BUAD 307 Midterm

Marketing

"The activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." The key things to know are that: Several tasks and other components are involved. Different groups (e.g., suppliers, customers, stakeholders) are involved. The desired outcomes are (1) to provide customers with value and (2) to capture this value (e.g., by being paid or by accomplishing desired objectives such as inducing healthier lifestyles). Main objective: create customer value subject to ethical and other constraints provide value -> capture value

"Triple Bottom Line"

A means to measure performance according to economic, environmental, and societal criteria

The Purchase Process

A number of factors may change the consumer's choice at the point of purchase. A product being out of stock, for example, may force the customer to switch brands. In addition, he or she may be influenced by in-store advertisements, coupons, or other promotions in the store.

Business models

A representation of how a firm intends to achieve desired objectives (usually eventual profitability) over time. eg: ride sharing, freemium products

Organizational mission

Brief statement of the "big picture" of what the organization exists to do E.g., for Apple, to produce elegant, user friendly consumer technology Shouldn't be too narrow or too broad Focus on enduring strategy and contributions over time rather than on specific products at specific times Subject to reconsideration over time technology, values, competitors, and customer needs change over time

Potential obstacles to selling highly valuable products to customers

Consumer must know product exists, which requires extensive marketing / advertising To get a product in a retailer, the retailer must first get rid of another product to make room for it Even then the new product can be lost in the "sea" of the other products Online retailers can typically carry more products than retailers, but search engine is very important, along with recommendations/suggestions

Information search

Consumer searches for potential solutions to the problem they are facing. Strategies can be divided into internal/ external search. Internal Search: Use of thinking/memory. Typically used for more low involvement decisions External Search: Consulting outside sources: friends, media, visiting stores, word of mouth Factors affecting search: - Benefits vs. cost- How much is at stake?- How much alternatives (brands) differ? • Locus of control: How confident is the consumer that his or her efforts will bring about a better decision? • Perceived risk • Performance • Financial• Social• Physiological • Psychological what are some alternative ways of solving the problem?

Consumer uncertainty

Consumers experience a great deal of uncertainty. There are many questions about products and other consumer related questions whose answers are not obvious. One may be able to search for answers online, but there will often be conflicting accounts, and it may be difficult to tell who may be right. And there is a possibility that some of the "information" has been posted by parties who want to sell products and/or have other vested interests. ex: Can't be sure if you eat a balanced diet, you do not need vitamin supplements

General ethical concerns: Misleading communication, potentially harmful products, taking advantage of ignorance

Deception and Manipulation. For something to be misleading or deceptive, it does not have to involve outright lies. Statements can be true and still misleading. For example, the Kraft cheese advertisement which mentioned the importance of calcium for bone growth and then showed the Kraft cheese slices to include a large amount of milk while the competing brand did not include any did not actually state that the competing brand had less calcium. That would not be true, but most people would tend to infer this given the information provided. However, in this case, the inference would be incorrect since the competing brand had calcium added separately. Note that, in some cases, there may be a "redeeming" purpose of acts or programs that may be manipulative if these efforts are intended for a good purpose (e.g., a non-profit program trying to get individuals to stop smoking by getting them angry at tobacco executives). Preying on personal insecurities. Advertisements may cause consumers to focus on bodily imperfections and other perceived personal limitations, causing the consumer to buy products that he or she may not otherwise have bought. Product dangers. Products that can potentially cause consumers harm tend to be problematic. In some cases, there may be some danger in using a product that is unavoidable. For example, it is not possible to design a car that can guarantee no risk of injury. In such cases, the benefits may outweigh the potential danger, but products that may cause serious injury or harm without sufficient redeeming benefit are more likely to be suspect. Ultimately, ethical decisions come down to personal convictions and the way that the individual decision maker sees the product or campaign is seen as a whole. The model presented will not flag all possible ethical violations; this is why the end points indicate "more likely" and "less likely" rather than a more definitive conclusion

The case of Dell Computer

Dell sells online and claims it reduces costs However, customization is probably more expensive than offering a set # of models Computer parts lose value quickly, so saving on distribution time is very beneficial Overall, costs likely cancel each other out

Strategic objectives

Desired outcomes to be achieved within a given time period Could involve profitability directly (often a long-term goal) Increase market share Certain % sales growth Achieve distribution in more outlets Consumers evaluate product more favorably Promoting literacy/preventing breast cancer (not focused on monetary profit) Desire to maximize profits does not differentiate the firm from others

Market balance (strategy)

Different firms should attempt to offer different forms of value appealing to different customer segments Otherwise, competition is likely to degenerate into price competition Both buyers and sellers are likely to be better off when the each customer receives a product fitting its needs at a higher price than if they receive a less well suited product at a lower price. Firms attempt to serve unique needs of different market segments Ex. of well balanced gadget industry: A - ease of use B - performance C - low price D - speed E - small size (convenience)

Post-purchase Behavior and Feelings

Feelings/States - Satisfaction - Post-purchase cognitive dissonance: a state where people will try to justify their purchases as rational even if it is clear they are not - Customer Loyalty Behaviors - Word of Mouth (Positive or Negative) - Product Returns

Compensatory vs. non-compensatory decision strategies

A compensatory decision involves the consumer "trading off" good and bad attributes of a product. For example, a vacuum cleaner may have high suction power (good) that compensates for high levels of noise (bad) Non-compensatory Decision Strategy: other good features CANNOT overcome one non-negotiable feature. For example, a parent may reject all soft drinks that contain artificial sweeteners. Here, other good features such as taste and low calories cannot overcome this one "non-negotiable" attribute.

