91 terms

Marketing Midterm 2012

This course gives students the opportunity to gain a basic understanding of the role and scope of responsibilities facing contemporary marketing management.
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Terms in this set (...)

What is "marketing"
The process of creating, distributing, promoting, and pricing goods, services, and ideas to facililtate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment.

The aim of marketing is to know and understand the customer so well that the products or service for him or her and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.
To think like a marketer, what 3 models will you use to develop a marketing strategy?
To think like a marketer is to decide upon your reality ACTIONS, based on your GOALS, that are grounded in REALITY. Fist start with a Situational Analysis (SWOT), Strategy (STP) and Marketing Mix.
What are the 5 Cs?!
(situational analysis)
Company
Competitors
Customers
Collaborators
Climate/Context
(all based in reality)
What is STP?!
(strategy)
Segmentation
Targeting
Positioning
What makes up the marketing mix?!
The 4 Ps:
Product
Price
Promotion
Place/Distribution
When would a marketing manager use a BCG matrix?
(Boston Consulting Group) BCG matrix is to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis
To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

One the Y axis, is the market growth rate, on the X axis is the Relative Market Share Compared to the largest competitor.
What is a "cash cow"?
(BCG matrix) Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
What is a "dog"?
(BCG matrix) Dogs or more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.
What is a "question mark"?
(BCG Matrix) Question marks (also known as problem children) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
What is a "star"?
(BCG Matrix) Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share.
What is the goal when analyzing a BCG Matrix?
The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks.

As a particular industry matures and its growth slows, all business units become either cash cows or dogs. The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a dog.
What is a perceptual map?
is a diagrammatic technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition.

Perceptual maps can have any number of dimensions but the most common is two dimensions. The first perceptual map below shows consumer perceptions of various automobiles on the two dimensions of sportiness/conservative and classy/affordable. This sample of consumers felt Porsche was the sportiest and classiest of the cars in the study (top right corner). They felt Plymouth was most practical and conservative (bottom left corner).

Displaying consumers' perceptions of related products is only half the story. Many perceptual maps also display consumers' ideal points. These points reflect ideal combinations of the two dimensions as seen by a consumer. The next diagram shows a study of consumers' ideal points in the alcohol/spirits product space. Each dot represents one respondent's ideal combination of the two dimensions. Areas where there is a cluster of ideal points (such as A) indicates a market segment. Areas without ideal points are sometimes referred to as demand voids.
What are the advatages perceptual maps offer marketing mangaers?
Marketing managers can understand what consumers feel about their brand.
Why are mission statements important for brands?
Complex or simple, good mission statements keep eveyone on the same page (this could be a good thing even if customers never see them).
In the first video example of Method (household cleaners), what lead Adam Lowry and Eric Ryan to rethink household cleaners?
Eric knew people wanted cleaning products they didn't have to hide under their sinks. And Adam knew how to make them without any dirty ingredients. Their powers combined, they set out to save the world and create an entire line of home care products that were more powerful than a bottle of sodium hypochlorite.

They realized customer's preferences and by conducting a BCG Matrix and marketing reseach, realized there was a hole in the market, or market opportunity, to introduce a new cleaning product.
What is a SMART goal?
Specific
Measurable
Achievable
Realistic
Time-bound
In order to have a solid marketing strategy, what does the marketing manager need to know and understand?!
In order to have a great marketing strategy, a marketing manager needs to conduct marketing reserach (primary and secondary) and have an understanding of consumer behavior. In other words, what drives purchases!
What's the first step in developing a marketing mix?
Start with an honest appraisal of your firm's and products capabilities. You gotta SWOT it!

Do we make a good product? Do we deliver great value-bang for buck? Are we good at promotions? Do we need to be? Can we get somewhere others can't? Do we have a better supply chain?
Can your firm or product excell in all of the 4 Ps?
NO! Often, each of the 4Ps can be framed as tradeoffs witht he others. You can't win at everything. Play to your stregnths!
What makes up a market? Can O'Gara's donating bread to the homeless shelter be considered a market?
The first factor is that markets consist of customers who are qualified to make a purchase. Qualified customers are defined as those who:

•Seek a solution to a need, and
•Are eligible to make a purchase, and
•Possess the financial ability to make the purchase, and
•Have the authority to make the decision.

