowledge, culture, and personality.
Provide examples of firms that engage in sustainable development, green marketing and cause-related marketing.
An example is 3M. This company has an initiative called "Pollution prevention pays" or 3P. This program has been around since 1975 and relies on employees suggestions on how to reduce pollutants. Since 3M has implemented this they have reduced over 3.5 billion pounds of air, water, and solid waste pollutants. Another example is Levi using used plastic bottles in their jeans. Plastic does not biodegrade so this is a great way to help get rid of some waste.
List the forms of non-store selling and provide an example of each.
Automatic Vending: Vending machines with drinks or food, or Best Buy vending machines which hold iPods, cameras, phones, and more Direct Mail and Catalogs: IKEA (can purchase furniture through catalogs), Dell (no stores, products shipped) Television Home Shopping: QVC, HSN Online Retailing: any online website, Amazon.com, Bestbuy.com Telemarketing: insurance companies calling to sell products or politicians trying to get votes Direct Selling: Avon, Mary Kay
List different sales promotions and the objectives of each. What are some advantages and disadvantages of each?
Consumer orientated sales promotions are used to support a company's advertising. Some examples of popular sales promotions are: Coupons Objective: help stimulate demand of a product or service. Advantage: They help to encourage retailer support since a retailer has to accept it Disadvantage: consumer may delay using the coupon until it is about to expire. Deals Objective: increase trial and can be used to retaliate against a competitor Advantage: reduces consumer risk Disadvantage: reduces the perceived product value and consumers may delay until the deal is about to expire Premiums Objective: helps to build goodwill Advantage: consumers always love free or cheaper merchandise Disadvantage: consumers may buy for the premium, not the product Contests Objective: Increases consumer purchases and builds business inventory Advantage: Encourages a consumer's involvement with the product Disadvantage: Requires the company to come up with a creative contest idea Sweepstakes Objective: encourages current consumers to buy more of the product and minimizes their likelihood to switch brands Advantage: increases the consumer's usage of the product Disadvantage: sales will drop after the sweepstakes ends Samples Objective: encourages new product trial Advantage: low risk for consumer Disadvantage: high cost for company Loyalty programs Objective: encourages repeat purchases Advantage: helps to create loyalty Disadvantage: high cost for company Point of purchase displays Objective: increases product trial while also providing support for other promotions Advantage: provides good product visibility Disadvantage: difficult and expensive to get a retailer to provide space Rebates Objective: encourage customers to purchase the product and to stop a decline in sales Advantage: stimulates demand Disadvantage: steals sales from the future and reduces the perceived product value Product placements Objective: introduces a new product while also demonstrating product use Advantage: provides a positive message about the product in a noncommercial setting Disadvantage: the company has little control over how the product is presented
What are the different categories of consumer goods/products? Provide an example for each.
Convenience products-consumer purchases frequently, conveniently, and with a minimum of shopping effort. Ex. toothpaste, hand soap Shopping products- are items for which the consumer compares several alternatives on criteria such as price, quality, or style. Ex. Cameras, TVs Specialty Products - are items that the consumer makes a special effort to search out and buy. Ex. Rolls- Royce cars, heart surgery Unsought products- are items that the consumer does not know about or knows about but does not initially want. Ex Burial insurance, thesaurus
What is brand extension?
Definition: The practice of using a current brand name to enter a different product class. EX: Honda is a great example - they established a quality brand name through cars, and now they have extended their brand to things like lawn mowers and snowmobiles by using their pre-existing brand name.
What are the stages of the product life cycle? Identify an example of a product in each category.