Value engineering (4 P's)

Tools to provide customer value (4 Ps): - Product (tangible item & associated services) - Price (different customer segments pay different amounts depending on product needs and preference) - Place (making a product available and convenient to customer) - Promotion (advertising, sales promo, publicity, selling) Increase offering value by: - Decreasing cost - Enhancing customer benefits (Improving durability, performance, reliability, convenience and aesthetics)

Broad implications of aging populations in the U.S., Japan, and China (no specific figures needed)

U.S. Japan China - Average age of population increasing due to 1. Greater Life Expectancies and 2. Decreasing Birth Rates (in some cases) - Affects demand for specific types of products i.e. baby products - Affects consumer savings and consumption - Affects Size of the available Work Force - Affects Tax Revenue - Affects Jobs available - Fewer babies are being born = lower demand for baby products - By 2050, people aged 65 & older will equal to about 20% of the US population

Scope of marketing

activity, institution, processes ---> Marketing ---> Creation, communication, delivery, exchange ---> Offerings, value ---> customers, clients, partners, society

The marketing environment

marketing environment involves what is beyond the control of the firm. A firm, for example, can control its own strategy to some extent, but cannot generally control competitors. ex: COVID inflation Factors: Social Factors Demographic Factors Economic Factors Technological Factors Political and Legal Factors Competitive Factors

Laws of interest to U.S. firms doing business abroad

- Anti-trust: U.S. antitrust laws are generally enforced in U.S. courts even if the alleged transgression occurred outside U.S. jurisdiction. For example, if two Japanese firms collude to limit the World supply of VCRs, they may be sued by the U.S. government (or injured third parties) in U.S. courts, and may have their U.S. assets seized. - The Foreign Corrupt Influences Act: illegal for U.S. firms to pay bribes abroad. Firms engaging in this behavior, even if it takes place entirely outside the U.S., can be prosecuted in U.S. courts, and many executives have served long prison sentences for giving in to temptation. - Anti-boycott laws: Illegal for U.S. firms to participate in boycott of Israel or even declare that their firm does not do business with Israel. Many Arab countries maintain a boycott of Israel, and foreigners that want to do business with them may be asked to join in this boycott by stopping any deals they do with Israel and certifying that they do not trade with that country. It is illegal for U.S. firms to make this certification even if they have not dropped any actual deals with Israel to get a deal with boycotters. Technically, it is illegal to participate in boycotts of other countries not sanctioned by the U.S. Government, but the emphasis is on Israel. - Trading With the Enemy: With a few very limited exceptions, it is illegal for U.S. firms to trade with certain countries that are viewed to be hostile to the U.S.—e.g., Cuba, North Korea, Libya and Iran. The idea is that trade will strengthen these enemies, thus giving them greater strength to harm the U.S. or its allies. There are also certain product categories— e.g., high speed computers—that are subject to certain export limitations so that these products will not end up in the hands of U.S. enemies. Sometimes, advances in certain types of technology will make very simple computers—and occasionally even high end video games—off limits for exportation since it is believed that these devices could be modified to be used in military applications. - Extra-territoriality: U.S. courts will often take jurisdiction over cases of violations of U.S. law that occurred entirely abroad

Types of organizations that use marketing:

- Businesses - Government Units - Nonprofit Organizations - Cause related organizations

Immediate environment

- Company capabilities: the first factor that affects the consumer is the firm itself - Competitors: marketers must understand their competition in order to reach consumers - Corporate partners: must take into account ally/partner firms

Four E framework of social media

- Excite the customer - Educate the customer - Experience the product or service - Engage the customer

Basic Internet economics, including work done by the customer in the brick-and-mortar setting

- In most markets, online merchants tend to have HIGHER costs than do conventional retailers - Intermediaries usually add value through specialization of labor and consolidation of tasks. Eliminating intermediaries usually results in higher costs. - Customers do a lot of the work when they select, aggregate, bring for check-out, and carry away their products. Employees of e-commerce companies and their transportation services have to be paid to do this work!

Issues in bribery (expectations and what is permitted in a given jurisdiction)

- In some countries low level government officials are paid poorly and are expected to receive tips for their services. (similar to U.S. waitresses) What Constitutes a Bribe? • Clear cases: Paying for - Service or action that would not be provided otherwise - Getting out of paying a fine or other adverse consequence - A legal or administrative ruling (e.g., a vehicle classified as a "car" or "pickup truck") • "Muddier" cases: Paying for -Faster action on merchandise being processed through customs ("facilitating payments") - Advice or insight - Service from low level government official Because of strict U.S. anti-bribery laws, U.S. executives can face significant obstacles operating in certain cultures. For example, U.S. executives may be invited to the wedding of a government official's son or daughter but may be prevented from giving a gift commensurate with local standards. A firm may either buy supplies at above market rates or sell these at below market prices when dealing with relatives of government officials. Since determining the fair market value of these items can be difficult in countries where disclosure of trades and prices are limited, it may be less clear whether a bribe was intended.

Reality of online economics and competition

- Intense competition for large market products (large quantity demanded attracts many sellers) A new online merchant will face competition from established traditional merchants. These will often have the cash reserves to stay in business for a long time even with temporary competition . - Use of large demand products as loss leaders (e.g., Amazon.com bestsellers) Amazon.com, for example, has found it necessary to discount best selling books deeply - Competition will force reduced costs—if any—to be passed on to customers. Savings passed on to consumers --> in the long term probably make normal profits - Competition makes charging for shipping and handling difficult. - Less competition on specialty products greater margins

Growth strategies

- Market penetration: employs the existing marketing mix and focuses efforts on existing customers. - Market development: employs existing marketing offering to reach new market segments, domestic or international. - Product development: offering a new product or service to a firm's current target market. - Diversification: introducing a new product or service to a market segment that is currently not served.

