Marketing
Economic Considerations
1. Comparative analysis of economic development in different countries 2. Assessment of economic infrastructure 3. Measurement of consumer income 4. Recognition of countries' currency exchange rates
Marketspace
The transformative power of technology may be best illustrated by the rapid growth of the marketspace, an information- and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings.
Political Stabilitiy
Track countries' restraints supplied by agencies such as the PRS group
Microfinance
practice of offering small collateral-free loans to individuals to begin small businesses
Developing The Research Plan
1. Specify Constraints 2. Identify Data 3. Determine how to collect data
Packaging and labeling challenges and responses
1. The continuing need to connect with customer 2. Environmental concerns 3. Health, safety, and security issues 4. Cost reduction
Economic Espionage Act
1996. Makes the theft of trade secrets by foreign entities a federal crime in the US
The Product Level
How they vary with different levels of products
Selective Retention
Selective retention means that consumers do not remember all the information they see, read, or hear, even minutes after exposure to it. This affects the internal and external information search stage of the purchase decision process.
Marketing dashboard
Shows how marketers measure actual performance versus the call that a new product planning
Ultimate Consumers
Ultimate consumers are the people—whether 80 years or eight months old—who use the goods and services purchased for a household.
Tariffs
government tax on goods to raise prices on imports
Constraints
The restrictions placed on potential solutions to a problem
A Fashion Product
A style of the time; Life cycles for fashion products frequently appear in women's and men's apparel
Organizational Foundation
An organization's foundation is its philosophical reason for being—why it exists. Successful visionary organizations use this foundation to guide and inspire their employees through three elements: core values, mission, and organizational culture
Organizational Direction
Business Goals -Long term -Short term
Specialty products
Items at the consumer make a special effort to search out and buy
JIT Inventory System
Just In Time inventory system that reduces the inventory of production parts to those to be used w/in hours or days On time delivery becoming more imp.
Bottom of the Pyramid
Largest and poorest socioeconomic group
Learning
Learning refers to those behaviors that result from (1) repeated experience (2) reasoning
Multidomestic Marketing Strategies
Many different product variations, brand names, and advertising programs used by multinationals
Dual Adaptation Strategy
Modifying both product and promotion messages
Branding Strategies
Multiproduct Multibranding Private Branding
Dynamically continuous innovation
Only just changes in venerable are required
Psychographic
Personality, values, lifestyle, needs
New Product Concept
Picture or verbal description of a product or service the firm might offer for sale
Gross Income
The total amount of money made in one year by a person, household, or family unit is referred to as gross income (or "money income" at the Census Bureau).
Marketing & Your Career
You perform many marketing activities and make marketing-related decisions
Global Competition
exists when firms originate and market their products and services worldwide
CDI
A category development index
Strategic Alliances
Agreements two or more independent firms to cooperate for the purpose of achieving common goals such as competitive advance or customer-valued creation
Private Branding
Also called reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer Typically produces high profits for manufacturers & resellers
Utilitarianism
An alternative perspective on moral philosophy is utilitarianism, which is a personal moral philosophy that focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the consequences of ethical behavior. If the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical. This philosophy underlies the economic tenets of capitalism and, not surprisingly, is embraced by many business executives and students
Decision
Conscious choice from two or more alternatives
Continuous innovation
Consumers don't need to learn new behaviors
Market Research
Defining market problem and opportunity systematically collecting and analyzing information and recommending actions
Creating a New Use Situation
Finding new uses for a product
Industrial Markets
Industrial firms in some way reprocess a product or service they buy before selling it again to the next buyer Companies that primarily sell physical goods (manufacturers, mining, construction, farms, timber & fisheries) represent 25% of industrial firms The services market sells diverse services such as legal advice, auto repair, finance, insurance, real estate, transportation, communication, public utility firms & non for-profit organization
Lifestyle
Lifestyle is a mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them. The analysis of consumer lifestyles, called psychographics, provides insights into consumer needs and wants. Lifestyle analysis has proven useful in segmenting and targeting consumers for new and existing products and services
Market Share
Market share is the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
Finding New Customers
Marketing to attract new customers
Breadth & Depth of Marketing
Marketing today affects every person and organization. To understand this, let's analyze (1) who markets (2) what is marketed (3) who buys and uses what is marketed (4) who benefits from these marketing activities (5) how they benefit
Profit
Profit is the money left after a business firm's total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings.
Increasing a Products Use
Promoting more frequent usage
Product positioning
Refers to the place a product occupied in consumers minds on important attributes relative to competitive products
Magnuson-Moss warranty/FTC improvement act 1975
Regulates the content of consumer warranties and has strengthened consumer rights with regard to warranties
Right to Choose
Relating to the right to choose, today many supermarket chains demand "slotting allowances" from manufacturers, in the form of cash or free goods, to stock new products. This practice could limit the number of new products available to consumers and interfere with their right to choose. One critic of this practice remarked, "If we had had slotting allowances a few years ago, we might not have had granola, herbal tea, or yogurt."
Traditional Auction
Seller puts an item up for sale and would be buyers are invited to bid in competition with each other
Product extension
Selling the same product in other countries
Direct Exporting
Sells without intermediaries
Product
So a product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value.
Diversity in Asian Subculture
Studies show that the Asian American subculture as a whole is characterized by hard work, strong family ties, appreciation for education, and median family incomes exceeding those of any other ethnic group. T This subculture is also the most entrepreneurial in the United States, as evidenced by the number of Asian-owned businesses. These qualities led Metropolitan Life Insurance to identify Asian Americans as a target for insurance following the company's success in marketing to Hispanics.
Make-buy Decision
Under problem recognition An evaluation of whether components and assemblies will be purchased from outside supplier or built by the company itself
Customs
What is considered normal and expected about the way people do things in a country
Harvesting
When a company retains the product but reduces marketing costs
Dumping
When a firm sells a product in a foreign country below its domestic price or actual cost
Joint Venture
When a foreign com pay and local firm invest together to create a local business, share ownership, and control profits
Small Businesses As Competitors
While large companies provide familiar examples of the forms and components of competition, small businesses make up the majority of the competitive landscape for most businesses. Consider that there are approximately. 5 million small businesses in the United States, which employ half of all private sector employees. In addition, small businesses generate 65 percent of all new jobs annually and 50 percent of the gross domestic product (GDP). Research has shown a strong correlation between national economic growth and the level of new small business activity in previous years.
Internal approach
evaluate the technical feasibility of a proposed new product Idea to determine if it meets the objectives defined in new profit strategy development phase
Language
experienced global marketers use back-translation where a translated word or phrase is retranslated into original language by a different interpreter to catch errors
Product At 3M
"How do college students really study?" asked David Windorski, a 3M inventor, in trying to develop a new product. He needed to convert this knowledge into a product that actually helps students improve their studying. Finally, Windorski and 3M had to manufacture and market this product using 3M's world-class adhesive technology. Sound simple? Perhaps. But David Windorski invested several years of his life conducting marketing research on students' study behavior, developing product ideas, and then creating an actual product students could use. This process of discovering and satisfying consumer needs is the essence of how organizations such as 3M create genuine customer value through effective marketing. David Windorski's invention got a personal testimonial from host Oprah Winfrey on her TV show. More on this later
The Deceptive Mail Prevention and Enforcement Act (1999)
"No purchase is necessary to enter" is displayed in the mailing, in the rules, and on the entry form.
4 Factors of Marketing to Occur
(1) two or more parties (individuals or organizations) with unsatisfied needs (2) a desire and ability on their part to be satisfied (3) a way for the parties to communicate (4) something to exchange.
Sales
(dollars or units). If profits are acceptable, a firm may elect to maintain or increase its sales even though profits may not be maximized.
Wait to segment consumer markets
1. A geographic segmentation which is based on where prospective customers live or work 2. Demographic which is based on some objectives physical, measurable, or other classification attribute of prospective customers 3. Cycle graphics and meditation which is based on some subjective mental or emotional attributes, aspirations, or needs of prospective customers 4. Behavioral segmentation which is based on some observable actions or attitude by prospective customers such as where they buy it with benefits they seek how frequently they buy, and when they buy
Creating Brand Equity
1. Create brand awareness to give the brand an identity 2. Establish brand meaning in the minds of consumers - a functional, performance related dimension and an abstract, imagery related dimension 3. Elicit the proper consumer responses to a brands identity & meaning - attention is placed on how consumers think & feels about a brand (perceived quality & emotional reaction) 4. Create a consumer brand connection & loyalty
Criteria to use in selecting the target segment
1. Divide the market into segments 2. Pick the target segment Market side, expected growth, competitive position, cost of reaching the segment, compatibility with the organization's objectives and resources
Trade Name
A commercial, legal name under which a company does business
Market Modification
A company tries to find new customers, increase a products use among existing customers, or create new use situations
Power of Buyers & Suppliers
A competitive analysis must consider the power of buyers and suppliers. Powerful buyers exist when they are few in number, there are low switching costs, or the product represents a significant share of the buyer's total costs. This last factor leads the buyer to exert significant pressure for price competition. A supplier gains power when the product is critical to the buyer and when it has built up the switching costs.
Personal Influence
A consumer's purchases are often influenced by the views, opinions, or behaviors of others. Two aspects of personal influence are very important to marketing: opinion leadership and word-of-mouth activity.
Brand Licensing
A contractual agreement whereby one company (licensor) allows its brand name or trademark to be used with products or services offered by another company (licensee) for a royalty or fee
The Relationship
A firm achieves meaningful customer relationships by creating connections with its customers through careful coordination of the product, its price, the way it's promoted, and how it's placed.
Quality
A firm may offer the highest quality, as Medtronic does with its implantable medical devices.
Employee Welfare
A firm may recognize the critical importance of its employees by stating its goal of providing them with good employment opportunities and working conditions.
Market product grid
A framework to relate the market segment of potential buyers to products offered or potential marketing actions by an organization
Market product grid
A framework to relate the market segments of potential buyers to products offered or potential marketing actions
Product
A good, service, or idea of the bundle of tangible and intangible attributes that satisfies consumers needs and is eceived in exchange for money or something else of value
Product line
A group of product or service items that are closely related because they satisfy your needs, are used together, are sold to the same customer group, are distributed through the same outlets , or fall within ay given price range
Marketing Dashboard
A marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective.24 Often, active hyperlinks provide further detail. An example is when a chief marketing officer (CMO) wants to see daily what the effect of a new TV advertising campaign is on a product's sales.
Market Strategy
A marketing strategy is the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it. The term implies both the end sought (target market) and the means to achieve it (marketing program).
Social Class
A more subtle influence on consumer behavior than direct contact with others is the social class to which people belong. Social class may be defined as the relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be grouped. A person's occupation, source of income (not level of income), and education determine his or her social class. Generally speaking, three major social class categories exist—upper, middle, and lower—with subcategories within each. To some degree, persons within social classes exhibit common values, attitudes, beliefs, lifestyles, and buying behaviors. Compared with the middle classes, people in the lower classes have a more short-term time orientation, think in concrete rather than abstract terms, and see fewer personal opportunities. Members of the upper classes focus on achievements and the future and think in abstract or symbolic terms.
Culture
A second social force, culture, incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group. Because many of the elements of culture influence consumer buying patterns, monitoring national and global cultural trends is important for marketing. Cross-cultural analysis needed for global marketing
Warranty
A statement indicating the liability of the manufacturer for product deficiencies Express warranties - written statements of liabilities Limited coverage warranty - specifically states the bounds of coverage and areas of non coverage Full warranty - has no limits of non coverage
STM (Stimulated Test Market)
A technique that replicates a full scale test market to a limited degree to save time and money
Family Decision Making
A third influence in the decision-making process occurs within the family. Two decision-making styles exist: spouse-dominant and joint decision making. -With a joint decision-making style, most decisions are made by both husband and wife. Joint decision making is common for cars, vacations, houses, home appliances and electronics, family finances, and medical care. As a rule, joint decision making increases with the education of the spouses. -Spouse-dominant decisions are those for which either the husband or the wife is mostly responsible. Research indicates that wives tend to have more say when purchasing groceries, children's toys, clothing, and medicines. Husbands tend to be more influential in home and car maintenance purchases.
Decision Making
Act of consciously choosing from alternatives
3. The Marketing Program
Activities in step 2 tell the marketing manager which customers to target and which customer needs the firm's product offerings can satisfy—the who and what aspects of the strategic marketing process. The how aspect—step 3 in the planning phase—involves developing the program's marketing mix (the four Ps) and its budget.
Information Search: Seeking Value
After recognizing a problem, a consumer begins to search for information, the next stage in the purchase decision process. First, you may scan your memory for previous experiences with products or brands. This action is called internal search. Or a consumer may undertake an external search for information. This is needed when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and the cost of gathering information is low. The primary sources of external information are (1) personal sources, such as relatives and friends whom the consumer trusts (2) public sources, including various product-rating organizations such as Consumer Reports, government agencies, and TV "consumer programs" (3) marketer-dominated sources, such as information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores
3M's Strategy
After working on 15 or 20 wood and clay models, Windorski concluded he had to build a highlighter product that would dispense Post-it® Flags because the Post-it® Notes were simply too large to put inside the barrel of a highlighter. Hundreds of the initial highlighter prototypes with Post-it® Flags inside were produced and given to students—and also office workers—to get their reactions. This research showed users wanted a convenient, reliable cover to protect the Post-it® Flags in the highlighter. So Windorski's rotating cover for the Post-it® Flags was born. Most of David Windorski's initial design energies under 3M's 15 Percent Rule had gone into his Post-it® Flag Highlighter research and development. But Windorski also considered other related products. Many people in offices need immediate access to Post-it® Flags while writing with pens. Students are a potential market for this product, too, but probably a smaller market segment than office workers. After several years of research, development, and production engineering, 3M introduced its new products. Figure 1-4 outlines the strategies for each of the four marketing mix elements in 3M's program to market its Post-it® Flag Highlighters and Post-it® Flag Pens. Although similar, we can compare the marketing program for each of the two products: Post-it® Flag Highlighter. The target market is mainly college students, so 3M's initial challenge was to build student awareness of a product that they didn't know existed. The company used a mix of print ads in college newspapers and a TV ad and then relied on word-of-mouth advertising—students telling their friends how great the product is. Gaining distribution in college bookstores and having attractive packaging was also critical. Plus, 3M charged a price to distributors that it hoped would give a reasonable bookstore price to students and an acceptable profit to distributors and 3M. Post-it® Flag Pen. The primary target market is people working in offices. But some students are potential customers, so 3M gained distribution in some college bookstores of Post-it® Flag Pens, too. But the Post-it® Flag Pens are mainly business products—bought by the purchasing department in an organization and stocked as office supplies for employees to use. So the marketing program in Figure 1-4 reflects the different distribution or "place" strategies for the two products. The success of these two products has also led Windorski to design a second generation of Post-it® Flag Highlighters and Pens without the rotating cover to make it easier to insert replacement flags. The new tapered design is also easier for students to hold and use.
Societal Responsibility
An even broader concept of social responsibility has emerged in recent years. Societal responsibility refers to obligations that organizations have (1) to the preservation of the ecological environment and (2) to the general public.
Label
An integral part of the package and typically identifies the product or brand, who made it, where and when it was made, how it used to be used, and packaged contents and ingredients
Data
concepts = ideas about products r services methods = approaches used to collect data to solve part of a problem Facts and figures related to the problem Primary Data - newly collected Secondary Data - internal(inputs and outcomes) and external(input data related to the effort expended to make sales)
Market Orientation
An organization that has a market orientation focuses its efforts on (1) continuously collecting information about customers' needs, (2) sharing this information across departments (3) using it to create customer value
Core Values
An organization's core values are the fundamental, passionate, and enduring principles that guide its conduct over time. A firm's founders or senior management develop these core values, which are consistent with their essential beliefs and character. They capture the firm's heart and soul and serve to inspire and motivate its stakeholders—employees, shareholders, board of directors, suppliers, distributors, creditors, unions, government, local communities, and customers. Core values also are timeless and should not change due to short-term financial, operational, or marketing concerns. Finally, core values guide the organization's conduct. To be effective, an organization's core values must be communicated to and supported by its top management and employees; if not, they are just hollow words.
Anheuser-Busch
Anheuser-Busch has been an advocate for responsible drinking for nearly three decades. The company began an aggressive campaign to fight alcohol abuse and underage drinking with its landmark "Know When to Say When" campaign in 1982. In 1989, a Consumer Awareness and Education Department was established within the company. This department, now called the Corporate Social Responsibility (CSR) Department, is charged with developing and implementing programs, advertising, and partnerships that promote responsible drinking; helping prevent alcohol abuse; and helping curb underage drinking before it starts.
R&D Labs
Another source of new products is a firm's own research and development Provide open innovation
Brand Name
Any word, device, sound, shape, or color used to distinguish a seller's goods or services
Market segment
Are the relatively homogeneous group of prospective buyers that results from the market segmentation process
The Appendix
Arthur R. Kydd's appendix (1) describes what marketing and business plans are, including the purposes and guidelines in writing effective plans, and (2) provides a sample marketing plan.
Pure Competition
At one end of the continuum is pure competition, in which there are many sellers and they each have a similar product. Companies that deal in commodities common to agribusiness (for example, wheat, rice, and grain) often are in a pure competition position in which distribution (in the sense of shipping products) is important but other elements of marketing have little impact.