Definition: the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. Introduction Stage - When the product is introduced. Sales grow slowly and profit is minimal. Objective is to created customer awareness and stimulate trial. A lot is spent on advertising. Prices are changed around to increase awareness and start growth stage. Ex. penetration pricing. A example for a product in introduction stage 3D tvs, they are just recently available for homes. Growth - Growth stage of the is characterized by rapid increases in sales. Profit is high. It's the stage that competitors appear and aggressive pricing is started. Blue Ray DVD Players, they are increasingly providing people with the best viewing experience Maturity - Slowing of the sales or revenue. Sales increase at a decreasing rate. Few new buyers. Marginal competitors begin to leave. DVD Players, they have a strong market share and almost everyone has one, but they are not developing further technology. Decline - Decline stage occurs when sales drop. During decline a company will follow one of two strategies to handle a declining product deletion or harvesting. VHS players, they are definitely falling off because it is easier, cheaper, and more convenient to switch to modern day technology.
Provide examples for each of the pricing strategies provided below. Demand-oriented Competition-oriented
Demand-oriented Demand-Oriented pricing focuses on the number of potential buyers for the product class,product, brand, and clearly affects the price that can be change. Ie: The Denver Broncos changed ticket sale prices when Payton Manning was hired to play. Competition-oriented Competitive oriented-pricing relates to pure competition and compares companies that compete in the same marketplace producing hundreds of one initial product selling at the price set by the market. Ie: Hundreds of grain elevators sell corn whose price per Bushel is set within the market place.
What are the central marketing concerns?
Discovering and satisfying the needs of consumers
Marketing exchange and conditions required for marketing
Exchange: the trade of things of value between a buyer and a seller so that each is better off after the trade Conditions required for marketing Two or more parties with unsatisfied needs: consumer wants/needs something, business wants to sell something to make money Desire and ability to satisfy those needs: both parties have the want and ability to satisfy needs-consumer has money and want, seller has time and resources A way for the parties to communicate: phone, computer, store, etc Something to exchange: marketing occurs when the transaction takes place and both the buyer and seller exchange something of value
What are the three different types of problem-solving behaviors and what is the level of customer involvement of each? Identify an example of a product in each category.
Extended Problem Solving - · Considerable time and effort devoted to decision. · Searching for external information. Several options with many attributes considered. Example: Cars Limited Problem Solving - · Seek Some information to help find alternative. · Several brands may be evaluated but not on as many attributes. Example: Restaurant for meal Routine Problem Solving - · Easiest of all decisions, recognize problem, make decision. · Little time or effort spent on seeking information. · This decision process is almost a habit. · Example: Low priced frequently purchased items ie Generic groceries.
-What are the different ways to segment a market? Identify a firm that uses each method.
Geographical segmentation: Based on where prospective customers live or work (region, city, size). Campbell Soup Company found that its canned nacho cheese was too spicy for people living in the eastern US and not spicy enough for people in the west and southwest US, and fixed their recipe based on these results. Demographic segmentation: Based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) of prospective customers. L'Oreal uses demographic segmentation because males and females have different needs. Psychographic segmentation: Based on some subjective mental or emotional attributes (personality), aspirations (lifestyle), or needs of prospective customers. Atkins uses market segmentation by marketing their meals to diet-conscious individuals, those that want to live a healthy life. Behavioral segmentation: Based on some observable actions or attitudes by prospective customers - such as where they buy, what benefits they seek, how frequently they buy, and why they buy. benefits sought Product features - Micro-Fridge understands that college students living in a dorm want to have food in their room but don't have that much space, and therefore markets a combination microwave, fridge, freezer, and charging station to these students. Usage rate (quantity consumed or patronage - store visits - during a specific period) - Airlines such as Frontier and Southwest have developed frequent-flier programs to encourage customers to use the same airline repeatedly to create loyal customers, and these customers receive benefits from the airline for doing so.
What is the difference between elastic and inelastic pricing? Provide an example of each.
Inelastic pricing occurs when demand is inelastic. This means that the demand for a product or service will remain relatively the same despite changes in price. An example of this is gasoline. There are very few viable substitutions for gasoline, so if prices increase people will continue to buy it. Elastically priced goods will see a change in demand if prices change. An example of this would be an increase in Campbell's soup prices. If Campbell's increased their prices, consumers would likely switch to a different brand of soup.
What are the 4 "I"s of service? Identify an example of each.
