MBA706-Marketing Strategy Chapters 5&6

derived demand

Business demand that ultimately comes from (derives from) the demand for consumer goods.

thinkers

Investigative people, conservative, practical consumers that look for durability, functionality and value in products

Maslow's Hierarchy of Needs

bottom of triangle is physiological (basic), then safety, then social needs (love/belonging), then esteem, then finally self-actualization

mass marketing or undifferentiated marketing

came first and evolved along with mass production. it involved selling the same product to everybody. Ex: Henry Ford

other players in the buying decisions

initiators- the people within the organization who first see the need for the product users- the people and groups within an organization that actually use the products influencers- people who may or may not use the product but have experience or expertise that can help improve the buying decision gatekeepers- people such as buying assistants, personal assistants, administrative assistants and other individuals that have some say about which sellers get a foot in the door deciders- the person who makes the final purchasing decision

the interpersonal and personal dynamics of B2B marketing

interpersonal factors- office politics personal factors- consciously or subconsciously simplifying the buying decision solely based on how likable a sales rep is

dilution effect

irrational consumer behavior ex: broken set of dishes worth less even though the number of unbroken is greater than what you would get in a small set that was unbroken

Personal factors that vary by individual

mood- whether you enjoy shopping or feel it is a chore personality- describes a persons disposition the big 5 personality traits that psychologists discuss are: openness- how open are you to new experiences conscientiousness- how diligent you are extraversion- how outgoing or shy (introverted) you are agreeableness- how easy you are to get along with neuroticism- how prone you are to negative mental states self-concept- is easier to link to peoples buying behavior. It is how you see yourself positive or negative. Your ideal self is how you would like to see yourself. Others' self-concept- how you think others see you

survivors

narrowly focused life, fewest resources, do not exhibit primary motivation and often feel powerless. cautious consumers

achievers

people who are motivated by success, politically conservative, and work-oriented; they value the familiar. image is important, prestige products that demonstrate success to their peers

geodemographics

study of people based on the fact that people with similar demographics tend to live close to one another

microtargeting

the use of direct marketing techniques that employ highly detailed data analytics in order to isolate potential customers with great precision

innovators

those buyers who want to be the first to have the new product or service- a taste for the finer things in life

primary motivations

used to understand consumer behaviors by looking at ideals, achievement, and self-expression

Advergames

video games containing advertisements

Delight

when an offering exceeds expectations. this generates a positive word of mouth and online feedback

Satisfaction

when the product delivers what was promised and meets their expectations. Develops long term relationships

Recommendations for collecting customer data

-collect personal data- names, mailing, email address. contact information allows for message personalization. Demographics include age, income, gender, profession. Overtime collect information about lifestyles, attitudes, interest, opinions. -Collect transactional data- when, how often, and what did customers buy from you? -Collect data during each interaction- phone, online chat, in-store, online contest entry, survey response -use customer relationship management software- CRM software allows for easy storage, tracking, manipulation, and usage of data. - Encrypt customer data- create a customer information privacy policy that explains the types of data collected, how data is used, whether it is shared and if so with whom. Allow an opt-out feature -to sell data or not sell data- firms can profit by selling their customer's data at least in the short term. customers drop companies that sell their information, assuming they can track the sale back to your business and they don't return. you must disclose your intent to sell data in your privacy policy -leverage data to add value to the customer- use the data to customize your communications and even your product. - avoid common mistakes- don't ask for too much data at once, don't collect data then fail to use it. don't limit your decision making to transactional data alone

An attractive market

-is sizable- large enough to be profitable given your operating costs -it is growing- demand is large - competitors do not already swamp the segment, or you have found a way to stand our in a crowd- -Either it is accessible, or you can find a way to reach it -the company has the resources to compete in it -it fits in with your firms mission and objectives

steps in one to one marketing

1. establish short term measures to evaluate your efforts- determine how you will measure your effort. Ex: measurements can be customer satisfaction ratings, increase revenues, number of products sold, transaction costs 2. identify your customers- gather all the information you can about your current customers, including their buying pattern 3. differentiate among your customers- determine who your best customers are regarding what they spend and will spend in the future and how easy or difficult they are to serve 4. interact with your customers, targeting your best ones- find ways and media in which to talk to customers about topics they are interested in and enjoy. 5. customize your products and marketing messages to meet their needs- try to customize your marketing messages and products to give your customers exactly what they want

duties of a professional buyer or procurer

1. evaluate the availability of products, the reliability of the products vendors, and the technical support they can provide 2. studying the firms potential vendors sales records and inventory levels 3. identifying suppliers and obtaining bids from them 4. negotiating prices, delivery dates, and payment terms for goods and services 5. keeping abreast of changes in the supply and demand for goods and services their firms need staying informed of the latest trends to anticipate consumer buying patterns 6. determining the media in which to place advertisements 7. tracking advertisements in media to check competitors sales activities

