Marketing 301 Study Study Guide
Rational Man
assumes people work diglently to maximize their utility
Roles in Decision Making Unit
consumer purchasing and B2B - Initiator, Influencer, Decider, Purchaser, User, Evaluator, etc.
Integrated marketing mix
controllable: product, price, distribution, promotion how the environmental analysis can affect the target market
Evoked Set
the group of products (or brands), resulting from an information search, from which the buyer has determined that he or she will make a choice Narrowing Evoked Set 1. Analyze Product 2. Use cutoff criteria 3. Rank or weight attributions
"Law of Large Numbers"
the more number of trial runs you test, the more likely you will get true data
Creative destruction
walk away from profitable business to switch to new innovation (EX: blockbuster)
Prospect theory utility curve - shape and meaning
- they want to "lock in" their gains - when dealing with "losses" people tend to be more risk-taking - they are willing to take a risk to avoid a loss and get back to "ground zero"
Sales / Marketing Segments in B2B
-Promotion through personal sales, trade shows, publications, associations -More negotiation -Professional purchasing -Fewer customers -Larger volumes Segment based on: company characteristics (size, location, profitability) buying process (sensitivity, good track record, typical buying process, DMP on slow) customer relationships (long-term history, loyal to other suppliers)
Social Influences
-Reference Group -Opinion Leader -Family Member
Consumer involvement in different types of purchases (factors that mediate)
-Social Visibility (shoes vs. undies) -Interest (artwork) -Social Factors (pizza at home vs. wine at dinner) -Previous Experience (1st or 10th laptop you bought)
Marketing misperceptions
-all about advertising -represent a cost to the firm -all about sales "plots" and "scamming" -unethical and harmful to society -about "hype" and "sizzle"
What are five essential parts of a complete Positioning Statement?
1) Analyze market, define customer segment 2) Identify competitors 3) Draw a Perceptual Map 4) Develop Positing Statement 5) Monitor Perceptual space
Competitive Analysis Steps and Strategy
1) Develop cost advantage-lower cost model 2) Product or service must be difference 3) Find a "niche" in the market
Corporate Strategic Planning Process (Marketing Mix decision process)
1) Identify business mission 2) analyze the situation (SWOT, Market Environment) 3) Identify opportunities (Segmentation, targeting, positioning) 4) Implement the marketing mix (4 P's) 5) Evaluate performance using market metrics
5-step model of consumer decision
1) need recognition 2) information search 3) evaluation of alternatives 4)purchase 5)post-purchase behavior **not always in this sequence things can complicate it
B2B Buying Steps
1)Producers/Growers/Manufacturers (OEMs = Original Equipment Manufacturers) 2)Resellers (Wholesalers, Brokers, Retailers) 3)Other Businesses / Governments / Institutions ---- 1) RFI (Request for Information) 2) RFQ / RFP (Request for Quote/Proposal) 3) Quote/Proposal 4) Negotiation 5) Agreement
AIDA model
1. Awareness/Info Gathering 2. Deliberation / Attitude Formation 3. Action
Hierarchy of effects model
1. Awareness/Info Gathering 2. Deliberation / Attitude Formation 3. Action
B2B Inelastic with respect to price
A change in price will not affect the demand for B2B products as significantly as it does for consumer products
Availability heuristic
A mental mistake that occurs when people judge the likelihood of something happening by how easily they can call other examples of the same thing to mind. EX:plane crash will happen now
Perceptual Map/ Positioning Map? How does one define the dimensions, or Axes, of a Perceptual Map?
A visual depiction of customer perceptions of competitive products, brands, or companies in a market
Non-compensatory
Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)
B2B marketing Vs. B2C marketing (differences, price differences, sales, marketing media, steps)
B2B is highly information intensive, highly involved consumers there are professional purchasing agents, focus on theoretical value proposition (product features, life cycle, cost of operation), performance guarantees required
A concentrated targeting strategy definition and pros/cons
An approach that selects one segment of a market for targeting marketing efforts. Pro: concentrate resources, meet narrow segment needs, small firms can compete effectively, strong positioning possible Con: may decrease in size, or change, large competitors may market to niche segment EX: Rolex, Harley Davidson
differentiated/multi-segment targeting strategy definition and pros/cons
An approach that selects two or more well-defined market segments and develops a distinct marketing mix for each. Pro: potential for greater success, risky Con: high cost, cannibalization EX: Coca Cola, P&G
undifferentiated targeting strategy definition and pros/cons
An approach that views the market as one big market with no individual segments and thus uses a single marketing mix. Pros: saving on marketing cost Con: average product offerings, easier for competitors to take over EX: Sugar, Gas,
Mental anchors
Arbitrarily, unrelated numbers can set anchors in peoples' minds. (EX: Social Security test, marketing relates to pricing) -MENTION idea in head and then you keep thinking about it
GE Matrix
Build = Invest / Growth Hold = Cautiously Invest Harvest = Harvest / Divest
What are the 5 characteristics of a well-written Positioning Statement? (the CRUDE model)
C - Credible R - Relevant U - Unique D - Durable E - Emotionally appealing
differentiation as competitive tool
Can better understand + meet consumer needs if they divide up markets
Framing definition (examples)
Choices depend on the way the choice is described
Maslow's Hierarchy of Needs model
Classifies motivations
3 C's
Consumer Cost Comptencies
Behavioral Decision Theory
Consumer behavior is seldom straightforward, neat, and easy to predict - in fact sometimes consumers are downright irrational and illogical Behavior -> Attitude
Experience Curve/Learning Curve
Cost declines as number of units is produced (curved line) -growth is assured by expanding population -no competitive substitue -too much faith in mass production and declining manufacturing costs -carefully controlled market experimentation
Decision making process (DMP) Vs. Decision Unit (DMU)
DMP = process of buying DMU = typical life stages, social trends, initiators, influences, purchases, consumers, evaluators
Compensatory processing
Decision based on overall value of alternatives (good attribute can outweigh bad ones)
B2B Fluctuating
Demand for business products is more unpredictable than for consumer products (• Demand fluctuates more than demand for consumer products )
B2B Derived
Demand for business products results from demand for consumer products (• Demand is derived from the demand for consumer products )
What do we mean by "positioning"?