Intangibility: Services cannot be held, touched, or seen before the purchase decision. Education, flight Inconsistency: Services depend on the people who provide them, their quality varies with each person's capabilities and day-to-day job performance. Barber (haircut), chef (food) Inseparability: The consumer cannot (and does not) separate the deliverer of the service from the service itself. DU Inventory: The inventory cost of a service is a cost of paying the person used to provide the service along with any needed equipment. Restaurant
What does market share mean?
Market share → ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself
Types of marketing research
Marketing research=the process of defining a marketing problem and opportunity, systematically collecting and analyzing information and recommending actions
-What does segmentation mean?
Marketing segmentation involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action. Market segments are the relatively homogenous groups of prospective buyers that result from the market segmentation process.These people are similar to one another in terms of consumption behavior, but are heterogenous between segments.
Marketing strategy vs. marketing tactic?
Marketing strategy → means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it Long-term Marketing tactic → detailed day-to-day operational marketing actions for each element of the marketing mix that contribute to the overall success of marketing strategies; used to implement a marketing program successfully Short-term EX: General Motor's decision to cut prices to build market share Tactic → price change is usually short-term EX: iPhone 5c Tactic → to penetrate new markets of China and price-sensitive customers EX: Ford's mission to produce best medium sized car in world Strategy → quality is a long-term notion
What does marketing mean?
Marketing=the activity for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large
4. What are the categories on Ansoff's market-product matrix? Identify a product that fits in each category.
Present Product New Product Present Market Market Penetration Coke, IcyHot Product Development Coke Zero, Microsoft Surface Tablet, Amazon Prime New Market Market Development If Ben and Jerry's started selling childrens clothing Diversification Coke Touch Screen Vending Machine, Amazon Drones Market Penetration: a marketing strategy to increase sales of current products in current markets. There is no change in either the basic product line or the markets served. To increase sales, either sell more product or sell it at a greater price. Market Development: a marketing strategy to sell current products to new markets. Product Development: a marketing strategy of selling new products to current markets. Diversification: a marketing strategy of developing new products and selling them in new markets.
-What are two different ways to position products? Provide an example of each.
Product positioning refers to the place a product occupies in consumers' minds on important attributes relative to competitive products. Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market, an example would be Domino's, Little Caesars, and Pizza Hut hunting for the same consumer segments. Differentiation positioning involves seeking a less-competitive, smaller market niche in which to locate a brand. Features and functions in a product or service are highlighted to make a brand seem distinctive and attract consumers who are receptive to innovation. For example, when McDonalds introduced the low-fat McLean Deluxe hamburger, it was trying to appeal to the health conscious segment of consumers. McDonalds was trying to differentiate themselves from competing directly with Wendy's and Burger King..(trying).
What is product repositioning? Provide an example of a company/brand that has used this approach.
Product repositioning: Changing the place a product occupies in a consumer's mind relative to competitive products. Example: Napisan is a Australian laundry detergent product that was designed to wash baby diapers. It was very popular up until around the 1980's when there was a significant change in consumer lifestyles. As parents stop having as much free time there was a big shift from using washable clothes diapers to using disposables ones. This made the sales of the Napisan product fell in line with the decrease in consumer demand. The firm had a good quality product so they decide it to reposition the product. Napisan is a product that is now used as the ideal laundry detergent for tough stains.
What does publicity mean?
Publicity is a nonpersonal, indirectly paid presentation of an organization, product, or service. It can take the form of a news story, editorial, or product announcement. Advantage: credibility Disadvantage: lack of the user's control over it
List different types of advertising. What are some advantages and disadvantages of each?