stages in the B2B buying process

1. needs recognition- someone recognizes a need 2. need description and quantification- set of criteria and parameters to guide the evaluation process 3. vendor/supplier search- information about products and which vendors can supply them 4. qualified potential suppliers requests for proposals (RFP)- each vendor that qualifies receives an RFP which is an invitation to submit more information about how the firm can satisfy the business needs 5. proposal evaluation and selection-review of the RFP takes place and the vendor is selected 6. establishing an order routine- creating an order that includes the agreed upon price, quantities, expected time of delivery, return policies, warranties and other negotiations 7. usage, post purchase evaluation and vendor feedback- feedback is shared with the vendor

government contracting process

1. planning and research 2. respond to RFP (requests for proposals), RFQ (requests for quotes), IFB (invitations to bid) 3. bid submission 4. oral presentation 5. contract award

cognitive dissonance (buyers remorse)

A buyer's doubts shortly after purchase about whether the decision was the right one. More likely to happen when purchases are complex or involve a high price

subculture

A group of people within a culture who are different from the dominant culture but have something in common with one another such as common interests, vocations or jobs

concentrated marketing

A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches

Segmentation in B2B markets

A price-focused segment A quality and brand-focused segment A service-focused segment A partnership-focused segment

A multisegment marketing

A strategy of targeting multiple segments in the market in which a distinct marketing strategy might be developed for each group

Business to Business markets and buying behavior

B2B has fewer customers, often geographically concentrated, with a small number accounting for most of the company's sales. Larger dollar amounts due to more transactions, longer decision cycles, and more reliance on personal selling, more rigid product standards

joint demand

Demand for one product that is affected by the level of demand for another product.

Targeting Global Markets

Firms that compete in the global marketplace can use any combination of the segmenting strategies we discussed or none at all. Global markets can be mass marketing or targeted marketing targeted marketing can be multisegment or concentrated in a niche, microtargeting or one to one market

The consumer buying process

Needs- transportation but satisficed in different ways Wants- articulating specific brands or attributes 5 stages to the buying process: 1-need recognition-marketer must engage in research that allows them to identify customer wants 2-information search-consumers seek out personal sources for information. Including opinion leaders, and word of mouth recommendations. Or use external sources for information including websites. All of this is used to weed out less desirable solutions and narrow down the choices to a few brands aka an evoked set. 3-alternative evaluation-very personal and varies customer to customer but, generally based off benefits and attributes that are important to the customer. 4- purchase decision- when they have decided they want an item the sales team must be careful not to cause them to back out due to feeling insulted or angered by salespeople. The marketers can also alleviate perceptions of risk by offering money back or no questions asked returns 5-post purchase evaluation-monitoring consumers reactions and product performance

proximity marketing

The distribution of marketing content to mobile devices that have opted in at a particular local geo-location to receive information

Segmentation and Target marketing

The segments or groups of people and organizations your firm chooses to sell to is a target market Targeted marketing or differentiated marketing means that you differentiate some aspects of the marketing mix (the product, promotion, price, distribution, supply chain) for one or more segments of selected customers. Ex: General Motors offered a car for every income level Key Benefits of segmenting and targeting markets -avoid head-on competition -develop new offerings and expand profitable brands and product lines -remarket older, less profitable products and brands -identify early adopters -redistribute money and sales efforts to focus on your most profitable customers -retain at-risk customers in danger of defecting to your competitors

Experiencers (VALS)

Trendsetting, impulsive, variety-seeking- spend money on fashion, entertainment, socializing

VALS vs. PRIZM

VALS are the values and lifestyles surveys that create the basis of PRIZM groups but, they also overlay information with geographical data

dissatisfaction

When a product falls below a buyers expectations. These customers are more likely to share their frustrations. Marketers must monitor online reviews and fix legitimate complaints

social class

a group of people with similar backgrounds, incomes, and ways of living 7 classes of American consumers upper-upper class- inherited wealth lower-upper class- CEOs, doctors, lawyers upper-middle class- college graduates and managers middle class- white collar and blue collar jobs working class- blue collar workers lower- working but on welfare lowest class- people on welfare

makers

a low resource group that values self-sufficiency and the familiar- unimpressed with material possessions prefer value over luxury