O'Gara's donating bread to a homeless shelter can be considered a market since there are two parties and O'Gara's exchaged goodwill (maybe good public relations) when it donated bread to homeless people who were in need of bread.
Who is at the focal point of all marketing activites?
CUSTOMERS: the purachers of organizations' products.
What is a target market?!
A specfic group of customers on whom an organization focses its marketing efforts.
Can a product be an idea?
YES! A product is a good, a service, or an idea. A good is a physical entity you can touch. A service is the application of human and mechanical efforts to people or objects to provide intangible benefits to customers. Ideas include concpets, philosophies, images and issues. For example, a couselor, for a fee, provides advice on how to improve in one's life goals and lead a "happy" life. Political parties, church and schools are ideas.
What are the exchanges individuals and organizations make in order to be considered a market? (from textbook)
The provision or transfer of good, services, or ideas in return of something of value.
What is the "marketing environment" consist of? (from textbook)
The competitive, economic, political, legal and regulatory, technological, and sociocultural forces that surround the customer and affect the marketing mix?
Define the marketing concept?
A managerial philosophy that an organization should try to satisfy customers' needs through a coordinated set of activites that also allows the organization to achieve its goals.
What are some objectives business (for profit) want to acheive through marketing?
1) increasing profits
2) increase market share or maintain market share
3) increase sales
-or a combination of three
What is marketing management?
The process of planning, organizing, implementing, and controlling marketing activites to facilitate exchanges effectively and efficiently.
What were the goals of the creaters of The Putting Lot?
-bring community together
-use sustainable goods to build a putting course
-inspire others to think about sustainable goods and community activites.
What are the four pillars in the socail responsibility and ethics pyramid?
1) Philanthropic-be a good corporate citizen
2) Ethical- obligation to right and just things for its own sake and avoid harm
3) Legal-obey the law
4) Economic-be profitable
What is "green marketing"?
A strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enchancing the natural environment.
What's the difference between a good decision v. making a decision well?
A good decision is outcome based whereas making a decision well is process orientated. Marketing is about making decision. You improve the probability of making a good decision by making your decision well.
How do marketing managers made a decision well?
By (marketing) research and critical thinking. The three componets to this process are:
1) What are you trying to accomplish?
2) What do you already know?
3) How are you going to get it (the missing or incomplete data)?
What the most common mistake in strategic planning?
A common mistake is to reframe the key question of "what do I already know"? Consider the following in framing the key question:
1) What data/information is missing?
What is the process of market research?
1) problem definition-what are you trying to accomplish?
2) reserach design-what do you have/need?
3) data collection-get it
4) data analysis & interpretation-stats
5) present results & make decision
---FEEDBACK to circle back to step 1.
What is the most negleted step of market reserach?
step 1-problem definition
What are the 3 basic types if market reserach?
1) exploratory reserach
What do people think about a product or brand
2) descriptive reseach
Who might buy this product or brand? Why do they buy it? Are there any substitutes? How much are people willing to pay for it?
3) causal research
How does nudging price influence sales? Should we emphasize comfort or challenge stylishness?
Where would a focus group be labeled in market research?
exploratory reserach
Where can you find trends in market reserach?
exploratory research. You can find correlations involving the variables.
In determine how much to price a product, what reserach would be most helpful and why?
causal reserach. You can determine how much a customer is willing to pay for a product or brand-based on their value perception.
-of couse the econ majors would answer something to the effect of the market or equilibrium price and that is a major factor that should not be overlooked. But in the world of marketing, we look to see what our target is willing to pay which might be less or more than the market price.
What is the most common example of primary research?
A customer survey.
Are surveys foolproof?
NO! Surveys can lead you astray. It is critical to frame the questions in order to get accurate results.
What is the common problem with surveys?
Customer framing, memory, and biases can lead to inflated results or under reported activity.
What can help a marketing manager in his or her research after collecting data from a survey?
Secondary maket reseach. Examples are: published research, trade organizations, syndicated research, government souces-census, and statistical abstracts.
What is the value of "data mining" and how did this lead to Target knowing when women were pregnant?
Data mining combs through pre-existing date looking for behavioral patters.
What is true about primary and secondary research?
They are both credible. Both are yellow in the chart in PowerPoint
Why is timely reseach important? And what is the difference between timely and speed in comparing 3 types of marketing research?
Timley is important to discover salient needs and trends. Timley is the current situation whereas speed refers to how fast you can get your hands on the data.
What is discovered when a company matches a core competence to opportunites it has discovered in the marketplace?
A competitive advantage. When AT&T partnered with Apple and the I phone was sold only to AT&T customers. AT&T has a competitive advantage for 3 years. Now AT&T and Verizon have a competitie advantage over Sprint and T Mobile in offer the I phone to consumers.
When marketing managers examine the decision-making process model, what specifically reveals opportunities for firms?
deconstruction. Think of consumers deciding NOT to buy a product and looking for why they didn't buy.
What are the 5 steps in the linear series of consumer decision-making?
1) problem recognition
2) information search
3) alternative evaluation
4) make a decision
5) post-decision evaluation
When Alex is hungry and remembers "I'm loving it" and decides to buy a Big Mac from McDonalds. What influenced his decision from the consumer decision-making model influences?
Psychological influences:
memory
motivation
self
perception
learning
values
attidues
lifestyle