Social Media (E-commerce, general use for marketing)

- Paid advertising / "sponsored" posts - Unpaid firm/brand pages (channels) - Hashtags - User content, contests

Consumer problems, recognition, and solutions

- Problems: Difference between actual and ideal state/ situation - Recognition: problems are not always recognized immediately. Have to recognize them - Solutions: can be internal/external search, evaluation of alternatives

Disciplines underlying Consumer Behavior

- Psychology - Sociology - Economics - Anthropology - Linguistics - Geography - Cognitive Science

Levels of involvement and decision characteristics o Duration of involvement o Magnitude of involvement o Manifestations of involvement

-Involvement: extent to which consumer is willing to put in effort to make best decision - Involvement duration: 1. temporary (highly involved over short period of time) (e.g. highly involved in buying car, not interested in cars after) vs. 2. enduring (lasting interest even if they will not need to make a purchase in the near future) (e.g. keeping up with fashion trends, photography equipment) -Temporary does not mean that magnitude is not high, could be very high -Elaboration Likelihood Model: Suggests that under high involvement --> more attention & deeper processing. Means that claims will be more carefully scrutinized. Under low involvement, weak arguments may be given more weight. Less attention to credibility of source - Magnitude of involvement: very low to very high - Manifestations of involvement: reading magazines, online info search, checking out offerings in store, asking friends, etc.

"Bottom of the Pyramid" market

-Typically found in developing countries -Often have no more than one or a few dollars in their possession at any one time - Lowering cost of product to the extent possible - Reducing the size of an item that has to be purchased at any one time Merchants may play a role in breaking down items (e.g., a fraction of a soap bar) Can be a profitable market due to the large number of people involved (economies of scale) e.g. cheap plastic cups with aluminum lid instead of water bottles for poor people

Consumer decision making and stages—theory and reality

1) problem recognition—you realize that something is not as it should be. Perhaps, for example, your car is getting more difficult to start and is not accelerating well. 2) Information search— what are some alternative ways of solving the problem? You might buy a new car, buy a used car, take your car in for repair, ride the bus, ride a taxi, or ride a skateboard to work. 3) Evaluation of alternatives. A skateboard is inexpensive, but may be ill-suited for long distances and for rainy days. 4) Purchase stage, and sometimes a post-purchase stage (e.g., you return a product to the store because you did not find it satisfactory). In reality, people may go back and forth between the stages. For example, a person may resume alternative identification during while evaluating already known alternatives. 5) Post-purchase evaluation/ behaviors (Sometimes) Maybe return product after In reality, people go back-and-forth between stages. Stages are also blurred in reality. Ex. a consumer who goes car shopping will start the evaluation process whilst doing the information search.

Case of Hostess (maker of Twinkies)

2011) Hostess was unable to negotiate a cost effective deal with its main union ■ happened on top of a "triple whammy" that had hit packaged goods manufacturers: - costs of ingredients had gone up due to increased costs of petroleum (needed for fertilizer, transportation, and processing) - a consolidation in the supermarket industry & the entry of Walmart's supercenters had put downward pressure on wholesale prices - the recession had caused a # of customers who in the past bought national brand items to switch to store brands and lower tier brands. ○ 2013) Hostess entered bankruptcy → sold off.

Associative network of knowledge

Adidas --> yeezy --> kanye The brain uses associations between different "nodes" (ideas or other pieces of information) to activate related others. Here is an example of what may come to mind when a consumer sees a picture of an elephant or otherwise comes to think of one. From a brand management perspective, it is useful to have one's product tied to as many positive nodes as possible. This allows for more opportunities for the product memory to be triggered, potentially resulting in purchase behavior and/or further elaboration.

Common differences from U.S. law among other countries

Advertising—often not permitted: - Comparative advertising -"Puffery"—vague, opinion based assertions (e.g., "best quality") - Pharmaceutical advertising - Termination of franchisees and other contracts may be more difficult overseas -Employment • Privacy • Retail - Assortment carried by stores - Discounting - Store hours

Sustainable competitive advantage

An advantage over the competition that is not easily copied and can be maintained over a long period of time. Something the firm can persistently do better than its competitors. The wall makes it hard for outside competitors to contact customers inside. However, competitors will attempt to break down the wall Over time, advantages will erode because of these competitive forces, but by building strong walls, marketers can sustain their advantage and boost profits for a longer time. Ex. Nike has a thick wall because of the solid foundation of innovation which has produced a strong brand and a loyal customer base. Customers go to Nike as their first option when they need sports shoes. e. Marketing strategy: identifies a firm's target market, a related marketing mix (four Ps), and the bases on which the firm plans to build a sustainable competitive advantage

"Conscious Marketing"

An approach to marketing that acknowledges four key principles, entails a sense of purpose for the firm that is higher than just making a profit - A higher purpose - think toms shoes - Stakeholders - who is affected? - Conscious leadership leaders are conscious - Conscious culture - all decisions are based on ethics of the culture

Sociocultural factors and Hofstede's Dimensions

Analysis of systematic differences among business people within different cultures Hofstede's Six Dimensions of Culture is used for people of different origins to work effectively with people from a range of cultural and geographic backgrounds. Power Distance (High v. Low) The extent to which rank/seniority is significant in culture Uncertainty Avoidance (High v. Low) The extent to how risk averse a culture is Individualism vs Collectivism Extent to which individual outcome is valued more than group outcome Masculinity vs Femininity Masculine: greater emphasis on gender differences, men are expected to be tough, winning is important, emphasis on force and conquering, emphasis on quantity Feminine: less openly gendered, less encouragement of open competition, sympathy for underdog, more emphasis on environmental preservation, NOT expressly based on status of women in a society Time Orientation (Long v. Short Term) Willingness to invest for longterm vs need to show immediate profits Indulgence (High v. Low) Extent to which society allows for enjoyment, leisure, pleasure vs the expectation of suppressing these desires i.e. eating, spending, resting, informal attire

Core competencies (strategy)

Areas in which a firm excels & that other firms cannot easily imitate - "broad, fundamental capabilities (not readily imitated by customers) in which an organization excels ex: stylish design of electronics (Apple)/ ease of use, broad assortment of online merchandise (Amazon)

