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Principles of Marketing, Chapter 8, Unit 1 and Chapter 7, Unit 6
Terms in this set (50)
Can an item of similar quality be bought at a lower price elsewhere? If not
Is manufacturing it in-house the best use of limited company resources? This is a buying decision and is essentially one of economics.
IF a firm does decide to buy a product instead of making it
The purchase will be a new buy, a modified rebuy or a straight rebuy.
If a company decided to purchase new radio technology to replace buzzers
It represents a new buy and is the greatest opportunity for new vendors.
Greatest opportunity for vendors is a new buy
No long-term relationship has been established for this product, specifications may be somewhat fluid, and buyers are generally more open to new vendors.
The buyer cannot afford to run out of supply
If the new buy item is a raw material or a critical counter part
The seller of a new buy must be able
To convince the buyer that the seller's firm can consistently deliver a high-quality product on time.
Modified rebuy may include
A new color, greater tensile strength in a component part, more respondents in a marketing research study, or additional services in a janitorial contract.
Because two parties are familiar with each other and credibility has been established
In a modified rebuy, buyer and seller can concentrate on the specifics of the modification.
In some cases, modified rebuys are open to outside bidders
The purchaser uses this strategy to ensure new terms are competitive.
Example of modified rebuys to include outside bidders
Manufacturing company buying modified radios with a vibrating feature for those on the floor. The firm may be open to do this to examine the price/quality offerings of several suppliers.
Usually, a straight rebuy is routine
Because the terms of the purchase have been agreed to in earlier negotiations.
Example of straight rebuy
Company purchasing additional radios for new managers from the same supplier on a regular basis.
Purchasing Contract is a common instrument
Used in straight-rebuy situations and used with products that are bought often and in high volume.
Purchasing contract to sales person
Promises this person a sure sale to their B2B customer.
Purchasing contract to buyer
A quick, confident decision to reorder a product.
Retaining an existing customer
Is much easier than attracting new ones, so sales people mustn't take straight-rebuy relationships for granted.
The moral principles or values that generally govern the conduct of an individual or group.
Ethics can be viewed as standards
Of behavior by which moral conduct is judged.
Most companies follow ethical practices, to help achieve this
Over half of all major corporations offer ethics training to employees.
Codes of Ethics or Business Conduct
Many companies have these that help guide buyers and sellers.
Some companies build a reputation not just around products
But also around a few highly developed service skills, and include companies like McDonald's, L.L. Bean, and Lexus.
Most firms develop customer service measures
Unique to their own strategy, value, propositions, and target market.
Anderson Corporation asses loyalty of its trade customers
By their willingness to continue carrying its windows and doors recommend its products to colleagues and customers, increase their volume with the company, and put its products in their own homes.
Each firm's measure of customer service
Should not only ask "what are your expectations" and "how are we doing" but should also reflect what the firm wants its customers to do.
Ethical Norms and Values for Marketers
Can be found at www.marketingpower.com and is the American Marketing Association's statement of ethics.
Some companies selectively provide different levels of customer service by giving the most valuable customers superior service
This can make it so a firm is more likely to stay happy, hopefully increasing retention of these high-value customers and maximizing the total business value they generate over time.
To achieve the goal of delivering superior service to superior clients
The firm must be able to divide customers into two or more groups based on value and create and apply policies that govern how service will be allocated among groups.
Policies that deliver superior service to superior clients might establish
Which customers' phone calls get "fast-traked" and which customers are directed to use the web and/or self-service, how specific email questions are routed, and who is given access to online chat and how isn't.
Providing different customers with different levels of service is a sensitive matter
It must be handled very carefully and very discreetly to avoid offending lesser value, but still important customers.
People or organizations with needs or wants and the ability and willingness to buy.
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
Marketing Segments are somewhere between two extremes
Every individual person/individual organization, the entire world.
Market Segmentation (verb)
The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.
The purpose of market segmentation
Is to enable the marketer to tailor marketing mixes to meet the needs of one or more specific segments
The same group of people might vary in market
As one homogenous market, a market of individual segments, market composed of two segments based on gender, market composed of age segments, as well as market composed of specific age and gender segments.
Coca-Cola and Market Segmenting
Offers dozens of products based on flavor, calorie and caffeine content preferences.
Market Segmentation is a Powerful Tool
Nearly all markets include groups of people with different needs/preferences, helps marketers define customer needs and wants.
Helps marketers define objectives and better allocate resources, performance can be better evaluated.
Market Segmentation for marketers
Chico's Market Segmentation
Thrives by marketing to 35-55 year old women, who want comfortable, yet stylish clothing and sells private label clothing with nonjudgmental sizes.
Best Buy market segmentation through geographic location in Baytown Texas store
Caters to Eastern European workers from big ships that are temporarily docked at port. Moved iPods to the front and paired them with overseas power converters, and made signage simpler.
To be useful, a segmentation scheme must produce segments based on
Substantiality, Identifiability and Measurability, Accessibility, and Responsiveness
Segment must be large enough to warrant developing and maintaining a special marketing mix.
Segmentation Identifiability and Measurability
Segments must be identifiable and their size measurable.
The firm must be able to reach members of targeted segments with customized marketing mixes.
Segmentation Responsiveness, unless one market segment responds to a marketing mix differently
From other segments, that particular segment does not need to be treated separately.
Segmentation allows marketers to identify groups of customers
With similar needs and to analyze the characteristics and buying behavior of these groups.
Segmentation provides marketers with information
To help them design marketing mixes specifically matched with the characteristics and desires of one or more segments.
Segmentation is consistent with the marketing concept
Of satisfying customer wants and needs while meeting the organization's objectives.
Substantiality doesn't necessarily mean the segment must have many potential customers, for example
Marketers of custom-designed homes/buildings, commercial airplanes, and large computer systems usually develop programs tailored to each potential customer's needs.
In most cases, a market needs many potential customers to make commercial sense (substantiality in segmentation)
Home banking failed in the 80s because of a lack of personal computers, but today it's thriving because of a large number of personal computers.
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