Brand recall is also a factor
Anna is walking to St. Thomas on Grand Avenue and realizes she is starving and usually goes to Pandora Bread but Greenmill is in front of her and decides to eat there. What influenced her decision to buy food from Greenmill in the consumer decision-making model influences?
Situational influences:
purchase task
social surrounding
physcial surroundings
temporal effects
John is shopping at Mall of America with his best friends from high school and as they pass the movie theater one of his friends mentions they want to see Alex Cross and everyone starts to agree and finally John buys a ticket to Alex Cross. What influenced his decision in the consumer decision making model influences to buy a movie ticket to Alex Cross?
sociocultural influences:
influence
reference groups
family
social class
culture
symbolic consumption
When do consumers feel a need for something? And how does marketing help consumers recognize this?
When they notice a difference between their current desired and desired state. Good marketing will show an imbalance between present state and preferred state.
What is the key to needs-based marketing?
Positioning your product as the solution to a relevant/salient need.
How can Maslow's Hierarchy help market managers determine customer needs?
Marketing managers can match needs to products and create messages that resonate to that need for the product. In other words, marketing managers communicate to consumers that their product/brand is the solution to that need.

Needs:

self actualization
self-esteem
love and belonging
safety and security
physiological needs
What is an example of making consumers in a shopping mall know about a salient need for food?
Cooking food out in the open so odors can be present to consumers and trigger needs and desires for purchases.
What occurs when a consumer thinks in the information serach model, "I need some Food! What should I eat?!"
Internal serach happens first (products and brands)
external search happens second (products and brands close to them)
both list a set of option for satisfying the need
What is the best way to influence consumers when they begin the internal and external search for a solution to their need?
By changing the question for consumers by:
1) what's the relevant comparison (Mini Cooper and Porche side by side)
2) What's the most important attribute? (Allegra standing tall above the competition to denote a longer lasting allergy relief)
3) What's the fair price for this product? (Clearance items that say was $50 and NOW $35.99!)
What are reference groups and how can they drive consumer behavior?
External sources that provide information about what products or behaviors are good or bad. Endorsements like MJ and being a Tommie at UST.
What is informational influence?
We get recommendations and new information from others that may influence our decision-making
What is normative influence?
We see how others are behaving,
or what they're buying, and use these observations to
determine the "right" course of action
What is value-expressive influence?
We see how others are
behaving, or what they're buying, and make our choices
to express shared values (or not)
What is an alternative evaluation toward a product or brand?
Attitude, that is, making judgements about their various product options.
What are the 3 measurable parts of a consumer's attitude?
Attributes - relevant characteristics that are important to the
consumer
• Beliefs - the degree to which the consumer believes that the
product or brand is strong on each attribute
• Importance weights - how impt. each attribute is to the consumer
What can marketing managers determine when they know their target market's attiudes and preferences?
Deconstruction reveals opportunites so can gathering attributes, level of importance, and beliefs of the product will reveal an attitude score that is helpful is revealing market opportunities and evaluating brand equity.
