Marketing 3000- exam 1

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Principles of marketing. Chapters 1,2,3,5,7

Customer satisfaction

Extent to which a firm fulfills a customer's needs, desires, and expectations.

Marketing

The performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of needs-satisfying goods and services from producer to consumer or client.

What is the aim of marketing?

To identify a customer's needs and meet those needs so well that the product almost sells itself.

Where should marketing begin?

Trying to anticipate the needs of potential customers.

Pure subsistence economy

An economy where each family unit produces everything it consumes. Marketing is not needed.

Macro Marketing

A social process that directs an economy's flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.

What is the emphasis of macro marketing?

THe emphasis is on how the whole marketing system works. Includes looking at how marketing effects society and vice versa.

What is the role of a macro marketing system?

To effectively match the heterogenous supply and demand and at the same time accomplish society's objectives.

Economies of scale

As a company produces larger numbers of a particular product, the cost of each product goes down.

What are the universal functions of marketing?

Buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information.

Buying function of marketing

Looking for and evaluating goods and services

Selling function of marketing

Promoting the product ( the most visible function)

Transporting function of marketing

Movement of goods from one place to another

Storing function of marketing

Holding goods till customers need them.

Standardization and grading function of marketing

Sorting products according to size and quality. ( Reduces the need for inspection and sampling)

Financing function of marketing

Provides necessary cash and credit to produce, transport, store, promote, sell, and buy products

Risk taking function of marketing

Bearing the uncertainties that are a part of the marketing process.

Market info function of marketing

Involves collection, analysis, and distribution of all info needed to plan, carry out, and control marketing activities whether in the firm's own neighborhood or overseas

What benefit do intermediaries or middlemen bring to the macromarketing system

Make it more efficient and effective

Collaborators

Firms that facilitate or provide one or more of the marketing functions other than buying or selling (advertising agencies, mktg research firms, etc)

E-commerce

Exchanges between individuals or organizations- and activities that facilitate these exchanges- based on applications of info technology

Economic system

The way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in society.

What are the 2 basic kinds of economic systems?

Command economies and market directed economies. Most economies are a mix of the two

command economy

Government officials decide what and how much is to be produced and distributed by whom, when, to whom, and why. "planned economy"

Market directed economy

The individual decisions of the many producers and consumers make the macro-level decisions for the whole economy

Simple trade era

A time when families traded or sold their surplus output to local middlemen, who sold the goods to consumers or distant middlemen

Production era

A time when companies focused on specific products- perhaps because few of these products are available in the market

Sales era

A time when a company emphasizes selling because of increased competition

Marketing department era

A time when all marketing activities are brought under control of one department to improve short-run policy planning and try to integrate the firm's activities.

Marketing company era

A time when, in addition to short-run marketing planning, marketing people develop long-range plans- sometimes for more years ahead- and the whole company effort is guided by the marketing concept.

Production orientation

Making whatever products are easy to produce then trying to sell them.

Marketing orientation

Trying to carry out the marketing concept. Offers customers what they need

Customer value

The difference between the benefits a customer sees from a market offering and the costs obtaining those benefits.

Micro-macro dilemma

Producers and consumers making free choices can cause conflicts and difficulties. What is good for some firms and consumers may not be good for society as a whole

Social responsibility

A firm's obligation to improve it's positive effects on society and remove it's negative ones.

Marketing ethics

The moral standards that guide marketing decisions and actions

Marketing management process

Planning marketing activities, directing the implementation of the plans, controlling these plans. ( continuous)

Strategic (management) planning

The managerial process of developing and maintaining a match between an organization's resources and its market opportunities.

Marketing strategy

Specifies a target market and a related marketing mix.

Target market

A fairly homogeneous ( similar) group of customers to whom a company wishes to appeal.

Marketing mix

The controllable variables the company puts together to satisfy this target group. Usually includes some product, offered at a price, with some promotion to tell potential customers about the product, and a way to reach the customer's place.

Target marketing

A marketing mix is tailored to fit some specific target customers.

