What is the basic premise of marketing?
satisfying customer's needs and creating value for customers to build strong relationships to capture value from customers
What is the definition of Marketing?
the activity, set of institutions (markets, suppliers, wholesalers, retailers), and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
What are the marketing activities and what do they do together?
segmentation, targeting and positioning, developing and managing products and brands, pricing, distribution, selling and promoting
*together they allow marketers to create and capture value
What is the domain of marketing?
goods and services, ideas, people, places, causes, events, organizations and experiences
What is the first step of the marketing process?
Understand the marketplace and customer needs and wants
What defines a need? What are the three categories?
state of felt deprivation - physical (food, clothing, shelter, safety), social (belonging, affection, status), and individual (learning, self-expression, pleasure)
What is a want?
how a need is manifested in the market place...need - food and a want would be a big mac
What do needs and wants provide motivation for?
they provide motivation for consumption and drive us to buy and consume
What is a market?
current and potential customers who are willing and able to enter an exchange (financially) with the marketer (generally by making a purchase)
What is the second step of the marketing process?
design a customer driven marketing strategy
What two questions must be answered for these steps?
1. What customers will we serve - segmenting the marketing and selecting a segment to target
2. How can we serve these customers best? determine how to differentiate from competitors based on perceived value
What are demands?
wants backed by buying power
What is the marketing concept?
a philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering desired benefits better than competitors - learn what members of target market want and follow through
What are other philosophies hat other organizations follow?
production concept, product concept, selling concept
Explain these three philosophies
1. production concept - favor highly affordable, being inexpensive, distribution efficiency, widely available
2. product concept - consumers want highest quality, best performance, best features, devoted to product improvement, innovative features
3. selling concept -heavy emphasis on selling and promotional effort - selling what company makes over what the market wants
What is the societal marketing concept?
the idea that marketing decisions should consider customers' and society's long-run interest in addition to wants, needs and organizational interests
*extension of marketing concept - also wants to benefit society at large
What is the third step in the marketing process?
Construct an integrated marketing program that delivers superior value
Explain the third step.
Choose marketing mix elements to create and deliver superior value
Marketing mix: product, price, place, promotion
* these elements are based on who we want to target and how we want to position the product in target market place
What are the four types of value created by Marketing?
functional, symbolic, hedonic, time, place and form value
Describe each type of value.
Functional/utilitarian value - food, meet need for food and satisfies hunger, tools meet the need to screw in a screw, computer meets the need of internet
symbolic - convey image/idea about yourself - example how clothes look on your body for desired image or cars what they say about you (hybrid - saving the environment)
hedonic - pleasure, sensations you get - example chocolate - pleasureable to eat, and alcohol burger - buying a more delicious burger for 5 dollars vs 2 dollars
time, place and form value - saving time and convenient - buying a 9 dollar beer at a baseball game (place value) than at a liquor store
form: single serving pack vs family size
What is the fourth step of the marketing process?
build profitable relationships and create customer delight
Explain two parts of this fourth step
1. customer relationship management - the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction - maximize customer loyalty
2. perceived value - the difference between all of the benefits and the costs of marketing offering relative to competitive offerings (value - not absolute)
Why are companies so focused on CRM (customer relationship management)?
- increasing emphasis for marketers -- instead of individual transactions, marketers want long term relationships with customers
- 80/20 - pareto principle - for most companies 80% of profits are generated by 20% of customers
- insights provided by information technology -- storage of demographic data to determine best customers to find out who to target
- attempting to relate more deeply and interactively with customers - greater levels of interaction
- goal: attract, nurture, and retain most profitable customers
What is the final step of the marketing process?
capture value from customers to create profits and customer quality
What does the process include? 3 steps
1. marketers generally capture value through price -- create more value, charge a higher price
2. effective pricing is crucial to profitability
3. stronger brands have greater pricing power - brand with a greater perceived value - allow to charge a greater price
Explain customer lifetime value (CLV), Share of customer and customer equity in terms of the last step of the process.
CLV - the value of the entire stream of purchases that the customer would make over a lifetime of patronage - regular customers vs one time
share of customer - the portion of the customer's purchasing that a company gets in its product categories - share of wallet - ex. 10% of entertainment dollars
customer equity - total combined customer lifetime value of all customers (current and potential)- indication of firm's future profitability
What are the four areas of the changing marketing landscape?