Organizational culture and buying decisions

Autocratic, Democratic, Consultative, and Consensus

Relative costs in selling online, in retail settings, and combined mode

Cost of handling online orders is often higher than distributing through stores Online stores have to compete with other online merchants and prices will be driven down to that of retail stores Competition will be greater for products that have large markets than for those where markets are smaller and more specialized. Amazon.com, for example, has found it necessary to discount best selling books deeply. Higher prices—closer to the list price—can be charged for specialty books, but for a large part of the market, competition will be intense. A new online merchant will face competition from established traditional merchants. These will often have the cash reserves to stay in business for a long time even with temporary competition. The online merchant, if it has no cash reserves other than stockholders' investment, may run out of cash before it can become profitable. SEE CHART IN PPT

"Showrooming"

Customers visit a store to touch, feel, and even discuss a product's features with a sales associate, and then purchase it online from another retailer at a lower price. Allows the customer to compare the prices online to see whether a better deal is available

International economics o Floating exchange rates o Exchange rates and trade imbalances o Some influences on exchange rates o Measurements of country wealth o Assessing costs of living o Impact of government economic policies on buying power of consumers (especially tax rate effects)

Exchange rates come in two forms: "Floating"—When a country imports, it must sell its currency (causing an increase in supply) to be able to buy the currency of the country from which it is importing (whose currency, then, will experience an increase in demand) "Fixed"—currencies may be "pegged" to another currency (e.g., the Argentine currency is guaranteed in terms of a dollar value), to a composite of currencies (i.e., to avoid making the currency dependent entirely on the U.S. dollar, the value might be 0.25*U.S. dollar+4*Mexican peso+50*Japanese yen+0.2*Euro+0.1*British pound), or to some other valuable such as gold. Note that it is very difficult to maintain these fixed exchange rates—governments must buy or sell currency on the open market when currencies go outside the accepted ranges. Fixed exchange rates, although they produce stability and predictability, tend to get in the way of market forces—if a currency is kept artificially low, a country will tend to export too much and import too little. Some countries share a currency—i.e., they maintain a currency union. For example, although not all European Union (EU) countries participate in the Euro, this same currency is used in countries such as Germany, France, Spain, Belgium, Finland, and Greece. Maintaining a common currency that will stay constant potentially reduces the risk of setting up long term contracts with firms in other countries that are part of the currency system. However, this may also get in the way of economic forces that would help better reflect the value of goods and services produced in a country. Greece, for example, has been unwilling to undertake austerity measures (such as a reduction in government spending) needed to justify the number of Euros the country has available to spend, and much of the cost of this is then borne by other member countries with more "disciplined" economies. Trade balances and exchange rates: When exchange rates are allowed to fluctuate, the currency of a country that tends to run a trade deficit will tend to decline over time, since there will be less demand for that currency. This reduced exchange rate will then tend to make exports more attractive in other countries, and imports less attrac

Firm level factors affecting online sales potential

Firm reputation and credibility - Since the customer is buying a product without the opportunity to expect it, and since the customer will need to have a certain confidence that the merchandise ordered will actually arrive, firms with stronger reputations will be more likely to receive orders. Volumes Sold - Automation can help limit labor costs Ability to sell multiple items together - It is useful to be able to spread the costs of packaging and shipping across a number of different items. Synergy with traditional retail store operations - Well known retail chains— e.g., Staples, Costco, and Nordstrom's—have established reputation as discussed above and are thus more likely to be trusted. Having retail locations also makes it easier to accept returns, and the combined sales of online and brick-and-mortar outlets make for a greater bargaining power Localization of minimization of sales tax Location for low labor and land costs Potential for repeat sales to the same customer - Just as in traditional brick-and-mortar sales, it is often more cost effective to sell to existing customers than constantly trying to reach new ones. This is true online as well. In addition, based on knowing what the customer has bought in the past, it is possible to identify other customers who have bought these same items and identify additional common purchases among these relatively similar individuals. This process, known as collaborative filtering, is discussed below.

Framing

Framing involves different ways of expressing equivalent information. This may affect how a product is perceived. For example, beef that is "80% lean" tends to be evaluated favorably, while a description of "20% fat" may evoke disgust.

Country of origin effects

How a consumer perceives a product based on the country it is labeled to be from: When you think cheese tastes better if it's from France; not as true now

win-win/"x-win" opportunities for firms and nonprofit organizations

In some cases, it may actually be profitable for companies to do good deeds. This may be the case, for example, when a firm receives a large amount of favorable publicity for its contributions, resulting in customer goodwill and an enhanced brand value. A pharmacy chain, for example, might pay for charitable good to develop information about treating diabetes. The chain could then make this information on its web site, paying for bandwidth and other hosting expenses that may be considerably less than the value of the positive publicity received.

Profitability of online firms in markets where costs of selling online are lower

In some cases, selling online is clearly less expensive than selling in a brick-and-mortar setting. For example, the customer can do most of the data entry work when airline tickets are bought online rather than through a brick-and-mortar travel agent or through an physical office of the airline. At first glance, this might seem to suggest that entering businesses where such cost advantages exist will result in high levels of profit. This, however, is not the case. Sellers who have this cost advantage will be competing with other firms that also have this cost advantage. Therefore, over time, competition will drive prices down and all, or nearly all, the cost savings ultimately go to the customer. You are not competing just against dinosaurs! You are competing against others with the same cost advantage!

Internet of Things (products intersect with internet)

Increasingly, devices, appliances, and other things can be connected to the Internet. In the consumer's household, this can often be done through an existing wifi-connection. Thus, it is possible for appliances to send back error codes to manufacturers, to download software upgrades automatically, and to be controlled remotely. A printer, sensing that it is about to run out of toner, can automatically notify Amazon to send a replacement cartridge without human intervention.

