Principles of Marketing: Exam 2

Examples of Time Poverty

1-hour photo labs, drive-thru pharmacies, "faster download times," fast food restaurants, shopping online

External Search

If information is inadequate, consumers seek out additional sources

Confirmation

Reinforce the customers' choice through advertising, sales promotion, and other communications

Impulse

Unplanned purchase Ex. Buying gum while getting gas, magazine, gum

Equipment

Used in daily operations

What is a product in generic terms?

"Bundle of consumer benefits" Can be an item, service, idea, person or place

Custom Market

"Mass Customization" Tailor specific products to the specific needs of an individual consumer Increasing use due to advancement in technology Ex. making a personalized dog collar

What is Subliminal Perception?

"Perception below the threshold of awareness" -hidden messages perceiving to be inappropriate Ex. Disney movies have some -not much use in marketing -Not illegal but most consumer behavior experts have concluded that such methods aren't effective

Test Marketing

-A sample launching of the product -The complete marketing plan is tested in a small geographic area similar to the larger market

What is AIO Inventory?

-Activities, interests and opinions -Help marketers to identify a consumer's characteristics by constructing an individual's psychographic profile

Milennials or Generation Y

-Children of Baby Boomers -Over 75 million today -1st generation to have computers: heavy on social media and USG, coupons and content marketing -Prefer experience over possessions -On the course to be the most educated generation

What is meant by the term "Convergence" as a dynamically continuous innovation?

-Coming together of 2 or more technologies to create a new system -One of the most talked about forms of dynamically continuous innovation -Consumers had to learn how to completely use it. Ex. Phone with a camera

What is Post-Purchase Evaluation?

-Consumer satisfaction following purchase of product is critical -Level of satisfaction is influenced by whether or not expectations of quality are met or exceeded

What is Information Search?

-Consumers need adequate information to make good decisions -Internal and External search

What is Time Poverty?

-Consumers' belief that they are more pressed for time than ever before

What is Product Choice?

-Deciding on one product and acting on choice -Heuristics

Technical Development

-Engineers work to develop and refine a working prototype -Firm may need to apply for a patent -Don't want to get here unless you are confident with phase 4

Unsought Products

-Goods and services for which a consumer has little awareness or interest until a need arises -Often required a good deal of advertising or personal selling to interest buyers Ex. Burial plots, life insurance for young people

Specialty Products

-Have unique characteristics that are important to buyers at almost any price -Marketers have to go to a lot of effort to make their product stand out -Customers tend to be very brand loyal Ex. Clinique cosmetics, Big Bertha golf clubs, Rolex Watch

What is Evaluation of Alternatives?

-Identifying a small number or products for closer consideration -Compare alternatives based upon evaluative criteria

What is Behavioral Targeting?

-Marketers deliver ads for products that are of most interest to consumers by observing what they do -A strategy that presents individuals with ads based on their internal use -Technology allows marketers to tailor the ads consumers see to websites they've visited

Idea Generation

-Marketers use a variety of sources to come up with the ideas for new products -Value creation via collaboration with customers, salespeople, service personnel and other stakeholders

Continuous Innovation

-Modification to an existing product -Consumers don't need to learn anything new; change is minimal Ex. Knockoff

Dynamically Continuous

-Modification to an existing product -Requires a modest amount of learning for consumers to use

What is Problem Recognition?

-Occurs whenever the consumer sees a difference between current state and desired/ideal state -Marketers can develop ads that stimulate problem recognition

What is Cognitive Dissonance?

-Part of Post-Purchase Evaluation -the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change -After a purchase, a consumer may feel doubt or anxiety about the purchase decision -what actions can marketers take to alleviate cognitive dissonance?

What is Heuristics?

-Part of Product Choice -mental shortcut that allows people to solve problems and make judgments quickly and efficiently -price=quality -brand loyalty -country of origin

Classical Conditioning

-Pavlov's dog experiment -The pairing of an unconditioned stimulus with a neutral stimulus and overtime, the neutral will evoke the same response as the unconditioned stimulus -Ex. Beer commercial: couple sitting on the beach enjoying life with a beer. Consumers will associate the beer with the ocean and an enjoyful life

What is an opinion leader?

