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Terms in this set (99)
Reasons for marketing
Managing profitable customer relationships through creating and capturing value using the marketing mix
1) attract new customers with superior value
2) Keep and grow curent customers by delivering satisfaction.
It is not just selling and advertising. It is satisfying customer needs.
Reasons for marketing:
-Helps company increase the value pie and capture as much of the value pie as possible.
5 Step Marketing process
1) Understand the marketplace and customer needs and wants
2) Design a customer driven marketing strategy
3) Construct an integrated marketing program that delivers superior value
4) Build profitable relationships and create customer delight
5) Capture value from customers to create profits and customer equity.
1) Understand the marketplace and Customer needs:
5 core customer and marketplace concepts:
-need: states of felt deprivation (can be physical, social, individual)
-wants: the form human needs take. (need food, want taco)
-Demand: a want that is backed by buying power.
2) Market offerings
-a combination of products, services, information, or experiences offered to a market to satisfy a want or need.
3) Customer value and satisfaction:
-must set the right level of expectations. Too low and not enough buyers, too high and not good satisfaction.
4) Exchanges and relationships
-Exchange: the act of obtaining a desired object from someone by offering something in return.
-Relationships are big.
-the set of actual and potential buyers of a product.
the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.
-forget that a product is only a tool to solve a customer problem.
2) Designing a customer driven strategy:
-Deciding who to serve (market segmentation, target Marketing)
-Choosing a value proposition
-Marketing Management orientations
Marketing Management: the art and science of choosing target markets and building profitable relationships with them.
-find, attract, keep, and grow target customers by communicating and delivering superior customer value
Who to serve?
-Segmentation: dividing market into segments of customers.
-Target Marketing: selecting the segments it will pursue.
Choosing a value proposition:
-set of benefits or values it promises to deliver to customers to satisfy their needs.
-how a company will differentiate itself and position itself in the market.
1) Production Concept:
- consumers will favor products that are available and highly affordable.
-Focus on improving production and efficiency.
-may cause too much of a focus on operations.
2) Product Concept:
-Consumers will favor products that offer the most in quality, performance, and innovation
-focus on improving product.
-may lead to marketing myopia.
-Consumers will not buy enough of the firms products unless it undertakes a large-scale selling and promotion effort.
-Practiced with unsought goods (insurance)
-focuses on sales transactions rather than relationships.
-Profits through sales volume
-inside out perspective.
4) Marketing Concept:
-Holds that achieving organizational goals depends on knowing the needs and wants fo target markets and delivering the desired satisfactions better than competitors.
-focus on customer needs/wants.
-find the right products for your customers
-profits through customer satisfaction.
-Outside in perspective
5) Societal Marketing Concept:
-Marketing strategy should deliever value to customers in a way that maintains or improves the consumers's and society's well-being.
3) Preparing an integrated marketing plan
-the 4 Ps
Transforms the marketing strategy into action.
-consists of a firms marketing mix.
Using the 4 Ps
-Product (need satisfying market offering)
-Price (how much it will charge)
-Place (how it will be available)
-Promotion (how it will communicate with target customers)
4) Building Customer Relationships:
Customer relationship management
-Customer satisfaction (Disastisfied, satisfied, delighted)
Customer relationship levels
-Frequency marketing program
Partner Relationship Management:
Customer Relationship Management: the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
-Customer value (Perceived value): A customer buys from the firm that offers the highest customer perceived value. perceived value is the evaluation of the difference between all the benefits and costs of a market offering relative to those of competing offers.
-Customer satisfaction: The products perceived performance relative to the buyer's expectations.
-Delight comes from exceeding expectations.
Customer relationship levels:
-Basic relationships (low margin customers)
-Full partnerships (key customers)
-Frequency Marketing programs: reward those who buy frequently or large amount.
-club marketing: Members get special benefits
Partner Relationship Management:
-Working closely with partners in other company departments and outside the company to jointly bring greater value to customers.
-linking all departments.
-supply chain management.
Selective Relationship management
use customer profitability analysis to weed out losing customers and target winning ones for pampering.
Consumer generated Marketing
whether invited by marketers or not.
-Marketing messages, ads, and other brand exchanges created by consumers themselves.
5) Capturing Value from Customers:
-Customer loyalty/retention (customer lifetime value)
-Increase share of customer
-Building customer equity.
-creating delight in customers creates loyalty
-Customer lifetime value: the value of the entire stream of purchases that customer would make in his lifetime
Share of Customer:
-the share they get of the customer's purchasing in their product categories.
-offer greater variety to current customers.