Remember, advertising is any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor. Advertisements basically consist of two types: 1. Product Advertisements - sell a good or service Take 3 forms: Pioneering (or informational) - tells people what a product is, what it can do, and where it can be found Objective: to inform the target market Advantages: typically interesting, convincing, and persuasive Disadvantages: doesn't compare the competition Competitive (or persuasive) - promotes a specific brand's features and benefits Objective: to persuade the target market to select the firm's brand rather than a competitor's (comparative advertising) Advantages: attract more attention and increase the perceived quality of the advertiser's brand Disadvantages: need lots of marketing research to legally support their claims Reminder - reinforces previous knowledge of a product Objective: to assure current users they made the right choice (reinforcement) Advantage: good for products that have achieved a well-recognized position or are in the mature phase of the product life cycle Disadvantages: not as effective for newer brands/products 2. Institutional Advertisements - build goodwill/image for an organization Objective: support the public relations plan or counter adverse publicity Advantages: promotes positive brand awareness Disadvantages: doesn't promote a specific/individual product Take 4 forms (objectives/advantages/disadvantages similar to the product forms): Advocacy - states the position of a company on an issue Pioneering institutional - informational; tells people what a product is, what it can do, and where it can be found Competitive institutional - promotes the advantages of one product class over another and are used in markets where different product classes compete for the same buyers Reminder institutional - brings the company's name to the attention of the target market
What are search, experience and credence properties? Identify an example of a product that is high on each property.
Search properties: can be determined before purchase, such as color, size, style. - High in search property: clothing, jewelry, furniture Experience properties: can be discerned only after purchase or during consumption. - High in experience property: haircuts, vacation Credence properties: characters that consumer may find impossible to evaluate even after purchase and consumption. - High in credence properties: legal services, autorepair
What are the 5 environmental forces? Identify an example of each and how it may influence a firm's strategy.
Technology Economical Situation Social Demographics Political/Regulations Based on Competition
What is the difference between the depth and breadth of a product line? Provide examples of companies that focus on each?
The depth of a product refers to a store that carries a large assortment of each item. Examples would be Finish Line (only shoes) or Godiva (only specialty chocolate). The breadth of a product refers to a store that carries a variety of different items. Examples would be Wal-Mart (carries clothes, produce, electronics, etc.) or a department store such as Nordstroms (carries clothes, shoes, accessories, etc.).
What are the dimensions of the BCG model focused on planning for SBUs? Identify an example of a product in each quadrant.
The dimensions of the BCG model focused on planning for SBU's: Stars, Cash Cows, Problem Children, Dogs. (Explain graph). -Cash Cows: products in a low growth markets, but with high market share, more stabilized products. Ex: Kelloggs Cornflakes, Coca-Cola, Colgate Toothpaste -Star: products with high market share, in a high growth market→ products has to have more market growth because the market is changing drastically and constantly. Ex: youtube -Problem Children: products of a company with low market share, in high growth markets, aren't doing well in the market. Ex: samsung camera, not the best seller in that market for that product. -Dogs: products with very low market share, low growth, products to possibly get rid of→ drain on the companies resources Ex: 2D printers
What are the 5 elements of the promotional mix (IMC)? When would a company use each and what are some advantages/disadvantages of each?
The promotional mix consists of five communication tools which include: Advertising - any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor Advantages: attention-getting, reaches a large audience, a company can control what it wants to say and can target the consumer, the company can ensure that the same message will be decoded by all receivers in the market segment Disadvantages: high costs, difficult to receive good feedback Example: Coca-Cola commercials, advertisements in movie theaters, vending machines, etc. Personal Selling - two-way flow of communication between a buyer and seller designed to influence a person's or group's personal decision Advantages: salesperson can control to whom the presentation is made, less wasted coverage, personal component, easy to get feedback, persuasive, can give complex information Disadvantages: no consistent communication because of its flexibility, high costs, generally the most expensive of the five communication tools Example: cosmetic counters at department stores Sales Promotion - a short-term inducement of value offered to arouse interest in buying a product or service Advantages: short-term promotion often stimulates sales, very flexible Disadvantages: gains are often temporary, sales drop off when the deal ends, cannot be used continuously otherwise they lose their effectiveness, customers can delay purchase until deal is offered, customers question the product's value, can lead to promotion wars, easily duplicated Example: Monopoly game at McDonald's Public Relations - a form of communication management that seeks to influence the feelings, opinions, or beliefs held by consumers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services; publicity (a nonpersonal, indirectly paid presentation of an organization, product, or service) often plays the most important role in PR Advantages: credibility Disadvantages: lack of user's control over it, no guarantee that review, event, etc. will be positive, difficult to get media cooperation Example: critic's reviews Direct Marketing - using direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet; includes face-to-face selling, direct mail, catalogs, telephone solicitations, direct response advertising, online marketing Advantages: customized to match the needs of specific target markets, can be prepared quickly, and facilitates relationship with customer Disadvantages: requires comprehensive, up-to-date database with information about the target markets, database is expensive to maintain, growing concern over privacy, declining customer response Example: Target sending a customer coupons and catalogs based on previous purchases All promotional activities are used to provide a consistent message across all audiences, which is referred to as integrated marketing communications.