1. digital age - IT, expansion of internet users, new technology
2. globalization - increase threats from global competition, increase in opportunities from emerging markets
3. focus on ethics and responsibility - increase in concern how marketing effects communities example tobacco - stress on sustainability and recycling
4. growth in use of marketing by not-for-profits - increase interest in using marketing to promote causes/charities *techniques/tools for public campaigns
** all areas changing rapidly
What is strategic planning?
the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing market opportunities. - assessing what were good at what's going on in the marketing environment, how are strengths are matched with opportunities given by environmental circumstances
* keep current business going and take advantage of opportunities of constantly changing environment
Describe the process of the generic strategic plan
mission --> financial goals and objects --> operational goals and objectives, HP/Personnel goals and objectives, marketing goals and objectives ---> marketing strategy (target segment, positioning, marketing mix)
what is a mission statement?
a statement of the organization's purpose - what it wants to accomplish in the larger environment - an invisible hand walking people in the right direction
What are characteristics of good mission statements?
*market oriented - what are our customers and what do they value
- emphasis on strengths
should be realistic, specific, in line with the marketing environment, based on distinctive competencies and motivating
How do you set goals and objectives after creating a mission statement?
- the mission should be translated into goals and objectives
- creates a hierarchy of objectives that are consistent with one another (accomplishing lower level helps accomplish higher level objectives) financial objective -- marketing objective -- marketing strategy
Explain the acronym SMART for accomplishing good objectives.
objectives should be...
specific, measurable, achievable, relivant, and time bound
What are the four general strategies for growth and where are they located?
market penetration, product development, market development and diversification - they are located in the market/product matrix or the market expansion grid
List and give an example for each of he general strategies.
1. market penetration - sell more to current market with the original product - example coming up with new recipes involving baking soda and cereal
2. product development - new product to existing customers - under armour introduced a brand of shoes, google chrome, ing direct opened checking accounts not just savings
3. market development - new market using existing products - geographic expansion - New Saxby's coffee location moved from out of Philly to Delaware markets
4. diversification - new product to new market -- Nike first entered golf market made golf products to new customers who had an interest in golf
each company department can be thought of as a link in the company's internal value chain -- each department carries out an important link in the chain
How do companies develop a customer-driven marketing strategy?
*careful customer analysis guided by marketing strategy
involving market segmentation, targeting, differentiation and positioning and formulating an effective marketing mix
the process of diving a market into distinct groups of buyers with different needs, characteristics, or behavior who are likely to require separate products or marketing activities -- divide into groups with similar needs
what is a market segment?
a group of customers who respond in a similar way to the marketing mix -- ex. segment who wants biggest, most comfortable car regardless of price
involves selecting one or more segments for whom the marketer plans to tailor a product's marketing mix (to maximize its perceived value) - pick 5 or 6 look at short and long run financial return and determine if the company can fulfill the needs of these consumers that had been targeted. -- want value to be sustained over time
involves superior customer value by actually differentiating the market offering - establish a perception that market offering is superior in a way that matters to consumers
creating a clear, distinctive and desirable place in the minds of target customers (relative to competing market offerings) - place product occupies relative to competitors' products in consumers minds
What is the marketing mix?
the set of controllable marketing tools that the company uses to maximize the appeal of its offering to the target market
Explain the four ps of the marketing mix
product (customer solution)- variety, features, brand name, quality, design, packaging and services
place (convenience) - channels, coverage, logistics, locations, transportation, assortments and inventory
promotion (communication) - advertising, sales promotion, public relations and personal selling
price (customer cost) - list price, discounts, allowances, payment period, credit terms
* elements are all interdependent and must work together
what are the basic contents of a marketing plan?
1. executive summary (analysis, planning, implementing, controlling)
2. current marketing situation (evaluating what we know about the market situation) including a SWOT analysis
3. marketing objective - analysis provides objectives
4. marketing strategy - plan from objectives
5. implementation plan - action- what we are specifically going to do
6. cost and projected outcomes - estimating payoffs from implementation
How do some companies determine their return on marketing or ROI (return on investment)?