Building customer equity
-customer equity: the total combined customer lifetime values of all the company's current and potential customers.
-the more loyal the more equity.
-suggests future of company
Customer Relationship groups:
-Potentially profitable but not loyal
-short term customers
-hard to convert to loyal customers.
-both profitable and loyal
-strong fit between needs and company offerings.
-little fit for customer and offerings
-lowest profit potential
-limited fit between customer need and offering.
-low profit potential
-loyalty but low profits.
-should be fired if cannot improve.
Changing Marketing Landscape
-Not for profit companies
-Internet: Fastest growing marketing form.
-Marketers cannot expect customers to seek them out.
-Trying to sell local products internationally.
-buying supplies from abroad.
-deliver what is advertised
-treat customers with respect
Not For profit companies
It is delivering the experience of participating in the creation of personalized entertainment.
-line waiting is part of the fun (watching the product as its made.
-Personalization is emerging.
Attributes success to never forgetting what its like to be a customer.
-Created a virtual world for customers.
Price x Quantity sold - variable costs - Fixed costs
Willingness to Pay (WTP)
The highest price that customers are willing to pay. This is the same as their value.
-A customer will buy the product if the price is equal to or lower than their value.
Product, Promotion and Place can affect profits by influencing a customer's willingness to pay.
Price is meant to help capture as much of the value pie as possible.
An all pay auction strategy.
-winner (highest bidder) pays teh bid + the cost of bids.
-losers: pay the cost of bids.
Promotion: Google ad (various websites
Place: web only
Company image: negative
Shows that being first to market is very important. Only way for other auctions to survive is a different auction model or revenue model.
1)Defining Market-oriented Mission
2) Setting Company objectives and goals
3) Designing the Business Portfolio
-analyze current portfolio
-Develop strategies for future portfolios
Strategic Planning: The Process of developing and maintaingin a strategic fit between the organization's goals and capabilities and its changing marketing opportunities.
1)Defining a Market-Oriented Mission
-Mission Statement: a statement of the organization's purpose-what it wants to accomplish in the larger environment.
-Mission statements should be marketing oriented (defined in terms of satisfying company needs).
-should be meaningful and specific.
2) Setting Objectives/Goals
3) Designing the Business portfolio:The collection of businesses and products that make up a company.
a) Analyze current business portfolio
-evaluate products and businesses of the company.
-put more resources into more profitable business
-Evaluate the attractiveness of the SBU's market and the strength of the SBU in that market
b) Strategies for Growth and downsizing
-Product/market expansion grid
-Strategies for downsizing
Marketing plays key role in strategic planning:
-provides a guiding philosophy (the market concept)
-provides inputs (help to identify attractive market opportunities and assess the potential of a firm)
-Designs strategies for reaching the unit's objective
Strategic Business Units
-Can be a company division, a product line, or even a single product or brand.
Company must decide whether to...
-build (invest more into business to build share)
-Hold (invest just enough to hold at current level)
-Harvest (milking short-term cash flow)
-Divest (selling it or phasing it out and using resources elsewhere)
Portfolio Planning Method
Boston Consulting Group Approach: classifies SBUs according to the rowth share matrix
-Stars: high growth high market share products/businesses.
-Cash Cows: low growth, high share. (established and successful)
-Question Marks: low share units in high growth markets (decide which question marks it should develop)
-Dogs: low growth, low share products (not large sources of cash.)
Problem with matrix methods: focuses on short-term with little advice for long-term
Product Market Expansion Grid
1) Market Penetration:
-making more sales without changing its original product.
-improving marketing mix, adjust product design, advertise, price, etc.
2) Market Development
-identifying and developing new markets for its current products.
-demographic markets/geographic markets
3) Product development:
-New products to current market
-starting up or buying businesses outside of its curretn products and market. (New Product, New Market)
Partnering to build customer relationships
-Partnering with other company departments
-Parnering with others in the mKt system
Partnering w/ other company departments.
a) Value chain: series of departments that carry out value creating activities to design produce, market, deliver, and support, a firms products.
-value chain only as strong as weakest link.
-difficult but try to maximize customer experience across the organization.
Partnering with others in the marketing system.
-Value delivery Network:the network made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.
Marketing Mix: (Customer Driven Strategy)
-Market Segmentation (segment)
-the Process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or mkt programs.
-A market segment: is a group of consumers who respond in a similar way to a given set of marketing efforts
-Evaluating each segment's attractiveness and selecting one or more segments to enter.
-Want to profitably generate the greatest customer value and sustain it.