Buying center roles

Initiator, Influencer, Decision maker, Buyer, Gatekeeper, and User Many firms employ professional purchasing staffs whose job it is to identify and negotiate the best deal. Therefore, the user of the product—e.g., a new large screen computer for computer assisted design—may be used by someone other than the buyer. An initiator originates a decision process. For example, a manufacturing engineer may point out that certain equipment is about to be worn out or that the brand of a component currently in use appears to result in a lot of defects or frequent breakdowns in the system. Others may then evaluate potential new suppliers and make decisions as to how to proceed. Some employees may influence the decision even if they do not make the final one. For example, design and manufacturing engineers may recommend the most suitable component makers. A gatekeeper may either possess knowledge that may only be passed on if it favors this individual's preferences. In other cases, a gatekeeper may be able to veto a choice not favored.

SWOT analysis

Internal Strengths Internal Weaknesses External Opportunities External Threats used to identify effective strategies. Analysis shoud be used to overcome weaknesses and threats through a company's strengths and opportunities Could be used to: Decide where to concentrate resources Take advantage of strengths/ opportunities Address weaknesses and threats Use strengths and opportunities to compensate for weaknesses and threats

Approaches to alternative identification (solution search)—internal vs. external search

Internal search involves the consumer identifying alternatives from his or her memory. For certain low involvement products, it is very important that marketing programs achieve "top of mind" awareness. For example, few people will search the Yellow Pages for fast food restaurants; thus, the consumer must be able to retrieve one's restaurant from memory before it will be considered. For high involvement products, consumers are more likely to use an external search. Before buying a car, for example, the consumer may ask friends' opinions, read reviews in Consumer Reports, consult several web sites, and visit several dealerships. Thus, firms that make products that are selected predominantly through external search must invest in having information available to the consumer in need—e.g., through brochures, web sites, or news coverage.

Model for identifying ethical concerns

Is the act deceptive/manipulative/misleading? Does it prey on personal insecurities? Harmful/dangerous? Do benefits outweigh risks? Is there a sufficiently redeeming purpose?

Google's battle with France

It has become a new law in the European Union that people can unlink their name with searches on the internet. For example, if there is a video of you throwing up in college linked to your name when you google it, it can be unlinked. The law also requests that your name can be unlinked anywhere in the world even if you are not in france. Google disagrees with this censorship and they are now in court.

Marketing as an exchange

People giving up something to receive something they would rather have

Sources of profitability for Amazon.com

Likely the most efficient and well run major online merchant, but estimated to lose 5-6 billion per year on tangible merchandise it ships to customers VTB: small-volume products that have lots of value are more cost-effective to ship to end-customers Absolute margins: high absolute margins (more important than % margins) allows merchant to spend $ on processing, packaging, & shipping the order o Charging for shipping makes the online merchant less competitive -Amazon profits from: • Sale of electronic content (books, movies, etc.) • Extensive web site hosting (Ex: Netflix) • Ebay like brokering of used merchandise shipped from seller to buyer • Services provided to smaller online retailers (ex: sales tax assessment)

Sentiment analysis (social media)

Marketers analyze data from social media sites to collect consumer comments about companies and their products. Listen --> analyze --> do

Strategy—purpose

Marketing strategy is meant to clarify & define what types of objectives an organization would like to achieve and how this should be done plans are need to clarify what kinds of strategic objectives an organization would like to achieve and how this is to be done - must consider the amount of resources available plans - to achieve desired objectives (ex. profit, market share) - based on available resources (ex. financial, patents, trademarks, people, brand name/image , distribution channels) - subject to choices made (ex. willingness to take risk, short run vs. long run goals)

Consumer information processing (diagram)

Perception --> Attention --> Comprehension --> Links to other items in memory/association --> Storage (in memory) --> Triggers --> Retrieval --> Elaboration --> Behavior

Communicating value to customers

This communication could happen through advertising or through word of mouth that results from product quality or other marketing efforts. Awareness through advertising requires elaborate, lengthy, expensive campaign. Social Media and "Guerrilla Marketing" Exposure through Retail settings is another way. But retailers use precious shelf space and product may drown in a sea of other products. For some products customer must see what the product actually does to recognize the value (i.e. Pillow Pets aren't just stuffed animals)

"Normal" profits in free markets

Normal profits are the profits expected from a market. In a free market, competition drives down profits to these normal levels. If firms in an industry are making "supernormal profits"--higher than normal--firms will join this market and drive the profits down to normal.

Universal, retrieved, and evoked (consideration) sets

Options identified and considered as solutions to problems (circular diagram with three layers) - Universal set (outer): All possible options/ products available - Retrieved set (middle): options that come to mind when thinking of options - Evoked/Consideration set (inner): options that will be considered by the consumer and are easily remembered

Organizational buyers (B2B) o Types o Characteristics o Purchase types

Organizational buyers that make buying decisions for their companies for a living, tend to be somewhat more sophisticated than ordinary consumers. Types: - Manufacturers/Service Providers (components) - Resellers/ Wholesalers - Institutions - Government, businesses, and non-profit organizations Characteristics: - Tend to be more Risk Averse - Greater involvement (more important decisions) - Bureaucracy (more people involved) - Long term relationships—investing in providing value to the customer over time; anticipating customer needs - Price is important but may not be the most important factor Purchase Types: - Straight Rebuy: same brand is purchased from the same supplier as last time (usually for low stakes purchases) - Limited Decision Making: few alternatives examined, but only limited effort is invested - Extended Decision Making: Major efforts made to find suppliers who are examined carefully. (For High Stake Decisions) Organizational buying usually involves more people than individual buying. Often, many people are involved in making decisions as to (a) whether to buy, (b) what to buy, (c) at what quantity, and (d) from whom. An engineer may make a specification as to what is needed, which may be approved by a manager, with the final purchase being made by a purchase specialist who spends all his or her time finding the best deal on the goods that the organization needs. Often, such long purchase processes can cause long delays. In the government, rules are often especially stringent—e.g., vendors of fruit cake have to meet fourteen pages of specifications put out by the General Services Administration. In many cases, government buyers are also heavily bound to go with the lowest price. Even if it is obvious that a higher priced vendor will offer a superior product, it may be difficult to accept that bid.