Baby Boomers
Baby boomers are retiring at a rate of 10,000 every 24 hours, and they will all be 65 or older by 2030. Their participation in the workforce has made them the wealthiest generation in U.S. history, accounting for an estimated 50 percent of all consumer spending.
Purchase Decision Process
Behind the visible act of making a purchase lies an important decision process and consumer experience that must be investigated. The stages a buyer passes through in making choices about which products and services to buy is the purchase decision process. 5 Stages: (1) problem recognition (2) information search (3) alternative evaluation (4) purchase decision (5) postpurchase behavior
Customers & Competitors
Ben & Jerry's customers are ice cream and frozen yogurt eaters who have different preferences (form, flavor, health, and convenience). Medtronic's customers are cardiologists and heart surgeons who serve patients. Lands' End communicates a remarkable commitment about its customer experience and product quality with these unconditional words: Guaranteed. Period. In today's global marketplace, the distinctions among competitors are increasingly blurred. Lands' End started as a catalog retailer. But today, Lands' End competes with not only other clothing catalog retailers but also traditional department stores, mass merchandisers, and specialty shops. Even well-known clothing brands such as Liz Claiborne now have their own chain stores. Although only some of the clothing in any of these stores directly competes with Lands' End offerings, all these retailers have websites to sell their offerings over the Internet. This means there's a lot of competition out there.
Tiffany Walmart strategy
Businesses offering different variations of the same basic offering to hi and lo and segments
Organizational Strategies
By level -Corporate -SBU -Functional By Offering -Product -Service -Idea
Environmental Scanning
Changes in the marketing environment are a source of opportunities and threats to be managed. The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning.
Customer Satisfaction
Customers are the reason the organization exists, so their perceptions and actions are of vital importance. Satisfaction can be measured with surveys or by the number of customer complaints an organization receives.
Social Responsibility
Firms may seek to balance the conflicting goals of stakeholders to promote their overall welfare, even at the expense of profits.
Number of Potential Buyers
Firms selling to consumers reach thousands/millions Firms selling to organizations are restricted to fewer buyers
New Buy
First time buyer of the product/service; greater potential risks in the purchase
Close Ended
Fixed alternative questions that require selecting one or more options from a set of predetermined choices
Multibranding
Giving each product a distinct name Useful when each brand is intended for a different market segment Fighting brands - purpose is to confront brands Advertising & promotion costs tend to be higher The advantages of this strategy are that each brand is unique to each market segment and there is no risk that a product failure will affect other products in the line
Government Markets
Gov't units are federal, state, and local agencies that buy goods and services for the constituents they serve
Green Marketing
Green marketing—marketing efforts to produce, promote, and reclaim environmentally sensitive products—takes many forms
Trade Feedback Effect
Imports affect exports; Argument for free trade among nations
Business Plan
In contrast to a marketing plan, a business plan is a road map for the entire organization for a specified future period of time, such as one year or five years. A key difference between a marketing plan and a business plan is that the business plan contains details on the research and development (R&D)/operations/manufacturing activities of the organization. Even for a manufacturing business, the marketing plan is probably 60 or 70 percent of the entire business plan. For firms like a small restaurant or an auto repair shop, their marketing and business plans are virtually identical. The elements of a business plan typically targeted at internal and external audiences
Non-Profit Organization
In contrast, a nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction. Regardless, it also must receive sufficient funds above its expenses to continue operations.
Components of Competition
In developing a marketing program, companies must consider the factors that drive competition: entry, the bargaining power of buyers and suppliers, existing rivalries, and substitution possibilities. Scanning the environment requires a look at all of them. These factors relate to a firm's marketing mix decisions and may be used to create a barrier to entry, increase brand awareness, or intensify a fight for market share.
Extended Problem Solving
In extended problem solving, each of the five stages of the consumer purchase decision process is used and considerable time and effort are devoted to the search for external information and the identification and evaluation of alternatives. Several brands are in the consideration set, and these are evaluated on many attributes. Extended problem solving exists in high-involvement purchase situations for items such as automobiles and audio systems.
Limited Problem Solving
In limited problem solving, consumers typically seek some information or rely on a friend to help them evaluate alternatives. Several brands might be evaluated using a moderate number of attributes. Limited problem solving might be used in choosing a toaster, a restaurant for lunch, and other purchase situations in which the consumer has little time or effort to spend.
Who Benefits
In our free-enterprise society there are three specific groups that benefit from effective marketing: consumers who buy, organizations that sell, and society as a whole. True competition between products and services in the marketplace ensures that consumers can find value from the best products, the lowest prices, or exceptional service. Providing choices leads to the consumer satisfaction and quality of life that we have come to expect from our economic system. Organizations that provide need-satisfying products with effective marketing programs—for example, Target, IBM, and Avon—have blossomed. But competition creates problems for ineffective competitors, such as eToys and hundreds of other dot-com businesses that failed a decade ago. Finally, effective marketing benefits society.35 It enhances competition, which both improves the quality of products and services and lowers their prices. This makes countries more competitive in world markets and provides jobs and a higher standard of living for their citizens.
CMO
In recent years many large firms have changed the title of the head of marketing from vice president of marketing to chief marketing officer (CMO). These CMOs have an increasingly important role in top management because of their ability to think strategically. Most bring multi-industry backgrounds, cross-functional management expertise, analytical skills, and intuitive marketing insights to their job.
Todays Organizations
In studying today's visionary organizations, it is important to recognize (1) the kinds of organizations that exist (2) what strategy is (3) how this strategy relates to the three levels of structure found in many large organizations
ISO 9000
In the global market, standards developed by the International Standards Organization in Geneva, Switzerland, refer to the standards for registration and certification of a manufacturers quality management and assurance system based on an on-site audit of practices and procedures
Monopolistic Competition
In the second point on the continuum, monopolistic competition, many sellers compete with substitutable products within a price range. For example, if the price of coffee rises too much, consumers may switch to tea. Coupons or sales are frequently used marketing tactics.
Differentiation positioning
Involved seeking a must competitive, smaller market niche in which to locate a brand
Unsought products
Items of the consumer does not know about or knows about but does not initially want
Convenience products
Items that a consumer purchases frequently, conveniently, and with the minimum of shopping effort
Four Aspects of the Product Life Cycle
Length of the Product Life Cycle Shape of the Product Life Cycle The The Product Level: Class & Form The Life Cycle & Consumers
Sherman Antitrust Act (1890)
Lobbying by farmers in the Midwest against fixed railroad shipping prices led to the passage of this act, which forbids (1) contracts, combinations, or conspiracies in restraint of trade and (2) actual monopolies or attempts to monopolize any part of trade or commerce.
Business Marketing
Marketing of goods & services to companies, governments, or not for-profit organizations for use in the creation of goods and services that they can produce and market to others
Moral Idealism
Moral idealism is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. This philosophy exists in the Consumer Bill of Rights and is favored by moral philosophers and consumer interest groups. For example, the right to know applies to probable defects in an automobile that relate to safety.
Consumer Income and Purchasing Power
Must consider average per capita, or household income and how it's distributed
Firms Selling to Organization
Must: 1. Understand the organizations needs 2. Get on the right bidders list 3. Find the right ppl in the buying center 4. Provide value to organizational buyers
Cannibalization
New products or new chain stealing customers and sales from the older, existing one
Observational Data
Obtained by watching either mechanically or in person how people behave
Experiment
Obtaining data by manipulating factors under tightly controlled conditions to test cause and effect
Introduction Stage
Occurs when a product is introduced to its intended target market Marketing objective is to create consumer awareness & stimulate trial - the initial purchase of a product by a consumer During this period sales grow slowly, and profit is minimal Lack of profit is often the result of large investment costs in product development
Decline Stage
Occurs when sales drop Products tend to consume a disproportionate share of management & financial resources relative to their future growth
Organizational Buyers
Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
Global Marketing Strategy
Practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ
Stage Gate
Process to evaluate whether the results at each stage of new product development process are successful enough o warrant proceedings to the next stage
Exporting
Producing goods in one's country and selling them
Marketing Mix Activities
Product - features brand name packaging service warranty Price - list price, discounts, allowances, credit terms, payment method Promotion - advertising, personal selling, public relations, sales promotion, direct marketing Place - outlets, channels, coverage, transportation, stock level
Competencies
Senior managers must ask the question: What do we do best? The answer involves an assessment of the organization's core competencies, which are its special capabilities—the skills, technologies, and resources—that distinguish it from other organizations and provide customer value. Exploiting these competencies can lead to success.
Dichotomous Question
Simplest form with a yes or no response
Robinson-Patman Act (1936)
Small businesses were threatened, and they lobbied for the Act. This act makes it unlawful to discriminate in prices charged to different purchasers of the same product, where the effect may substantially lessen competition or help to create a monopoly.
Other sources of primary Data
Social Media, Panels and experiments, info technology and data mining
Cause Marketing
Socially responsible efforts on behalf of the general public are becoming more common. A formal practice is cause marketing, which occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products.
SBU
Some multimarket, multiproduct firms, such as General Electric and Johnson & Johnson, manage a portfolio or group of businesses. Each group is a strategic business unit (SBU), which is a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers. At the strategic business unit level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities. For less complex firms with a single business focus, such as Ben & Jerry's, the corporate and business unit levels may merge.
Role of a Product Manager
Sometimes called a Brand Manager; Manages the marketing efforts for a close-knit family of products or brands Responsible for managing existing products through the stages of the life cycle Also engage in extensive data analysis related to their products & brands & sometimes executing a marketing program Monitor measures with CDI & BDI
Screening and evaluation
Stage of new product process than internally and externally evaluates new product ideas to eliminate those that warrant n further effort
New Product strategy dvelopment
Stage of new product process that defines the role for a new product in terms of the firms overall objectives Uses SWOT analysis and environmental scanning
Commercialization
Stage of the New Product Process that positions and launches a new product in full scale production and sales
Development
Stage of the new product process that turns the idea on paper into a prototype Involves analyzing the entire sequence of steps or service encounters to improve the interactions between consumers and service provider
Measures of Success
Standards used in evaluating proposed solutions to the problem
Consumer Ethnocentricism
Tendency to believe that it is inappropriate to purchase foreign-made products
Newness in legal terms
The US Federal Trade Commission advises that the term new be limited to use with the product to 6 months after it enters regular distribution
Consumer Behavior
The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions.
Organizational synergy
The increase customer value through the performing organizational functions such as marketing Manufacturing more efficiently
Exchange
The key to achieving these two objectives is the idea of exchange, which is the trade of things of value between buyer and seller so that each is better off after the trade.5
Segmentation
The link between the various buyers needs an organization's marketing program Is only a means to an end it leads to tangible marketing actions that can increase sales and profitability
Organizational Buying Criteria
The objective attributes of the suppliers products & services and the capabilities of the supplier itself Most commonly used criteria: 1. Price 2. Ability to meet the quality specifications required for the item 3. Ability to meet the required delivery schedules 4. Technical capability 5. Warranties and claim policies in the event of poor performance 6. Past performance on previous contracts 7. Production facilities and capacity
Usage rate
The quantity consumedor patronage (store visits) during a specific period
Right to Be Informed/Federal Trade Commission
The right to be informed means that marketers have an obligation to give consumers complete and accurate information about products and services. This right also applies to the solicitation of personal information over the Internet and its subsequent use by marketers. An FTC survey of websites indicated that 92 percent collect personal information such as consumer e-mail addresses, telephone numbers, shopping habits, and financial data. Yet, only two-thirds of websites inform consumers of what is done with this information once obtained. The FTC wants more than posted privacy notices that merely inform consumers of a company's data-use policy, which critics say are often vague, confusing, or too legalistic to be understood. This view is shared by two-thirds of consumers who worry about protecting their personal information online. The consumer right to be informed has spawned much federal legislation, such as the Children's Online Privacy Protection Act (1998) and self-regulation initiatives restricting disclosure of personal information.
Disposable Income
The second income component, disposable income, is the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation. Thus, if taxes rise or fall faster than income, consumers are likely to have more or less disposable income.
Social Forces
The social forces of the environment include the demographic characteristics of the population and its values. Changes in these forces can have a dramatic impact on marketing strategy.
An Entrepreneur: Ben & Jerry's
The two founding entrepreneurs of Ben & Jerry's have successfully implemented some highly creative marketing and organizational strategies over the years. For example: Caring Dairy. They buy their milk and cream from a cooperative that guarantees their supplies are bovine growth hormone free. PartnerShops. Their "social entrepreneurship" PartnerShop programs enable community-based nonprofit organizations to own and operate ScoopShops that help employ at-risk youth and young adults to better their lives. Fair Trade. They believe that "people should get their fair share of the pie." To that end, they practice Fair Trade-certified sourcing of key ingredients—cocoa, coffee, and vanilla—for their deliciously unique flavors like Bonnaroo Buzz. These items are purchased from producers in developing countries who practice sustainable farming techniques. AIDS Prevention and Care. They developed a limited edition "Goodbye Yellow Brickle Road" ice cream in partnership with Sir Elton John to help his worldwide AIDS Foundation. The name is a play on one of his most popular song titles. The flavor is "an outrageous symphony of decadent chocolate ice cream, peanut butter cookie dough, butterbrickle, and white chocolate chunks." This creative, funky business is Ben & Jerry's Homemade Holdings, Inc., which links its mission statement to social causes designed to improve humanity, as shown on the next page.
Length of the product Life Cycle
There is no set time in which a product moves through the life cycle Consumer products have shorter life cycle than business products
Strategic Direction
To set a strategic direction, an organization needs to answer two difficult questions: (1) Where are we now? and (2) Where do we want to go?
Triple Bottom Line
Today, emphasis is placed on the triple-bottom line—recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.30 Growing interest in green marketing, cause marketing, social audits, and sustainable development reflects this recognition.
Post purchase Behavior: Value in Consumption or Use
Use of the Internet to gather information, evaluate alternatives, and make buying decisions adds a technological dimension to the consumer purchase decision process and buying experience.
Regional Rollouts
Used by large companies to introduce the product into geographical areas
Durable good
Usually last over many uses such as appliances
Buy Classes
Vary from routine reorder or straight rebuy to the completely new purchase called new buy; also the modified rebuy
Skimming Strategy Vs. Penetration Pricing
When a high initial price may be used to help the company recover the costs of development & capitalize on the price insensitivity of early buyers To discourage competitive entry, a company can price low, referred to as penetration
Open Innovation
When an organization finds and executes creative new product ideas by developing strategic relationships with outside individuals and organizations
Repositioning the Product
When companies decide to reposition a product or product line in an attempt to bolster sales Changes the place a product occupies in a consumers mind relative to competitive products Their are four factors that trigger the need for repositioning actions
Reaching a New Market
When sales are disappointing companies try to reposition products to reach a new market
Laws
Whereas ethics deal with personal moral principles and values, laws are society's values and standards that are enforceable in the courts. This distinction can sometimes lead to the rationalization that if a behavior is within reasonable ethical and legal limits, then it is not really illegal or unethical.
1 product in multiple market segments
With an organization for this is only a single product or service and attempts to sell it to two or more market segments, it avoids the extra cost of developing an additional versions of The incremental cost of taking the product into new market segments are typically those of a separate campaign or a new channel of distribution
Business Model
With today's increased global competition, many organizations are rethinking their business model, the strategies an organization develops to provide value to the customers it serves. Technological innovation is often the trigger for this business model change.
Foreign Corrupt Practices act
amended by the international anti-dumpting and fair competition act. 1997. make it a crime for US corporations to bribe an official or foreign government or party to obtain business in a foreign country
Questionairee Data
obtained by asking people about their attitudes, awareness, intentions, and behaviors
Product item
product that has unique brand, size, or price
Selective Perception
Because the average consumer operates in a complex environment, the human brain attempts to organize and interpret information with a process called selective perception, a filtering of exposure, comprehension, and retention.
Mission
By understanding its core values, an organization can take steps to define its mission, a statement of the organization's function in society that often identifies its customers, markets, products, and technologies. Often used interchangeably with vision, a mission statement should be clear, concise, meaningful, inspirational, and long-term Recently, many organizations have added a social element to their mission statements to reflect an ideal that is morally right and worthwhile. This is what Ben & Jerry's social mission statement shows in the chapter opener. Stakeholders, particularly customers, employees, and now society, are asking organizations to be exceptional citizens by providing long-term value while solving society's problems.
Semiotics
Correspondence between symbols and their meaning for people
Product Life Cycle
Describes the stages a new product goes through in the market place: Introduction Growth Maturity Decline
Supply Partnership
Exists when a buyer & its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products & services delivered to the ultimate consumer
A Fad
Experiences rapid sales on introduction and then an equally rapid decline
Open Ended Question
Express opinons, ideas or behaviors
Trademark
Identifies that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it
Buying Center
Individuals in this grp share common goals, risks, & knowledge important to a purchase decision Highly formalized and is called a buying committee
Global Market Space
Information from sellers anywhere to buyers anywhere at anytime and at a lower cost
Global Companies
International firms = engages in trade and marketing in different countries as an extension of the marketing strategy in its home country Multinational firms - view the world as consisting of unique parts and markets to sac part differently Transnational firm - view the world as one market and emphasizes cultural similarities
Information Technology
Operating computer networks that can store and process data
Sustainable Procurement
Provisions that supply partnerships include
Purchase Decision: Buying Value
Two choices remain: (1) from whom to buy (2) when to buy The choice of which seller to buy from will depend on such considerations as the terms of sale, your past experience buying from the seller, and the return policy. Often a purchase decision involves a simultaneous evaluation of both product attributes and seller characteristics. Deciding when to buy is determined by a number of factors. For instance, you might buy sooner if one of your preferred brands is on sale or its manufacturer offers a rebate. Other factors such as the store atmosphere, pleasantness or ease of the shopping experience, salesperson assistance, time pressure, and financial circumstances could also affect whether a purchase decision is made now or postponed.