(ROI = net return from marketing / costs)
day after recall, brand awareness, market share, sales revenue, customer trial/acquisition, customer retention, customer lifetime value
*measurability and being able to determine success of marketing efforts is growing in importance
consists of actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers
*companies must adapt and change to a marketing environment -- want to meet new market place challenges and opportunities
actors effect how a company goes about marketing and serve customers who have implications on how to market offerings
larger societal force that affect a microenvironment
explain the first step in formulating a marketing strategy - to analyze organization's situation
SWOT analysis - strengths, weaknesses, threats and opportunities - what's going on in a business that will affect marketers
including internal (strengths and weaknesses) - company, customers, mission, where they stand versus competition
and external (opportunities, threats) - cultural trends, business, technological cycle, macroenvironment
What is the goal of the SWOT analysis?
identify the key aspects of the situation that are likely to influence company and marketing performance
*it is an exhaustive analysis since we should not discuss every factor and only look at the key factors
How must the areas/departments inside of a company work together?
they all affect the marketing department's planning strategy. All departments must "think consumer" and work together to provide superior value and satisfaction - must find out problems that customers are facing
explain the role of suppliers in the microenvironment
they provide the resources needed to produce good and services - important actors
they are an important link in the "value delivery system"
most marketers treat suppliers like partners in creating/delivering customer value
**without them - customers are unable to get products they want
explain the role of marketing intermediaries in the microenvironment
they help the company to promote, sell and distribute its goods to final buyers including:
- resellers: help find customers to sell to (wholesalers/retailers)
- physical distribution firms: help company to stock and move goods from point or origin to destination
- marketing service agencies - helps company target and promote products to the right markets
- financial intermediaries - banks, credit companies, insurance companies - insure against risk of buying/selling
what is the role of customers in the microenvironment? who are the five types of markets may purchase a company's goods and services?
*user is the one who buys the product
five types of markets that may purchase a company's goods and services
2. business for production use
3. reseller to resell for a profit
4. government for public service/people in need
5. international - same buyers in other countries
explain the role of competitors in the microenvironment
- those who serve a target market with products and services are viewed by consumers as being reasonable substitutes for the firm's products or services
- includes direct (movie of same drama) and indirect (other sources of entertainment) competitors
- company must seek to gain strategic advantage against these organizations -- by positioning offerings strongly against competitors' offering in mind of consumers
what do we know about customers, what do they value, lifestyle, how to prospect new customers and marketing mix to maximize appeal
nature of industry and how company is differentiated, what their marketing position is, SWOT, how do they stack up
explain the role of publics in the microenvironment. who are the different publics?
any group that has an interest or impact on an organization's ability to achieve its objectives.
financial, media, government, citizen-action, local, general, internal
explain the role of demographics in the macroenvironment
the study of human populations, in terms of size, density, location, age, gender, race occupation and other statistics. involves people who make up markets
ex. "me generation" one child per family - indulging one child- starbucks is targeting
how do marketers keep track of the demographic environment?
- marketers track changing age and family structures, geographic population shifts, educational characteristics and population diversity at home and abroad -- provide good proxy for what needs are
- U.S. census
explain the importance of the changing age structure
*single most important demographic trend
- baby boomers, generation X and Millennials are key groups
- 78 million born between 1946 and 1964
- nearly 25-30 % of the population
- spend nearly 2.3 trillion annually and hold 3/4 of nation's financial assets
- 50% of total consumer spending
Shadow of baby boomers born between 1965 and 1976 less materialistic, experienced divorced, most educated and have a lot of purchasing power
Generation Y/echo boomers - born between 1977 and 2000 comfort with technology
How is the family composition changing?
traditional households in decline, married couples with children are only 23%, nontraditional houses are growing, married without children 29%, single parents 16%, non-family households 32% - more women work and stay at home dads
how does this present opportunities for marketers?