Attitudes and their components

Three components to attitude: - Cognitive: a person's belief system, what we believe to be true - Affective: emotions, what we like or dislike - Behavioral: the actions we take based on what we know and feel

Macroenvironmental factors ("big picture" only—you do not need to know the specifics of the different generational cohorts)

Other factors influence consumers. CDSTEP - Culture (regional/international) - Demographics - Social Trends - Technological Advances - Economic Situation - Political environment/rules

Cryptocurrencies

Over the last decade, an number of "crypto" currencies have developed. These are entirely digital in nature and permit completely anonymous transactions. Most are based on so called "block chain" technology where a number of parties are involved in verifying a transaction, reducing the role of any centralized organization. The technology behind these currencies is quite complex and require a great deal of computer processing power. There are some potential benefits in that such currencies, including the potential for processing micropayments at a reduced cost. Cryptocurrencies often appeal greatly to certain civil libertarians who want to reduce the role of the government both in being the main source of currency and to regulate and oversee transactions between individuals. They could also allow some users that can't get bank accounts to access one. (Women in Saudi Arabia) Problems: Facilitation of Illegal Activities (Silk Road), Tool to circumvent taxes, Use by Terrorists, High fluctuation in Value, Relies heavily on Computing Power (High Energy Costs)

Procedural knowledge and its implications NOTE - generally involves neuromotor skills NOT conscious knowledge

Procedural knowledge refers to knowledge of how to do something—e.g., drive a car or touch type a document. Knowledge—some conscious and some unconscious—of how to do something - Drive a car - Draw in 3D - Handwrite - Hit a baseball with a bat - Touch type - Tie a tie - Walk in high heels - Usually contains a large unconscious component (over time, clumsy conscious actions become semi-automatic with practice) -Often involves a component of fine motor skills - Lack of training may prevent consumers from buying and using certain products—e.g., manual transmission car, motorcycle -Some products can be optimized to reduce the effort needed to gain sufficient procedural knowledge

Products vs Solutions

Product Marketing focuses on both the tangible item and the service ( features and functionality) Solutions focuses on describing the customer segmentation or industry landscape (industry trends, business process, key issues, persona) Netflix started shipping out DVDs to Customers (Product) lead to a database of consumer preferences for recommendations. Then provided an enhanced way of providing the customer benefit with STREAMING (Solution)

Purchasing power parity (PPP)

Purchasing Power Parity (PPP) is a hypothesis that exchange rates will reach equilibrium when the exchanged amount of money would buy the same in both the original currency and the currency bought. In reality, this hypothesis does not hold up. It should be noted that some products may be more expensive in one country while others will be more expensive. Things also depend a great deal on where in the country one is buying. Things will tend to be much more expensive in big cities in China such as Beijing and Shanghai than they are in the country. In less developed countries, the cost of labor tends to be much less expensive than in more developed ones. Similarly, more well developed countries may be better able to afford regulations that protect the environment but raise the price of doing business. More developed countries also tend to have stricter standards for employee and customer safety. Ironically, less developed countries are often more bureaucratic. This may both delay getting the permits needed and, in some cases, there may be expectations of payoffs. Some well developed countries have complicated regulatory structures, too, that are expensive to navigate and delay the start of new projects.

Search engines and search engine optimization

Quality LINKS more important than key words Several issues in search engines and directories are important. Some search engines, such as Google, base rankings strictly on merit (although sites are allowed to get preferred paid listings on the right side of the screen). Other search engines allow sites to "bid" to get listed first. Some sites may end up paying as much as a dollar for each surfer who clicks through. If a potential customer is valuable enough, it may be worth paying for enhanced listings. Often, however, it is better to be listed as number two or three since only more serious searchers are likely to go beyond the first site. The first listed site may attract a number of people who click through without much serious inspection of the site. but most tend to heavily weigh the number of links from other sites to a site and the keywords involved. More credit is given for a link from a highly rated site—thus, having a link from CNN.com would count much more than one from the site of the Imperial Valley Press. On any given page, the weight given from a link will depend on the total number of links on that page. Having one of one hundred links will count less than being the only one. One source reports that the weight appears to be proportional so that one out of one hundred links would carry one percent of the weight of being the sole link, but that may change and/or vary among search engines.

Heuristics

Simplified low effort decision rules for low stakes decisions that should be made quickly Intended for a quick decision rather than the "best" one that could be made with more effort and time Heuristics are simplified decision rules that may be used by consumers under conditions of low involvement or lack of information. For example, the consumer may automatically select the most expensive product in a category, figuring that the higher priced product is likely to be of higher quality. A consumer may also decide to automatically buy either Coke or Pepsi if that brand is on sale but to buy Coke (the most preferred brand) if neither is on sale, not considering any other brands or the actual depth of the discount. Example: Buying Organic foods if available without putting in info search

Burger chains in India

Since cows are sacred animals in India, burger chains were sought to be a very unlikely product to offer in a country where people do not eat meat. However, Wendy's (and other chains) used cultural adaptation to provide the fast food restaurants with veggie and non cow meat burgers to permit success.

Situational influences on decision making

Situational factors can influence the purchase and shopping situation - Purchase situation: consumer may like cheap items, but buys an expensive one because of an upcoming wedding for a friend - Shopping situation: many things about a store influence decision making - store atmosphere - salespeople - crowding - In-store demonstrations - promotions - packaging

Micro-payments—problems, opportunities, and applications. Merchant Banks and Fees -- Percentage and Fixed Base Charge (swipe fee) What micropayments are NOT

Small charges; not viable for tangible goods (shipping cost too high for low cost item). Not viable for paying over time (Cost of splitting small payment into parts too large with payment processing fees) Usually only for electronic goods However, collecting small amounts of money can be - Costly—credit card firms or debit processing firms may charge a significant per transaction fee - Inconvenient—the customer may not be willing to enter much information - Mobile technology (e.g., smart phones or tablets) with active login—may be helpful for the higher end (e.g., 50¢+) micro-payments due to established billing relationship - AliPay and certain other electronic payment systems charge lower minimum fees and may be viable - Merchant banks (payment processors) charge a small percentage fee AND larger swipe fee around 30 - 50 cents

CoverGirl's use of Snapchat

Snapchat used geo-filters to promote a covergirl product line. When taking a picture near a make up store, users could see this geo filter.