Mass marketing

The typical production oriented approach- vaguely aims at everyone with the same marketing mix, assuming everyone is the same and is a potential customer.

4 P's of marketing

Product, Place, Promotion, Price

4 P's- Product

Your good or service should satisfy some customer need

4 P's- Place

Concerned with all the decisions involved in getting the right product to the target place.

Channel of distribution

What a product reaches customers through. Any series of firms or individuals that participate in the flow of products from producer to final user or consumer

4 P's- Promotion

Concerned with telling the target market or others in the channel of distribution about the right product. Includes personal selling, mass selling, and sales promotion

Personal selling

Involves direct, spoken communication between sellers and potential customers

Customer service

Personal communication between seller and customer who wants seller to resolve a problem with purchase- often key to building repeat business.

Mass selling

Communicating with large numbers of customers at the same time.

Advertising

Main form of mass selling- Any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor.

Publicity

Any unpaid form of nonpersonal presentation of ideas, goods, or services

Sales promotion

Those promotion activities- other than advertising, publicity, and personal selling- that stimulate interest, trial, or purchase by final customers or others in the channel.

4 P's- Price

Price setting must consider the kind of competition in the target market and the cost of the whole marketing mix.

Marketing plan

A written statement of a marketing strategy and the time related details for carrying out the strategy

What should a marketing plan spell out, in detail?

(1) What marketing mix will be offered to whom ( the target market), and for how long. (2) What company resources ( shown as costs) will be needed at what rate (month by month?). (3) What results are expected ( sales and profits perhaps monthly or quarterly, customer satisfaction levels, and the like). The plan should also include some control variables.

After the marketing plan is developed, what should the marketing manager be concerned with?

Implementation: Putting marketing plans into operation

Operational decisions

Short run decisions to help implement strategies.

Marketing program

Blends all of the firm's marketing plans into one big plan

Customer equity

The expected earnings stream ( profitability) of a firm's current and prospective customers over some period of time.

What is the best way to increase customer equity?

To find cost effective ways to increase earnings from current customers while bringing profitable new customers into the fold.

Breakthrough opportunities

Opportunities that help innovators develop hard to copy marketing strategies that will be profitable for a long time.

Competitive advantage

A firm has a marketing mix that the target market sees as better than a competitor's mix.

Differentiation

The marketing mix is distinct from and better than what is available from a competitor. Can be based on any one element of the marketing mix

What can make differentiation more obvious to target customers?

When there is a consistent theme integrated across the 4 P's

S.W.O.T. Analysis

Identifies and lists the firms strengths and weaknesses and its opportunities and threats. Helps take advantage of opportunities and strengths while avoiding weaknesses and threats.

Market penetration

Trying to increase sales of a firm's present products in present markets, probably through a more impressive marketing mix.( Making it easier to repeat online orders or cross selling, like having Adobe photoshop promote Adobe reader)

Market development

Trying to increase sales by selling present products in new markets, may involve searching for new uses for product. ( McDonalds is in airports, zoos, amusement parks, etc)

Product development

Offering new and improved products for present markets. By knowing prsent market's needs a firm may see new ways to satisfy customers. ( Heinz' purple ketchup appeals to kids)

Diversification

Moving into totally different lines of business- perhaps entirely unfamiliar products, markets, or even levels in the production marketing system. Involves the biggest risk.

What might having international customers improve?

Economies of scale, lower costs and prices may give a competitive advantage both in home markets and abroad.

What might lead a firm to international marketing?

Unfavorable trends in marketing environment at home or favorable trends in other countries.

Environmental analysis ( monitoring or scanning)

An ongoing process of identifying external forces, analyzing them, and predicting their potential impact. Results often form the basis for strategic, long-term planning.

What forces are interrelated and may have a profound effect on marketing programs and future strategies?

Demographic, economic, competitive, sociocultural, political, and technological forces.

5 steps of strategic planning

Situation analysis, developing market objectives, determining product position, selecting target markets, and designing a strategic marketing mix

Conducting a situation analysis:

Analyzing current marketing programs to see what changes are needed. Highly dependent on info collected and anazlyzed in the external environmental scanning process. Major environmental changes often trigger the need for a more formal situation analysis.