as the american family and household makeup changes, the special needs of nontraditional households provide the basis for new products or services ex. daycare services
explain the economic environment as a macroenvironmental factor
factors that affect consumer purchasing power and spending patterns, including business cycle, inflation, unemployment, resource availability, and income
ex. recession of 2008 customers are looking for greater value in products
explain the natural environment as a macroenvironmental factor
involves natural resources that are needed as inputs by marketers or that are affected by marketing activities
including shortages of raw materials, increased pollution, increased government intervention, environmentally sustainable strategies and natural disasters
ex. developing green products, the storm room for fear of tornado/hurricane season
explain the technological environment as a macroenvironmental factor
involves scientific knowledge, research, inventions and innovations that result in new and improved goods and services
-changes rapidly, creating new markets and opportunities and/or danger or products becoming obsolette
- challenge to make practice, affordable new products, often have to start by being priced at a high level and need group of consumers to start purchasing
* need higher research and development to keeo up
explain the political/legal environment as a macroenvironmental factor
includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society
areas of concern:
- new legislation
- changing government agency enrollment
- increased emphasis on ethics and socially responsible behavior
need to know laws - example credit card act of 2009 - increase interest rates and must give notice of rate increase -- impact on how credit cards are marketed
explain the cultural environment as a macroenvironmental factor
a culture is the institutions and other forces that affect a society's basic values, perceptions, preferences and behaviors. - cultural values are principles, qualities or beliefs that members of a culture consider important and desirable (cultural factors - values, ideas, beliefs, attitudes and activities
ex. more americans focused on fitness - can market these products, also return to traditional values - make more available at home
what is environmental scanning? what is the goal?
collecting and analyzing information about the micro and macro environment that can affect the marketer's markets and marketing activities
- identify swot
- reduces uncertainty and crucial part of all business plans/planning - find out what key drivers of success are
What do companies need information about in order to gain insights?
consumers needs, marketing environment (economic, technological, and government) and competition
** consumer is king and only way to make a profit is by meeting their needs and what they really want
What do marketing managers need?
they do not need more information they need better information that provides them with insights that are useful for decision making -- customer insights provides them with a competitive advantage -- customer insight can sometimes replace marketing research
Explain the process of the marketing information system
assessing information needs (what do we need to know), development of data (internal databases, marketing intelligence, marketing research), analyze and use information (critical convert to information)
What does the marketing information system help managers to do?
1. assess information needs
2. develop needed information
3. analyze and use information to generate and validate actionable customer insights
balances information that users would like against what they need and what is feasible to offer
design effective MIS systems that give managers the right information at the right time to use to create customer value and relationships mis efforts are costly
Describe developing marketing information in terms of internal databases
electronic collections of consumer and market information obtained from data sources within a company network - records about customers with every transaction
example: using Acme card at the supermarket to figure out what kinds of products people want -- however sometimes collection of data is not always in the right form
explain marketing intelligence as a part of developing marketing information
systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment. - ongoing, continuous, day to day needs of managers
- improve decision making by understanding consumer environments, assessing and tracking competitors' actions - provide early warnings of threats or opportunities
What are some ways to gather marketing intelligence?
- "dumpster diving" is one way to gather it - legal but unethical
- companies viewed trash to see how food changed as immigrants were in America for longer
- need to rack competitors reports, business publications, trade show exhibits, press releases, ads and web pages -- ongoing
explain marketing research as part of developing marketing information
systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing an organization
ex. about a specific time -- macy's would need to know if it paid for a new store to be opened
explain the marketing research process
*defined beginning, middle and end
1. defining the problem and research objectives
2. developing the research plan for collecting information
3. implementing the research plan- collecting and analyzing the data
4. interpreting and reporting the findings
symptom vs. problem
symptom - people aren't renting apartments in a certain building
problem - competitor opened new building
What are the different types of research objectives for defining a problem and objectives
exploratory research - start with this - gathering preliminary information that will help define the problem and suggest hypothesis -- qualitative and unstructured getting a feel for whats going on
descriptive research - generating information to better describe marketing problems, situations or markets -- describe marketing potential, demographics and attitudes of customers, answers questions more specifically about a problem we have already identified (answers who, where, when, how)
casual research - testing hypotheses about cause-and-effect relationships, understanding why
What does developing the research plan require?
determining the exact information needed,developing a plan for gathering it efficiently, and presenting the written plan to management
What does the research plan outline?
sources of existing data, specific research approaches, contact methods, sampling plans and instruments for data collection
*in form of written proposal that must include cost
what are the advantages of secondary data?