Moral Philosophy
Two prominent personal moral philosophies have direct bearing on marketing practice: (1) moral idealism and (2) utilitarianism.
GDP
monetary value of all goods and services produced in a country during one year
Quota
restriction placed on amount of product allowed to enter or leave a country
Idea Generation
Second stage of new product process, involves developing a pool of concepts to serve as candidates for new products
Newness from the customer's perspective
Second way to define new products is in terms of their effects on consumption. This approach classifies new products according to the degree of learning required by the consumer
Postpurchase Behavior
Examined in a formal product acceptance process
Blended Family
Formed by merging two previously separated units into a single household. Today, one of every three Americans is a stepparent, stepchild, stepsibling, or some other member of a blended family.
Mixed Branding
Fourth strategy where a firm markets products under its own name and that of a reseller b/c the segment attracted to the reseller is different from its own market
Control Test
Involves contracting the entire test program to an outside service that pays retailers for shelf space and can therefore guarantee a specific percentage of the product's potential distribution volume
Product Counterfeiting
Involves low-cost copies of popular brands not manufactured by the original producer This is a problem
Discontinuous innovation
Involves making the consumer learn entirely new consumption patterns to use the product Marketing efforts for discontinuous innovations usually involve not only gaining initial customer awareness but also educated customers on both the benefits and proper use of the innovative products activities that can cost millions of dollars
Brand Equity
The added value a brand name gives to a product beyond the functional benefits provided Provides a competitive advantage & advantage that consumers are willing to pay a higher price for a product with brand equity
Data Visualization
Today's marketers use data visualization, which presents information about an organization's marketing metrics graphically so marketers can quickly (1) spot deviations from plans and (2) take corrective actions.
New Product Process
7 Stages an organization goes through to identify business opportunities and convert them into products or services
BDI
A brand development index
5 Step Marketing Research
1.Define the problem, set objectives, and identify possible actions 2.Develop research plan, specify constraints, identify data, and determine how to collect data 3. Collect relevant information, obtain secondary and primary data 4. develop findings, analyze data and present findings 5. Target marketing actions, make recommendations, implement action, and evaluate results
3 Main Types of Marketing Research
1.Exploratory Research; ideas about a problem 2.Descriptive; trying to find frequency that something occurs or extent of relationship with two factors 3.Casual; most sophisticated to determine the extent to which the change in one factor changes another one
Market segmentation diagram
1.Identify market needs = benefits in terms of product features expense quality time inconvenience 2.links needs to actions = take steps to segment and target markets 3.execute marketing program in actions = a marketing mix in terms of product price promotion and place
Business
A business describes the clear, broad, underlying industry or market sector of an organization's offering. To help define its business, an organization looks at the set of organizations that sell similar offerings—those that are in direct competition with each other—such as "the ice cream business." The organization can then begin to answer the questions, "What do we do?" or "What business are we in?"
Business Firm
A business firm is a privately owned organization such as Target, Nike, or Volkswagen that serves its customers to earn a profit so that it can survive.
Why Segment Markets
A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits
Reverse Auction
A buyer communicates a need for a product or service and would be suppliers are invited to bid in competition w/ each other
5 Steps of A Social Audit
A social audit consists of five steps: 1. Recognition of a firm's social expectations and the rationale for engaging in social responsibility endeavors. 2. Identification of social responsibility causes or programs consistent with the company's mission. 3. Determination of organizational objectives and priorities for programs and activities it will undertake. 4. Specification of the type and amount of resources necessary to achieve social responsibility objectives. 5. Evaluation of social responsibility programs and activities undertaken and assessment of future involvement.
Corporate Culture
A third influence on ethical practices is corporate culture. Corporate culture is the set of values, ideas, and attitudes that is learned and shared among the members of an organization. The culture of a company demonstrates itself in the dress ("We don't wear ties"), sayings ("The IBM Way"), and manner of work (team efforts) of employees. Culture is also apparent in the expectations for ethical behavior present in formal codes of ethics and the ethical actions of top management and co-workers.
Attitude
An attitude is a "learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way." Attitudes are shaped by our values and beliefs, which are learned.
SWOT
An effective summary of a situation analysis is a SWOT analysis, an acronym describing an organization's appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats. The SWOT analysis is based on an exhaustive study of four areas that form the foundation upon which the firm builds its marketing program: Identify trends in the organization's industry. Analyze the organization's competitors. Assess the organization itself. Research the organization's present and prospective customers.
Reciprocity
An industrial buying practice in which two organizations agree to purchase each others products & services
Intranet
An intranet, for example, is an Internet-based network used within the boundaries of an organization. It is a private network that may or may not be connected to the public Internet.
None durable good
An item consumed in 1 for a few uses
Strategy
An organization has limited human, financial, technological, and other resources available to produce and market its offerings—it can't be all things to all people! Every organization must develop strategies to help focus and direct its efforts to accomplish its goals. However, the definition of strategy has been the subject of debate among management and marketing theorists. For our purpose, strategy is an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals.9 All organizations set a strategic direction. And marketing helps to both set this direction and move the organization there.
Organizations
An organization is a legal entity that consists of people who share a common mission. This motivates them to develop offerings (products, services, or ideas) that create value for both the organization and its customers by satisfying their needs and wants.3 Today's organizations can be divided into business firms and nonprofit organizations.
Organizational Structure
An organization must connect with all of its stakeholders. Thus, an important corporate-level marketing function is communicating its core values and mission to them. Medtronic has a "rising figure" wall mural at its headquarters. The firm also presents every new employee with a medallion depicting this "rising figure" on one side and the company's mission statement on the other. And each December, several patients describe to a large employee holiday celebration how Medtronic devices have changed their lives.19 These activities send clear messages to employees and other stakeholders about organizational culture, the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization.
NAFTA
Canada, Mexico, and US; Created marketplace of 450 million consumers and stimulated trade flows and cross-border retailing
Culture
Culture refers to the set of values, ideas, and attitudes that are learned and shared among the members of a group. Culture also serves as a socializing force that dictates what is morally right and just. This means that moral standards are relative to particular societies. These standards often reflect the laws and regulations that affect social and economic behavior, which can create ethical dilemmas. Companies that compete in the global marketplace recognize this fact.
CRM
Customer relationship management (CRM), the process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace. This process requires the involvement and commitment of managers and employees throughout the organization28 and a growing application of information, communication, and Internet technology.
Business Culture
Societal culture provides a foundation for understanding moral behavior in business activities. Business cultures "comprise the effective rules of the game, the boundaries between competitive and unethical behavior, [and] the codes of conduct in business dealings." Consumers have witnessed instances where business cultures in the financial (inside trading), insurance (deceptive sales practices), and defense (bribery) industries went awry. Business culture affects ethical conduct both in the exchange relationship between sellers and buyers and in the competitive behavior among sellers.
Societal Values
Societal values and attitudes also affect ethical and legal relationships among individuals, groups, and business institutions and organizations. Consider the copying of another's copyright, trademark, or patent. These are viewed as intellectual property. Unauthorized use, reproduction, or distribution of intellectual property is illegal in the United States and most countries, which can result in fines and prison terms for perpetrators. The owners of intellectual property also lose.
Socioculture Influences
Sociocultural influences, which evolve from a consumer's formal and informal relationships with other people, also exert a significant impact on consumer behavior. These involve personal influence, reference groups, family influence, social class, culture, and subculture.
Macroeconomic Conditions
Of particular concern at the macroeconomic level is the performance of the economy based on indicators such as GDP (gross domestic product), unemployment, and price changes (inflation or deflation). In an inflationary economy, the cost to produce and buy products and services escalates as prices increase. From a marketing standpoint, if prices rise faster than consumer incomes, the number of items consumers can buy decreases. Periods of declining economic activity are referred to as recessions. During recessions, businesses decrease production, unemployment rises, and many consumers have less money to spend. The U.S. economy experienced recessions from 1973-75, 1981-82, 1990-91, and in 2001. Most recently, a recessionary period began in 2007 and ended in 2009, becoming the longest in recent history
Product Modification
Involves altering one or more of the products characteristics; such as quality, performance, or appearance to increase the value to its customers & increase sales
Head to head positioning
Involves competing directly with competitors in similar product attributes in the same target market
Trading Down
Involves reducing the number of features, quality, or price like airlines "downsizing" - reducing the package content w/o changing package size and maintaining or increasing the package price
Supplier Development
Involves the deliberate effort by organizational buyers to build relationships that shape suppliers, products, services, and capabilities to fit a buyers needs and those of its customers
Growth Stage
Is characterized by rapid increases in sales Sales increase b/c of new people trying or or using the product and a growing proportion of repeat buyers
High Learning Product
Is one for which significant customer education is required and there is an extended introductory period
How to segment markets
Offer different products to reach high income and low income families Three specific segmentation strategies are product in multiple market segments, multiple products in multiple market segments, and segments of one or mass customization
Test Marketing
Offering a product for sale on a limited basis in a defined area for a specific period of time standard, controlled, stimulated
Writing a position statement
Marketing managers often to convert their positioning ideas for the offering into a succinct written positioning statement
Marketing Plan
Most organizations tie the marketing metrics they track in their marketing dashboards to the quantitative objectives established in their marketing plan, which is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years. The planning phase of the strategic marketing process usually results in a marketing plan that sets the direction for the marketing activities of an organization.
Motivation
Motivation is the energizing force that stimulates behavior to satisfy a need. Because consumer needs are the focus of the marketing concept, marketers try to arouse these needs. An individual's needs are boundless. People possess physiological needs for basics such as water, shelter, and food. They also have learned needs, including self-esteem, achievement, and affection. Psychologists point out that these needs may be hierarchical; that is, once physiological needs are met, people seek to satisfy their learned needs.
Population Shifts
Nearly a century ago each of the top 10 most populous cities in the United States was within 500 miles of the Canadian border. Today, seven of the top 10 are in states that border Mexico. Last year, Texas gained more people than any other state—its population increased by almost 500,000!
Product Invention
New product design to satisfy common needs across countries
Organization Buying Objectives
Nissan Motor Co. switched its advertising agency b/c it expects the new agency to devise a more effective ad campaign to help it sell more cars & increase revenues Emphasis on buying from minority and women owned suppliers & vendors Companies include environmental initiatives
NAICS
North American Industry Classification System Provides common industry definitions for Canada, Mexico & the US, which makes it easier to measure economic activity in the 3 member countries of NAFTA NAICS replaced CIS system NAICS permits a firm to find the NAICS codes of its present customers and then obtain NAICS-coded lists for similar firms
Organization of SMP
Planning Phase -SWOT Analysis -Market Product Focus & Goal Setting -Marketing Program (Marketing Plan) Implementation Phase (Results) Evaluation Phase
World Population
Population Explosion -The most recent estimates indicate there are 6.9 billion people in the world today, and the population is likely to grow to 9.4 billion by 2050. While this growth has led to the term population explosion, the increases have not occurred worldwide; they are primarily in the developing countries of Africa, Asia, and Latin America. -India is predicted to have the world's largest population in 2050 with 1.75 billion people, and China will be a close second with 1.44 billion people. World population projections show that the proportion of the world's population in more developed countries such as the United States, Japan, Australia, and those in Europe is declining Another important global trend is the shifting age structure of the world population. - Worldwide, the number of people 60 years and older is expected to more than triple in the coming decades and reach 2 billion by 2050
Market
Potential consumers make up a market, which is people with both the desire and the ability to buy a specific offering. All markets ultimately are people. People who are aware of their unmet needs may have the desire to buy the product, but that alone isn't sufficient. People must also have the ability to buy, such as the authority, time, and money. People may even "buy" an idea that results in an action, such as having their blood pressure checked annually or turning down their thermostat to save energy.
Protectionism
Practice of shielding one or more industries within a country's economy from foreign competition through the use of quotas and tariffs; limits outsourcing of jobs, protects national security, discourages economic dependency, and promotes development of domestic industries
Counter Trade
Practice of using barter rather than money for global sales
Companies Recognizing Perceived Risk
Recognizing the importance of perceived risk, companies develop strategies to reduce the consumer's perceived risk and encourage purchases. These strategies and examples of firms using them include the following: -Obtaining seals of approval: The Good Housekeeping seal for Fresh Step cat litter. -Securing endorsements from influential people: Endorsements for Promise soft spread from 9 out of 10 cardiologists. -Providing free trials of the product: Samples of Mary Kay's Velocity fragrance. -Giving extensive usage instructions: Clairol hair coloring. -Providing warranties and guarantees: Kia Motors's 10-year, 100,000-mile warranty.
Reference Groups
Reference groups are people to whom an individual looks as a basis for self-appraisal or as a source of personal standards. Reference groups affect consumer purchases because they influence the information, attitudes, and aspiration levels that help set a consumer's standards. For example, one of the first questions one asks others when planning to attend a social occasion is, "What are you going to wear?" Reference groups influence the purchase of luxury products but not necessities—reference groups exert a strong influence on the brand chosen when its use or consumption is highly visible to others.
Product Class
Refers to the entire product category or industry such as prerecorded music
Geographic
Region, city size, statistical area, media, density
Evaluative Criteria
Represent both the objective attributes of a brand (such as display) and the subjective ones (such as prestige) you use to compare different products and brands. Firms try to identify and capitalize on both types of criteria to create the best value for the money paid by you and other consumers. These criteria are often displayed in advertisements.
Cultural Symbols
Represent ideas and concepts
Motivation of Unethical Consumers
Research on unethical consumer behavior indicates that these acts are rarely motivated by economic need. This behavior appears to be influenced by (1) a belief that a consumer can get away with the act and it is worth doing and (2) the rationalization that the act is justified or driven by forces outside the individual—"everybody does it."
Behavioral
Retail store type, direct marketing, product features, usage rate, user status, awareness/intentions
Products energies
Running vertically down the market product, each column represents an opportunity for efficiency and research and development and production
Involvement
Sometimes consumers don't engage in the five-stage purchase decision process. Instead, they skip or minimize one or more stages depending on the level of involvement, the personal, social, and economic significance of the purchase to the consumer. High-involvement purchase occasions typically have at least one of three characteristics: The item to be purchased (1) is expensive (2) can have serious personal consequences (3) could reflect on one's social image. For these occasions, consumers engage in extensive information search, consider many product attributes and brands, form attitudes, and participate in word-of-mouth communication. Low-involvement purchases, such as toothpaste and soap, barely involve most of us, but audio and video systems and automobiles are very involving.
Marketing Dept
Shaped by its relationship w/ internal & external forces The marketing department is responsible for facilitating relationships, partnerships, and alliances with the organization's customers, its shareholders (or often representatives of groups served by a nonprofit organization), its suppliers, and other organizations.
Demographics
Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation is referred to as demographics.
Customer Value & Proposition
Designing an effective marketing mix also conveys to potential buyers a clear customer value proposition, which is a cluster of benefits that an organization promises customers to satisfy their needs.
2. Market Product Focus & Goal Setting
Determining which products will be directed toward which customers (step 2 of the planning phase) is essential for developing an effective marketing program (step 3). Goal setting involves specifying measurable marketing objectives to be achieved. -Set marketing and product goals. Chances of new-product success are increased by specifying both market and product goals. Based on their market research, Medtronic executives set the following goal: Market its pacemaker within three years, manufactured in China for the Asian market. -Select target markets. The Champion pacemaker will be targeted at cardiologists and medical clinics performing heart surgery in India, China, and other Asian countries. -Find points of difference. Points of difference are those characteristics of a product that make it superior to competitive substitutes. Just as a competitive advantage is a unique strength of an entire organization compared to its competitors, points of difference are unique characteristics of one of its products that make it superior to competitive products it faces in the marketplace. For the Champion pacemaker, the key points of difference are high quality, long life, reliability, ease of use, and low cost. -Position the product. The pacemaker will be "positioned" in cardiologists' and patients' minds as a medical device that is high quality and reliable with a long, nine-year life. The name Champion was selected after testing acceptable names among doctors in India, China, Pakistan, Singapore, and Malaysia.
Take marketing actions to reach target market
Develop and execute an action plan in the form of a marketing program
Marketing Metric
Each display in a marketing dashboard shows a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result. The choice of which marketing metrics to display is critical for a busy marketing manager, who can be overwhelmed with irrelevant data
Family Influence
Family influences on consumer behavior result from three sources: consumer socialization, passage through the family life cycle, and decision making within the family or household.