-May choose market niches (if you have limited resources take groups that are overlooked)
-effective positioning begins with differentiation.
-actually diffentiating the company's market offering so that it gives consumers more value.
-Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products.
-Why a shopper will pay a little more for your brand.
The Set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.
1) Product: The goods and services combination that the company offers to the target market.
2) Price: The amount of money customers must pay to obtain the product.
3) Place: company activities that make the product available to target consumers.
4)Promotion: activities that communicate the merits of the product and persuade the target customers to buy it.
Alternatively for the customer:
Managing the Marketing Effort
3) Marketing Implementation
4) Department organization
5) Marketing Control
1) Marketing Analysis:
-Strengths (capabiliites, resources, positive situational factors) Match strengths to opportunities.
-Weaknesses (internal limitations, and negative situational factors that may interfere with the companies performance)
-Opportunities (favorable factors or trends that a company should exploit)
-Threats (Unfavorable external factors that may present challenges to performance)
-deciding on marketing strategies that will help the company attain its overall strategic objectives.
-Process of turning marketing plans into actions in order to accomplish strategic mkt objectives.
4) Marketing Organization
-Functional organization: different things are headed by different specialists.
-Goegraphic organization if they sell across the country.
-product management: for companies with many products.
-evaluating the resutls of strategies and plans and taking corrective action to ensure that objectives are attained.
-operating control: checks ongoing performance against the annual plan and taking corrective action wen necessary.
Return on Marketing investment: (marketing ROI)
the net return from a marketing investment divided by the costs of the marketing investment.
-hard to measure.
-WOn a bunch of awards at teh national hardware store.
-suffering from myopia
-safe and easy use but poor marketing.
Consumer buyer behavior
Consumer buyer behavior: the buying behavior of final consumers-individuals and households that buy goods and services for personal consumption.
Consumer Market: these final consumers combine to make up the consumer market.
The inputs that enter the consumer's black box:
- The 4 Ps
-Forces and events in the consumer's environment.
(economic, technological, political and cultural.
The buyer's characteristics and his decision process will affect how he or she perceives stimuli.
Chararacteristics affecting consumer behavior:
1) Cultural Factors
-the most basic cause of a person's wants and behavior. The set of basic values, perceptions, wants, and behaviors learned by a memeber of society form family and other important institutions.
- (Marketers try to spot cultural shifts)
-ie... a shift toward health/diets.
-Groups of people with shared value systems based on common life experiences and situations
-include nationalities, religions, racial groups, geographic regions
-fast growing, tend to buy more brands/high quality, family shopping, brand loyal
-more price conscious but still like brands
-strongly motivated by quality and selection.
-most fashion conscious
-Most Affluent U.S. Demographic
-growing fast, tech savy
-most brand conscious .
-More healthcare, do it for me, Beauty has no age.
c) Social Class
-societies relatively permanent and ordered divisions whose members share similar values, interests, and behaviors.
Characteristics affecting Consumer behavior
2) Social Factors
-groups and social networking
(Word of Mouth/Buzz Marketing)
-Roles and Status
a) Groups: two or more people who interact to accomplish individual or mutual goals.
-Reference groups: serve as direct or indirect points of comparison or reference in forming a person's attitudes or behavior.
-Create pressures to conform
-Word of Mouth: Try to reach the opinion leaders within a reference group.
-Buzz Marketing: enlisting or even creating opinion leaders to serve as brand ambassadors who spread the word about their products.
aa) Social Networking
-online communities where petiole socialize or exchange information and opinions.
-blogs, sites, virtual worlds.
-set up pages to interact with consumers.
-buying roles between husband and wife.
Marketers used to aim at one gender now look to the other.
-kids have a major influence on parents
c) Roles and Status:
-Role: consists of the activities people are expected to perform according to the person's around them. (working mother)
People within a reference gropu who because of special skills, knowledge, personality, or other characteristics, exert social influence on others.
-the influentials, leading adopters.
-Use of Word of mouth/buzz marketing.
Characteristics Affecting Consumer Behavior:
3) Personal Factors
-age and life cycle status
-Personality and self-concept
a) Age/life cycle status
-tastes in goods changes with age and stage in life.
-Youth, Getting Started, Builders, Accumulators, and finally Preservers.
-blue collar workers buy more rugged clothes.
-company may specialize in a certain occupation.
c) Economic Situation:
-income sensitive goods
-Recession a company will redesign/reprice their goods.
-a person's pattern of living as expressed in his or her psychographics
-activities, hobbies, opinions
-Consumers don't just buy products they buy the lifestyles those products represent.
e) Personality and self-concept
-Personality: the unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment.