- available more quickly and at a lower cost than primary data
- can sometimes lead to information that an individual firm could not gather itself
- easy and inexpensive
*like researching stuff we have researched our whole lives -- internal registers, census data
*look at secondary first before primary data
what are the disadvantages to secondary data?
- needed information may not exist as secondary data
- secondary data must be carefully evaluated for relevancy, accuracy, currency and impartiality
- rarely obtain all data they need from secondary sources
**look at secondary sources then primary data
what are the decisions that must be made for collecting primary data?
- research approach (observation, survey or experiment)
- contact methods (mail, telephone, personal or online)
- sampling plan (sampling unit, sample size, and sampling procedure)
- research instruments (questionnaire or mechanical instruments)
Explain the process of gathering observational research and its benefits/weaknesses
-gathering of primary data by observing relevant people, actions and situations
- can obtain information that people are unwilling or unable to provide (ex. if someone walks right or left when walking into a department store)
- cannot be used to observe feelings, attitudes, and motives and long-term or infrequent behaviors
- ethnographic research - anthropological perspective - observing people in their natural habitat
Explain the process of gathering survey research and its benefits/weaknesses
- most widely used method for primary data collection
- approach best suited for gathering descriptive information
- can gather information about people's knowledge, attitudes, preferences or buying behavior
*Observational often not enough, details of what's going on -- bad thing is that customers cannot remember and do not want to answer certain questions
Explain the process of gathering experimental research and its benefits/weaknesses
- tries to explain cause-and-effect relationships
- selecting matched groups of subjects or stores
- giving different treatments (ex. new formulation of twinkies vs original twinkies -- compare sales, pick two very similar cities)
- controlling unrelated factors
- checking differences in group responses
What are the different contact methods?
- mail surveys - relatively low cost, generate truthful response, no interview bias, not much control
- telephone surveys more flexible, faster, better response rate, lots of control, more expensive, interview bias, people hang out
- personal interviews: (individual interviewing and focus group interviewing) flexible, can control, high response rate, expensive, interview bias, consumers want to look good
- online marketing research (internet surveys and online panels, experiments, online focus groups) allow group to interact in focus groups with group discussion and structured format
(surveys - online marketing research - quickest and cheapest with lots of flexibility, control and a fair amount of information)
What three questions must a sampling plan answer?
1. Who is to be surveyed? Selecting the sample unit - more variable more will collect, more same will need smaller sample size
2. How many people should be surveyed? Sample size -size is not a critical feature -- not about how big but instead how representative -- bigger is often more expensive
3. How should the people in the sample be chosen? describe the sampling procedure - probability vs non probability samples
non probability: example procedure where we don't know odds of sample unit being included in sample - trabant
probability: sampling procedure that we do know probability that a group will be included in sample - (blue balls picked out of a hat)
Explain the questions that must be answered for questionaire decisions?
- What questions to ask
- the form of each question - open-ended -- short or long -- customer can give full opinion but its often harder to interpret
- close-ended- click answer - multiple choice - clearer information
- wording should be simple, direct and as unbiased as possible
- questions should be arranged in a logical order (starting with screening questions to weed out people, then meaty questions, trick questions toward the end and demographics at the end because people can always answer those)
What are the different research instruments?
mechanical devices take many forms: people meters (can tell who's watching and if TV is on), checkout scanners (match demographics with purchases at supermarket), eye tracking devices (put goggles on and see where eyes are moving at commercials), and even neuromarketing (tracking brain wave activity - see what ads stimulate the brain)
What are the steps in implementing the research plan?
- collecting the data: most expensive phase and subject to error
- processing the data: check for accuracy and code for analysis
- analyzing the data: tabulate results and then interpret
Explain the process of interpreting and reporting the findings
- interpret the findings
- drawing the conclusions
- report to management: present findings and conclusions that will be most helpful to decision making and customer relationship management (long term relationships and needs over time - ongoing able for company to flourish)
- MIS must make information readily available for decision making
What are some other marketing information considerations?