Business Analysis
Specifies the features of the product and the marketing strategy needed to bring it to market and make financial Asses the total business fit with the company's mission and objectives Requires detailed financial projections, marketing and product synergies related to companies' existing operation Financial Projections of expected profits require estimates of expected prices for unit and units sold as well as costs of R&D, production and marketing
Market Testing
Stage in the new product process that involves exposing actual products to prospective consumers under realistic purchase conditions
Subculture
Subgroups within the larger, or national, culture with unique values, ideas, and attitudes are referred to as subcultures. Various subcultures exist within the American culture. The three largest racial/ethnic subcultures in the United States are Hispanics, African Americans, and Asian Americans.
Subliminal Perception
Subliminal perception means that you see or hear messages without being aware of them. The presence and effect of subliminal perception on behavior is a hotly debated issue, with more popular appeal than scientific support. Indeed, evidence suggests that such messages have limited effects on behavior.
Chart
Suppliers Organization (Marketing Dept, Other Dept, & Employees) Customers Environmental Forces -Social = demographic shifts & cultural changes -Economic = macroeconomic conditions & consumer income -Technological = changing technology, technologies impact on customer value, electronic business technologies -Competitive = alternative forms of competition, small businesses -Regulatory = laws protecting competition, laws affecting marketing mix actions, self-regulation
Data Mining
THE EXTRACTION OF HIDDEN PREDICTIVE info from large databases to find statistical links between consumer purchasing patterns and marketing actions
Evaluation Phase
The evaluation phase of the strategic marketing process seeks to keep the marketing program moving in the direction set for it. Accomplishing this requires the marketing manager to (1) compare the results of the marketing program with the goals in the written plans to identify deviations and (2) act on these deviations—correcting negative deviations and exploiting positive ones.
Ethics of Exchange
The exchange process is central to the marketing concept. Ethical exchanges between sellers and buyers should result in both parties being better off after a transaction.
Copyright
The federal copyright law is another way for a company to protect its competitive position in a product. The copyright law gives the author of a literary, dramatic, musical, or artistic work the exclusive right to print, perform, or otherwise copy that work. Copyright is secured automatically when the work is created. However, the published work should bear an appropriate copyright notice, including the copyright symbol, the first year of publication, and the name of the copyright owner, and it must be registered under the federal copyright law.
Pure Monopoly
The final point on the continuum, pure monopoly, occurs when only one firm sells the product. Monopolies are common for producers of goods considered essential to a community: water, electricity, and cable service. Typically, marketing plays a small role in a monopolistic setting because it is regulated by the state or federal government. Government control usually seeks to ensure price protection for the buyer, although deregulation in recent years has encouraged price competition in the electricity market.
Discovering Consumer Needs
The first objective in marketing is discovering the needs of prospective customers. But these prospective customers may not always know or be able to describe what they need and want. A need occurs when a person feels deprived of basic necessities such as food, clothing, and shelter. A want is a need that is shaped by a person's knowledge, culture, and personality.
Price Related Legislation
The pricing component of the marketing mix is the focus of regulation from two perspectives: price fixing and price discounting. Although the Sherman Act did not outlaw price fixing, the courts view this behavior as per se illegal (per se means "through or of itself"), which means the courts see price fixing itself as illegal. Certain forms of price discounting are allowed. Quantity discounts are acceptable; that is, buyers can be charged different prices for a product provided there are differences in manufacturing or delivery costs. Promotional allowances or services may be given to buyers on an equal basis proportionate to volume purchased. Also, a firm can meet a competitor's price "in good faith."
Organizational Strategies
The organizational foundation sets the "why" of organizations and the organizational direction sets the "what." To convert these into actual results, the organizational strategies are concerned with the "how." These organizational strategies vary in at least two ways, depending on (1) a strategy's level in the organization and (2) the offerings an organization provides to its customers.
Greenwashing
The practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, service, technology, or company practice
The Life Cycle & Consumers
The rate at which consumers adopt products Factors that affect whether a consumer will adopt a product are usage barriers (product isn't compatible with w/ existing habits), value barriers (the product provides no incentive to change), risk barriers (psychological, economical, or social), and psychological barriers (cultural differences or image)
Right to Safety
The right to safety manifests itself in industry and federal safety standards for most products sold in the United States. In fact, the U.S. Consumer Product Safety Commission routinely monitors the safety of 15,000 consumer products.
5 Roles of the Buying Center
Users = ppl in organization who actually use the product or service Influencers = affect the buying decision usually by helping define the specification for what is bought Deciders = have formal/informal power to select or approve the supplier that receives the contract; usually the buyer or purchasing manager (technical purchases usually from the R&D) Gatekeepers = control the flow of information in the buying center
Fast Prototyping
Uses a do it, try it, fix it approach encouraging continuing improvement even after the initial design
Hand In Hand International
Using a technique called microfinance, Hand in Hand provides small loans (about $125) to women in India, South Africa, and Afghanistan who want to start and operate a small business. A Hand in Hand self-help group reaches out to the poorest, least educated, would-be businesswomen and teaches them first the basics (reading, writing, and arithmetic) and then the skills needed to operate a business. Percy Barnevik, the founder of Hand in Hand, says he wanted to "gift" his knowledge, abilities, and passion as a retired CEO to improve society's quality of life.
Product Related Legislation
Various federal laws in existence specifically address the product component of the marketing mix. Some are aimed at protecting the company, some at protecting the consumer, and at least one at protecting both.
TTM (Time to Market)
Vital in introducing a new product on time rather than late for profit
Indirect exporting
When a firm sells produced goods in foreign country through an intermediary returns least profit
Cross Functional Teams
When developing marketing programs for new offerings or for improving existing ones, an organization's senior management may form cross-functional teams. These consist of a small number of people from different departments who are mutually accountable to accomplish a task or a common set of performance goals. Sometimes these teams will have representatives from outside the organization, such as suppliers or customers, to assist them.
Acting on Deviations
When evaluation shows that actual performance has failed to meet expectations, managers need to take corrective actions. -Exploiting a positive deviation. If Kodak's innovative digital products sell better than expected, Kodak might try to move quickly to offer these to international customers—such as its digital photo printers for the German market. -Correcting a negative deviation. However, if Panasonic is able to surpass Kodak in global market share of digital cameras, Kodak may need to reduce prices.
Social Responsibility
While many ethical issues involve only the buyer and seller, others involve society as a whole. For example, suppose you change the oil in your old Chevy yourself and dump the used oil in a corner of your backyard. Is this just a transaction between you and the oil manufacturer? Not quite! The used oil will contaminate the soil, so society will bear a portion of the cost of your behavior. This example illustrates the issue of social responsibility, the idea that organizations are accountable to a larger society.
Environmental Forces
While marketers can control their marketing mix factors, there are other forces that are mostly beyond their control These are the environmental forces in a marketing decision, those involving social, economic, technological, competitive, and regulatory forces.
Personality
While motivation is the energizing force that makes consumer behavior purposeful, a consumer's personality guides and directs behavior. Personality refers to a person's consistent behaviors or responses to recurring situations. Although many personality theories exist, most identify key traits—enduring characteristics within a person or in his or her relationships with others. Such traits include assertiveness, extroversion, compliance, dominance, and aggression, among others. These traits are inherited or formed at an early age and change little over the years.
Reseller Markets
Wholesalers & retailers that buy physical products & resell them again w/o any reprocessing Look at these organizational buyers in terms of 1. How they make their own buying decisions 2. Which products they choose to carry
Experimental concerns
Widespread concern over growth of solid waste and shortage of viable landfill sites
Women & Cars
Women are a driving force in the U.S. automobile industry. Enlightened carmakers have hired women designers, engineers, and marketing executives to better understand and satisfy this valuable car buyer and influencer. What have they learned? While car price and quality are important, women and men think and feel differently about key elements of the new-car buying decision process and experience. Carmakers have learned that women, more than men, dislike the car-buying experience and specifically, the experience of dealing with car salespeople. In particular, women dread the price negotiations that are often involved in buying a new car. Not surprisingly, about half of women car buyers take a man with them to finalize the terms of sale
Consumer Reports
You might study the comparative evaluation of selected smartphones appearing in Consumer Reports
What Is Marketing
You perform many marketing activities and make marketing-related decisions
Small Businesses
You perform many marketing activities and make marketing-related decisions In February 2004, a 19-year-old college sophomore from Harvard University started his own small web service business from his dorm room. He billed it as "an online directory that connects people through social networks at colleges." That student, of course, was Mark Zuckerberg. He named his web service "Thefacebook.com." A somewhat fictionalized version of the founding of Facebook—now minus the the—appears in the 2010 movie, The Social Network.
Needs & Desires
You've developed an unmet need—a desire Satisfy these unmet needs Furthermore, you have the money to buy the item
Direct Investment
biggest commitment a company can make entails a domestic firm investing in and owning a foreign subsidiary
Cross cultural Analysis
involves the study of similarities and differences among consumers in two or more nations or societies
Values
personally or socially preferable moments of conduct or states of existence that tend to persist over time
Competitive
-Customer generated content (feedback) -Microbusiness impact increasing through peer-to-peer websites -Partnerships, collaboration & co-creation of value
Economic
-Economic Crisis recovering to new economic marketplace -International activity from Asia & Latin Am -Investment in sustainable living infrastructure
6 Digit Coding System for NAICS
-First two digits designate a sector of the economy -Third digit designates a subsector -Fourth digit represents an industry group -Fifth digit designates a specific industry & is most detailed level at which comparable data are available -Sixth digit designates individual country level national industries
Technology's Impact on Consumer Value
-First, the cost of technology is plummeting, causing the customer value assessment of technology-based products to focus on other dimensions such as quality, service, and relationships. -Technology also provides value through the development of new products. -Technology can also change existing products and the ways they are produced. Many companies are using technological developments to recycle products through the manufacturing cycle several times.
4 Reasons for Unethical Behavior
-First, there is increased pressure on businesspeople to make decisions in a society characterized by diverse value systems. -Second, there is a growing tendency for business decisions to be judged publicly by groups with different values and interests. -Third, the public's expectations of ethical business behavior have increased. -Finally, and most disturbing, ethical business conduct may have declined.
Regulatory
-Online privacy protection -Regulatory guidance regarding green & environmental marketing crime -Health consciousness to public & private smoke-free areas
Social
-Social networks becoming dominant form of communication -Consumers purchase decisions are becoming value based & focused on improving world -Global media consumption growing
Technology of Tomorrow
-Social networks will become social platforms that provide functionality, community, and identity well beyond the value provided by traditional corporate websites. -"Natural user interfaces" will utilize gesture, touch, and voice to change the way we interact with and control computers and complicated machines. -Green technologies such as SmartGrid infrastructure, online energy management, and consumer-generated energy (e.g., home wind turbines) will gain widespread acceptance among American consumers. -Biotechnology will be used to develop genetically modified crops to create enough food for a growing world population.
Organization
-The Market w/ Potential Needs -Info -Discover Needs -Concepts for Products -Satisfy Needs w/ the 4 P's -Goods/Services/Ideas
Criteria to use in forming segments
1. Simplicity and cost-effective of assigning potential buyers to segments 2. Potential for increased profits = one of my sons of eternity for future profits and return on investment ROI 3. Similarities of the needs of potential buyers within asegment 4. Difference of needs of buyers among segments 5. Potential of a marketing action to reach a segment
Four types of consumer products
1. The effort the consumer spends on the decision 2. That attributes used in making the purchase decision 3. The frequency of a purchase
The Marketing Mix
4 P's = controllable factors—product, price, promotion, and place—that can be used by the marketing manager to solve a marketing problem. For example, when a company puts a product on sale, it is changing one element of the marketing mix—namely, the price. The marketing mix elements are called controllable factors because they are under the control of the marketing department in an organization.
Generational Cohorts
A major reason for the graying of America is that the 76 million baby boomers—the generation of children born between 1946 and 1964—are growing older.
Brand Personality
A set of human characteristics associated with a brand name
Advantages and Disadvantages of Secondary Data
Advantages: Time Savings and low Cost Disadvantages: Data out of date and incorrect definitions
Primary Demand Vs. Selective Demand
Advertising & promotion expenditures in the production stage are often made to stimulate primary demand - the desire for the product class rather than for a specific brand Company attention is focused on creating selective demand, the preference for a specific brand
African American Buying Patterns
African Americans have the second-largest spending power of the three racial/ethnic subcultures in the United States. Consumer research on African American buying patterns has focused on similarities and differences with Caucasians. When socioeconomic status differences between African Americans and Caucasians are removed, there are more similarities than points of difference. Differences in buying patterns are greater within the African American subculture, due to levels of socioeconomic status, than between African Americans and Caucasians of similar status. Even though similarities outweigh differences, there are consumption patterns that do differ between African Americans and Caucasians. For example, African Americans spend far more than Caucasians on boy's clothing, rental goods, and audio equipment. Adult African Americans are twice as likely to own a pager and spend twice as much for online services, on a per capita basis, than Caucasians. African American women spend three times more on health and beauty products than Caucasian women. Furthermore, the typical African American family is five years younger than the typical Caucasian family. This factor alone accounts for some of the observed differences in preferences for clothing, music, shelter, cars, and many other products, services, and activities. Finally, it must be emphasized that, historically, African Americans have been deprived of employment and educational opportunities in the United States. Both factors have resulted in income disparities between African Americans and Caucasians, which influence purchase behavior. Recent research indicates that while African Americans are price conscious, they are strongly motivated by quality and choice. They respond more to products such as apparel and cosmetics and advertising that appeal to their African American pride and heritage as well as address their ethnic features and needs regardless of socioeconomic status.
Competitive products
Analyzing the competition can lead to new product ideas
Balancing Interests of Different Groups
As organizations have changed their orientation, society's expectations of marketers have also changed. Today, the standards of marketing practice have shifted from an emphasis on producers' interests to consumers' interests. In addition, organizations are increasingly encouraged to consider the social and environmental consequences of their actions for all parties. Guidelines for ethical and socially responsible behavior can help managers balance consumer, organizational, and societal interests.
Low Learning Product
Begins immediately because little learning is required by the consumer, and the benefits of the purchase are readily understood
Beliefs
Beliefs are a consumer's subjective perception of how a product or brand performs on different attributes. Beliefs are based on personal experience, advertising, and discussions with other people. Beliefs about product attributes are important because, along with personal values, they create the favorable or unfavorable attitude the consumer has toward certain products, services, and brands.
Who Buys & Uses
Both individuals and organizations buy and use goods and services that are marketed. Ultimate consumers are the people—whether 80 years or eight months old—who use the goods and services purchased for a household. In contrast, organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale. Although the terms consumers, buyers, and customers are sometimes used for both ultimate consumers and organizations, there is no consistency on this. In this book you will be able to tell from the example whether the buyers are ultimate consumers, organizations, or both.
Global Brand
Brand marketed under the same name with similar coordinated marketing programs
Action of SWOT
Build on a strength. Find specific efficiencies in distribution with Unilever's existing ice cream brands. Correct a weakness. Recruit experienced managers from other consumer product firms to help stimulate growth. Exploit an opportunity. Develop new product lines of low-fat, low-carb frozen yogurts and sorbets to respond to consumer health concerns. Avoid a disaster-laden threat. Focus on less risky international markets, such as Canada and Mexico.
Product Adaptation
Changing a product to make it appropriate for a country's consumer preferences
Catching a Raising Trend
Changing consumer trends lead to repositioning such as "low fat"
Product repositioning
Changing the place a product occupies in a consumer's mind relative to competitive products
Standard Test
Company develops a product and then attempts to sell it through normal distribution channels in a number of test market cities
External Approach
Concept tests that sere as external evaluations with consumers that consist of preliminary testing of a new product idea rather than an actual product
Multiproduct
Company uses one name for all its products in a product class Family branding or corporate branding when company trade name is used Makes possible product line extensions - practice of using a current brand name to enter a different product class This strategy can result in lowering advertising & promotion costs because the same name is is used on all products, thus raising the level of brand awareness Subbranding - which combines a corporate or family brand with a new brand to distinguish a part of its product line from others Brand Extension - The practice of using a current brand name to enter a different product class Co-Branding - The pairing of two brand names of two manufacturers on a single product
Competitive Advantage
Competencies should be distinctive enough to provide a competitive advantage, a unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation.
Health, safety, and security issues
Concerns packaging materials
Product mix
Consists of all the product lines offered by an organization
Global Consumers
Consumer groups living in many countries who have similar needs or seek similar features and benefits from a product or service
Profit
Most firms seek to maximize profits—to get as high a financial return on their investments (ROI) as possible.
"Green Products"
Consumer purchase, use, and disposition of environmentally sensitive products relate to consumer social responsibility. Research indicates that consumers are sensitive to ecological issues. For example, a recent survey of U.S. consumers indicated that 50 percent were personally willing to change their lifestyle to improve the environment. However, only 28 percent could identify their own shopping or living habits over the past five years that help protect the environment. Related research shows that consumers (1) may be unwilling to sacrifice convenience and pay higher prices to protect the environment and (2) lack the knowledge to make informed decisions dealing with the purchase, use, and disposition of products. Consumer confusion over which products are environmentally safe is also apparent, given marketers' rush to offer "green products." For example, few consumers realize that nonaerosol "pump" hair sprays are the second-largest cause of air pollution, after drying paint.
Cognitive Learning
Consumers also learn through thinking, reasoning, and mental problem solving without direct experience. This type of learning, called cognitive learning, involves making connections between two or more ideas or simply observing the outcomes of others' behaviors and adjusting your own accordingly.