-People who influence others' attitudes or behaviors because others perceive them as possessing expertise about the product -have high interest in product category -Impart both positive and negative product information -Are among the first to buy new products

How is the study of Marketing used in lifestyles?

-Reflects a pattern of living -Marketers seeks to describe people according to AIO's

What is Culture?

-Represents the shared values, beliefs, customs and tastes produced or practiced by a group of people -Includes rituals such as weddings and funerals -Marketers tailor products to cultural values

Operant Conditioning

-The learning that occurs as the result of rewards for punishments -Ex. Get a free t-shirt with the purchase of a ticket, happy meal toy with meal

Communication

-The new product is launched into the market -Full-sclae production, distribution, advertising, and sales promotion are begun

Convenience Products

-Typically nondurable gods or services bought frequently with minimal effort Ex. staples -Consumers are not brand loyal to convenience products and they will readily substitute brands -Consumers expects products to be low prices and widely available

Baby Boomers

-ages 52-70 today -75 million in the U.S. today -Frequent online shoppers and FB users -75% are more likely to purchase an item if their is a coupon or discount -Sandwich generation 10% of their children live with them -Multigenerational families

How is family life cycle used to segment markets?

-changes over time -as families move through stages, different product categories ascend or descent in importance -Even if importance is constant, needs within category may change -Family sizes are decreasing -non-traditional families

What are the 5 requirements for successful segmentation?

-have members with similar product needs/wants who are different from members of other segments -Be measurable in size and purchasing power -Be large enough to be profitable -Be reachable by marketing communications -Have needs the marketer can adequately serve

What is Consumer Socialization?

-the process in which children acquire all the necessary skills to function as consumer

What are the 7 phases of New Product Development in order?

1. Idea generation 2. Product Concept Development and Screening 3. Marketing Strategy Development 4. Business Analysis 5. Technical Development 6. Test Marketing 7. Communication

What are the 5 steps of the Decision-Making Process?

1. Problem Recognition 2. Information Search 3. Evaluation of Critics 4. Product Choice 5. Post-Purchase Evaluation

Early Adopters

13.5% -More concerned about social acceptance than innovators are -*More* of opinion leaders -Responsible for the long-range success of a product -They filter products accepted by innovators and popularize them to the masses -Heavy users of media -Marketers often target them in their promotion

Laggards

16% Price conscious; suspicious of change; bound by tradition By the time laggards adopt a product, it may already be superseded by other innovations

Innovators

2.5% Risk takers Well-educated, younger, higher income Wordly; aggressive A few may be opinion leaders Ex. Waiting in line around Apple for the new iPhone

Late majority

34% Skeptics who adopt a new product when it becomes a necessity or their is social pressure to purchase Typically older, more conservative, less-educated; more traditional consumers

Early Majority

34% They adopt just before the "average person;" solid, middle-class consumer Makes the product part of the "American scene;" when this group adopts a product, there has been a general acceptance of the innovations

What is the 80/20 rule?

80% of sales are coming from 20% of customers Heavy, medium and light users and non users of a product Ex. books, beer, coffee, tobacco Ex. online shopping: only 8% of internet users account for 85% of online advertising (clickthroughs)

How does the FTC Act define a "new product?"

A product must be entirely new or changed significantly It is only "new" for 6 months

Undifferentiated

AKA "Mass Marketing" Appeal to a broad spectrum of people with one marketing plan Decreasin in today's use Ex. Walmart

Membership

Act a certain way because of you're apart of them

Augmented Product

Actual product plus supporting features such as warranty, repair, installation, customer report

Generation X

Ages 36-51 today 66 million today "Baby Busters" -Latch-key children -heavy users of loyalty programs: the more you buy the more you save -self-reliant, value-oriented, independent, brand loyal -Responsible for 30% of U.S income earned

What is Usage Occasions?

An indicator used in behavioral market segmentation based on when consumers use a product most Ex. Candy, greeting cards, vacations, party supplies

What is Innovation?