-Idea that brands have personalities
-self concept/self image: people's possessions contribute to and reflect their identities.
Brand Personality: and the 5 types:
Brand personality: the specific mix of human traits that may be attributed to a particular brand.
1)sincerity (down to earth, honest, wholesome)
2)excitement (Daring, spirited, imaginitive)
3) Competence: (reliable, intelligent, successful)
4) Sophistication (upper class and charming)
5) ruggedness (outdoorsy and tough)
Characteristics that affect Consumer behavior:
4) Psychological Factors
-Perception (selective attention, selective distortion, selective retention)
-Learning (Drives, cues)
-Beliefs and attitudes
-a need becomes a motive when it is aroused to a sufficient level of intensity.
-a drive /motive is a need that is sufficiently pressing to direct teh person to seek satisfaction.
-a person's buying decisions are affected by subconscious motives that even teh buyer may not fully understand.
-Pyramid of needs
-hierarchy of needs.
-the process by which people select, organize and interpret information to form a meaningful picture of the world.
--Selective attention: the tendency for people to screen out most of the info to whcih they are exposed.
--selective Distortion: the tendency to interpret info in a way that will support what they already believe.
--Selective retention: Likely to remember good points made about a brand they favor and forget good points made about competing brands.
-Changes in an individual's behavior arising from experience.
-drives: strong internal stimulus that calls for action. May become a motive when directed toward a stimulus object.
-cues: minor stimuli that determine when , where and how the person responds (hearing of a sale, spot in window)
-if experience is rewarding then the action will be reinforcing.
d) Beliefs and Attitudes:
-a descriptive thought a person holds about something.
-may be based on actual knowledge, opinion, or faith.
-A person's consistently favorable or unfavorable evaluations, feelings and tendencies towards an object or idea.
-difficult to change.
-try to fit products into existing attitudes.
Review: Characteristics Affecting Consumer Behavior
2) Social Factors
3) Personal Factors
types of buying behavior:
-Dissonance Reducing buying behavior
-Habitual Buying behavior
-Variety seeking buying behavior
Complex buying behavior:
when they aer highly involved in a purchase and perceive significant differences among brands.
-expensive, risky, infrequent purchase, highly expressive.
-develop beliefs, attitudes and then making a thoughtful purchase choice.
-marketers for these need to help buyers learn aboutheir product.
Dissonance-Reducing Buying Behavior:
-post purchase dissonance
Consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands.
-buyers shop around quickly
-May experience post purchase dissonance: after sale discomfort.
-marketers should make them feel good about their purchase.
Habitual Buying Behavior
Occurs under conditions of low consumer involvement and little significant brand difference
If you keep reaching for the same brand it is out of habit rather than brand loyalty.
-Ad repetition can create familiarity and conviction.
-Prices and sales promotions stimulate product trial.
Variety Seeking Behavior
in situations characterised by low consumer involvement but high perceived brand differences.
-a lot of brand switching.
-Market leader will encourage habitual buying while competitors will encourage variety seeking.
Buyer Decision Process:
1) Need recognition
2) Information search
3) evaluation of alternatives
4) Purchase decision
5) Post Purchase behavior
1) Need recognition:
-buyer recognizes a problem or need.
-triggered by internal stimuli (Hunger, thirst)
-Triggered by external stimuli (Ad or word of mouth)
2) information search:
-If the drive is strong and a satisfying product are near then he will buy it then.
-but if not info search: the consumer is aroused ot search for more info
-this may be heightened attention or active searching.
-can obtain info from (personal sources, commercial sources, public sources, experiential sources)
-personal sources legitimize the product while commercial merely inform.
3) Evaluation of Alternatives:
-Consumer uses info to evaluate alternative brands in the choice set
4) Purchase Decision:
-decision about which brand to purchase.
Factors affecting intention and decision
a) attitudes of others
b) Unexpected situational factors
5) Post purchase behavior:
-take further action after purchase based on their satisfaction or dissatisfaction.
-did it meet expectations?
-Almost all lead to cognitive dissonance: (buyer discomfort after the purchase)
-should set up complaint systems to avoid dissatisfaction in the future.
Buyer decision process for new products:
-Going from first hearing of a product to ultimate adoption of the product.
Stages of Adoption:
Awareness: (aware but uninformed)
Interest (seeks info)
Evaluation (considers it)
Trial ( tires the new product on small scale)
Adoption (decides to make full and regular use)
5 adopter gropus
-Innovators (try it first, risk takers)
-Early Adopters (Opinion leaders, adopt early but carefully)
-Early majority (adopt before average person)
- Late Majority (skeptical )
-laggards (suspicious of change.