Changing Values
Culture also includes values that may differ over time and between countries. During the 1970s, a list of values in the United States included achievement, work, efficiency, and material comfort. Today, commonly held values include personal control, continuous change, equality, individualism, self-help, competition, future orientation, and action. An increasingly important value for consumers in the United States and around the globe is sustainability and preservation of the environment. Concern for the environment is one reason consumers are buying hybrid gas-electric automobiles, such as the Toyota Prius and the Chevy Volt, and electric vehicles, such as the Nissan Leaf. A change in consumption orientation is also apparent. In the past, consumers often used debt to make many of their purchases. High unemployment and lower real estate prices, however, have changed their perspective. Today, U.S. consumers have become cautious buyers
Culture
Culture refers to the set of values, ideas, and attitudes that are learned and shared among the members of a group.
Balance of Trade
Difference between the monetary value of a nation's exports and imports; Surplus equals exports exceed imports; Deficit = imports exceed exports
Digital Millenium Copyright Act (1998)
Digital technology has necessitated additional copyright legislation, called the Digital Millennium Copyright Act (1998), to improve protection of copyrighted digital products. In addition, producers of DVD movies, music recordings, and software want protection from devices designed to circumvent antipiracy elements of their products.
Diversification Analysis
Diversification analysis is a technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. For any market, there is both a current product (what the firm now sells) and a new product (what the firm might sell in the future). And for any product there is both a current market (the firm's existing customers) and a new market (the firm's potential customers).
Organizational Buyers Divided
Divided into 3 markets -Industrial -Reseller -Government
Product Deletion
Dropping the product from the company's product line The most drastic strategy
Functional Level
Each strategic business unit has a functional level, where groups of specialists actually create value for the organization. The term department generally refers to these specialized functions such as marketing and finance At the functional level, the organization's strategic direction becomes its most specific and focused. Just as there is a hierarchy of levels within an organization, there is a hierarchy of strategic directions set by managers at each level.
Likert Scale
Either agrees or disagrees with a statement
Extranet
Extranets, which use Internet-based technologies, permit communication between a company and its supplier, distributors, and other partners (such as advertising agencies).
Elements of Competitive Advantage
Factor conditions, Demand conditions related in supporting industries, company strategy structure and rivalry
Satisfying Student Needs
His search for the 2-in-1 highlighter plus Post-it® Flags produced working models that students could actually use to give him feedback. Windorski had taken some giant steps in trying not only to discover students' needs for his product but also to satisfy those needs with a practical, useful product.
Idea Generation Methods
Individual interview involves a single researcher asking questions of one respondent Depth Interviews - Lengthy Free-Flow questions Focus Groups - informal sessions of 6-10 prospective customers, discussion leader asks opinions about the firms and its competitors' products
Product differentiation
Involves a friend using different marketing mix activities such as product features and advertising to help consumers the product is being different and better than competing products
Trading Up
Involves adding value to the product or line through additional features or higher quality materials
Market segmentation
Involves aggregating prospective buyers into groups that have, needs and will respond similarly to a marketing action
Structure of Today's Organizations
Large organizations are extremely complex. They usually consist of three organizational levels whose strategies are linked to marketing -Board of Directors -Corporate Level -Strategic Business Unit Level Functional Level -Information Systems -Finance -Research & Development -Marketing -Manufacturing -Human Resources
Stimulus of Behavioral Theory
Marketers use two concepts from behavioral learning theory. -Stimulus generalization occurs when a response elicited by one stimulus (cue) is generalized to another stimulus. -Stimulus discrimination refers to a person's ability to perceive differences in stimuli.
Neuromarketing Methods
Martin Lindstrom used brain scanning to analyze the buying process
Research Objectives
Measurable goals and the decision makers to achieve marketing research
Industries
Organizations that develop similar offerings create an industry, such as the computer industry or the automobile industry. As a result, organizations make strategic decisions that reflect the dynamics of the industry to create a compelling and sustainable advantage for their offerings relative to those of competitors to achieve a superior level of performance. The foundation of much of an organization's marketing strategy is having a clear understanding of the industry within which it competes.
Technology
Our society is in a period of dramatic technological change. Technology, the third environmental force, refers to inventions or innovations from applied science or engineering research. Each new wave of technological innovation can replace existing products and companies.
Functional benefits
Packaging often plays a functional role, such as storage, convenience, protection, or product quality
Gray Market
Parallel importing situation where products are sold through unauthorized channels of distribution
Failure Fee
Penalty payment a manufacturer makes to compensate a retailer for devoting valuable shelf space to a product that failed to sell
Perceived Risk
Perception plays a major role in the perceived risk in purchasing a product or service. Perceived risk represents the anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences.
Product Form
Pertains to variations within the product class
Currency Exchange Rate
Price of one's currency expressed as another country's currency
Valuing Brand Equity
Recognition that brands are an asset is apparent in the decision to buy & sell products
Communication Adaptation Strategy
Recognizing that cultural and buying motives differentiate
Packaging
Refers to any container in which it is offered for sale and on which label information is conveyed
The Challenge: Meeting Consumer Needs w/ New Products
Robert M. McMath, who has studied more than 110,000 of these new-product launches, has two key suggestions: (1) focus on what the customer benefit is (2) learn from the past First, find out what consumers need and want. Second, produce what they need and want, and don't produce what they don't need and want. A need occurs when a person feels deprived of basic necessities such as food, clothing, and shelter. A want is a need that is shaped by a person's knowledge, culture, and personality.
5 Roles of Individual Family Members
Roles of individual family members in the purchase process are another element of family decision making. Five roles exist: (1) information gatherer (2) influencer (3) decision maker (4) purchaser (5) user
Market synergies
Running horizontally across the grid, each row represents an opportunity for efficiency in terms of the market segment
Good
Tangible attributes that a consumers 5 senses can pereceive
VALS System
The VALS system seeks to explain why and how consumers make purchase decisions. -Ideals-motivated groups. Consumers motivated by ideals are guided by knowledge and principle. Thinkers are mature, reflective, and well-educated people who value order, knowledge, and responsibility. They are practical consumers and deliberate information-seekers who value durability and functionality in products over styling and newness. Believers, with fewer resources, are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. They choose familiar products and brands, favor American-made products, and are generally brand loyal. -Achievement-motivated groups. Consumers motivated by achievement look for products and services that demonstrate success to their peers or to a peer group they aspire to. Achievers have a busy, goal-directed lifestyle and a deep commitment to career and family. Image is important to them. They favor established, prestige products and services and are interested in time-saving devices given their hectic schedules. Strivers are trendy, fun-loving, and less self-confident than Achievers. They also have lower levels of education and household income. Money defines success for them. They favor stylish products and are as impulsive as their financial circumstances permit. -Self-expression-motivated groups. Consumers motivated by self-expression desire social or physical activity, variety, and risk. Experiencers are young, enthusiastic, and impulsive consumers who become excited about new possibilities but are equally quick to cool. They savor the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Much of their income is spent on fashion items, entertainment, and socializing and particularly on looking good and having the latest things. Makers, with fewer resources, express themselves and experience the world by working on it—raising children or fixing a car. They are practical people who have constructive skills, value self-sufficiency, and are unimpressed by material possessions except those with a practical or functional purpose. -High- and low-resource groups. Two segments stand apart. Innovators are successful, sophisticated, take-charge people with high self-esteem and abundant resources of all kinds. Image is important to them, not as evidence of power or status, but as an expression of cultivated tastes, independence, and character. They are receptive to new ideas and technologies. Their lives are characterized by variety. Survivors, with the least resources of any segment, focus on meeting basic needs (safety and security) rather than fulfilling desires. They represent a modest market for most products and services and are loyal to favorite brands, especially if they can be purchased at a discount.
Social Entrepreneurship
The answer: They are all "social entrepreneurs" that are actively practicing—you guessed it!—social entrepreneurship. In a nutshell, social entrepreneurship applies innovative approaches to organize, create, and manage a venture to solve the practical needs of society. They usually are nonprofit organizations and focus on issues facing people who lack the financial or political means to solve their own problems.
Value Consciousness
The concern for obtaining the best quality, features, and performance of a product or service for a given price—is driving consumption behavior for many products at all price levels.
Corporate Level
The corporate level is where top management directs overall strategy for the entire organization. "Top management" usually means the board of directors and senior management officers with a variety of skills and experiences that are invaluable in establishing overall strategy.
CEO
The president or chief executive officer (CEO) is the highest ranking officer in the organization and is usually a member of its board of directors. This person must possess leadership skills and expertise ranging from overseeing the organization's daily operations to spearheading strategy planning efforts that may determine its very survival.
Perception
The process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world.
Consumer Socialization
The process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers is called consumer socialization. Children learn how to purchase (1) by interacting with adults in purchase situations (2) through their own purchasing and product usage experiences
Economy
The second component of the environmental scan, the economy, pertains to the income, expenditures, and resources that affect the cost of running a business and household. We'll consider two aspects of these economic forces: a macroeconomic view of the marketplace and a microeconomic perspective of consumer income.
Size of the Order of Purchase
The size of the purchase involved in organizational buying is typically much larger than in consumer buying
Discretionary Income
The third component of income is discretionary income, the money that remains after paying for taxes and necessities. Discretionary income is used for luxury items such as a Cunard cruise. An obvious problem in defining discretionary versus disposable income is determining what is a luxury and what is a necessity.
Sales Forecast
The total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and marketing efforts
Modified Rebuy
The users, influencers, or deciders in the buying center want to change the product specifications, price, delivery, schedule or supplier
Societal Marketing Concept
The well-being of society at large should also be recognized in an organization's marketing decisions. In fact, some marketing experts stress the societal marketing concept, the view that organizations should satisfy the needs of consumers in a way that provides for society's well-being.
Current Perceptions of Ethical Behavior
There has been a public outcry about the ethical practices of businesspeople. Public opinion surveys show that 58 percent of U.S. adults rate the ethical standards of business executives as only "fair" or "poor"; 76 percent say the lack of ethics in businesspeople contributes to tumbling societal moral standards; and advertising practitioners and car salespeople are thought to be among the least ethical occupations. Surveys of corporate employees generally confirm this public perception. When asked if they are aware of ethical misconduct in their companies, 49 percent say "yes."
Self Concept
These personality characteristics are often revealed in a person's self-concept, which is the way people see themselves and the way they believe others see them. Marketers recognize that people have an actual self-concept and an ideal self-concept. -The actual self refers to how people actually see themselves. -The ideal self describes how people would like to see themselves. These two self-images are reflected in the products and brands a person buys, including automobiles, home appliances and furnishings, magazines, consumer electronics, clothing, grooming and leisure products, and frequently, the stores in which a person shops.
Clayton Act (1914)
This act forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred.
Organizational Buyers
Those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale
Idea
Thought that leads to a product or action, such as a concept for a new invention for getting people out to vote
Multicultural Marketing
To adapt to this new marketplace, many companies are developing multicultural marketing programs, which are combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races. Because businesses must now market their products to a consumer base with many racial and ethnic identities, in-depth marketing research that allows an accurate understanding of each culture is essential.
Demographics
Gender, age, race, life stage, birth, household size, marital status, income education, occupation
4 P's
Having selected its target market consumers, the firm must take steps to satisfy their needs, as shown in the right side of Figure 1-3. Someone in the organization's marketing department, often the marketing manager, must develop a complete marketing program to reach consumers by using a combination of four tools, often called "the four Ps"—a useful shorthand reference to them first published by Professor E. Jerome McCarthy -Product. A good, service, or idea to satisfy the consumer's needs. -Price. What is exchanged for the product. -Promotion. A means of communication between the seller and buyer. -Place. A means of getting the product to the consumer.
15 % Rule
He gets creative "thinking time" under 3M's "15 Percent Rule," during which inventors can use up to 15 percent of their time to do initially unfunded research that might lead to marketable 3M products.
Technological
-Increase availability of smartphone advertising -Online data collection & behavioral targeting capabilities growing faster -TV's, phones, and tablets becoming connected
4 Market-Product Strategies
-Market penetration is a marketing strategy to increase sales of current products in current markets, such as selling more Ben & Jerry's Bonnaroo Buzz Fair Trade-sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Increased sales are generated by selling either more ice cream (through better promotion or distribution) or the same amount of ice cream at a higher price to its current customers. -Market development is a marketing strategy to sell current products to new markets. For Ben & Jerry's, Brazil is an attractive new market. There is good news and bad news for this strategy: As household incomes of Brazilians increase, consumers can buy more ice cream; however, the Ben & Jerry's brand may be unknown to Brazilian consumers. -Product development is a marketing strategy of selling new products to current markets. Ben & Jerry's could leverage its brand by selling children's clothing in the United States. This strategy is risky because Americans may not see the company's expertise in ice cream as extending to children's clothing. -Diversification is a marketing strategy of developing new products and selling them in new markets. This is a potentially high-risk strategy for Ben & Jerry's if it decides to try to sell Ben & Jerry's branded clothing in Brazil. Why? Because the firm has neither previous production nor marketing experience on which to draw in marketing clothing to Brazilian consumers.
Picking A Good Brand Name
-Should suggest product benefits -Should be memorable, distinctive & positive -Should fit company or product image -Have no legal or regulatory restrictions -Simple & emotional
3 Concepts of Social Responsibility
1) profit responsibility 2) stakeholder responsibility 3) societal responsibility
2 Aspects of evaluation process
1. Evaluating the decision itself = monitoring the market place to determine if action is necessary in the future 2. Evaluating the decision process used = whether marketing research and analysis was effective or flawed
Step in segmenting and target market
1. Group potential markets Into segments 2. Group products to be sold into categories 3. Develop a market product grid an estimate the size of market 4. Select target market 5. Take marketing actions to reach target market
Product positioning
1. Identify important attributes for the product or brand class 2. Discover how target customers rate competing products or brands with respect to these attributes 3. Discover where the companies products or brands is on these attributes in the minds of potential customers 4. Reposition the company's product or brand
Marketing reasons for new product failiures
1. Insignificant point of difference 2. No economical access to buyers 3. Incomplete market and product protocol before product development starts 4. Not satisfying consumer needs on critical factors 5. Bad timing 6. Poor Product quality 7. Too little market attractiveness 8. Poor execution of the marketing mix
3 Types of Sales forecast
1. Judgement of decision-maker = direct forecast estimating the value without any intervening steps; lost horse forecast = starting with the last known value of the item being forecast, listing the factors that could affect the forecast, assessing whether they have a positive or negative impact, making the final forecast 2.Surveys of Knowledgable Groups = Develop sales forecast of prospective buyers and a firm's sales force; Survey of buyer's intentions involves asking prospective customers if they are likely to buy the product during some future time period; Sales force survey involves asking the firm's sales people to estimate sales during a coming sales period 3.Statistical Methods = Trend Extrapolation which involves extending a pattern observed in the past data into the future; Linear Trend Extrapolation which is descried with a straight line to fit past sales data and project it into the future to give the forecast
Organizationl problems and new product failures
1. Not listening to the voice of the consumer 2. Skipping stages in the new product process 3. Pushing a poorly conceived product into the market to generate quick revenue 4. Encountering groupthink in task force and committee meetings 5. Not learning critical take asway lessons from past failures 6. Avoiding the NIH problem "Not Invented Here"
Sages in The Buying Decision Process
1. Problem Recognition 2. Information Search 3. Alternative Evaluation 4. Purchase Decision 5. Postpurchase Behavior
Understanding the Buying Center
1. Which individuals are in the buying center for a product/service? 2. What is the relative influence of each member of the grp? 3. What are the buying criteria of each member? 4. How does each member of the grp perceive our firm Buyer, purchasing manager & individuals from other functional areas included
WTO
1995. to address and array of trade issues, permanent institution that rules governing trade between members through panels of trade experts who decide on trade disputes
Racial & Ethnic Diversity
A notable trend is the changing racial and ethnic composition of the U.S. population. Approximately one in three U.S. residents belongs to the following racial or ethnic groups: African American, Native American or Alaska Native, Asian American, or Native Hawaiian or Pacific Islander.
Changing the Value Offered
A company can decide to change the value it offers to buyers and trade up or down
Patent Law
A company can protect its competitive position in new and novel products under the patent law, which gives inventors the right to exclude others from making, using, or selling products that infringe the patented invention.
Code of Ethics & AMA
A formal statement of ethical principles and rules of conduct. It is estimated that 86 percent of U.S. companies have some sort of ethics code and one of every four large companies has corporate ethics officers. Ethics codes typically address contributions to government officials and political parties, customer and supplier relations, conflicts of interest, and accurate recordkeeping. -Lack of specificity is a major reason for the violation of ethics codes. Employees must often judge whether a specific behavior is unethical. The American Marketing Association has addressed this issue by providing a detailed statement of ethics, which all members agree to follow. -A second reason for violating ethics codes rests in the perceived behavior of top management and co-workers. Observing peers and top management and gauging responses to unethical behavior play an important role in individual actions.
Consumerism
A grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions. This movement continues and is reflected in growing consumer demands for ecologically safe products and ethical and socially responsible business practices. One hotly debated issue concerns liability for environmental abuse.