Family life cycle

a series of stages determined by a combination of age, marital status, and the presence or absence of children that affect buying behavior Ethnicity in Spanish speaking groups can be seen as: Just moved inr's- recent arrivals, Spanish dependent, struggling but optimistic FOBrs (fashionistas on a budget)- Spanish dominant, traditional, but striving for trendy Accidental explorers- Spanish preferred, not in a rush to embrace US culture The enlightened- bilingual, technology savvy, driven, educated, modern Doubting Tomases- bilingual, independent, skeptical, inactive, shopping uninvolved Latin flavored- English preferred, reconnecting with Hispanic traditions SYLrs (single, you'd Latinos)- English dominant, freethinkers, multicultural

buying centers

all those people in an organization who become involved in the purchase decision

consumer segmentation bases

behavioral, demographic, psychographic, geographic behavioral- what benefits do customers want, and how do they use our product? (usage rate, usage situation, user status and loyalty) demographic- how do the ages, races, and ethnic backgrounds of our customers affect what they buy? (age, income, gender, family) geographic- where are our customers located, and how can we reach them? what products do they buy based on their location? (region, size of town, population density, climate). Geocoding- a process that takes data and plots it on a map psychographic- what do our customers think about and value? How do they live their lives? (activates, interests, opinions, values, attitudes, lifestyles)

Types of business buyers

can be nonprofit or profit businesses. 4 basic categories producers-companies that purchase goods or services that they transform into other products resellers- companies that sell finished goods without changing them Ex: wholesalers like Walmart Governments- the largest purchaser of goods and services in the world is the US government institutions- nonprofit organizations such as the red cross, churches, hospitals

Perception

how you interpret the world around you selective exposure- selecting information we see or hear selective attention- filtering out information based on how relevant it is to you selective retention- forgetting information even if it is relevant to them usually because it contradicts their beliefs repetition- the number of times you must see a commercial before you remember it selective distortion- misinterpretation of the intended message shock advertising- surprising stimuli to increase attention subliminal advertising- exposing consumers to stimuli such as photos, ads, and messages that cannot be perceived by the conscious mind by stealthily embedding them in movies or ads

consumer market

many customers, geographically dispersed, smaller total dollar amounts due to fewer transactions, shorter decision cycles, more reliance on mass marketing via advertising, websites, and retailing, less rigid product standards

family

market research consider a persons family to be the most important influences on their buying behavior

attitude

mental positions or emotional feelings people have about a product

psychological factors

motivation- inward drive to get what we need. basic needs must be met before fulfilling higher level needs according to Maslow

B2B e-commerce

online exchanges between companies and individual consumers

believers

people motivated by ideals, predicable buy loyal, choose familiar products and established brands

strivers

people who are low in resources, but motivated by the opinions and approval of others. active consumers because shopping is both a social activity and an opportunity to show peers their ability to buy, they are impulsive as their finances allow

societal factors

personal, situational, or psychological factors that influence what you buy

Reference groups and opinion leaders

reference groups are groups a consumer identifies with and may want to join. they influence consumers attitudes and behaviors opinion leaders- people with expertise in certain areas

types of B2B web sites

sell-side- a site which a single seller/vendor sells products to many different buying organizations buy-side- a business buys products from multiple sellers that go there to do business with the firm B2B auctions- web based auctions that occur between businesses can be sell-side or buy-side. sell-side auctions are also called forward auctions- its an auction where surplus industrial equipment is sold buy-side auctions are also called reverse auctions- buyer initiates the auction to find the cheapest supplier of a product

culture

shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people

factors that influence consumer behavior

situational factors- store design and layouts that make you walk passed lots of items to encourage more sales. Crowding is when customers leave because the stores are too crowded but, there is also herd behavior that suggests if a store is crowded customers want to join so they don't miss out store locations- availability physical factors- music, lighting, temperature, smells that create atmospherics. some physical factors like weather are outside of the companies control Social situations- the pressure from being a good neighbor or friend will cause you to buy things you don't need. Think girl scout cookies, pampered chef Time- time of day and year can affect how much consumers feel they need to buy Reason for purchase-dinner that needs to be done in an hour vs. a gift or special occasion will dictate how long you are willing to shop

types of B2B buying situations

straight rebuy situations-the firm is simply reordering an existing item for inventory or for use within their business new buying selling situation- when a firm purchases a product for the first time. very time consuming new to an organization buying situation- when new personnel take over or firm is expanded and there is no one with experience A modified rebuy- a company wants to buy the same type of product it has in the past but with some modifications to its specifications

Customer lifetime value (CLV)

the approximate worth of a customer to a company in economic terms; overall profitability of an individual consumer over a lifetime

Fluctuating Demand

the demand for any given business product can change in response to consumer demand changes

Learning

the process by which consumers change their behavior after they gain information or experience. operant or instrumental conditioning- learning occurs through repetitive behavior that has positive or negative consequences classical conditioning- associating a conditioned stimulus with an unconditioned stimulus to get a particular response

Niche Marketing

the process of finding small but profitable market segments and designing or finding products for them EX: Hohner 85% market, tetra 80% market, Swarovski 65% market, uwate and st Jude medical center 60% market