5 characteristics especially important in influencing an innovation's rate of adoption
1) Relative advantage: Degree to which the innovation appears superior to existing products.
2) Compatitbility: fits with teh values and experiences of potential consumers
3) Complexity: degree to which it is difficult to understand.
4) Divisibility: degree it may be tried on a limited basis
5) Communicability: Degree it can be observed or described by others.
Victoria's Secret Pink...
Business buyer Behavior
Business buying processes
Business buying behavior:
- refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented or supplied to others.
Business Buying Process:
-business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands.
Involve more dollars and items than consumer markets.
Main differences between business and consumer are:
-Market structure and demand
-nature of the buying unit
-types of decisions
-and the decision process
Business Market structure/demand:
-More fluctuating demand than consumer goods
Deals with far fewer but larger buyers.
(Goodyear sells to car dealerships)
-Business demand is derived demand: ultimately derives from the demand for consumer goods.
-total demand for many business products is not affected much by price changes, especially in the short run.
-demand for many goods and services tend to change more and more quickly than the demand for consumer goods.
Nature of the buying unit
Business purchase involves more decision participants and more professional purchasing effort.
-Often more than one person involved in the buying decision. (marketers and salespeople)
Types of decisions and the decision process
-business buying more money, more formalized.
More complex buying decisions than consumers.
-large sums of money, complex technical/ecoomic considerations.
-buying process often more formalized.
-buyer and seller are more dependent on eachother. (more customization)
-systematically developing networks of supplier partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell to others.
Business Buyer behavior:
a)Types of buying situations
-systems selling(solutions selling)
Straight rebuy: a business buying situation in which the buyer routinely reorders something without modifications
Modified Rebuy: buyer wants to modify the product specifications, prices, terms or suppliers
New task; the buyer purchases a product or service for the first time
Systems selling: buying a packaged solution to a problem from a single seller thus avoiding all the separate decisions involved in a complex buying situation.
-buying everything from one seller.
Participants in the business buying process:
Users: members of the org who will use the product or service. (often initiate the buying proposal and define specifications)
Influencers: OFten help define specifications and provide info for evaluating alternatives. (technical)
Buyers: have formal authority to select the supplier and arrange terms of purchase. (selecting vendors/negotiating.)
deciders: formal or informal power to select or approve the final suppliers.
Gatekeepers (control the flow of information to others.
(Buying Center):all the individuals and units that play a role in the purchase decisoin making process
Influences on business buyers
-shortages in key materials
-political, technological developments.
-culture and customs.
3) interpersonal factors
-age, income, education, job position, personality, risk attitudes
Business buying Process:
-general need description
1) Problem recognition:
-first stage in which someone in the company recognizes a problem or need that can be met through buying a good/service.
2)General Needs description:
-describes characteristics and quantity of the needed item.
3) Product Specifications
-help of value analysis engineering team.
-decides on and specifies the est technical product and characteristics for a needed item.
4) Supplier search:
-finding the best vendors.
5) Proposal Solicitation:
-buyer invites suppliers to submit proposals.
-proposals should make a company stand out.
6) Supplier selection
-Members of the buying center revie and select a supplier
7)Order Routine Specification:
-the final order listing the specifications, quantity needed, expected time of delivery, return policies, and warranties.
-Buyer reviews supplier performance
-decide if they will rebuy or switch in the future.
-company buying sites
Buying on the internet.
-Reverse auctions: put their need online and invite suppliers to bid for it.
-trading exchanges: companies work collectively to facilitate the trading process.
Consist of schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care.
-buying objective is often not for profit.
Federal, state, and local governments that purchase or rent goods and services for carring out the main functions of government.
-offer large opportunities for many companies both big and small
-often require bids and go with lowest bidder.
-tend to favor domestic producers.
Marketing Information System:
-fresh understandings of customer and the marketplace derived from marketing information that become the basis for creating customer value and relationships.
Marketing Information system:
-people and procedures for assessing informational needs, developing the needed information and helping decision makers to use the info to generate and validate actionable customer and market insights.
-balances the info they would like to have with what is feasible and what they need to have.
Developing Marketing information:
-internal databases: electronic collections of consumer and market information obtained from data sources within the company network
-access this to identify marketing opportunities and problems.
-created from transactions, demographics, psychographics and buying behavior.
-sometimes incomplete or wrong form.
-the systematic collection and analysis of publicly available information about consumers, competitors and developments in the marketing environment.