Marketing Plan
A marketing plan is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years. No single "generic" marketing plan applies to all organizations and all situations. Rather, the specific format for a marketing plan for an organization depends on the following: • The target audience and purpose. Elements included in a particular marketing plan depend heavily on (1) who the audience is and (2) what its purpose is. A marketing plan for an internal audience seeks to point the direction for future marketing activities and is sent to all individuals in the organization who must implement the plan or who will be affected by it. If the plan is directed to an external audience, such as friends, banks, venture capitalists, or potential investors for the purpose of raising capital, it has the additional function of being an important sales document. In this case, it contains elements such as the strategic plan/focus, organization, structure, and biographies of key personnel that would rarely appear in an internal marketing plan. Also, the financial information is far more detailed when the plan is used to raise outside capital. The elements of a marketing plan for each of these two audiences are compared in • The kind and complexity of the organization. A small neighborhood restaurant has a somewhat different marketing plan than Medtronic, which serves international markets. The restaurant's plan would be relatively simple and directed at serving customers in a local market. In Medtronic's case, because there is a hierarchy of marketing plans, various levels of detail would be used—such as the entire organization, the strategic business unit, or the product/product line. • The industry. Both the restaurant serving a local market and Medtronic, selling heart pacemakers globally, analyze competition. However, their geographic thrusts are far different, as are the complexities of their offerings and, hence, the time periods likely to be covered by their plans. A one-year marketing plan may be adequate for the restaurant, but Medtronic may need a five-year planning horizon because product-development cycles for complex, new medical devices may be three or four years.
Perceptual map
A means of this displaying or graphing into dimensions the location of products or brands in the minds of consumers
Asian Buying Patterns
About 70 percent of Asian Americans are immigrants. Most are under the age of 30. The Asian subculture is composed of Chinese, Japanese, Filipinos, Koreans, Asian Indians, people from Southeast Asia, and Pacific Islanders. The diversity of the Asian subculture is so great that generalizations about buying patterns of this group are difficult to make. Consumer research on Asian Americans suggests that individuals and families can be divided into two groups. -Assimilated Asian Americans are conversant in English, highly educated, hold professional and managerial positions, and exhibit buying patterns very much like the typical American consumer. -Nonassimilated Asian Americans are recent immigrants who still cling to their native languages and customs. The diversity of Asian Americans evident in language, customs, and tastes requires marketers to be sensitive to different Asian nationalities.
Advantages and disadvantages of Primary Data
Advantage: Flexible, more specific Disadvantages: Costly and time consuming
Strategic Marketing Process
After an organization assesses where it is and where it wants to go, other questions emerge, such as: -How do we allocate our resources to get where we want to go? -How do we convert our plans into actions? -How do our results compare with our plans, and do deviations require new plans? To answer these questions, an organization uses the strategic marketing process, whereby an organization allocates its marketing mix resources to reach its target markets. This process is divided into three phases: planning, implementation, and evaluation
Electronic Commerce
Any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services is often called electronic commerce. Network technologies are now used for everything from filing expense reports, to monitoring daily sales, to sharing information with employees, to communicating instantly with suppliers.
The American Household
As the population age profile has changed, so has the structure of the American household. In 1960, 75 percent of all households consisted of married couples. Today, that type of household is just 50 percent of the population. Only 21 percent of households are married couples with children, and only 10 percent are households with working fathers and stay-at-home moms. Some of the fastest growing types of households are those with an adult child who has moved back home with his or her parents and those with unmarried partners. These two categories included 5.5 million individuals and 7.5 million couples, respectively, in 2010. Analysis by the U.S. Bureau of the Census indicates that young people are postponing marriage and parenthood and that the increase in households with unmarried partners reflects that "pooling resources by moving in together may be one method of coping with extended unemployment." Businesses are adjusting to the changes because they have implications for purchases related to weddings, homes, baby and child products, and many other industries. The increase in cohabitation (households with unmarried partners) may be one reason the national divorce rate has declined during recent years. Even so, the likelihood that a couple will divorce exceeds 40 percent, and divorce among baby boomers—what is being called gray divorce—appears to be increasing.
Stakeholder Responsibility
Criticism of the profit view has led to a broader concept of social responsibility. Stakeholder responsibility focuses on the obligations an organization has to those who can affect achievement of its objectives. These constituencies include consumers, employees, suppliers, and distributors
Business products
B2b products or industrial products Products that organizations by that assist in providing other products for resale The major characteristic visit other sales are often the result of derived demand; that is, sales of business products for the results or are derived from the sale of customer products Business products may be classified as components or support products Components are items that become part of the final product Support products are items used to assist in producing other goods and services These include : Installations, such as buildings and equipment Accessory équipement, such as tools and equipment Supplies, such a stationary, paper clips, and brooms Industrial Services, such as maintenance, repair, and legal services
Caveat Emptor
Before the 1960s, the legal concept of caveat emptor—let the buyer beware—was pervasive in the American business culture.
Behavioral Learning
Behavioral learning is the process of developing automatic responses to a situation built up through repeated exposure to it. Four variables are central to how consumers learn from repeated experience: drive, cue, response, and reinforcement. -A drive is a need that moves an individual to action. Drives, such as hunger, might be represented by motives. -A cue is a stimulus or symbol perceived by consumers. -A response is the action taken by a consumer to satisfy the drive. -Reinforcement is the reward. Being hungry (drive), a consumer sees a cue (a billboard), takes action (buys a sandwich), and receives a reward (it tastes great!).
Ethics of Competition
Business culture also affects ethical behavior in competition. Two kinds of unethical behavior are most common: (1) economic espionage and (2) bribery.
Straight Rebuy
Buyer or purchasing manager reorders an existing product or service from the list of acceptable suppliers probably w/o checking w/ users or influencers from the engineering, production, or quality control departments
Maturity Stage
By a slowing of total industry sales or product class revenue Most consumers who buy the product are either repeat purchasers of the item or have tried and abandoned it Sales increase at a decreasing rate in the maturity stage as fewer new buyers enter the market Marketing attention is often directed toward holding market share through further product differentiation and finding new buyers
Parallel Development
CrossFunctional team member who conduct the simultaneous development of both the product and the production process stay with the product from conception to production
Cost reduction
Companies need innovative ways to cut packaging costs while delivering values to customers
Licensing
Company offers the right to trademark patent trade secret or other valued item in return for a royalty or fee
Existing Competitors & Substitutes
Competitive pressures among existing firms depend on the rate of industry growth. In slow-growth settings, competition is more heated for any possible gains in market share. High fixed costs also create competitive pressures for firms to fill production capacity. For example, airlines offer discounts for making early reservations and charge penalties for changes or cancellations in an effort to fill seats, which represent a high fixed cost.
Consumer Spending
Consumer spending, which accounts for two-thirds of U.S. economic activity, is affected by expectations of the future. The two most popular surveys of consumer expectations are the Consumer Confidence Index, conducted by a nonprofit business research organization called the Conference Board & the Index of Consumer Sentiment, conducted by the Survey Research Center at the University of Michigan. The surveys track the responses of consumers to specific questions about their expectations, and the results are reported once each month.
Family Life Cycle
Consumers act and purchase differently as they go through life. The family life cycle concept describes the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors. Today, the traditional family—married couple with children younger than 18 years—constitutes just 21 percent of all U.S. households. The remaining 78 percent of U.S. households include single parents; unmarried couples; divorced, never-married, or widowed individuals; and older married couples whose children no longer live at home. -Young singles' buying preferences are for nondurable items, including prepared foods, clothing, personal care products, and entertainment. They represent a target market for recreational travel, automobile, and consumer electronics firms. -Young married couples without children are typically more affluent than young singles because usually both spouses are employed. These couples exhibit preferences for furniture, housewares, and gift items for each other. Young marrieds with children are driven by the needs of their children. They make up a sizable market for life insurance, various children's products, and home furnishings. -Single parents with children are the least financially secure of households with children. Their buying preferences are often affected by a limited economic status and tend toward convenience foods, child care services, and personal care items. -Middle-aged married couples with children are typically better off financially than their younger counterparts. They are a significant market for leisure products and home improvement items. Middle-aged couples without children typically have a large amount of discretionary income. These couples buy better home furnishings, status automobiles, and financial services. -Persons in the last two phases—older married and older unmarried—make up a sizable market for prescription drugs, medical services, vacation trips, and gifts for younger relatives.
Consumer Ethics & Social Responsibility
Consumers also have an obligation to act ethically and responsibly in the exchange process and in the use and disposition of products. Unfortunately, consumer behavior is spotty on both counts. Unethical practices of consumers are a serious concern to marketers.38 These practices include filing warranty claims after the claim period; misredeeming coupons; making fraudulent returns of merchandise; providing inaccurate information on credit applications; tampering with utility meters; tapping cable TV lines; pirating music, movies, and software from the Internet; and submitting phony insurance claims. The cost to marketers of such behavior in lost sales and prevention expenses is huge. For example, consumers who redeem coupons for unpurchased products or use coupons for other products cost manufacturers $1 billion each year. Fraudulent automobile insurance claims cost insurance companies more than $10 billion annually. In addition, retailers lose about $30 billion yearly from shoplifting and $9.6 billion annually from fraudulent returns of merchandise. Consumers also act unethically toward each other. According to the FBI, consumer complaints about online auction fraud, in which consumers misrepresent their goods to others, outnumber all other reports of online crime.
3 Kinds of Groups
Consumers have many reference groups, but three groups have clear marketing implications. -A membership group is one to which a person actually belongs, including fraternities and sororities, social clubs, and the family. Such groups are easily identifiable and are targeted by firms selling insurance, insignia products, and charter vacations. -An aspiration group is one that a person wishes to be a member of or wishes to be identified with, such as a professional society. Firms frequently rely on spokespeople or settings associated with their target market's aspiration group in their advertising. -A dissociative group is one that a person wishes to maintain a distance from because of differences in values or behaviors.
Social Audit
Converting socially responsible ideas into actions involves careful planning and monitoring of programs. Many companies develop, implement, and evaluate their social responsibility efforts by means of a social audit, which is a systematic assessment of a firm's objectives, strategies, and performance in terms of social responsibility. Frequently, marketing and social responsibility programs are integrated.
Organizational Foundation
Core Values Mission (vision) Organizational Culture
Sustainable Development
Corporate attention to social audits will increase as companies seek to achieve sustainable development and improve the quality of life in a global economy. Sustainable development involves conducting business in a way that protects the natural environment while making economic progress. Ecologically responsible initiatives such as green marketing represent one such initiative. Recent initiatives related to working conditions at offshore manufacturing sites that produce goods for U.S. companies focus on quality-of-life issues. Companies that evidence societal responsibility have been rewarded for their efforts. Research has shown that these companies (1) benefit from favorable word of mouth among consumers and (2) typically outperform less responsible companies in terms of financial performance
Economic Infrastructure
Countries' communications transportation, financial, and distribution systems
Economic Espionage
Economic espionage is the clandestine collection of trade secrets or proprietary information about a company's competitors. This practice is illegal and unethical and carries serious criminal penalties for the offending individual or business. Espionage activities include illegal trespassing, theft, fraud, misrepresentation, wiretapping, the search of a competitor's trash, and violations of written and implicit employment agreements with noncompete clauses Economic espionage is most prevalent in high-technology industries, such as electronics, specialty chemicals, industrial equipment, aerospace, and pharmaceuticals, where technical know-how and trade secrets separate industry leaders from followers.
Multiple products and multiple market segments
Effective if it needs customers needs better quality or increase price, and adds to sales revenue and profit
The Marketing Program
Effective relationship marketing strategies help marketing managers discover what prospective customers need. They must translate this information into some concepts for products the firm might develop These concepts must then be converted into a tangible marketing program—a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. These prospects then react to the offering favorably (by buying) or unfavorably (by not buying), and the process is repeated. In an effective organization this process is continuous: Consumer needs trigger product concepts that are translated into actual products that stimulate further discovery of consumer needs.
Employee and Coworker Suggestion
Employees should be encouraged to suggest new product ideas through suggestion boxes
Whistle Blowers
Employees who report unethical or illegal actions of their employers.
Environmental Trends
Environmental trends typically arise from five sources: social, economic, technological, competitive, and regulatory forces
Ethics
Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.
Who Markets
Every organization markets. It's obvious that business firms involved in manufacturing (Heinz), retailing (Target), and providing services (Marriott) market their offerings. And nonprofit organizations such as your local hospital, your college, places (cities, states, countries), and even special causes (Race for the Cure) also engage in marketing. Finally, individuals such as political candidates often use marketing to gain voter attention and preference.
Brand Loyalty
Favorable attitude toward and consistent purchase of a single brand over time. Brand loyalty results from the positive reinforcement of previous actions.
Right to be Heard
Finally, the right to be heard means that consumers should have access to public-policy makers regarding complaints about products and services. This right is illustrated in limitations put on telemarketing practices.
Customer and supplier suggestion
Firms ask their salespeople to talk to customers and ask their purchasing personnel to suppliers to discover new product ideas
Prominence of Online Buying in Organizational Markets
First organizational buyers depend heavily on timely supplier information that describes product availability, technical specifications, application uses, price and delivery schedules Second this technology has been shown to substantially reduce buyer order processing costs Third business markets have found the Internet technology can reduce marketing costs particularly sales and advertising & broaden their potential consumer base for many types of products & services
Regulation
For any organization, the marketing and broader business decisions are constrained, directed, and influenced by regulatory forces. Regulation consists of restrictions state and federal laws place on business with regard to the conduct of its activities. Regulation exists to protect companies as well as consumers. Much of the regulation from the federal and state levels is the result of an active political process and has been passed to ensure competition and fair business practices. For consumers, the focus of legislation is to protect them from unfair trade practices and ensure their safety.
Slotting Fee
For new products, a payment a manufacturer makes to place a new item on a retailer's shelf
Customer Value
For our purposes, customer value is the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price. Loyal, satisfied customers are likely to repurchase more over time. Firms now actually try to place a dollar value on the purchases of loyal, satisfied customers during their lifetimes. Firms must find ways to build long-term customer relationships to provide unique value that they alone can deliver to targeted markets. Many successful firms have chosen to deliver outstanding customer value with one of three value strategies: best price, best product, or best service.
Routine Problem Solving
For products such as table salt and milk, consumers recognize a problem, make a decision, and spend little effort seeking external information and evaluating alternatives. The purchase process for such items is virtually a habit and typifies low-involvement decision making. Routine problem solving is typically the case for low-priced, frequently purchased products.
Importance of Organization & Diverse Factors
Foremost is the organization itself, whose mission and objectives determine what business it is in and what goals it seeks. Within the organization, management is responsible for establishing these goals. The marketing department works closely with a network of other departments and employees to help provide the customer-satisfying products required for the organization to survive and prosper. The organization must strike a balance among the sometimes differing interests of these individuals and groups. For example, it is not possible to simultaneously provide the lowest-priced and highest-quality products to customers and pay the highest prices to suppliers, the highest wages to employees, and the maximum dividends to shareholders.
Purchase Decision
Further complicated by the fact that two or more suppliers of the same item might be awarded contracts
US Population
Generally, the population is becoming larger, older, and more diverse. The 2010 Census reported that the resident population of the United States was 308 million people. If current trends in life expectancy, birthrates, and immigration continue, by 2030 the U.S. population will exceed 373 million people. This growth suggests that niche markets based on age, life stage, family structure, geographic location, and ethnicity will become increasingly important. The global trend toward an older population is particularly true in the United States. Today, there are approximately 40 million people age 65 and older. By 2030, this age group will include more than 72 million people, or almost 20 percent of the population. You may have noticed companies trying to attract older consumers by enlarging typefaces and avoiding colors that are difficult to read (yellow and blue). Finally, the term minority as it is currently used is likely to become obsolete as the size of most ethnic groups will double during the next two decades.
Generation X
Generation X, which includes the 15 percent of the population born between 1965 and 1976. This period is also known as the baby bust, because the number of children born each year was declining. This is a generation of consumers who are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation. They are not prone to extravagance and are likely to pursue lifestyles that are a blend of caution, pragmatism, and traditionalism. In addition, they are collaborative decision makers. In terms of net worth, Generation X is the first generation to have less than the previous generation. As baby boomers move toward retirement, however, Generation X is becoming a dominant force in many markets. Generation X, for example, is replacing baby boomers as the largest segment of business travelers. In response, hotel companies are creating new concepts that appeal to the younger market. Surveys of Generation X travelers indicate they want casual, tech-friendly lodging with 24-hour access to food and drinks, so Hyatt Corporation is building 400 new Hyatt Place all-suite hotels featuring free wireless Internet, flat-panel high-definition televisions, a 24-hour guest kitchen, a fitness center, and remote printing
Goals
Goals or objectives are statements of an accomplishment of a task to be achieved, often by a specific time. Goals convert an organization's mission and business into long- and short-term performance targets. Business firms can pursue several different types of goals
What Is Marketed
Goods, services, and ideas are marketed. Goods are physical objects, such as toothpaste, cameras, or computers, that satisfy consumer needs. Services are intangible items such as airline trips, financial advice, or art museums. Ideas are thoughts about concepts, actions, or causes. In this book, goods, services, and ideas are all considered "products" that are marketed. So a product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value. From the example in the book it will be clear whether this "product" really refers to a good, a service, or an idea. However, because goods are physical objects that are tangible and more easily understood, many of our examples are physical products—like Ben & Jerry's ice cream or Apple iPads. But services like those offered by art museums, hospitals, and sports teams are relying more heavily on effective marketing. For example, financial pressures have caused art museums to innovate to market their unique services—the viewing of artworks by visitors—to increase revenues. This often involves levels of rare creativity unthinkable several decades ago. This creativity ranges from establishing a global brand identity by launching overseas museums to sit-at-home video tours to practical marketing research to see what visitors really want and need. Ideas are most often marketed by nonprofit organizations or the government. For example, your local library may market the idea of developing improved reading skills, and the Nature Conservancy markets the cause of protecting the environment.