What are the different types of distribution density? Provide an example of a company that uses each.
There are three types of distribution density; Intensive, Exclusive, and Selective distributions. Intensive distribution simply means that a firm tries to place its products in as many outlets as possible, something that a company such as Lays might do. They want their product to have as much exposure as possible, which is why you will see Lays chips in every grocery store, convenience store, and even gas station that you will likely go to. Exclusive distribution is the opposite idea, making your product special and different by only selling it in selected areas. Luxury brands such as Prada, for example, only sells in select areas, using that as a point of difference for their product. Finally, selective distribution is a middle ground, and simply means that a firm will select a few retailers in an area to carry its products. I find technology companies a very good example of this; If you go to a Best Buy or Radio Shack or even a Target, you can likely find the same brand of cell phone that you would at the other location. It's not intensive since you can't find, say, and HTC phone at a gas station, yet HTC is not so luxury a brand as to be extremely exclusive in their distribution practices
What is value pricing? Provide an example of a company that uses this strategy.
Value Pricing is the practice of simultaneously increasing product and service benefits while maintaining or decreasing the price. Companies including value pricing and strategies are companies like Macy's, IKEA and other large wholesale or retail outlets.
What is the difference between direct and indirect marketing channels? Provide an example of each and discuss why a company might choose to use a particular channel.
When a company implements a direct marketing channel, they bring their product or service to the consumer directly, meaning there are no intermediate companies or steps taken, and all steps of the marketing channel fall on the producer itself. Companies such as Green Mountain Coffee Roasters, for example, have their own fleet of trucks that they use to distribute their fresh coffee straight to the consumer. Small companies often do not have the resources to implement a system of direct distribution, as hiring more employees, purchasing trucks, and implementing the system can be very expensive. However, using direct distribution gives a company direct access to data, as well as the ability to create a stable customer base around the ability to deliver small quantities, specialized products, etc. Indirect marketing channels involve running a product through a third party, often a wholesaler or retail store, when it comes to consumer products. This can take away some responsibility from a company, allowing them to rely on the third party to take care of the logistics of selling products. Best Buy is a good example of a retailer in the channel, for a company such as Beats Audio might pay them to sell their products. In this case, Beats Audio would be participating in an indirect system of distribution. The downside to indirect distribution is that the retailer and wholesaler that a company might use does take a cut of the profit, and too many middlemen could dilute the company message and their revenue.
-What are the criteria for forming successful market segments and selecting target markets?
When forming them, market segments should meet five essential criteria: Simplicity and cost-effectiveness in assigning potential buyers into segments, the potential for increased profits as a result of segmentation and advertising, the similarity of the needs of potential buyers within a segment, the difference of need of buyers among all segments, and the potential of some type of marketing action to reach a given segment. The criteria needed in selecting target segments is however, slightly different, even though many people confuse the two. There are five main criteria used in selecting a target segment: the overall market size, the expected growth of the market, the competitive positioning of the company within the market, the overall cost of reaching the market segment desired, and compatibility with the organization's objectives and resources i.e. don't overextend a company trying to reach a new segment.