The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
-insight into motivations, behavior and satisfaction.
4 Steps of Marketing Research.
1) Defining the problem and research objectives
-exploratory, descriptive and causal research
2) developing the research plan
-primary and secondary data
1) Define the problem/ set objectives
-most difficult but very important.
-Exploratory research: gather preliminary info that will help define the problem and suggest hypotheses
-Descriptive research: describe things such as market potential for a product or the demographics and attitudes of consumers who buy the product.
-Causal Research: to test hypotheses about cause and effect relationships.
2) developing the research plan
-outlines the sources of existing data and spells out the specific research approaches, contact methods, sampling plans and instruments that researchers will uses to gather new data.
-primary and secondary data. (see next slide below)
3) Implementing the research plan
-Puts the marketing research plan into action.
-involves collecting, processing and analyzing info.
-data collection (often most expensive)
-may hire out
-analyze/isolate the data.
4) Interpretting the findings
-draw conclusions and report the data to management.
-marketing manager knows more about the problems at hand.
Gathering Secondary Data
-Commercial online databases
-info should be relevant, accurate, current and impartial
Internal database good place to start
-or may choose to buy outside info
Commercial online databases:
-computerized collections of info available from online commercial sources or via the internet.
-info should be relevant, accurate, current and impartial
Primary Data Collection:
-Research approaches (Observational, Survey, Experimental)
-contact methods (phone, mail, interview, FOCUS GROUP)
a) Observational Research: gathering primary data by observing relevant people actions and situations. Fischer Price toy lab.
-cannot observe feelings, attitudes, or motives.
-ethnographic research: involves sending trained observers to watch and interact with consumers in their natural habitat.
-can generate fresh insights.
-Most widely used method.
-asking people questions about their knowledge, attitudes, preferences, and buying behavior.
-surveys are flexible
-people may not give honest answers or may not know answers to questions.
c) Experimental Research:
-selecting groups of subjects, giving them different treatments, controlling related factors and checking for differences in group responses.
-tries to explain cause and effect relationships.
a) mail questionnaires
-good for large amounts of info at low cost per respondent.
-may give more honest answers than in face to face.
-not very flexible, take longer, return rate is low.
-quick info, flexibility.
-higher response rates
-cost per respondent is higher, people unlikely to discuss personal info, interviewer bias.
-do not call lists
c)Individual interviewing: flexible, but costly
d)Focus Group interviewing
-participants paid a small sum.
-moderator focuses the discussion.
-6 to 10 people who gather for a few hours and talk about a product/service.
e) Online research:
-internet surveys, experiments, focus groups.
-high speed low costs
-more interactive, engaging, easier to complete, less intrusive
-high response rates
-impersonal medium can prevent natural interaction for qualitative research.
-downsides (restricted internet access, lack of control over sample)
-sample: a segment of the population selected for marketing research to represent the population.
(who is surveyed, how many, how the sample is chosen)
a)Questionaires: most common instrument.
-closed end questions
-open ended questions
-Careful of the wording and ordering of questions
-use simple, unbiased wording.
-monitor cunsumer behavior
-Blue eyes technology.
Customer Relationship management CRM
Managing the detailed info about individual customers and carefully managing customer "touch points" in order to maximize customer loyalty.
-touch points are purchases, sales force contacts, service calls, web visit, etc.
-data warehouses and mining techniques.
intranets: provides ready access to research info, reports, shared work docs, contact info, etc.
Extranets: suppliers, customers and others can access this to update their accounts, arrange purchases and check orders
Cultural differences often make it difficult.
-lost in translation.
Ethics in Research:
Continued consumer resentment for market research leads to lower response rate.
-tradeoffs between personalization and privacy.
-CPO chief privacy officer safegaurds the privacy of consumers.
Using research wrong.
-rig research design.
-CASRO Council of American Survey Reseach organizations.
Targeting (market targeting)
-dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.
-these segments should be able to be reached more efficiently and effectively with products that match their unique needs.
Segment: a relatively homogenous group of customers that will respond similarly to a marketing mix
-customers are as similar as possible within a segment, and as different as possible between segments.
-evaluating each market segment's attractiveness and selecting one or more market segments to enter.
-actually differentiating the makret offering to create superior customer value.
-Position the market offing in the minds of the target consumer.
-dividing into different geographic units such as nations, states, counties, regions, cities or neighborhoods.
-divides market into groups based on variables such as age, gender, family life-cycle, income, occupation, education, religion, race, gender, and nationality
-careful to guard against stereotypes.