- marketing research in small businesses and non profit organizations - small businesses often do not feel this is important but cost is often equal benefits and beneficial in the long run
- international marketing research -- global companies - deal with reputable companies in different countries, needs for consumers and channels are respected
- public policy and ethics in marketing research (intrusions on consumer privacy (many mistrust research should we applaud or resent companies who follow us on twitter) and misuse of research findings(used to produce intended effect - codes of research ethics each company needs to protect consumers' best interests)
why is it important for marketers to understand consumer buying behavior?
marketers should know these answers to creat marketing strategy to influence consumers to buy products
Explain the model of buyer behavior
changes in market variables (4 ps and other stimuli) lead to predictable changes in buyer responses, need to know how changes come from buyers, cannot accurately predict how consumers will react to change in marketing mix and economic factors until we know consumer -- must figure out black box
ex. p&g ads for pampers to stress idea of disposable diapers easy, convenient and will save time - at first did not do well a failure because they care more about benefits to baby than self benefits, ads emphasis on keeping babies dryer and happier - people bought more
Explain the two parts of the buyer's black box
Buyer's characteristics and buyer decision process- by understanding both factors can begin to understand how consumer transforms changes in marketing mix to specific responses - change in attitude towards brand, buyer behavior, etc
What are the four characteristics of buyers?
cultural, social, personal and psychological
Explain the role of culture in buyer behavior.
Culture - a group of people having shared values, perceptions, wants and behavior - impact consumption choices. ex. Americans value programs and want newest technology
- learn from family and other institutions and failure to understand will bring on ineffective marketing
ex. India made a vegetarian meals in McDonald's - food adapted to reflect differences in cultural preferences
Describe cultural changes
not static - can change over time - example sexual content in movies in different today versus 70 years ago and now culture is more accepting of sexual changes shown through the dress of todays teens
Describe sub-cultures within a culture
share of values, common life experiences/situations, culture is the basic values of most but not everyone, cultures can be broken down into similar groups - sometimes based on ethnicity
companies develop different products and promotional strategies for targeting different subgroups
Describe cultural social class
*permanent and ordered divisions who share similar values, interests and behaviors - marketers consider social class not solely by income but also education and occupation - social class have same preferences in clothes, social activities, cars - can tell what social class by products purchased
What are the three different reference groups? Describe them.
associative - reference groups in which you currently belong (ex. being a parent)
aspirational - groups not currently involved in but that you desire to be a part of (ex. dream of mingling with actors, pick cool products)
dissociative - groups that you do not want to belong to
(ex. AARP - not at the age yet of retirement or buying a minivan - change purchasing decisions)
Explain the role of familys as a social factor
complicated - group decision making ex. husband and wife and kids have different ideas of where to go on a family vacation
- roles of men and women becoming less concrete
Explain roles as a social factor
life is a set of roles and roles need certain products to fulfill those roles
ex. textbooks, backpack are needed to fulfill role as a student
role - how we are expected to perform
explain role transition as a social factor
need products to transition from student to a career women.
ex. new job as a salesperson use picture in mind of stereotypes, consumer would buy products associated with role
marketers often obtain employment of college students information and send mail about products that will help fulfill their roles
explain age as a personal factor
- predicatable changes in lifestyle and consumption patterns
- provides accurate forcasts
*changes over time - 5 year olds have different needs than 20 year olds
marketers are obsessed with age trends so they can predict products for the future - know age of customers 10 years from now but uncertain of income can recognize opportunities in advance
Explain the family life cycle as a personal factor
Older - left to right on the chart and the stages go down the chart
- certain events and stages lead to predictable buying changes (ex. products for a first child)
- spend less on enjoyments when these things happen
Explain needs as a psychological factor and Freud's idea
needs are underlying forces that create tension in an individual. Need creates tension/imbalances.
motive: need that is sufficiently pressing to direct the person to seek satisfaction
Freud - buying decisions are affected by subconscious motives that they may not fully understand
Explain the gap in tension
actual state - hunger, gap, desired state- full
gap causes tension and a need - in this case for food
once full, tension and gap go away
Explain the connection between needs, goals and motivation
Need to eat, goal to be full - goals create drive and motivation
needs (to be entertained) -- lead to goals (targeted to satisfying need of actual and desired state) --lead to motivation
What are Maslow's hierarchy of needs?