Groupons Success
Groupon's success is the result of a simple and effective business model and an insightful understanding of consumer behavior. In the future Groupon's strategies will require continued attention to understanding consumers around the globe. Mossler explains: "Groupon has been heralded as the fastest growing company of all time, and the reason for that is because we have solved this unsolvable problem, which is how do you engage with local customers. The model really works anywhere as long as you adapt for local communities."
E-Marketplaces
Has been the creation of online trade communities called e-marketplaces that bring together buyers & supplier organization
Hispanic Buying Patterns
Hispanics represent the largest racial/ethnic subculture in the United States in terms of population and spending power. About 50 percent of Hispanics in the United States are immigrants, and the majority are under the age of 25. One-third of Hispanics are younger than 18. Research on Hispanic buying practices has uncovered several consistent patterns: -Hispanics are quality and brand conscious. They are willing to pay a premium price for premium quality and are often brand loyal. -Hispanics prefer buying American-made products, especially those offered by firms that cater to Hispanic needs. Hispanic buying preferences are strongly influenced by family and peers. -Hispanics consider advertising a credible product information source, and U.S. firms spend more than $6 billion annually on advertising to Hispanics. -Convenience is not an important product attribute to Hispanic homemakers with respect to food preparation or consumption, nor is low caffeine in coffee and soft drinks, low fat in dairy products, or low cholesterol in packaged foods.
Newness compared with existing product
If a product is functionally different from existing products, It can be defined as new Create a whole new industry More features added to existing product to try to appeal to more customers
Select target market
If it selects too broad a set of segments it may spread its marketing efforts so thin that the extra expense exceeds the increased sales and profits
Implementation Phase
Implementation, the second phase of the strategic marketing process, involves carrying out the marketing plan that emerges from the planning phase. If the firm cannot put the marketing plan into effect—in the implementation phase—the planning phase was a waste of time. There are four components of the implementation phase: (1) obtaining resources (2) designing the marketing organization (3) developing planning schedules (4) actually executing the marketing program designed in the planning phase. Kodak provides a case example.
Consumer Bill of Rights
In 1962, President John F. Kennedy outlined a Consumer Bill of Rights that codified the ethics of exchange between buyers and sellers. These were the right (1) to safety, (2) to be informed, (3) to choose, and (4) to be heard. Consumers expect and often demand that these rights be protected, as have American businesses.
Trademark Law Revision Act
In 1988, the Trademark Law Revision Act resulted in a major change to the Lanham Act, allowing a company to secure rights to a name before actual use by declaring an intent to use the name. In 2003, the United States agreed to participate in the Madrid Protocol, which is a treaty that facilitates the protection of U.S. trademark rights throughout the world.
Responsibility Matters Campaign
In 2004, the brewer began a new chapter in its awareness and education efforts with the launch of its "Responsibility Matters" campaign. This effort emphasizes and implements effective education and awareness programs that promote responsibility and responsible behaviors, such as parents talking with their children about underage drinking, adults being designated drivers, retailers checking IDs to prevent sales to minors, and more. Anheuser-Busch believes these efforts are partly responsible for the decline in drunk-driving accidents, underage drinking, and other forms of alcohol abuse since 1982.
Barriers to Entry
In considering the competition, a firm must assess the likelihood of new entrants. Additional producers increase industry capacity and tend to lower prices. A company scanning its environment must consider the possible barriers to entry for other firms, which are business practices or conditions that make it difficult for new firms to enter the market. Barriers to entry can be in the form of capital requirements, advertising expenditures, product identity, distribution access, or the cost to customers of switching suppliers.
Services
Intangible activities with benefits that an organization provides to satisfy your needs in exchange for money or something else of value
Product
Includes not only physical goods but services and ideas as well
Opinion Leaders
Individuals who exert direct or indirect social influence over others are called opinion leaders. Opinion leaders are considered to be knowledgeable about or users of particular products and services, so their opinions influence others' choices. Opinion leadership is widespread in the purchase of cars and trucks, entertainment, clothing and accessories, club membership, consumer electronics, vacation locations, food, and financial investments.
Shopping product
Items for which the consumer compares several Alternatives such as price, quality,
Growth Strategies
Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid managers with these decisions are (1) business portfolio analysis and (2) diversification analysis.
Teach For America
Launched by college senior Wendy Kopp, Teach For America is the national corps of outstanding recent college graduates who commit to teach for two years in urban and rural public schools and become lifelong leaders in expanding educational opportunity. In fall 2011, 9,300 corps members taught in 43 regions across the country, while nearly 24,000 Teach For America alumni continue working from inside and outside the field of education for the fundamental changes necessary to ensure educational excellence and equity.
Involvement & Marketing Strategy
Low and high consumer involvement have important implications for marketing strategy. If a company markets a low-involvement product and its brand is a market leader, attention is placed on (1) maintaining product quality (2) avoiding stockout situations so that buyers don't substitute a competing brand (3) repetitive advertising messages that reinforce a consumer's knowledge or assure buyers they made the right choice. Market challengers have a different task. They must break buying habits by using free samples, coupons, and rebates to encourage trial of their brand. Advertising messages will focus on getting their brand into a consumer's consideration set. Marketers of high-involvement products know that their consumers constantly seek and process information about objective and subjective brand attributes, form evaluative criteria, rate product attributes in various brands, and combine these ratings for an overall brand evaluation—like that described in the smartphone purchase decision. Market leaders ply consumers with product information through advertising and personal selling and use social media to create online experiences for their company or brand. Market challengers capitalize on this behavior through comparative advertising that focuses on existing product attributes and often introduce novel evaluative criteria for judging competing brands. Challengers also benefit from Internet search engines such as Microsoft Bing and Google that assist buyers of high-involvement products.
Ethics
Many marketing issues are not specifically addressed by existing laws and regulations. Should information about a firm's customers be sold to other organizations? Should advertising by professional service providers, such as accountants and attorneys, be restricted? Should consumers be on their own to assess the safety of a product? These questions raise difficult ethical issues. Many companies, industries, and professional associations have developed codes of ethics to assist managers.
Attitude Change
Marketers use three approaches to try to change consumer attitudes toward products and brands, as shown in the following examples. -Changing beliefs about the extent to which a brand has certain attributes. To allay mothers' concerns about ingredients in its mayonnaise, Hellmann's successfully communicated the product's high Omega 3 content, which is essential to human health. -Changing the perceived importance of attributes. Pepsi-Cola made freshness an important product attribute when it stamped freshness dates on its cans. Before doing so, few consumers considered cola freshness an issue. After Pepsi spent about $25 million on advertising and promotion, a consumer survey found that 61 percent of cola drinkers believed freshness dating was an important attribute. -Adding new attributes to the product. Colgate-Palmolive included a new antibacterial ingredient, tricloson, in its Colgate Total Toothpaste and spent $100 million marketing the brand. The result? Colgate Total Toothpaste is now a billion-dollar-plus global brand.
Key Characteristics & Dimensions of Organizational Buying Behavior
Marketing Characteristics -Demand for industrial products & services is derived -Few customers typically exist & purchase orders are large Product/Service Characteristics -Prod/Serv are technical in nature & purchased on basis of specifications -Many of the goods purchased are raw & semifinished -Heavy emphasis is placed on delivery time, technical assistance, and postsale service Buying Process Characteristics -Technically qualified & professional professional buyers follow established purchasing policies & procedures -Buying objectives & criteria are typically spelled out, as are procedures for evaluating sellers, and their products/services -There are multiple buying influences & multiple parties participate in purchase decisions -There are reciprocal arrangements, and negotiation between buyers & sellers is commonplace -Online buying over the internet is widespread Marketing Mix Characteristics -Direct selling to organizational buyers is rule; and distribution is very important -Advertising and other forms of promotion are technical in nature -Price is often negotiated, evaluated, as part of broader seller and product or service qualities, and frequently affected by quantity discounts
How Consumers Benefit: Utility
Marketing creates utility, the benefits or customer value received by users of the product. This utility is the result of the marketing exchange process and the way society benefits from marketing. There are four different utilities: form, place, time, and possession. The production of the good or service constitutes form utility. Place utility means having the offering available where consumers need it, whereas time utility means having it available when needed. Possession utility is the value of making an item easy to purchase through the provision of credit cards or financial arrangements. Marketing creates its utilities by bridging space (place utility) and hours (time utility) to provide products (form utility) for consumers to own and use (possession utility).
Target Market
Marketing doesn't stop with the discovery of consumer needs. Because the organization obviously can't satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers. This is the target market—one or more specific groups of potential consumers toward which an organization directs its marketing program.
Something to Exchange
Marketing occurs when the transaction takes place and both the buyer and seller exchange something of value. In this case, you exchange your money for the bookstore's magazine. Both you and the bookstore have gained something and also given up something, but you are both better off because you have each satisfied your unmet needs. You have the opportunity to read People, but you gave up some money; the store gave up the magazine but received money, which enables it to remain in business. This exchange process and, of course, the ethical and legal foundations of exchange are central to marketing.
Global Organization Markets
Markets on a global scale Largest exporting industries focus on organizational buyers, not ultimate consumers Majority of world trade involves exchange relationships that span the globe
Beginning of Groupon
Mason started with a website called ThePoint.org, which was designed to organize campaigns, protests, boycotts, and fund raising drives for important social issues. ThePoint was not successful but it provided the concept of making offers that are only carried out if enough people commit to participate in them. With that idea Mason launched Groupon in October 2008 with a two-pizzas-for-the-price-of-one offer at the Motel Bar, located in the same building where ThePoint rented space. The concept quickly grew in Chicago and Groupon expanded into other U.S. cities, and then into other countries. Today Groupon is available in 375 American cities and 40 countries, and its subscriber base has grown from 400 in 2008 to 60 million today. According to Forbes magazine, Groupon is the fastest growing company in history. Part of Groupon's success is the simplicity of its business model—offer subscribers at least one deal in their city each day. The unique aspect of the concept is that a certain number of people need to buy into the offer before the coupon discount is valid. Approximately 95 percent of Groupon offers "tip," or reach the number of buyers required by the merchant. Once the minimum number is met, Groupon and the merchant split the revenue. For example, a yoga studio might offer a $100 membership for $50 if 200 people participate in the offer. Once 200 consumers have indicated interest, the deal "tips" and Groupon and the yoga studio each receive 50 percent of the revenue. Everyone wins. Consumers receive an exceptional value, the merchant obtains new customers without any advertising cost, and Groupon generates revenue for creating value in the marketplace. Many of the deals have generated extraordinary demand. The Joffrey Ballet, for example, sold 2,338 season subscriptions, doubling its subscriber base in one day! Similarly, consumers purchased 445,000 Groupons offering $50 worth of merchandise for $25 at the Gap, and 6,561 tickets to a King Tut exhibit in New York's Times Square for half price at $18 apiece. The most popular offering so far was a $25 ticket for an architectural boat tour in Chicago for $12. Groupon sold 19,822 tickets in eight hours! The company's attention to customer satisfaction ensures success stories like these. "We have a policy called 'The Groupon Promise' that any customer can return a Groupon, no questions asked—even if they used it—if they feel like Groupon has let them down," explains Mason. Groupon's success has attracted many more merchants than it can accommodate. In fact, only about 12 percent of all merchants that contact Groupon are selected to offer a deal. In addition to the deal-of-the-day offerings, Groupon has several other services. -First, it is testing a concept called Groupon Stores which allows merchants to create their own deals and send them out to their own audience. This allows more merchants to participate on a regular basis. -Second, the company has recently introduced a mobile service called Groupon Now. To use the service, consumers log in to the app on their smartphone and select one of two options: "I'm Hungry" or "I'm Bored." The phone then transmits its location to the Groupon servers and displays a list of nearby deals at restaurants or entertainment venues. The Groupon Now offerings represent a combination of Yellow Pages advertising and newspaper coupons for price-conscious consumers. Groupon's growth is evident in some amazing numbers. The company now sends more than 900 deals each day, occupies six floors of the former Montgomery Ward headquarters in Chicago, and employs more than 5,900 people. In addition, Groupon has created a market of consumer deal hunters and an industry of more than 500 competitive deal services. The competitors include LevelUp, Tippr, Bloomspot, Scoutmob, BuyWithMe, Yelp, and OpenTable. In addition, Google Offers, Facebook Deals, Yahoo! Deals, and Amazon's LivingSocial are all recently launched deal services.
Segments of one
Mass Customization means tailoring goods or services to take the individual custom in a high volume scale Is the next step beyond build toorder manufacturing the product only when there is an order from a customer
Derived Demand
Means that the demand for industrial products & services is driven by, or derived from, demand for consumer products and services
Millennials
Millennials are determined to make a difference in the world and, by doing so, make the world a better place. They are idealistic and eager to get started, particularly when it comes to environmental sustainability, which millennials believe is part of what it means to be socially responsible. The group includes students in college and graduate school and many early career employees. In different ways each group is making its voice heard.
Consumer products
Purchased by the ultimate consumer
Situational Influences
Often the purchase situation will affect the purchase decision process. Five situational influences have an impact on the purchase decision process: (1) the purchase task (2) social surroundings (3) physical surroundings (4) temporal effects (5) antecedent states. -The purchase task is the reason for engaging in the decision. The search for information and the evaluation of alternatives may differ depending on whether the purchase is a gift, which often involves social visibility, or for the buyer's own use. -Social surroundings, including the other people present when a purchase decision is made, may also affect what is purchased. Consumers accompanied by children buy about 40 percent more items than consumers shopping by themselves. -Physical surroundings such as decor, music, and crowding in retail stores may alter how purchase decisions are made. -Temporal effects such as time of day or the amount of time available will influence where consumers have breakfast and lunch and what is ordered. -Finally, antecedent states, which include the consumer's mood or the amount of cash on hand, can influence purchase behavior and choice. For example, consumers with credit cards purchase more than those with cash or debit cards.
Oligopoly
Oligopoly, a common industry structure, occurs when a few companies control the majority of industry sales. The wireless telephone industry, for example, is dominated by AT&T, Verizon, and Sprint-Nextel, which have 123, 92, and 48 million subscribers, respectively.
Men & Women Roles
One of the most notable cultural changes in the United States in the past 30 years has been in the attitudes and roles of men and women in the marketplace. Some experts predict that as this trend continues, the buying patterns of men and women will eventually be very similar. Generation Y represents the first generation of women who have no collective memory of the dramatic changes we have undergone.
Reacting to a Competitors Position
One reason to reposition a product is because a competitor's entrenched position is adversely affecting sales and market share
Shape of the Product Life Cycle
Or shape of sales curve "generalized life cycle" but not all curves are the same
Perceptual benefits
Package and label shape, color, and graphics distinguish one brand from another, convey a brands positioning, and build brand equity
Problem Recognition: Perceiving A Need
Problem recognition, the initial step in the purchase decision, is perceiving a difference between a person's ideal and actual situations big enough to trigger a decision In marketing, advertisements or salespeople can activate a consumer's decision process by showing the shortcomings of competing (or currently owned) products.
Promotion Strategies
Product sold globally in three ways 1. In the same form as its home market 2. With adaptations 3. New product
Profit Responsibility
Profit responsibility holds that companies have a simple duty: to maximize profits for their owners or stockholders. This view is expressed by Nobel Laureate Milton Friedman, who said, "There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
FTC
Promotion and advertising are aspects of marketing closely monitored by the Federal Trade Commission (FTC), which was established by the FTC Act of 1914. The FTC has been concerned with deceptive or misleading advertising and unfair business practices and has the power to (1) issue cease and desist orders and (2) order corrective advertising. In issuing a cease and desist order, the FTC orders a company to stop practices the commission considers unfair. With corrective advertising, the FTC can require a company to spend money on advertising to correct previous misleading ads. The enforcement powers of the FTC are so significant that often just an indication of concern from the commission can cause companies to revise their promotion. A landmark legal battle regarding deceptive advertising involved the Federal Trade Commission and Campbell Soup Co. It had been Campbell's practice to insert clear glass marbles into the bottom of soup containers used in print advertisements to bring the soup ingredients (e.g., noodles or chicken) to the surface. The FTC ruled that the advertising was deceptive because it misrepresented the amount of solid ingredients in the soup, and it issued a cease and desist order. Campbell and its advertising agency agreed to discontinue the practice
Lanham Act (1946)
Provides for registration of a company's trademarks. Historically, the first user of a trademark in commerce had the exclusive right to use that particular word, name, or symbol in its business. Registration under the Lanham Act provides important advantages to a trademark owner that has used the trademark in interstate or foreign commerce, but it does not confer ownership. A company can lose its trademark if it becomes generic, which means that it has primarily come to be merely a common descriptive word for the product.
Telephone Consumer Protection Act (1991)
Provides requirements for telemarketing promotions, including fax promotions. Telemarketing is also subject to a law that created the National Do Not Call Registry, which is a list of consumer phone numbers of people who do not want to receive unsolicited telemarketing calls.
