Intro to business chapter 11 study guide
Define the four different types of utility and explain how marketing contributes to the creation of utility. Then choose one of the following companies and describe how it creates each type of utility with its goods or services.
A firm's production function creates form utility by converting raw materials into finished goods and services. But its marketing function creates time, place, and ownership utility. • Form utility is created by converting raw materials into finished products. Then its marketing function takes over to satisfy a number of customer needs. • Time utility is created by making a product or service available when consumers want to purchase it. • Place utility is created by making it available in locations convenient for consumers. • Ownership utility is created by arranging for it to be transferred in an orderly way from seller to buyer.
Identify the two strategies that a firm could use to develop a marketing mix for international markets. What are the advantages and disadvantages of each?
The two strategies are standardization, offering the same marketing mix in every market, and adaptation, developing a unique mix to fit each market. The advantages of standardizing the marketing mix include reliable marketing performance and low costs. This approach works best with B2B goods, such as steel, chemicals, and aircraft, which require little sensitivity to a nation's culture. Adaptation, on the other hand, lets marketers vary their marketing mix to suit local competitive conditions, consumer preferences, and government regulations. Consumer tastes are often shaped by local cultures. Because consumer products generally tend to be more culture dependent than business products, they more often require adaptation.
Have students share which company they chose from the list and how it creates each type of utility. Some outlines are given below:
a. Subway sandwiches. Form—converts raw materials (food ingredients) into finished product (sandwiches). Time—sets hours at most convenient or peak times. Place—opens stores where they're easy to find, near major intersections, with ample parking. Ownership—organizes supplies with appropriate number of workers and designated tasks. b. Carnival Cruises—converts raw materials (ship, cabins, restaurants, decks) into finished service (memorable experience aboard with live shows). Time—year round with more cruises available in the winter. Place—located in scenic areas such as the Caribbean, entertainment, food and beverages, gift shops, emergency facilities. Ownership—has appropriate number of workers to assist guests. c. Barnes & Noble books. Form—converts raw materials (almost unlimited possibilities of published materials) into finished product (bookstore). Time—has hours during most convenient or peak times, may have late night hours in certain locations. Place—opens stores within malls, at strip malls, or in other strategic, easy-to-find spots with high traffic. Ownership—has appropriate number of workers, trains and informs them about books, designates tasks, organizes categories of books for easy access. d. Boric hair salons. Form—converts raw materials ( hair products like shampoo, conditioner and hairspray) into finished service (hairdo). Time—sets hours during most convenient or peak times, with longer hours on weekends or in summer. Place—opens centers on main streets, in locations that are easy to find and enter, where customer traffic is most likely. Ownership—has appropriate number of workers, strategically arranges supplies, designates tasks. e. Wal-Mart health clinics. Form -converts raw materials (bandages, tongue depressants, medicines, charts) into finished service (physical examination). Time—sets hours during most convenient or peak times. Place—opens centers on main streets, in locations that are easy to find and enter, where customer traffic is most likely. Ownership—has appropriate number of medical workers, strategically arranges supplies, designates tasks.
Describe how an organization might combine cause marketing and organization marketing. Give an example.
• Because marketing promotes a social or health issue (AVON Walks for Breast Cancer). • Organization marketing influences customers to accept the goals of, receive the services of, or contribute in some way to an organization (Tom Hank's TV spots for the Nature Conservancy). An example would be the annual Jerry Lewis Labor Day telethon to raise money to fight Muscular Dystrophy for the Muscular Dystrophy Association (MDA).
Describe how an organization might combine person marketing and event marketing. Give an example
• Person marketing focuses on the attention, interest, and preference of a target market by featuring a well-known person or celebrity (Michael Jordon endorsements for Nike). • Event marketing sponsors short-term events such as athletic competitions, music and cultural festivals, or charitable performances (sponsors of NASCAR racing events). The two could easily be combined by having a celebrity like Tiger Woods appear at an event such as a golf tournament
What are the three major determinants of consumer behavior? Give an example of how each one might influence a person's purchasing decision.
• Personal influences: individual factors such as needs and motives, perceptions, attitudes, learned experiences, and self-concept (examples: self-image, status, tendency to save or spend, medical needs, nutrition info, diet fads). • Interpersonal influences: broad factors such as cultural, social, and family influences (examples: family values, religious beliefs, ethnic tastes). • External events: outside factors such as natural disasters, severe weather, or price fluctuations (examples: hurricanes, floods, tornadoes, cigarette price hikes
Explain each of the methods used to segment consumer and business markets. Which methods do you think would be most effective for each of the following and why? (Note that a combination of methods might be applicable.)