-divides buyers into different groups based on social class, lifestyle, or personality.
-(cruise line for adventure seekers)
-divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.
a) occasion segmentation:
-dividing market into groups according to occasions when buyers get the idea to buy, actually make their purchase or use the purchased item. (coke's good morning campaign)
-finding the major benefits people look for in the product class, the kinds of people who look for that benefit and the major brands that deliver that benefit.
c) User Status
-forming segments of consumers who have similar needs and buying behavior even thought they are located in diff countries.
Requirements for effective segmentation
-the size, purchasing power, and profiles of the segment can be measured.
-segments can be effectively reached and served
-segments are large or profitable enough to serve
-conceptually distinguishable and respont differently to different marketing mix elements.
-effective programs can be deigned for attracting and serving the segments.
Selecting Target Market Segments:
1) Undifferentiated marketing: (mass marketing)
-a firm decides to ignore market segment differences and go after the whole market with one offer.
-focusses on what is common among the consumers.
2) Differentiated Marketing
-targets different segments with separate marketing mix for each.
-hope for stronger reach in each market.
-it can be expensive to come up with 10 different marketing mixes for 10 different segments.
3) concentrated Marketing (niche Marketing)
-one or a few marketing mix for one or a few segments.
-key is to have a large share i nthe chosen segment.
-likely fewer competitors
-involves higher than normal risks
4) Micro marketing:
-tailoring products and programs to suit the tastes of specific individuals and locations
=see the individual in every customer
-local and individual marketing.
-must have product variability and individual-level information.
3 factors to consider when evaluating attractiveness of customer segments
Segment size and growth
Segment structural attractiveness
-Relative power of cosutomers
-relative power of suppliers
Company long-run objectives and resources
Is how the customers view the company
-can try to control this through differentiation.
3 steps of differentiation and positioning
1) identify possible value differences and competitive advantages:
-must identify advantage and be able to deliver it.
-Product differentiation: features/performance
-service differentiation: convenience/delivery
2) choosing the right competitive advantage
a) how many differences to promote: ---develop a unique selling position (USP)
b)which differences to promote
3) selecting an overall position
-more for more
-more for same
-same for less
-less for less
-more for less
-the way teh product is defined by consumers on important attributes. THe place the product occupies in the consumers' minds relative to competing products.
-the full positioning of the brand-the full mix of benefits upon which it is positioned
a statement that summarizes company or brand positioning.
To (target segment and need) our (brand) is (concept) that (point out difference)
Chapter 8 (products, services, and brands)
3 Levels of Products and services:
1) Core customer value
-what is the buyer really buying.
-define core problem solving benefits of the product.
2)Turn the core benefit into an actual product
-develop product and service features, design, quality level, name, and packaging.
3) Build an augmented product around the core benefit and actual product by offering additional consumer services and benefits.
Types of Products:
-customers buy frequently , immediately and with a minimum of comparison and buying effort.
-in the process of selection and purchase, usually compares on such bases as suitability, quality, price and style.
-Product with unique characteristics or brand id for which a significant group of buyers is willing to make a special purchase effort.
-consumer either does not know about or knows about but does not normally think of buying.
-purchased for further processing or for use in conducting a business.
-include material/parts (raw materials), capital items, and supplies and services.
Other things you can market
-activities to create, maintain, or change the attitudes and behavior of target consumers toward an organization
-marketing for people
-city, state, nations
-Social Marketing: use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society.
Product and service Decisions:
1) product and service attributes
-quality: ability to satisfy stated or implied needs.
-Design: more than skin deep. Usefulness as well as looks.
-style: appearance of the product.
-a term, sign, symbol, design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors
-customers attach meanings to brands
-brands help consumers identify products, quality and constancy.
-designing and producing the container or wrapper for a product.
-packages important for attracting attention, describing the product and making the sale.
-range from tags to complex graphics.
-who made the product, how it is to be used, its contents.
5) Product Support Services
Product Line decisions
Product expansion: (line filling, line stretching)
Product Line: a group of products that are closely related because they function in a similar manner and are sold to the same customer gropus, marketed the same types of outlets, or fall in the same prices
-the amount of items in the product line
1)line filling: adding more items within the present range of the line
-may lead to cannibalization and confusion.
2) Line stretching:
-company lenthns its product line beyond current range. (up, down, both ways)
-Up: more valuable
Product mix (portfolio mix:)
the set of all product lines and items that a particular seller offers for sale.
-width: number of different product lines
-length: total number of items the company carries with product lines
-depth: number of versions offered of each product in the line.