Anything that customers perceive as new and different

Older consumers: "The Silent Generation"

Around 71-88 years old today 28 million in the U.S. today 89% of senior citizens have email and use it regularly (silver surfers)

What are the determining factors of social class?

Background, occupation, education, income

Core Product

Basic benefits the product will provide

Habitual

Being brand loyal to something, buying the same thing Ex. Toothpaste, Diet Coke, newspaper, groceries

What is Generation Z?

Born after 1997 First true "digital natives"

What are the two types of Behavioral Learning concepts pertaining to marketing?

Classical and Operant Conditioning

What is Downshopping?

Consumer preferences towards lower-priced products and brands with a practical, more economic image

Internal Search

Consumers search memory and environment for information

What are the 3 types of Product Innovations?

Continuous, Dynamically and Convergence Innovation

What are the 4 types of consumer products?

Convenience, shipping, specialty, unsought

What are the 3 layers of the product concept?

Core, actual and augmented

What are the disadvantages of Test Marketing?

Costly; lose confidentiality to competition "Jamming the test"

What are the 3 different ways that marketers segment markets?

Demographics, Psychographics, Behavior

Trial

Demonstrations, samples, trial-size packages

Differentiated

Develop different products that appeal to different and separate customer groups Ex. Retail stores: they all have diff. target markets

Marketing Strategy Development

Developing a plan to deliver the product the marketplace

Durable vs nondurable good

Durable: consumer products that provide benefits over a period of months, years or even decades Ex. car, appliances, furniture Nondurable: consumed over the short term Ex. Magazines, sushi

What are the 5 types of B2B Products?

Equipment Maintenance, repair operating (MRO) Raw materials Processed Materials and specialized services Component Parts

What is Geodemography?

Ex. PRIZM shows the demographics of people in a geographi location. Pittsburg would be small town collegiates, owns a kia, eat's a Logan's, etc.

What are the 4 variations of the Consumer Decision-Making Process?

Extended Limited Habitual Impulse

What is the different between a family and a household?

Family: related Household: roommates

What is Geocoding?

Geographically customized web advertising that feeds local ads to users Ex. Typing in doctor in Google will show you the nearest one

Shipping Products

Goods and services for which consumers purchase less frequently and will spend time and effort to gather information on price, product attribute, and product quality Ex. computers, TV's, appliances, furniture, car

MRO

Goods consumers relatively quickly

What is Microculture?

Groups of individuals who identify based on a common activity or art form Ex. Game of Thrones fans, sorority girls

What is Psychographics?

Groups people according to psychological and behavioral similarities -Ex. Becker company primary target market is surfboards for people who love to surf anf enjoy the outdoor beach way of life.

Extended

High perceived risk Typically expensive, infrequent purchases Ex. Car, house, major appliance

Difference between upper, lower and middle income

Highest 20% of incomes Lowest 20% of income Middle: 60% of income

What is User-generated Content (USG)?

Includes the millions of product-related comments, reviews, photos, images, and videos posted online by consumers mainly through social media Ex. Starbucks white cup contest on SM Ex. Lays: indi. could submit a new flavor

What is Content Marketing?

Involves Marketing products through the creation of valuable and relevant content to appeal to a specific target market -the product becomes the story instead of an advertiser that sponsors the story

Adoption

Make the product available Provide product use information

Who originated the concept of "Tipping Point?" What does it mean? examples?

Malcolm Gladwell Is the point when a product sales spike from a slow to a high level Ex. Facebook became very popular in 2008

Component parts

Manufactured goods or subassemblies of finished items that firms needs to complete their own goods

How is social class used to segment marketers?

Many consumers buy according to an image they'd like to portray, not their actual level Ex. Aspiration and reference groups: "easy credit" may lead consumers to buy cars and homes they can't truly afford

How is gender used to segment markets?

Many products appeal to one sex or the other 51% of U.S population is female Changing roles of men and women in society

What is Product Positioning?

Marketers seek to influence how a particular product is percieved in the minds of customers relative to competing offerings Market does not determine it, the consumer does "Consumer's perception of a broad relative to competing brands" Ex. Map example of the brands of computers

What is Sensory Marketing?