Developing market objectives

Marketing objectives are developed that are consistent with larger strategic goals and the findings from the situation analysis. Objectives need to be specific, measurable, and attainable.

Determining product position

Products image in relation to competing products, based on differential advantage

Selecting target markets

Requires an assessment of potential demand from potential consumer segments. The segment must be large enough to generate enough demand to be profitable.

Designing a strategic marketing mix

A marketing mix must be designed for each target market.

Economic buyers

People who know all the facts and logically compare choices to get the greatest satisfaction from spending their time and money

Economic buyer theory says that...

Consumers decide what to buy based on economic needs( concerned with making the most of the consumer's time and money) as they see it.

Economic needs include:

Economy of purchase or use, convenience, efficiency of operation and use, dependability in use, improvement of earnings.

Discretionary income

What is left of a family's money after taxes and necessitites. What is used to purchase luxury items.

What affects buying behavior?

A number of psychological variables, social influences, and the purchase situation itself combine with economic needs.

Needs

Basic forces that motivate a person to do something.

Wants

"Needs" that are learned during a person's life. Needs are more basic than wants

Drive

Strong internal stimulus that encourages action to reduce a need. A product purchase results from a drive to satisfy some need.

4 level hierarchy of consumer behavior:

pysiological needs ( biological needs), safety ( protection and well being), Social needs ( love, friendship, status, esteem), personal needs ( individual's need for personal satisfaction- unrelated to what others think or do)

What needs are targeted by marketing efforts in advanced economies?

Higher level needs

Perception

How we gather and interpret info from the world around us

Selective exposure

Our eyes and minds seek out and notice only info that interests us

Selective perception

We screen out or modify ideas, messages, and info that conflict with previously learned attitudes and beliefs.

Selective retention

We remember only what we want to remember.

Learning

A change in a person's thought processes caused by prior experiences. Almost all consumer behavior is learned

Steps in the learning process

Cues ( products, signs, ads and other stimuli in environment), response ( An effort to satisfy a drive), Reinforcement ( occurs when the response is followed by satisfaction-reduction in drive- strengthens the relationship between the cue and the response.)

What leads to habit?

Repeated reinforcement

Attitude

A person's point of view toward something. Can affect selective processes, learning, and buying decisions

What has more action implication: Attitudes or beliefs?

Attitudes because they generally involve liking or disliking. It's possible to have a belief about something but not like or dislike it

Beliefs

A person's opinion about something

Attitudes and beliefs sometimes combine to form an expectation. What is an expectation?

An outcome or event that one anticipates. Consumer expectations often focus on the benefits or value that the consumer expects from a firm's marketing mix

Lifestyle analysis

Used because marketing managers have not found a way to use personality in marketing strategy planning. An analysis of a person's day-to-day pattern of living as expressed in the person's activities, interests, and opinions (AIO's)

What do young couples, particularly those without children, typically spend on?

Durable goods- Automobiles, furniture, etc

When young couples have kids and as they get older what do the families tend to spend their money on?

More soft goods and services- education, medical, and personal care

Empty nesters:

People who's children are grown and who are now able to spend their money in other ways. Often an attractive market because they have more money to spend on expensive things they couldn't afford before.

What are social class groupings based on in the U.S.

A person's occupation, education, and type and location of housing

Reference group

The people to whom an individual looks when forming attitudes about a particular topic. Reference group influence is strongest for products that others can "see" and which relate to status in a group.

Opinion leader

A person who influences others. May vary from subject to subject but sometimesa leader in one area earns respect in another.

Why do more marketers pay attention to ethnic groups now?

The number of ethnic consumers is growing at a much faster rate than the overall society.