What are heuristics?
A proposition that connects an event with an action. Heuristics usually simplify decision making. For example, "buy the cheapest brand" is a choice heuristic that would simplify purchase. 2. (consumer behavior definition) The simplified "rules of thumb" by which decisions are made.
-be a sheep (follow the crowd)
-what you always do, habit (inertia)
-first product you see
What is the final stage in the decision process model?
Post-decision evaluation:
The final stage in the decision process involves figuring out
how it went. What did you learn? What will you tell others?
How do consumers reach satisfaction?
When consumers compare the actual experience of the product to what was promised (expectations). Hence the term: brand promise
(true or false) There are many forces that can influence our perception of whether our expectations were (dis)confirmed?
TRUE! It is very easy to revise our internal beliefs than it is to deny physical evidence that conflicts with them.
Why do we segment the market?
Not everyone will buy your product. Part of the marketing strategy is finding groups that are likely to be good customers and that you can reach.
What are the 5 steps to target market selection?
RESEARCH-ALWAYS START WITH RESEARCH
1) indentify the appropriate targeting strategy
2) determine which segmentation variables to use
3) develop maket segment profiles
4) evaluate relevant market segments
5) select specfic target markets
What should marketing managers asses first before researching and determining segmentation?
The firm's strengths and opportunities
Do we have the resources (access,
$$$, etc.) to market broadly?
• Do we have the ability to process
the information necessary to
target specific segments?
• Do we have the resources
(manpower, computing power,
time, $$$) needed to target
multiple segments?
Morton salt with a single marketing mix is an example of what segmentation strategy?
undifferentiated strategy
A strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product.

Morton salt is a great example since there are not many different salt makers and just about everyone buys salt.
Monte Blanc uses one marketing mix to target a single market is an example of what segmentation strategy?
Concentrated targeting strategy

A marketing segmentation strategy in which an organization targets a single market segmentation using one marketing mix.
Marriot has 3 different brands for 3 different segments and have their own marketing mixes is an example of what segmentation strategy?
Differentiated targeting strategy

A strategy in which an organization targets two or more segments by developing a marketing mix for each segment.
What are the two market structures in determining segmentation and a firm's strategy?
Homogeneous - uniform throughout.
Just about everyone in the market
has similar needs for the product.
❖ Heterogenous - diverse. The
product either:
• satisfies different needs for different
people (e.g., hybrid vehicles)
• and/or the strength of people's needs for
the product differ (e.g., heavy vs. light
wine drinkers)
What is the most common market structure?
In most cases, the market will be heterogenous. Youhave to then decide whether your firm has the capability to adopt the ideal strategy for that particular market structure.
What are the four segmentation variables for consumer markets?
1) Demographic variables
-age
-gender
-race
-ethnicity
-income
-education
-occupation
-family size
-family life cycle
-religion
-social class
2) Geographic variables
-region
-urban, suburban, rural
-city size
-county size
-state size
-market density
-climate
-terrain
3) Psychographic
-personality attributes
-motives
-lifestyles

4) Behavioristic Variables
-volume usages
-end use
-benefit expectations
-brand loyalty
-price sensitivity
What is the goal of segmentation?
you want a perceptual map to determine the viablitity of a new position for the product/brand.