starts at the bottom - each level must meet needs before moving to the next level
Maslow - behavior determined by strongest need - next step in hierarchy that is unfulfilled
physiological needs, safety needs, social needs, esteem needs, self-actualization
Explain the three levels of perception
selective attention - attention is selective and goal directed motivation influences what we selectively decide to pay attention to - people screen out most information exposed to
- selective distortion - support what they already believe - if a person likes a restaurant they will perceive a restaurant review to be better than it is
- selective retention - retain/recall information that goes along with prior beliefs, remember goo points about favorable brands, forget good points about competitors - only retaining positive things in a restaurant review about on that they like
Once motivated to seek a goal the question is how to do it. customers learn from past experiences and reinforce idea to buy product again - return to restaurant when similar needs to be achieved.
learning is the interplay of drives, stimuli, cues, responses and reinforcements
describe beliefs and attitudes
belief - descriptive thought someone has about something, hard to change beliefs and attitudes
^has a direct effect on brand image - thoughts that come to mind when thinking about a certain brand
- attitudes: beliefs affect attitudes, consistently favorable or unfavorable ideas toward object
Explain the buyer decision process
aspects influenced by buyer characteristics (ordered sequence)
need recognition, information search, evaluation of alternatives, purchase decision, postpurchase behavior
explain need recognition
hungry - need food, work - need microsoft word processing
How do companies create customer needs?
- create a new desired state - technology better devices
- change perceptions of actual state - consumers perception is somewhat inaccurate
ex. marketers show consumers they need to run a house test to stay safe so consumers believe actual state is not as good as they once perceived
Explain the approaches to search for problem solutions
Internal: memory/thinking, realize hunger search memory for food lied in the past, car insurance- geico name stuck in head
external - word of mouth, media, store visits, trial - need a car but only what they recall but what others say
impulse buying - no search
Explain the evaluation of alternatives in the form of non-compensatory and compensatory
choosing among rival brands - ex. car
non-compensatory - one or more features not willing to compromise on (want red car and good price) - cannot compensate with a green car
compensatory - consumer is willing to make compromises - other aspects compensate for the fact that car is not red - like the good price
*consumers need to know which features consumers can compromise on and how they make trade offs
Explain the process of how people make purchasing decisions
first start with a purchase intention
then take in the attitudes of others (opinion of car) and situational factors (expected price, your expected income, and economy at the time - potential drop in prices?)
then make a purchasing decision
Explain postpurchase behavior
- cognitive dissonance - uncertainty after making a purchase especially one with a high price then marketers know to follow up
- satisfaction(meets/exceeds expectations)/dissatisfaction (does not reach expectations) - how well product performs with expectations
most unhappy customers do not report dissatisfaction
Explain the buying behavior of businesses
buying behavior of organizations that buy goods and service for use in production of other products/services that are rented, sold and supplied to others. B2B sales - much larger market - retailers purchase from manufacturers, B2B computers to be used by employers - similar buying ideas
What are some factors of business buying behavior?
- number of customers - far fewer but larger customers - equipment, manufacturer - need to build very close relationships
- number of participants: buying center - much greater, more than 1 individual part of buying center, people of the organization must agree, different goals - people have different goals that conflict (ex. surgical equipment - doctors want best, buyers want best price)
- the buying process - much more complicated
how is the business process much more complicated and formal?
problem recognition, general need description (characteristics and quantity of needed items), product specification (value analysis), supplier search (find best values), proposal solicitation (invites qualified suppliers to submit proposals), supplier selection (review & select), order routine specification (final order and lists everything), and performance review (assess suppliers, provide feedback)
*more care is taken because it is a long-run relationship and possible contract
Explain modified rebuy, straight rebuy, and new buy
modified - some aspect of sale/buy is changed
straight - no modifications
new - all steps are redone
Why is it important to develop a customer driven marketing strategy?
many consumers are different - can identify groups with similar buying preferences - develop right relationships with the right customers
what are the four steps of a customer-driven marketing strategy?