3 levels of problem solving

Extensive problem solving, limited problem solving, routinized response behavior

Extensive problem solving

When consumers put much effort into deciding how to satisfy a need- as is likely for a completely new purchase or to satisfy an important need

Limited problem solving

Used by consumers when some effort is required in deciding the best way to satisfy a need. Typical when a consumer has some previous experience with a product but isn't quite sure which choice to make at the moment

Routinized response behavior

When a consumer regularly selects a particular way of satisfying a need when it occurs. Typical when a consumer has a considerable experience in how to meet a specific need and requires no new info. Also typical for low involvement purchases.

Dissonance

A feeling of uncertainty about whether the correct decision was made. The second thoughts you experience after buying.

Adoption process

The steps individuals go though on the way to accepting or rejecting a new idea. Similar to decision making process but learning plays a clearer role and promotion's contribution to a marketing mix is more visible.

Steps in adoption process

Awareness, interest, evaluation, trial, decision, confirmation

Adoption process- Awareness

The potential customer comes to know about the product but lacks details. May not know how it works or what it will do

Adoption process- Interest

If the consumer becomes interested, he will gather general info and facts about the product.

Adoption process- Evaluation

A consumer begins to give the product a mental trial, applying it to his or her personal situation

Adoption process- Trial

The consumer may buy the product to experiment with it in use. A product that is too expensive to try out or isn't available for trial may never be adopted

Adoption process- Decision

The consumer either decides on adoption or rejection. A satisfactory evaluation and trial may lead to adoption of the product and regular use. Reinforcement leads to adoption.

Adoption process- Confirmation

The adopter continues to re-think the decision and searches for support for the decision- that is further reinforcement.

Why is it important to watch out for oversimplifying stereotypes?

Consumers in a foreign culture may be bound by some similar cultural forces, but that doesn't mean they are all the same.

What are the two most common external stimuli to influence a purchase?

Having a problem with a product and the creation of new products

What is the most frequently used marketing mix stimuli?

Promotion- particularly advertising

Performance-expectations=

Level of satisfaction

Market

A group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and services- ways of satisfying those needs

What do production oriented managers describe their markets based on?

Their prdouct

Two basic types of markets

Generic and product

Generic market

A market with broadly similar needs- and sellers offering various, often diverse, ways of satisfying those needs

Product market

A market with very similar needs and sellers offering various close substitute ways of satisfying those needs.

What does too narrow a market definition do?

Limits a firm's opportunitites

What does too broad of a market definition do?

Makes the company's efforts and resources seem insignificant.

A complete product-market definition includes a four point description:

What: Product type
To meet what: Customer ( user) needs
For whom: Customer types
Where: Geographic area

What does a generic market definition emphasize?

Any product type that satisfies the customer's needs can compete in a generic market

Market segmentation

A two step process of (1) naming broad product markets and (2) segmenting these broad product markets in order to select target markets and develop suitable marketing mixes

What is the first step in effective market segmentation?

Naming a broad product market of interest to the firm. Marketers must disaggregate all possible needs into some generic markets and broad product markets in which the firm may be able to operate profitably.

What generic market and what broad product market would a car manufacturer focus on?

" transporting people in the world"
"cars, trucks, and utility vehicles for transporting people in the world"

Segmenting

Clustering people with similar needs into market segments

Market segment

A (relatively) homogeneous group of customers who will respond to a marketing mix in a similar way

Ideally "good" market segments meet the following criteria:

homogeneous within- The customers in a market segment should be as similar as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions.
Heterogeneous between- The customers in different segments should beas different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions
Substantial- The segment should be big enough to be profitable
Operational- The segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables.

3 basic ways to develop market oriented strategies in a broad product market

Single target market approach, multiple target market approach, and Combined target market approach.

Single target market approach

Segmenting the market and picking on of the homogeneous segments as the target market

Multiple target market approach

Segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix.

Combined target market approach

Combining two or more submarkets into one larger target market as a basis for first strategy

Segmenters

People who use either a single or a multiple target market approach

Combiners

People who use a combined target market approach. Try to increase the size of their target markets by combining two or more segments.

What benefits do segmenters believe their style gives them?

They believe that aiming at one or some of these smaller markets makes it possible to provide superior value and satisfy better.

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