The "Scarf of the Tiger"

Tony the Tiger Kellogg's conducted market research with different types of tigers, and the one with a scarf had the best results Consumers likely prefer the scarf because it makes the tiger more human-like and personable Market research is necessary for all marketing decisions, as personal preferences and biases are often distinctly different from consumer preferences

Starbucks' use of data to place new locations

Starbucks uses Geographic Information Systems (GIS) technology to pinpoint ideal locations and determine which kinds of stores to open in those locations. The technology uses data that includes location information, demographic details, and which locations have high traffic.

Subliminal messages

Subliminal ads are illegal in the US. Messages more than two syllables long have NO IMPACT on consumers. In 1957, it was reported that on selected evenings, movie goers in a theater had been exposed to isolated frames with the words "Drink Coca Cola" and "Eat Popcorn" imbedded into the movie. These frames went by so fast that people did not consciously notice them, but it was reported that on nights with frames present, Coke and popcorn sales were significantly higher than on days they were left off. This led the Federal Trade Commission to ban the use of subliminal advertising. The movie theater manager who claimed to have inserted the messages into the movie frames subsequently admitted that no such exposure actually took place. A number of subsequent studies have examined the impact of this type of brief exposure, but the consistent finding has been that these have no effect. There is research to show that people will start to giggle with embarrassment when they are exposed for a fraction of a second to "dirty" words in a tachistoscope, an experimental device that will show an image for an instant. Here, again, the exposure is so brief that the subjects are not aware of the actual words they saw, but it is evident that something has been recognized by the embarrassment displayed. It turns out that the brain may be able to detect one or two syllables with such brief exposure, and many dirty words tend to be brief—thus, the phrase "four letter words."

"Bricks-and-clicks" potential

Synergy between brick and mortar retailers, and an online store - Retail chains already have an established reputation - Seller can open up floor space in retail location by offering some products online only - Online purchases can be returned to store (reduce costs) - Volume purchasing power / big inventory With combined higher sales volumes from the two outlets, the firm gains greater bargaining power with suppliers and will often be able to negotiate lower prices. These lower prices be used to increase margins and/or to offer customers lower prices that can lead to even higher sales volumes

Culture and its implications (Int'l marketing)

The culture of a country or region involves not just behaviors but also values, expectations, and perceptions in the World. Firms operating in the U.S. will tend to face customers who will value individuality more than is the case in certain other countries. The culture of a country may also impact the extent to which status differences among individuals are emphasized or deemphasized. There is also some evidenced that there are differences in the attributions made for certain medical conditions. the behaviors, values, and expectations of a regionDell sells online and claims it reduces costs However, customization is probably more expensive than offering a set # of models Computer parts lose value quickly, so saving on distribution time is very beneficial • Overall, costs likely cancel each other out

Priming

The exposure to a stimulus may—without the conscious awareness of the consumer—impact his or her subsequent behavior. For example, it was found that individuals in an office where a credit card logo was present gave larger donations to a solicitor from a charitable organization than those in the control group where no such logo was displayed. This is despite the fact that only cash donations were accepted—thus, it was not a matter of the credit card being used in the place of potentially limited cash on hand.

Tippability

The potential of a small factor to change a low stakes decision from one alternative (possibly the one usually chosen) to another one offering this benefit eg.: Interesting image on packaging, celebrity endorsed eg: Choosing Snapple over other bottled tea brands due to the "fun facts" in the caps

Market segmentation

The process of dividing a market into meaningful, relatively similar, indentifiable segments or groups

Post-purchase cognitive dissonance

The uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evoke buyer's remorse.

The Means-End chain

Used to "probe" for ultimate motivations for consumer behavior we consider a logical progression of consequences of product use that eventually lead to desired end benefit. Thus, for example, a consumer may see that a car has a large engine, leading to fast acceleration, leading to a feeling of performance, leading to a feeling of power, which ultimately improves the consumer's self-esteem. Self-esteem --> end value desired The important thing in a means-end chain is to start with an attribute, a concrete characteristic of the product, and then logically progress to a series of consequences (which tend to become progressively more abstract) that end with a value being satisfied. Thus, each chain must start with an attribute and end with a value: An important implication of means-end chains is that it is usually most effective in advertising to focus on higher level items. For example, in the flower example above, an individual giving the flowers to the significant other might better be portrayed than the flowers alone.

Considerations in determining suitability for products and services for sale online NOTE: Exam answers should include economic factors (e.g., value-to-bulk ratio, absolute margins).

VTB: small-volume products that have lots of value are more cost-effective to ship to end-customers Absolute margins: high absolute margins (more important than % margins) allows merchant to spend $ on processing, packaging, & shipping the order Charging for shipping makes the online merchant less competitive SEE THE SUMMARY TABLE

Value; value co-creation

Value-Based Era - firms that are successful have a focus on discoving a customers' needs and wants. Value reflects the relationship of benefits to costs. Value Co-Creation - using the customer to act as collaborators to create the product/service

Web metrics

Web metrics involve statistics by which the performance of a web site can be evaluated. Google now offers a set of "Analytics" tools, including a set of web traffic statistics. Webmasters can sign up voluntarily to participate in this by placing certain "meta tag" code in their web pages. (This code is invisible to people viewing the respective web page in its regular display mode). Therefore, for such sites, Google does, in principle, have access to traffic information from all sources, including other search engines or links from other sites. It is not clear whether Google actually uses this information, however.

