MAR3023 Exam 1

Marketing
the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Customer Value
the unique combination of benefits received by targeted buyers that include quality, price, convenience, on-time delivery, and both before-sale and after-sale service.

perceived benefits/ cost

Types of utility
Ways to distinguish your product vs. the competition:

time
place
form
prosession

Exchange
the trade of things of value between a buyer and a seller so that each is better off after the exchange.
The Marketing Mix
the set of controllable factors of Product, Price, Place & Promotion used by marketing managers
Marketing Program
a plan that integrates the marketing mix to provide a product, service, or idea to prospective customers
Marketing Share
the ratio of the firm’s sales revenue to total industry sales revenue, including the firm.. the key indicator of a successful marketing program
MS(Brand)=
Sale$/Total$= Share(%)
“STP” Marketing
Segmentation
Targeting
Positioning
Environmental Scanning
the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends.
Core Values
the fundamental, passionate, and enduring principles that guide its conduct over time
Demographics
Describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation
Generation X
includes the 50 million people born between 1965 and 1976.
This period is also known as the baby bust, because during this time the number of children born each year was declining.
This is a generation of consumers who are self-reliant, supportive of racial and ethnic diversity, and better educated than any previous generation.
They are not prone to extravagance and are likely to pursue lifestyles that are a blend of caution, pragmatism, and traditionalism.
Generation Y
Includes the 72 million Americans born between 1977 and 1994.
Increasing births, which resulted from baby boomers having children, and it is often referred to as the echo-boom or baby boomlet.
They exert influences on music, sports, computers, video games, and all forms of communication and networking.
Interested in distinctive, memorable, and personal experiences and are very adept at managing their lives to create a work-life balance.
They are strong-willed, passionate about the environment, and optimistic.
This is also a group that is attracted to purposeful work where they have control.
The Making Responsible Decisions box describes how millennials’ interest in sustainability is influencing colleges, graduate schools, and employers.
Metropolitan Statistical Area
has at least one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration.
Micropolitan Statistical Area
has at least one urban cluster of at least 10,000 but less than 50,000 people and adjacent territory that has a high degree of social and economic integration.
Value Consciousness
The concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior for many products at all price levels.
What are some of the most dramatic technological changes occurring now?
Connectivity will grow to include all customers, homes, vehicles, appliances, and mobile devices to create the “Internet of Things.”

Computers will develop all five senses to create intelligent data collection and personalized predictive capabilities.

Green technologies such as smart grid electricity services, online energy management, and consumer-generated energy (e.g., home solar systems) will gain widespread acceptance among American consumers.

3D technologies will move from movie theaters and televisions to many new and useful applications.