Psychographics
Psychographics, the practice of combining psychology, lifestyle, and demographics, is often used to uncover consumer motivations for buying and using products and services. A prominent psychographic system is VALS from Strategic Business Insights (SBI). The VALS system identifies eight consumer segments based on (1) their primary motivation for buying and having certain products and services and (2) their resources
Panel
Sample of consumers or stores which researcher take a series of measurements
Special Methods
Sampling = selecting group of distributors, customers or prospects and asking them questions Statistical Interference = to generalize the results from the sample to larger groups to decide marketing factions
Selective Comprehension
Selective comprehension involves interpreting information so that it is consistent with your attitudes and beliefs. A marketer's failure to understand this can have disastrous results.
Selective Exposure
Selective exposure occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent. Selective exposure often occurs in the postpurchase stage of the consumer decision process, when consumers read advertisements for the brand they just bought. It also occurs when a need exists
Organization & Departments
Senior Management -Manufacturing Dept -Research & Development Dept -Human Resources Dept -Information Systems Dept -Marketing Dept -Finance Dept -Manufacturing Dept Environmental Sources -Social -Economic -Technological -Competitive -Regulatory
Branding
The organization chooses a name, phrase, design, or symbol or a combination of these to identify its products and distinguish them from those of competitors
Marketing
The American Marketing Association represents marketing professionals. Combining its 2004 and 2007 definitions, "marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large." This definition shows marketing is far more than simply advertising or personal selling. It stresses the need to deliver genuine benefits in the offerings of goods, services, and ideas marketed to customers. Also, note that the organization doing the marketing, the stakeholders affected (such as customers, employees, suppliers, and shareholders), and society should all benefit.
Quadrants In Growth Share
The BCG has given specific names and descriptions to the four resulting quadrants in its growth-share matrix based on the amount of cash they generate for or require from the organization: -Cash cows are SBUs that generate large amounts of cash, far more than they can invest profitably in themselves. They have dominant shares of slow-growth markets and provide cash to cover the organization's overhead and to invest in other SBUs. -Stars are SBUs with a high share of high-growth markets that may need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows. -Question marks are SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management's dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest. -Dogs are SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners for the organization. Dropping SBUs that are dogs may be required, except when relationships with other SBUs, competitive considerations, or potential strategic alliances exist.
Business Portfolio Analysis
The Boston Consulting Group (BCG), a nationally known management consulting firm, has developed business portfolio analysis. It is a technique that managers use to quantify performance measures and growth targets to analyze their firms' strategic business units (SBUs) as though they were a collection of separate investments. The purpose of the tool is to determine the appeal of each SBU or offering and then determine the amount of cash each should receive. More than 75 percent of the largest U.S. firms have used this analytical tool. The BCG business portfolio analysis requires an organization to locate the position of each of its SBUs on a growth-share matrix. The vertical axis is the market growth rate, which is the annual rate of growth of the SBU's industry. The horizontal axis is the relative market share, defined as the sales of the SBU divided by the sales of the largest firm in the industry. A relative market share of 10× means that the SBU has 10 times the share of its largest competitor, whereas a share of 0.1× means it has only 10 percent of the share of its largest competitor. The primary strength of business portfolio analysis lies in forcing a firm to place each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash producers and cash users in the future. Weaknesses of this analysis arise from the difficulty in (1) getting the needed information and (2) incorporating competitive data into business portfolio analysis.
The Toyota Way
The Toyota Way is a business philosophy used to (1) improve processes and products, (2) build trust, and (3) empower individuals and teams. There are two values that act as pillars of The Toyota Way. They are continuous improvement and respect for people. These values are evident in five business practices: -Challenge: To build a long-term vision and meet challenges with courage and creativity. -Kaizen: To continuously improve business operations, always striving for innovation and evolution. -Genchi Genbutsu: To always go to the source to find the facts and make correct decisions; to build consensus and expeditiously achieve goals. -Respect: To respect others and the environment, to build trust and to take responsibility. -Teamwork: To stimulate personal and professional growth, maximize individual and team performance.
Cultural Anthocentricity
The belief that aspects of one culture are superior to another
Connecting with customers
The challenge lies in creating aesthetic and functional design features that attract customer attention and deliver customer value in their use
Organizational Buying Behavior
The decision making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers
1. Situation Analysis
The essence of situation analysis is taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's marketing plans and the external forces and trends affecting it.
Evolution of Market Orientation
The first stage, the production era, covers the early years of the United States up until the 1920s. Goods were scarce and buyers were willing to accept virtually any goods that were available and make do with them. In the sales era from the 1920s to the 1960s, manufacturers found they could produce more goods than buyers could consume. Competition grew. Firms hired more salespeople to find new buyers. This sales era continued into the 1960s for many American firms. Starting in the late 1950s, marketing became the motivating force among many American firms and the marketing concept era dawned. The marketing concept is the idea that an organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization's goals. General Electric probably launched the marketing concept and its focus on consumers when its 1952 annual report stated: "The concept introduces ... marketing ... at the beginning rather than the end of the production cycle and integrates marketing into each phase of the business."25 Firms such as General Electric, Marriott, and Facebook have achieved great success by putting huge effort into implementing the marketing concept, giving their firms what has been called a market orientation. An organization that has a market orientation focuses its efforts on (1) continuously collecting information about customers' needs, (2) sharing this information across departments, and (3) using it to create customer value.26 The result shown in Figure 1-5 on the next page is today's customer relationship era that started in the 1980s, in which firms seek continuously to satisfy the high expectations of customers.
Customer Experience
The foundation of customer relationship management is really customer experience, which is the internal response that customers have to all aspects of an organization and its offering. This internal response includes both the direct and indirect contacts of the customer with the company. Direct contacts include the customer's contacts with the seller through buying, using, and obtaining service. Indirect contacts most often involve unplanned "touches" with the company through word-of-mouth comments from other customers, reviewers, and news reports.
Competition
The fourth component of the environmental scan, competition, refers to the alternative firms that could provide a product to satisfy a specific market's needs. There are various forms of competition, and each company must consider its present and potential competitors in designing its marketing strategy.
Generation Y
The generational cohort labeled Generation Y includes the 72 million Americans born between 1977 and 1994. This was a period of increasing births, which resulted from baby boomers having children, and it is often referred to as the echo-boom or baby boomlet. Generation Y exerts influence on music, sports, computers, video games, and all forms of communication and networking. Generation Y members are interested in distinctive, memorable, and personal experiences and are very adept at managing their lives to create a work-life balance. They are strong-willed, passionate about the environment, and optimistic. This is also a group that is attracted to purposeful work where they have control. The Making Responsible Decisions box describes how millennials' interest in sustainability is influencing colleges, graduate schools, and employers. The term millennials is used, with inconsistent definitions, to refer to younger members of Generation Y and sometimes to Americans born since 1994.
Distributed-Related Legislation
The government has four concerns with regard to distribution—earlier referred to as "place" actions in the marketing mix—and the maintenance of competition. -The first, exclusive dealing, is an arrangement a manufacturer makes with a reseller to handle only its products and not those of competitors. This practice is illegal under the Clayton Act only when it substantially lessens competition. -Requirement contracts require a buyer to purchase all or part of its needs for a product from one seller for a time period. These contracts are not always illegal but depend on the court's interpretation of their impact on distribution. -Exclusive territorial distributorships are a third distribution issue often under regulatory scrutiny. In this situation, a manufacturer grants a distributor the sole rights to sell a product in a specific geographical area. The courts have found few violations with these arrangements. -The fourth distribution strategy is a tying arrangement, whereby a seller requires the purchaser of one product to also buy another item in the line. These contracts may be illegal when the seller has such economic power in the tying product that the seller can restrain trade in the tied product.
Self Regulation
The government has provided much legislation to create a competitive business climate and protect the consumer. An alternative to government control is self-regulation, where an industry attempts to police itself. There are two problems with self-regulation, however: noncompliance by members and enforcement. In addition, if attempts at self-regulation are too strong, they may violate the Robinson-Patman Act. The best-known self-regulatory group is the Better Business Bureau (BBB). This agency is a voluntary alliance of companies whose goal is to help maintain fair practices. Although the BBB has no legal power, it does try to use "moral suasion" to get members to comply with its standards. The BBB recently developed a reliability assurance program, called BBB Online, to provide objective consumer protection for Internet shoppers. Before they display the BBB Online logo on their website, participating companies must be members of their local Better Business Bureau, have been in business for at least one year, agree to participate in BBB's advertising self-regulation program, abide by the BBB Code of Business Practices, and work with the BBB to resolve consumer disputes that arise over goods or services promoted or advertised on their site.
Consideration Set
The group of brands that you would consider from among all the brands of which you are aware in the product class. Your evaluative criteria result in two brands and their respective models (the Apple iPhone 4and the Sony Ericsson Xperia Play) in your consideration set. If these alternatives are unsatisfactory, you can change your evaluative criteria to create a different consideration set of brands and models.
Relationship Marketing
The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, which links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit. In terms of selling a product, relationship marketing involves a personal, ongoing relationship between the organization and its individual customers that begins before and continues after the sale.
WOM
The influencing of people during conversations is called word of mouth. Word of mouth is the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy. According to a recent study, 67 percent of U.S. consumer product sales are directly based on word-of-mouth activity among friends, family, and colleagues. The power of personal influence has prompted firms to promote positive and retard negative word of mouth. For instance, "teaser" advertising campaigns are run in advance of new-product introductions to stimulate conversations. Other techniques such as advertising slogans, music, and humor also heighten positive word of mouth. The power of word of mouth is magnified by the Internet through online forums, blogs, social media, and websites. In fact, companies use special software to monitor online messages and find out what consumers are saying about their products, services, and brands. They have found that 30 percent of people spreading negative information have never owned or used the product, service, or brand!
Alternative Evaluation: Assessing Value
The information search stage clarifies the problem for the consumer by (1) suggesting criteria to use for the purchase (2) yielding brand names that might meet the criteria (3) developing consumer value perceptions
The segmentation trade off
The key to success product differentiation and market segmentation strategies is finding the ideal balance between customers individual wants and achieving organizational synergy
Newness from the organization's perspective
The lowest level which usually involves the least, is a product line extension. This is an incremental improvement existing product line the company already cells At the next level is significant jumpin innovation or technology or a brand extension involving putting an established brand name on an new product in an unfamiliar market The second case you can interesting brand name to introduce a new product a new product into an unfamiliar market The second case using and existing brand name to introduce a new product into an unfamiliar market looks deceptive easy for companies with a powerful, national brand name The third and highest level of innovation involves a radical invention, truly revolutionary new product
Communication Benefits
The major benefit of packaging is a the legal information on it conveyed to the consumer, such as direction on how, where, and when to use the product And the source and composition of the product, which is needed to satisfy legal requirements of product disclosure
Marketing Concept
The marketing concept is the idea that an organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization's goals.
Ways for Parties to Communicate
The marketing transaction of buying a copy of People will never occur unless you know the product exists and its location. Similarly, the store owner won't stock the magazine unless there's a market of potential buyers nearby. When you receive a free sample in the mail or see the magazine on display in the bookstore, this communications barrier between you (the buyer) and your bookstore (the seller) is overcome.
Consumer Income
The microeconomic trends in terms of consumer income are also important issues for marketers. Having a product that meets the needs of consumers may be of little value if they are unable to purchase it. A consumer's ability to buy is related to income, which consists of gross, disposable, and discretionary components.
Sight Life
The mission of SightLife is incredibly clear and specific: "To end cornea blindness." Cornea blindness, affecting 10 million people globally, can be cured by transplanting a donated, healthy cornea to replace a diseased one. Seattle-based SightLife finds cornea donors and prepares the tissues for surgery. Seeking to create 900 eye banks around the world, SightLife recruited Tim Schottman to lead the effort. He had been part of the global strategy team at Starbucks that often opened six or seven stores in a day. Schottman's reaction to the SightLife challenge was, "Ah, only 900—that's not that hard."
Bribery
The second form of unethical competitive behavior is giving and receiving bribes and kickbacks. Bribes and kickbacks are often disguised as gifts, consultant fees, and favors. This practice is more common in business-to-business and government marketing than in consumer marketing. In general, bribery is most evident in industries experiencing intense competition and in countries in the earlier stages of economic development. According to a United Nations study, 15 percent of all companies in industrialized countries have to pay bribes to win or retain business.
Macromarketing
The societal marketing concept is directly related to macromarketing, which is the study of the aggregate flow of a nation's goods and services to benefit society. Macromarketing addresses broad issues such as whether marketing costs too much, whether advertising is wasteful, and what resource scarcities and pollution side effects result from the marketing system. While macromarketing issues are addressed briefly in this book, the book's main focus is on how an individual organization directs its marketing activities and allocates its resources to benefit its customers, or micromarketing. Because of the importance of ethical and social responsibility issues in marketing today.
Social Responsibility
The societal marketing concept stresses marketing's social responsibility by not only satisfying the needs of consumers but also providing for society's welfare. Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions. Like ethics, agreement on the nature and scope of social responsibility is often difficult to come by, given the diversity of values present in different societal, business, and corporate cultures.
Protocol
The statement that, before product development begins, identify well defined target market, specifies the customers needs, wants, and preferences, what the product will be in do to satisfy consumers
Diffusion of Innovation
The way in which a product diffuses or spreads through the population
80/20 rule
Usage rate is sometimes referred to in the terms of 80/20 rule, a concept that suggests 80 percent of a firm sales are obtained from 20 percent of its customers
Market Segmentation
This decision is often based on market segmentation, which involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. This enables an organization to identify the segments on which it will focus its efforts—its target market segments—and develop specific marketing programs to reach them.
Cognitive Dissonance
This feeling of postpurchase psychological tension or anxiety is called cognitive dissonance. To alleviate it, consumers often attempt to applaud themselves for making the right choice. So after your purchase, you may seek information to confirm your choice by asking friends questions like, "Don't you like my new phone?" or by reading ads of the brand you chose. After buying a product, the consumer compares it with his or her expectations and is either satisfied or dissatisfied. If the consumer is dissatisfied, marketers must determine whether the product was deficient or consumer expectations were too high. Product deficiency may require a design change. If expectations are too high, perhaps the company's advertising or the salesperson oversold the product's features and benefits. Sensitivity to a customer's consumption or use experience is extremely important in a consumer's value perception.
Planning Phase
Three steps in the planning phase of the strategic marketing process: (1) situation (SWOT) analysis (2) market-product focus and goal setting (3) the marketing program.
Statistical Areas
To assist marketers in gathering data on the population, the Census Bureau has developed a classification system to describe the varying locations of the population. The system consists of two types of statistical areas: -A metropolitan statistical area has at least one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration. -A micropolitan statistical area has at least one urban cluster of at least 10,000 but less than 50,000 people and adjacent territory that has a high degree of social and economic integration. If a metropolitan statistical area contains a population of 2.5 million or more, it may be subdivided into smaller areas called metropolitan divisions. In addition, adjacent metropolitan statistical areas and micropolitan statistical areas may be grouped into combined statistical areas.15 There are currently 366 metropolitan statistical areas, which include 84 percent of the population, and 576 micropolitan statistical areas, which include 10 percent of the population.
Changes in the Product Growth Stage
To help differentiate a company's brand from competitors
Marketing Tactics
To implement a marketing program successfully, hundreds of detailed decisions are often required. These decisions, called marketing tactics, are detailed day-to-day operational decisions essential to the overall success of marketing strategies.
Toyota Environmental Action Plan
To make its environmental vision actionable, Toyota developed a five-year Environmental Action Plan. The plan is structured around five key areas: -Energy and Climate Change -Recycling and Resource Management -Air Quality -Environmental Management -Cooperation with Society Toyota believes that partnerships with relevant organizations help increase awareness of its technologies and products. In addition, Toyota believes that the programs have other benefits, including: -Strengthen Toyota's image as an environmental leader among automakers -Communicate a message of environmental stewardship -Build awareness of the Prius and other Toyota hybrids -Educate park visitors on the benefits of advanced vehicle technology
Marketing Seeks To...
To serve both buyers and sellers, marketing seeks (1) to discover the needs and wants of prospective customers and (2) to satisfy them. These prospective customers include both individuals, buying for themselves and their households, and organizations, buying for their own use (such as manufacturers) or for resale (such as wholesalers and retailers).
Trademarks
Trademarks are intended to protect both the firm selling a trademarked product and the consumer buying it. A Senate report states: The purposes underlying any trademark statute [are] twofold. One is to protect the public so that it may be confident that, in purchasing a product bearing a particular trademark which it favorably knows, it will get the product which it asks for and wants to get. Secondly, where the owner of a trademark has spent energy, time, and money in presenting to the public the product, he is protected in this investment from misappropriation in pirates and cheats.
Online Auctions in Organizational Markets
Traditional Auctions & Reverse Auctions
Idea Evaluation Methods
Trying to test ideas to help marketing manager recommend marketing actions; involve conventional questionnaires using personal mail, phone, fax, and online surveys
Bidders List
Under Alternative Evaluation Typically 2/3 suppliers for each standard component & assembly are identified from a bidders list - list of firms believed to be qualified to supply a given item
Value Analysis
Under Information Search A systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs
Outside Visionaries
Universities inventors, and smaller nonm traditional firms that have incentions or innovative ideas that can become products