Relationship marketing

When firms focus on the life time value of a customer rather than the value of a single transaction. A firm focuses on the needs of the customer and meeting those needs to build up goodwill. They focus on their brand and loyalty more than acquiring sales right away. It's important to focus on customer benefits rather than the product/service form. Product/service forms become obsolete and new forms takeover. Many times a firm with a product form that is being obsolete can shift to a new form more effectively than the new entrants The Personal Selling Process- Steps i. Step 1: Generate and Qualify Leads 1. Generate a list of potential customers (leads) and assess their potential (qualify). ii. Step 2: Preapproach and the Use of CRM Systems 1. Preapproach: In the personal selling process, occurs prior to meeting the customer for the first time and extends the qualification of leads procedure; in this step, the salesperson conducts additional research and develops plans for meeting with the customer. 2. CRM (Customer Relationship Management) system: salespeople can access information form here. iii. Step 3: Sales Presentation and Overcoming Reservations 1. Person to person meeting. Get to know the customer 2. Beginning of the presentation is the most important of the selling process iv. Step 4: Closing the Sale 1. Obtaining commitment from the customer to make a purchase v. Step 5: Follow-Up 1. Used to solidify the customer relationship through great service quality for the future. 2. Reliability, responsiveness, assurance, empathy, tangibles

Iceberg Metaphor

With culture, certain elements—often manifested in the form of behavior—are readily visible. For example, in pre-pandemic times, people in some parts of the world might be seen shaking hands while others would bow their heads or exchange some other greeting. Other aspects—such as the "between the lines" messages that are communicated—are less visible and take longer to understand. Cultural elements that are readily visible (behaviors & practices). But under the iceberg there are many more aspects of culture such as perception, attitudes, beliefs, values, religion, etc.

Customer benefits and delivering value

a firm will create something of value to one or more customers who are willing to pay enough to make the venture worthwhile Benefit received > sacrifice for both parties value = benefits received/sacrifices made Low priced product may not represent value to customer if benefits received are perceived to be too low Different customer segments have different value perceptions & desires • A good value doesn't necessarily translate into a sales: o Someone else offers a better value o Customer isn't Aware of the offering o Customer doesn't get around to making the purchase Forms of Customer Value - • Form Utility - a product is made available to a consumer in a form that's more valuable than the commodities used to create it (wood vs. chair) • Place Utility - a product made available to the customer at a preferred location is worth more than at the place of manufacture (grocery store vs. a farm) • Time Utility - making a product available to a consumer when he needs it • Possession Utility - a consumer can go to one store and obtain a large assortment of goods from different manufacturers during one shopping occasion i.e. Walmart

M-commerce

mobile devices open up a new source of commerce - websites and mobile applications People increasingly access the Internet through cellular phones and other portable devices. Today, these can be used two ways. Web sites can be accessed through a browser. In addition, certain firms may make "apps" that make accessing their particular content easier, possibly adding certain security features. For example, a bank may create an app that lets customer access account information and perform transactions. Thus, the design can be made to make the best use of the available screen space. Information service providers such as Yelp may create applications optimized for the display of relevant information that they provide. M-Commerce tends to be more developed in certain countries—e.g., Japan, Finland, and even India—than in the U.S. In places where fewer people have easy access to computers, accessing the Internet through a smart-phone will tend to be more popular—thus the emphasis on M-Commerce in India, for example. Recent research in the United States has also found that a large proportion of young people from a lower socio-economic background report a cell phone as their primary means of accessing the Internet.

Case of Boeing

possible increase in trade barriers political developments affect opportunities to sell to different countries (e.g., Iran) political changes in export assistance uncertainty about long term fuel prices under high fuel prices, the Boeing 787 can reduce costs under lower fuel costs, the A380 can reduce labor costs very long lead time in developing the next generation of planes fluctuating world economy can dramatically affect demand for new aircraft with very short notice "glut" of nearly new places available during global recessions long backlog in orders during prosperity

Collaborative filtering (recommendation systems)

process used to identify products that an individual may be interested in buying based on individuals who are statistically similar Although the details on how collaborative filtering works are complicated, the basic idea is that we identify other customers who are "similar" to the customer of interest in the sense that they have bought many of the same things. We then identify items that have been bought by a lot of these similar customers, but not yet by the customer of interest. Chances are that although our target customer would not necessarily want to buy all of these items, many are likely to be of considerable interest.

Product standardization, adaptation, and customization o Advantages and disadvantages of each approach o Mandatory vs. discretionary adaptations

standardization involves making one global product in the belief the same product can be sold across markets without significant modification—e.g., Intel microprocessors are the same regardless of the country in which they are sold. - avoids high costs of customization - economies of scale in manufacturing - can produce a lot and get better at producing them quick - easier to establish global brand - CON: - may be significant differences in desires between cultures - unnecessary features - strong local competitors adaptation, whereby a common product is modified to some extent when moved between some markets—e.g., in the United States, where fuel is relatively less expensive, many cars have larger engines than their comparable models in Europe and Asia; however, much of the design is similar or identical, so some economies are achieved. customization, whereby the firm introduces a unique product in each country, usually with the belief tastes differ so much between countries that it is necessary more or less to start from "scratch" in creating a product for each market. Mandatory adaptations involve changes that have to be made before the product can be used—e.g., appliances made for the U.S. and Europe must run on different voltages, and a major problem was experienced in the European Union when hoses for restaurant frying machines could not simultaneously meet the legal requirements of different countries. Issues: - infrastructure differences vary among countries. i.e. outlets across countries may vary in voltage needed - may not be possible to make product that would be legal in both of two countries "Discretionary" changes are changes that do not have to be made before a product can be introduced (e.g., there is nothing to prevent an American firm from introducing an overly sweet soft drink into the Japanese market), although products may face poor sales if such changes are not made. Discretionary changes may also involve cultural adaptations—e.g., in Sesame Street, the Big Bird became the Big Camel in Saudi Arabia.