-consistency: how closely related the various lines are in end use, production, distribution.
Brands and brand equity:
Useful way for customers to summarize a specific set of features, benefits, services and experiences delivered.
-important asset that can outlast specific products.
-it is the key
-the differential effect that the brand name has on the customer response to the product or its marketing.
Brand equity= customer rating of brand- customer rating of nearest alternative.
Higher brand equity= higher WTP and/or Higher purchase probability.
Building strong brands
-->How do we want the customer to view our brand?
--What place does it occupy in their mind
#strong beliefs and values:
-what does the brand care about delivering to me? what does associating with this brand say about me?
-should suggest something about the products benefits/qualities
-should be easy to pronounce, recognize and remember
-should be distinctive
-should be extendable:
-should translate easily into foreign languages
-should be capable of registration and legal protection.
#Private Brand (store brand):
-growing faster than national brands.
-generic or no name brands
-priced lower than national brand.
-license names or symbols such as celebrities, movies etc.
-practice of using the established brand names of two diff companies on the same product.
4) brand development:
a) line extensions (Existing Brand, existing product)
-->lower cost strategy to communicate value of new products
-->risk of cannibalization within brand line.
- company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category.
-morton salt has become morton popcorn salt, morton lite salt.
b) brand extensions (Current brand, new product)
-gives product instant recognition and acceptance.
c) Multibrands (New band, existing product)
-locks up more buyers on reseller shelf space.
0each brand might obtain only a small market share.
-cocacola with fanta and sprite
d) new brands (new brand, new product)
-coke: minute maid, nestea, dasani
Chapter 9: New Products
Reasons new products fail
-overestimate market size
-actual product is poorly designed
-product incorrectly positioned
-launched at the wrong time
-priced too high
Product development process
-concept development and testing
-maketing strategy development
-Systematic search for new-product ideas.
-sources include computers, distributors, suppliers and others.
-brainstorming: no idea is a bad idea.
-distributors, suppliers, customers, competitors.
screening new product ideas in order to spot good ideas and drop poor ones as soon as possible.
-is it real (is there a real need and desire for it.
-can we win (competitive advantage)
-is it worth it (will the company grow)
Concept development and testing
-a detailed version of teh new product idea stated in meaningful consumer terms.
-testing new product concetps with a gropu of target consumers to find out if teh concepts have strong consumer appeal.
Product idea: idea for a possible product that the company can see itself offering to the market
Product image: way consumers perceive an actual or potential product.
marketing strategy development
designing an initial marketing strategy for a new product based on the concept
1) describe target market, planned value proposition, sales, market share, and profit goals.
2) Outline prodcuts planned price, distribution, and marketing budget.
3) Planned long run sales, profit goals, and marketing mix strategy.
A review of the sales, costs, and profit projections for a new product to find out whether tehse factors satisfy the company's objective.
Developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable market offering.
-hope prototype will satisfy the customers.
prodcut and marketing program are tested in realistic market settings.
-amount varies with product.
-costs are high but small compared to a major mistake.
Standardized test markets:
-small number of representative cities, conducts a campaign, uses store adits, and other measures to guage performance.
Controlled test markets
simulated test markets
will face high costs but introduce into the market.
-decide on timing, where
Two ways to obtain a new product
Acquisition: buying of a whole company, patent, license to prduce someone else's product.
New Product development:
-new original product from firm's own demand.
Product life cycle strategies:
- company finds and develops a new product idea
-sales are 0 and investment costs add up
-slow sales growth and profits are non-existent
-high distribution/promotion expense
-attract distributors and build inventories
-inform consumers informative advertisement.
-rapid market acceptance and increasing profits
-price stability or decline to increase volume.
-gain economies of scale
-add new features and models
-enter new market segments and new distribution channels
-persuade consumers (persuasive advertisment)
-Slowdown in growth and profits level off or decline
-overcapacity and competition
-increased RandD to support sales
-Sales fall off and profits fall
b) Harvest: reducing costs and hoping sales will hold
c) dropping the product
-Public policy and regulations regarding developing and dropping products, patents, quality and safety.
-must comply with laws regarding safety and quality.
Magnuson-moss warranty act:
-requires full warranties meet certain minimum standards including repair within a reasonabl time or replacement or full refund.
International product service marketing
Kitkat in Japan
International product and service marketers face special challenges:
-figure out what products to introduce to what countries
-they must decide how much to standardize or adapt their products and services for world markets
-packaging presents new challenges for international marketers.
Standardizaiton vs. Customization
Packaging and labeling
Customs, values and laws.
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