A segment must be a measurable group, accessible for communication, and large enough to offer profit potential. • To segment a consumer market, the following methods are used: geographical (by location, type of region, growth and migration factors), demographic (by personal or socioeconomic traits such as gender, age, occupation, education, marital or family status), psychographic (by psychological characteristics, values, or lifestyles), and product-related (by buyers' relationships to goods or services including benefits sought, usage rate, and brand loyalty). • To segment a business market, the following methods are used: customer-based (by business demographics based classifications of specific types of industries, by sales revenues, or by number of employees), end-use (by the way the purchased product will be used), and geographical (by location of targeted industries or foreign markets). a. supermarket featuring Mexican foods - geographical, demographic b. air conditioning units - geographical, demographic, psychographic, end-use c. motorcycles - demographic, psychographic, product-related, geographical d. line of pet food - demographic, psychographic, product-related e. dental insurance - demographic, psychographic, customer-based f. spa treatments - geographical, demographic, psychographic 11. What are the three major determinants of consumer behavior? Give an example of how each one might influence a person's purchasing decision. • Personal influences: individual factors such as needs and motives, perceptions, attitudes, learned experiences, and self-concept (examples: self-image, status, tendency to save or spend, medical needs, nutrition info, diet fads). • Interpersonal influences: broad factors such as cultural, social, and family influences (examples: family values, religious beliefs, ethnic tastes). • External events: outside factors such as natural disasters, severe weather, or price fluctuations (examples: hurricanes, floods, tornadoes, cigarette price hikes
What is a target market? Why is target market selection usually the first step in the development of a marketing strategy?
It's a group of potential customers with certain needs and wants that a firm singles out when directing its marketing efforts. The first step is to study and analyze potential target markets and choose from them, so all efforts can be focused toward a certain group of people with specific characteristics or similarities. The target market then allows the firm to focus its strategies and design them to satisfy specific preferences of certain consumers.
Describe the shift from a seller's market to a buyer's market. Why was this move important to marketers?
Marketplace success begins with the customer. This realization caused a shift from a seller's market—one with a shortage of goods and services that focused on moving its products—to a buyer's market—one with an abundance of goods and services that focused on satisfying customers. This realization was important to marketers because the marketplace has a huge number of firms offering millions of products and services, and only a customer orientation leads to long-term profit (defined by marketing concept).
What are the benefits of relationship marketing? Describe how frequency and affinity programs work toward building relationships.
Relationship marketing develops and maintains long-term, cost-effective exchanges with "partners"—customers, suppliers, and employees. It leads to customer (or supplier) satisfaction and long-term loyalty, gives customers preferential treatment, leads to a larger customer base through referrals, and often reduces a firm's production and advertising costs. Firms build and protect customer relationships using frequency and affinity programs. Frequency programs reward purchasers with cash, rebates, merchandise, or premiums. They offer personalization and customization. For instance, airlines, hotel groups, restaurants, and retailers offer frequency programs. Affinity programs build emotional links with customers. An affinity program is a marketing effort sponsored by an organization that solicits involvement by individuals who share common interests and activities.
Describe the types of data that someone who is thinking of starting a limousine service might choose to gather. How might this businessperson use the data in making the startup decision?
They might gather the following: • Internal data from inside existing or competing firms (financial records, bills, inventory levels, profitability statements). • External data from outside sources (published trade journals or associations, ad agencies, audience surveys, or subscription services). • Primary data gathered first-hand (market surveys or potential customer base or target markets, analysis of location and traffic patterns). • Secondary data from publications (government statistics, census data, local pamphlets and maps, info from local business groups, info on not-for-profit or association Web sites). Internal data from competing firms would pinpoint current market trends and the nature and amount of competition. External data and secondary data could be analyzed to provide a wealth of information about demographic markets, consumer preferences, census information, and local tastes and cultures. Primary data might be gathered by observation to get a "gut feeling" about a location, setting, traffic patterns, or potential customers. All this information could be used to understand the options, determine the ideal target market, and choose the best ways to reach this group.
Identify each of the following as a consumer product or a business product, or classify it as both:
a. cup of coffee—both (if a restaurant or sandwich shop purchased it for assembly of its own food product) b. bipod—consumer c. gasoline—both d. forklift truck—both e. toothbrush—consumer f. travel agency—business
Identify and describe four strategies blend to create a marketing mix?
• Product strategy: designing a product with basic required attributes, taking in package design, brand name, company image, etc. • Distribution strategy: ensuring that customers receive their purchases in the right quantities at the right times and locations. • Promotional strategy: blending advertising, personal selling, sales promotion, and PR efforts to influence purchase decisions. • Pricing strategy: setting justifiable and profitable prices for a firm's offerings (a difficult area of decision making within the marketing mix).