Distinctive claim to fit a pre-determined place in the mind of the customer, relative to competitive offerings on the most important product dimensions for the target segment EX: Value (you're worth it) , Benefit (softer skin), Feature (no hormones)
DMU examples in B2C & B2B
EX: B2C Fam buying bike Initiator: kid Influencer: neighbor Evaluator of Options: mom Decider: parents Purchaser: mom Consumer: kid Post-Purchase Evaluator: parent EX: B2B Whit buying computer Initiator: Admin Influencer: Sales Rep Evaluator of Options: Purchasing Agent Decider: Buying Committee Purchaser: Purchasing Agent Consumer: Whitman community Post-Purchase Evaluator: Buying Committee
Limited decision making
EX: Backpack -Low/Medium involvement -Low cost goods -Short to moderate time to decide -Both POS and product info helpful
Extensive Decision Making
EX: Car -High involvement -High cost goods -Evaluate many brands -Extensive product info -Brand loyalty important
Routine response behavior (habitual purchases) vs.
EX: Lettuce Head -Low involvement -Low cost -Quick decision -High Brand Loyalty -POS displays
Targeting a market segment: both financial/profitability reasons, and strategic reasons
Fit with company mission, strategy, and capabilities in manufacturing, sales, and promotions
What is a "positioning statement"?
For (target market) , (product name) is the (define competitive set) that provides (single most important benefit) because (single most important substantiation)
Customer-oriented firm
How can we better understand consumers (1960s-2000s) (marketing)
Societal Marketing
How can we can create value for our customers, that is best for society (2000s - now)
Product-oriented firm
How can we produce product itself better and how to produce more efficiently (1900s) EX: Blockbuster Video / Kodak
Sales-oriented firm
How can we sell more aggressively (persuading) (1930s-19060s)
Cancellation effect
If the net result is a gain: Integrate the gain and loss (positive and negative charges or same frequencies of positive and negative polarities nullify each other)
Silver Lining effect
If the net result is a loss: segregate the gain and loss (predicts that segregating a small gain from a larger loss results in greater psychological value than does integrating them into a smaller loss)
Decision process simplification / decision heuristics
Implicit or Explicit ways consumers simplify decisions (EX: brand restrictions, geography, recommendations)
Representativeness heuristic
In complex decision situations, our minds assess the evidence intuitively and try to compare it to mental models that we hold, then attempt to compute a reasonable answer.
Individual firm's pricing strategy vs. price leadership
Individual firm's pricing strategy and price leadership in an industry - economic value -> lower costs > lower prices
Product Life Cycle and BCG Matrix
Introduction = Question Market / Problem Child Growth = Star Maturity = Cash Cow Decline = Dog
"The Marketing Concept"?
It is about serving the best interest of the customer instead of "manipulating" them -Lifetime Value of Customer Outside in, not instead out
Asymmetrically dominated alternatives/'decoy' effect
It's mentally easier to compare and judge similar alternatives in a product category relative to each other, than to compare dissimilar alternatives.
Service Profit Chain
Keep employees happy they will give better service to customer and customer will come back and buy again and tell people
Marketing in a for-profit firm?
Let potential customers in your target market know about your product or service and how it can benefit them, with a view to selling it in exchange for money.
B2B price
Main Importance: Product Quality & Reliability - Total Value Proposition (lifecycle, cost of operation, service, assistance, replacement costs, etc.)
Ansoff's Matrix: Strategic Options for Growth
Market Penetration: increase sales of existing products to existing markets Market Development: introduce existing products to new markets Product Development: grow by selling new products in existing markets Diversification: emphasize both new products and new markets to achieve growth ~Low Risk to High Risk from top left to bottom right
Product Life Cycle Curve (explain why marketers rejection)
Marketers reject by product enhancements, new development, can be changed by market and be managed
Internal Search
Memory retrieval -Motivated by: how you personally feel/remember, recall, replay
How does the idea of positioning and perceptual mapping relate to "Categorization theory"?