Marketspace
an information- and communication-based electronic exchange environment occupied by sophisticated computer and telecommunication technologies and digital offerings
Electronic Commerce
the activities that use electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services.
Intranet
a way to communicate within the organization, and extranets
Extranet
a way to communicate with suppliers, distributors, and other partners such as advertising agencies.
What are the four different types of competition?
pure competition
monopolistic competition
oligopoly
pure monopoly
Pure Competition
there are many sellers and they each have a similar product. Companies that deal in commodities common to agribusiness (for example, wheat, rice, and grain) often are in a pure competition position in which distribution (in the sense of shipping products) is important but other elements of marketing have little impact.
Monopolistic Competition
many sellers compete with substitutable products within a price range.
For example, if the price of coffee rises too much, consumers may switch to tea. Coupons or sales are frequently used marketing tactics.
Oligopoly
a common industry structure, occurs when a few companies control the majority of industry sales. The wireless telephone industry, for example, is dominated by four carriers that serve more than 95 percent of the U.S. market. Verizon, AT&T, Sprint, and T-Mobile have 131, 120, 55, and 55 million subscribers, respectively.
Pure Monopoly
The final point on the continuum occurs when only one firm sells the product.
They are common for producers of products and services considered essential to a community: water, electricity, and cable service.
Typically, marketing plays a small role because it is regulated by the state or federal government.
Regulation
consists of restrictions state and federal laws place on business with regard to the conduct of its activities
Sherman Antitrust Act (1890)
This act forbids (1) contracts, combinations, or conspiracies in restraint of trade and (2) actual monopolies or attempts to monopolize any part of trade or commerce.
Clayton Act (1914)
This act forbids certain actions that are likely to lessen competition, although no actual harm has yet occurred.
Robinson-Patman Act (1936)
This act makes it unlawful to discriminate in prices charged to different purchasers of the same product, where the effect may substantially lessen competition or help to create a monopoly.
Digital Millennium Copyright Act (1998)
This act was created to improve protection of copyrighted digital products.
Consumerism
a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions
Lanham Act (1946)
This act provides for registration of a company’s trademarks.
Better Business Bureau (BBB)
uses moral suasion to get members to comply with its standards.
Federal Trade Commission (FTC)
monitors advertising. If it deems an ad to be false or misleading, it can issue a cease-and desist order.
Food and Drug Administration (FDA)
supervises the safety of food, tobacco, and other drugs.
Consumer Confidence Index
tracks consumers expectations based on responses to specific questions
Greenwashing
occurs when companies overstate their green claims in an attempt to appeal to customers who respond well to such things.
Marketing Research
is a set of activities that provides information for marketing decision making.
Demand Forecasting
gives a firm an idea of how much of a product it will sell.
What do Demand levels determine?
production scheduling
the firm’s approach to the marketplace
Segmentation
the use of research to divide the market into smaller subgroups of consumers that are each more homogeneous than the overall market.
How can marketers be segmented?
age
ethnic group
location
income
Market Tracking
follows sales over time to see how a product is selling and to determine if adjustments are needed.
Nielson
one of the largest market research firms in the world
What are some services that help companies with Ad Pretesting
Ipsos
ASI
Google AdWords
Facebook’s AdExpresso
What is the formal five-step approach to marketing research?
1. Define the problem
2. Develop a research plan
3. Collect relevant information by specifying
4. Develop findings and recommendations
5. Take marketing actions and evaluate results
Marketing Information System (MIS)
an integrated, ongoing decision support system that organizes data used in decision making.
Cross Tabulation
is a method of presenting and analyzing data involving two or more variables to discover relationships in the data
Sales Forecasting
refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts
lost-horse forecast
nvolves starting with the last known value of the item being forecast, listing the factors that could affect the forecast, assessing whether they have a positive or negative impact, and making the final forecast.
Syndicated
firms that gather information and produce reports for sale to other organizations
Four kinds of data found in marketing information systems:
look at matrix: Internal/ External & Primary/ Secondary
Secondary Data
those that are pre-existing; they were originally gathered for a purpose other than the one at hand.
Primary Data
gathered specifically for the task at hand.
Internal Data
gathered from within the organization. For example, information coming from the firm’s sales or billing records.
External Data
gathered from outside the firm. For example, conducting surveys with consumers.
Internal, Secondary Data
Data produced within the firm for some reason other than marketing.
What is an example of internal, secondary data?
Amazon customers’ purchase histories.
It is internal because they exist within the firm.
It is secondary because they were developed for reasons other than marketing (such as keeping records for refunds).
Internal, Primary Data
Data gathered for a specific purpose within the firm.
What is an example of internal, primary data?
Asking employees for new product ideas. i.e. Kraft requesting employee input to name a new Jell-O product, generating over 100 ideas within the first 24 hrs.
External, Secondary Data
Data gathered by an external organization for some reason other than a specific firm’s marketing efforts.
What is an example of external, secondary data?
Trade publications, in which companies are allowed access to data collected by industry trade groups.
External, Primary Data
comes from the “classic” marketing research that firms use to gather information about customers.
What is an example of external, primary data?
Snapple contracting with an outside research firm that does marketing research in a different way in order to better understand declining sales.
What are three basic types of external, primary data?
exploratory
descriptive
casual research
What happens to the research as you move from exploratory to casual?
it becomes more sophisticated and expensive
Exploratory Research
used during the first stage of an investigation, in which markets are trying to define a problem.

marketers observe what’s going on in the marking through observation, depth interviews, or focus groups.