Marketing techniques that link distinct sensory experiences such as unique fragrance with a product or service Ex. Abercrombie

Awareness

Massive Advertising

Interest

May use teaser advertising Providing just enough information to make you curious Ex. Movie trailer

What are the 3 types of reference groups? Which two are more influential in consumer behavior than the third?

Membership, Aspiration, Dissociative

Limited

Moderate perceived task Consumer has limited time or energy Ex. Clothing, smaller appliances

What is a national rollout?

Most products are introduced into the country gradually, a little at a time, and not overnight x. 5 cities that the states reside in and then expanding into states around the states, etc.

Discontinuous

Must create major change in the way people live -Consumers have to learn a great deal in order to be able to effectively use the product

Concentrated

Offer one or more products to a single segment Ex. Blackscocks.com: only sell one marketing plan going after one type of group of people

What is a Slotting fee?

Paying for a slot on the shelf

What is a Failure fee?

Penalty fee paid to the retailer by the product if the new product does not produce the sales promised -Carry my new product I promise it will sell but if it doesn't then the retailer gets paid

What is Geographic Segmentation?

People's preferences often vary depending on where they live Geography dictates climate, population, laws, culture, tastes and preferences Ex. Ray Bandz: targeted to people like Seattly but it is rarely sunny making people sensitive to light

Actual Product

Physical good or delivered service that supplies the benefits

Maslow's hierarchy of needs relating to marketing

Physiological: medicines, staple items Quaker Oats: "It's the right thing to do" Safety: insurance, alarm systems Allstate: "You're in good hands" Belongingness: Clothing, grooming products, clubs, drinks Pepsi: "You're in the Pepsi generation" Ego needs: car, furniture, credit cards Royal Salute Scotch: "what the rich give the wealthy" Self-Actualization: hobbies, travel U.S. Army: "Be all you can be"

What is the Long Tail Concept?

Potential for success by marketing products that only a few people want Works well for internet marketers that do not need to stock all the items they sell in a traditional retail story Ex. Amazon, Netflix

What are the 6 stages of the Production Adoption Process?

Process by which a consumer or a business customer begins to buy and use a new good, service or idea Bottom to top: 1. Awareness 2. Interest 3. Evaluation 4. Trial 5. Adoption 6. Confirmation

What are the 5 categories of the Product Diffusion Process?

Process by which a product or innovation spreads throughout a population 1. Innovators 2. Early adopters 3. Early majority 4. Late majority 5. Laggards

Processed material and specialized services

Processed: produced by firms when they transform raw materials from their original state Specialized services: Those which are essential to the organization buy are not a part of the actual production of a product

Product Concept Development and Screening

Product ideas are tested for technical and commercial success

Raw materials

Products of fishing, lumber, agricultural, and mining industries used to manufacture finished goods

Evaluation

Provide information to customers about how the product can benefit them

What is VALS?

Segmants U.S. adults into 8 distinct types or mindsets using a specific set of psychological traits and key demographics that drive consumer behavior -Based on 3 primary consumer motivations: ideals, achievements, self-expression

What are the 3 steps in the Target Marketing Process in order?

Segmentation, Targeting, Positioning

What is Subculture?

Societal group who share a distinctive set of beliefs, characteristics or common experience Ex. Members of a religious or ethnic group

Cognitive Learning

Stressed the importance of internal mental processes and that views people as problem solvers -Ex. Buying a car: extensive research, time and visiting many car dealer shops

Business Analysis

The product's commercial viability is assessed

What are the four methods of choosing a targeting strategy?

Undifferentiated, differentiated, concentrated, custom market

Aspiration

We don't belong to that group but we want to

Dissociative

We don't belong to the group and don't want to

What does "Jamming the test" mean?

When a competitor tries to sabotage a company's test market Ex. Pizza Hut does a sample day and Domino's retaliates with free coupons

Psychographics

Your own interest, opinions and activities that make up your lifestyle Ex. liking to run, swim, eat chips, etc.

What are the advantages of Test Marketing?

measures actions, not intentions observe competition measure repeat purchase rate, consumers' characteristics, dealer enthusiasm, etc.