Mental grouping of similar objects, events and people EX: chairs (Aristotle) - what is common to tell all?
Boston Consulting Group
Method to manage product portfolio -Use cash cow to invest to invest in new products (question mark =launch/introduction) portfolio model look at all products
micromarketing (one-to-one) targeting strategy definition and pros/cons
Micromarketing: from mass markets to "markets of one" - mass customization enabled by new low-cost tech (CRM, mfg., fast delivery, etc.) EX: custom computers
Central Route to Persuasion
Motivated by knowledge, memories and experiences
Peripheral Route to Persuasion
Motivated by stimuli, feelings
B2B Joint / Interdependent
Multiple items are used together in final product. Demand for one item affects all (• Demand for one item affects demand for other, related products (joint demand)
Elimination by Aspects
Narrow down to features you want and then deciding which is "compensatory" or "non-compensatory"
Growth Industries
No such thing, only companies can capitalize on and create growth
How do segmentation and differentiation relate to positioning?
Once you segment, you find target market and then create the positioning that would best appeal to that category of people
Cognitive dissonance and how marketers try to reduce
Only occur after a decision is made - feeling of discomfort or stress (buyer's remorse) Reduce by: warranties, effective communication, follow-up, return policy
"multiplier effect" B2B / "accelerator effect" B2B
Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.
Marketing as a "function"
Product + Brand Management (development, manufacturing, pricing, promotion) Supply Chain Management (distribution channel) Retail, Merchandising + Sales (point of sale displays, purchasing, merchandising)
4 P's
Product, Place, Promotion, Price
Push Marketing Vs. Pull Marketing (When to use and why)
Push: Sell to distributors Pull: Sell to consumers
cannibalization
Reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.
Segregating gains and integrating losses
Segregate Gains "Don't wrap all the birthday presents in one box" Integrate Losses "Give me all the bad news at once...get it over with" "Don't nickel-and-dime me to death"
Cognitive distortion types
Selective attention: notice certain stimuli and ignore other Selective distortion: remember only info that supports personal beleifs Selective retention: change or distort info that conflicts our beliefs, desire, or self-image
Mental Accounting definition (examples)
Separate their money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. Many small gains will be greater than 1 large gain (ex: finding 10 $10 bills vs. finding $100)
Marketing Myopia
Short-sighted and inward looking approach to marketing that focuses on needs of company instead of consumers EX: Railroads, Hollywood, Dry Cleaners
How is the Positioning Statement used by a firm's Marketing function?
The Positioning Statement is a marketing document used by managers and advertisers. It is NOT the advertising itself.
Levels of involvement
Utilitarian = Mortgage, Insurance Low Involvement = Paper Towels, Staples Ego Intensive = Car, Sports, Jewelry Simple DMP vs. Complex DMP Convince vs. Transactional
Lateral Marketing VS. Vertical Marekting
Vertical markets are focused on a single niche market (new segments within the current market) (EX: Sugary Cereal, Oats Cereal) (current market -> current market) Lateral market is able to sell its goods and services in more than one industry (leverages their core competencies, technologies and skillsets into other markets) (current market -> new market)
Prospect Theory (Kahneman and Tversky)
We encode our decisions as "gains" and "losses" -losses "hurt" more than "pleasure" from gains -If choice may cause regret, decision makers stop choice
Golden Circle
What > How > Why
neutral reference point
from some neutral reference point in our mind, called an "anchor"
bases for market segmentation - examples
geographic = location demographic = age, gender, race, income neighborhood lifestyle categories. psychographic = VALS (lifestyle, motives) behavioristic life cycle stage. Specialized: Life style, Life stage, geo-demographic= PRIZM, usage rate=(heavy users vs. light users -80/20 rule: For many firms, 20% of their customers generate 80% of the total demand for their product(s), benefits sought (benefits they want from product)
regret (anticipation of regret) on choice behavior
huge spectator in decision process -if a choice may cause regret, decision makers eliminate the choice
market segment targeting changed over the past 60 years
mass marketing 1950s - 1970s: share of market, product development, find customers for product one-to-one marketing: focus on customer, develop customer, find products for customer
Latent Need
needs that consumers may carry, but have not been consciously recognized yet
External Information Search
often unable/unwilling to determine degree of bias -influenced by: attention, motivation, involvement, mood
Marketing definition
process by which companies create value for customers and build customer relationships to capture value for continuous exchange
"market segment" Vs. "target market"?
segment: grouping people together with similar needs and characteristics market: the direct group of people your marketing efforts are targeted at causing mutal exhanges
impact of event imagine-abilty / "vividness effect"
single case stories people pay attention too vivid or highly graphic and dramatic events affect an individual's perception of a situation - consumer experience
useful segmentation method
substantial = Segment must be large enough to offer profit and growth identifiable / measurable = Must be identifiable and their size measurable. Must be able to gauge and monitor their needs. accessible = reachable with the marketing mix responsive = must react differently to sales, communications, and distribution efforts.