Data tends to be qualitative

used to formulate marketing questions rather than answer them

Firms use this to capture consumers “in their native habit” -in the real world
exploratory research observation
Consumer ethnography
an approach to observation that involves immersing oneself in the consumer’s world by going to where he or she lives or shops
probably the most widely used form of exploratory research
focus groups
This is led by a moderator who is trained but does not have to be a clinical psychologist
focus groups
Depth interview
A one-on-one approach to exploratory research in which a trained researcher sits down with an individual consumer and has a conversation with him or her about a particular product category or advertisement.
What is a common technique used in in depth interviews?
Laddering
Give an example of laddering
A researcher asked a customer why he enjoys Haagen-dazas and the customer says he enjoys the “excellent flavor”. The researcher then continues to ask questions on why this is a desirable attribute and finds that it feels like an “affordable luxury”. The researcher continues to ask why and found that excellent flavor represents this customer’s sense of accomplishment.

Laddering helps make connections between basic product attributes to the symbolic meaning of the product to the customer.

Descriptive Research
this involves taking a “snapshot” of the marketplace by developing an accurate description of consumers and the market.
This involves a larger number of people and a more systematic, precise, quantitative recording of their responses.
descriptive research observation
Personal Observation
involves a large number of people, whose behavior is recorded much more systematically.
What is an example of personal observation in descriptive research?
cameras watching how customers behave while they navigate through a mall department store
Examples of Electronic Observation in descriptive research:
Smartphone apps that connect to Bluetooth “beacons,” which are tiny wireless sensors that identify customers and track their personal location while in the store.

Data can be scaled and analyzed more easily this way.

What are the four basic kinds of surveys in descriptive research?
mail surveys
phone surveys
personal interviews
web surveys
Mail Surveys
a questionnaire that is mailed out to a sample of people and asks them to each fill it out and return it and sometimes they include a small incentive so people will fill them out.
What is a problem associated with mail surveys?
many people don’t take the time to fill them out and mail them back in which causes the response rates to be very low.
Phone Surveys
These surveys used to be the “backbone” of the marketing research industry and received high response rates. However, today, they are much less effective.
What is a problem associated with phone surveys?
they are very biased because many people scan their calls and won’t pick up from an unfamiliar number and the people who do respond may not a representative sample of the target population
Personal Interviews
these surveys involve a live, one-on-one interaction with a consumer.
What is an example of a personal interview?
A mall intercept survey
What are mall intercept surveys?
surveys performed by interviewers who intercept shoppers while they are walking from store to store in the mall.

They are useful in the sense that they allow consumers to physically interact with new products.