Is the market large enough?
The estimate cost/benefit ratios
develop a position statement for new segment as to why they want that product-differenitiation
(true or false) Products are used as attiude objects?
true
Since the textbook is unclear of what the "total product" is, what are the 3 elements of a product?
1) core product
2) actual product
3) Augmented product
What is the core product?
The key benefits of what the product represents to the consumer and the needs it will fulfill
What is the actual product?
The tangible product
What is the augmented product?
extras: delivery method, warranties, financing, after-sales care, ect. The longevity of the product and overall value.
What is Keller's brand pyramid and consumer behavior insights to offers to marketing managers?
Brand equity, according to Keller, is the effect that brand knowledge has on consumer response to the marketing of a brand, with the effect occurring when the brand is known and when the consumer possesses favourable, strong and unique brand associations. The Customer-Based Brand Equity (CBBE) model identifies four steps which denote
questions asked by customers, and represent a 'branding ladder', with each step dependent on achieving the previous one. These steps consist of six brand building blocks,
with a number of sub-dimensions.

KEY BENEFIT: to differentiate betwee cognitive and affective responses to brands.


To build a strong brand, the aim is to reach
the pinnacle of the pyramid where a harmonious relationship exists with customers.

Briefly overviewed, the first step of the CBBE model is to ensure the correct 'brand identity'.
Answering the first question customers ask about brands - Who are you? - the purpose is to
create an identification of the brand, and an association with a specific product class or need.
How do brand add value to products?
Competitive Advantage

•Reduced marketing
costs
•Attract new customers
•Reassurance
•Faster to respond to
competitive threats
•Familiarity/liking
•Positive market signal
•Perceived substance
•Commitment
•Freebie into
consideration set
•Reason to buy
•Tie-breaker
•Positioning
•Pricing power
•Channel interest
•Extensions
•Cognitive processing
•Internal search
•Reason to buy
•Fosters positive feeling
•Positive attitudes
•Extensions
What is the product life cycle composed of?
Market introduction stage 1.costs are very high
2.slow sales volumes to start
3.little or no competition
4.demand has to be created
5.customers have to be prompted to try the product
6.makes no money at this stage

2. Growth stage 1.costs reduced due to economies of scale
2.sales volume increases significantly
3.profitability begins to rise
4.public awareness increases
5.competition begins to increase with a few new players in establishing market
6.increased competition leads to price decreases

3. Maturity stage 1.costs are lowered as a result of production volumes increasing and experience curve effects
2.sales volume peaks and market saturation is reached
3.increase in competitors entering the market
4.prices tend to drop due to the proliferation of competing products
5.brand differentiation and feature diversification is emphasized to maintain or increase market share
6.Industrial profits go down

4. Saturation and decline stage 1.costs become counter-optimal
2.sales volume decline
3.prices, profitability diminish
4.profit becomes more a challenge of production/distribution efficiency than increased sales
Note: Product termination is usually not the end of the business cycle, only the end of a single entrant within the larger scope of an on-going business program
Why and how is the core product the primary driver in consumer behavior?
The proof is in the pudding...the tangible core product is the solution to a customers' needs and the key factor to delivering the brand promise. In other words, the core products delivers the expectations promised in the marketing and leads to customer satisfaction.
What is the Technology Adoption Lifecycle Model?
The technology adoption lifecycle model describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. The process of adoption over time is typically illustrated as a classical normal distribution or "bell curve." The model indicates that the first group of people to use a new product is called "innovators," followed by "early adopters." Next come the early and late majority, and the last group to eventually adopt a product are called "laggards."

The demographic and psychological (or "psychographic") profiles of each adoption group were originally specified by the North Central Rural Sociology Committee, Subcommittee for the Study of the Diffusion of Farm Practices (as cited by Beal and Bohlen in their study above).

The report summarised the categories as:

innovators - had larger farms, were more educated, more prosperous and more risk-oriented
early adopters - younger, more educated, tended to be community leaders
early majority - more conservative but open to new ideas, active in community and influence to neighbours
late majority - older, less educated, fairly conservative and less socially active
laggards - very conservative, had small farms and capital, oldest and least educated
What is diffusion?
How quickly a product spreads in the marketplace (is rapid
diffusion always good?). Ten factors affecting diffusion:

Nature of the segment
Type of decision
Marketing effort
Felt need
Compatibility
Relative advantage over alternatives
Complexity
Observability
Trialability
Perceived risk