1. divide customers into groups of similar preferences, goals and behaviors (segmentation)
2. select markets/segments to target (targeting)
3. differentiate offering to create superior customer value (differentiation)
4. arrange market offering to occupy a clear, distinctive and desirable place relative to competing markets in consumer's minds (positioning)
Describe the process of segmentation
subdividing a market into distinct subsets of customers that behave in the same way or have similar needs and preferences
- divide heterogeneous market into homogeneous segments
- most markets can be divided into segments
*automobile industry - differences in preferences - much variability (heterogeneous) - then bring similar preferences to market sporty cars (homogeneous)
Describe geographic segmentation, demographic segmentation, and psycho graphic segmentation as consumer characteristics and basis's of segmentation
- geographic segmentation: clothing in the south is lighter than clothing in the north
- demographic segmentation - age, gender, family size, life cycle, income, education, etc. most popular basis for segmentation - 4 seasons targets affluent
psycho - lifestyle/personality - more outgoing people war bolder clothing, outdoorsy more rugged.
Explain behavior segmentation
- occasions - if a person is dressing for a formal or a frat party, being PEEPS on holidays
- benefits sought - (convenience/time saving)brand name benefit or comfortable benefit - finding major benefits people look for in a product class, kinds of people who look for benefits and major brands who deliver benefit
- usage rate - some people have many shoes others have only few pairs
*use multiple segmentation bases in an effort to identify smaller, better-defined target groups
How do you identify a segment as useful?
1. measurable: size, purchasing power, and profiles can be measured (left-handed can not be)
2. accessible: effectively reached and searched - need to know where to advertise for customers
3. substantial - large/profitable enough to serve - don't develop cars just for people whose height is over seven feet
4. differentiable - segments are distinguishable and respond differently to 4ps and programs (married and nonmarried women may respond the same to perfume - do not require separate segments)
5. actionable - can be designed for attracting/serving the segments. - some airlines are too small to market each segment
Describe the process of targeting and evaluating and selecting segments
there are three factors -
1. size and growth - bigger not always better need the right size and growth
2. company objectives and resources - only enter market to agree with objectives, have resources and gain value/advantages over competitors
3. structural attractiveness - how stiff is competition within a segment - too many competitors or substitute products will limit profits
what is the majority fallacy?
when companies consistently avoid targeting smaller groups - we must always consider not only size but level of competition
Where do the vast majority of of consumer preferences lie?
in the medium or average
Explain mass marketing (undifferentiated) and differentiated marketing
mass marketing - selling a single product to all customers with a single marketing mix - little to no segmentation - assumes market is homogeneous and all customers have the same needs
ex. utilities, flour
differentiated marketing - selling multiple versions of a product to different, relatively large market segments - heterogeneous market, 4ps are different for different segments
more expensive * to offer 10 of 10 different products than 100 of same product
Explain niche marketing (concentrated strategy) and micro marketing
niche - going after a single, small market segment - smaller firms do this and there is less competition
ex. ice fishing market or cooking with endangered animals
micro - tailoring elements of the marketing mix for small local areas or each individual customer - buyers shape products that they buy and buying experience
ex. nike.com - can individualize your shoes, and local walmart tailors individual store merchandise with similar precision
How do the sides of the customer driven marketing strategy (selecting costumers to serve and decide on value proposition) come together?
to value creation for targeted customers
Explain how buying a product is more than just owning the product
people buy want satisfaction rather than objects - not just a drill it puts holes in wood and maybe its the brand they want or the image of making men feel manly
What is value proposition and how does it lead to competitive advantage?
value proposition - full mix of benefits upon which the brand is differentiated and positioned.
- solid value proposition leads to competitive advantage by differentiating brands in a meaningful way
explain product positioning
how a product is perceived by consumers relative to competing products - design marketing mix for a certain perception - get consumers to get product view they way they want, complex set of perceptions, impressions and feelings that consumers have for the product compared with competing products
if markets believe they have the highest quality but consumers do not see it that way it is not positioned that way
Explain the concept of positioning maps
size of circles represent the size of segment - where they are positioned on the map represents in this case with bar soaps how moisturizing they are and their degree of deodorant (zest - high moisturizing and deodorant capabilities)
perceived position is where they are located on the map
what are the three primary uses for positioning maps?
1. use to evaluate effectiveness of current strategy and how product is currently perceived
2. use to figure out where we stand relative to competition
3. use to identify opportunities for new products or repositioning - positions evolve gradually - can see opportunities for sizes of segment and if their needs are being fulfilled