What is a problem associated with mall intercept surveys?
they don’t usually involve a representative sample of the overall population.
Web Surveys
These surveys are rapidly growing and allow for much more representative samples than they did before. They can produce huge samples at a relatively low cost and allow marketers to see results instantaneously.
They can use geo-targeting to find respondents on the basis of their location to result in more relevant samples.
What are some of the key factors in descriptive research?
population
sample
response rate
representativeness
error (bias)
questionnaire design error
Population
the group of interest to the firm or organization. It is often broader than the market segment a firm is trying to target, and can be difficult to define.
Sample
A subset of the population. It is usually impossible and expensive to survey the entire population, so we survey a representative group to draw conclusions about the population as a whole.
Must be random and response rate must be high
Response Rate
The percentage of people who actually agree to participate in the research.
Representativeness
measures how accurately the sample actually reflects the population. The firm needs to have a sample that is random and large in order to have this.
Error (bias)
low response rates or poor samples that are not representative of the population can cause this. It is inaccuracy in predicting consumer response.
Sample Error
results from selecting a sample that is either biased or too small.
What is an example of sampling error?
If survey respondents have disproportionately higher income than the population of interest.
Interviewer Error
Interviews can inadvertently impact survey responses through their body language and voice inflection leading to responses that might be different based on whether the interviewers gender and/or physical features.
Questionnaire Design Error
The questions themselves might either intentionally or unintentionally make the respondent more likely to answer in a particular way. Push pools are an example of this.
What would a free recall question be for how memorable a Super Bowl commercial was?
“What commercials do you remember seeing during the Super Bowl?”
What would a cued recall question be for how memorable a Super Bowl commercial was?
“Do you remember seeing any commercials about pickup trucks during the Super Bowl?”
What would a recognition question be for how memorable a Super Bowl commercial was?
Showing the commercial to participants and asking them,
“Do you remember seeing a commercial for the Chevy Silverado during the Super Bowl?”
Causal Research
addresses why something happens in the marketplace. Firms conducting this research are looking for explanations of various phenomena. This research tries to determine what influences consumer behavior through experiments.
Most expensive but also more powerful
What is the goal of causal research?
to manipulate the experimental independent variable while controlling for all extraneous independent variables, and then measure the response of the dependent variable.
What are two essential elements of causal research?
Manipulation and control
Manipulation
Marketers should change only one experimental independent variable to see what impact it has on the ultimate response.
Control
All extraneous variables should be controlled, or help constant, wile single independent variable of importance is being manipulated.
What are two major kinds of experiments that are used in causal research?
laboratory experiments
test marketing (field experiments)
Laboratory Experiments
These experiments use data from people who are brought into a lab environment and asked to answer questions about a product.
These experiments manipulate one variable and control all others so that marketers can try to establish a cause for changes in the dependent variable.
These experiments are good at controlling internal validity.
These experiments are bad at controlling external validity.
Test Marketing (Field Experiments)
conducted in the field, where marketers see whether a product will sell in a “real world” environment.
What are some issues that marketers must consider when conducting field experiments (or test marketing)?
cost
competition
timing
repurchase rate
fine-tuning
Cost
test marketing is extremely expensive so they are usually only used when marketers face a big decision
Competition
competitors may interfere with a test market by lowering their prices or offering incentives in the test market which makes it difficult to attribute the results of the test market to the firm’s intended independent variable.
Timing
The period of time during which a company does a test market may not be representative of how the product will perform in the future.
Repurchase Rate
a critical variable in measuring a new product’s success.
Fine- Tuning
Test marketing can be used to adjust aspects of a firm’s marketing program, including product formulations, advertising campaigns, pricing points, and packing.
AB Testing
When firms are increasingly testing two or more alternative marketing programs.
Testing in separate regions with different income levels, etc.
Scanner Panel
This looks at household data across time. The same people answer a survey periodically so that a firm can understand more about how a person or household is trying new products, if they are repeating purchases, the frequency of their purchases, and how much they purchase.
Elastic Demand
exists when a 1 percent decrease in price produces more than a 1 percent increase in quantity demanded, thereby actually increasing total revenue
Inelastic
Products and services considered to be necessities
Cognitive Dissonance
post purchase anxiety
Word- of- mouth
the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy.
Consumer Socialization
The process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers
What are the three largest racial/ethnic subcultures in the United States?
Hispanics
African Americans
Asian Americans
What are the four main types of Utility?
Time
Place
Form
Possession
Time
wanting a product as close to when it will be used as possible
Place
wanting a product as close to where it will be used as possible
Form
multiple uses for a product
Possession
getting a product without fully paying upfront for it
Customer Relationship Management (CRM)
the overall process of building and maintaining profitable relationships through delivering superior value and superior satisfaction.
Value Proposition
the set of benefits it promises to deliver to the customers. For example, BMW promises an “ultimate driving machine” which keeps a company focused and different from its competitors.
Marketing Orientation
the focus is on satisfying consumer wants and needs
Market Orientation
all departments in a firm are worried about providing customer value
What is the difference between marketing orientation and market orientation?
the main difference is that the focus of all departments in a firm with providing customer value but in a firm with a marketing orientation, only the marketing department is focused on providing customer value.
Macro Trends
have a broad influence on all of the firms in an economy. i.e.: demographic, cultural, economic, technological, regulatory, and natural trends
Micro Trends
narrower and have a more specific impact on one particular firm. i.e.: industry-specific, regional, customer, competitor, stakeholder, supplier, channel, and internal trends.
Stakeholder
an individual or group that is affected by the firm in any way.
Supplier
the organizations that provide the firm with the inputs it needs to operate. i.e.: groups of employees, who provide valuable labor services
Channel
include distributors, wholesalers, and retailers who are involved in getting the product from the manufacturer to the customer.
Internal
refer to the trends within the firm itself.
What does the marketing environment do?
it sets boundaries for what a firm can or cannot do.
Multigenerational Households
households with members of more than one generation
Psychographics
includes the activities, interests, and opinions of consumers. They give marketers insight into customers’ perceptions of brands and the importance of various product attributes.
Ethics
the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas
What does the right to be informed mean?
marketers have an obligation to give consumers complete and accurate information about products and services.
Laws
Society’s values and standards that are enforceable in the courts.
caveat emptor
The legal concept of “let the buyer beware” that was pervasive in the American business culture prior to the 1960s.
What are the two most common types of unethical behavior?
economic espionage and bribery
Where is economic espionage most prevalent?
in high-technology industries, such as electronics, specialty chemicals, industrial equipment, aerospace, and pharmaceuticals, where technical know-how and trade secrets separate industry leaders from followers
Economic Espionage
the clandestine collection of trade secrets or proprietary information about a company’s competitors
Code of Ethics
a formal statement of ethical principles and rules of conduct
Whistle-Blowers
employees who report unethical or illegal actions of their employers
What are the two prominent personal moral philosophies that have direct bearing on marketing practice?
moral idealism and utilitarianism
Moral Idealism
is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome
Social Responsibility
organizations are part of a larger society and are accountable to that society for their actions
Utilitarianism
a personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior
What are three concepts of social responsibility?
profit responsibility, stakeholder responsibility, and societal responsibility
Profit responsibility
holds that companies have a simple duty: to maximize profits for their owners or stockholders
Stakeholder responsibility
focuses on the obligations an organization has to those who can affect achievement of its objectives. These constituencies include consumers, employees, suppliers, and distributors
Societal responsibility
refers to obligations that organizations have to the preservation of the ecological environment and to the general public. Emphasis is placed on the triple-bottom line—recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth.
The societal marketing concept
is the view that an organization should satisfy the needs of consumers in a way that provides for society’s well-being
Green marketing
marketing efforts to produce, promote, and reclaim environmentally sensitive products—takes many forms
Cause Marketing
occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products
Sustainable Development
involves conducting business in a way that protects the natural environment while making economic progress
Social Audit
a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility.
What are the five steps that a social audit consists of?
1. Recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors.
2. Identification of social responsibility causes or programs consistent with the company’s mission.
3. Determination of organizational objectives and priorities for programs and activities it will undertake.
4. Specification of the type and amount of resources necessary to achieve social responsibility objectives.
5. Evaluation of social responsibility programs and activities undertaken and assessment of future involvement.
What are the five situational influences have an impact on the purchase decision process?
the purchase task, social surroundings, physical surroundings, temporal effects, and antecedent states
What are the sociocultural influences?
personal influence, reference groups, family, social class, culture and subculture
What are the psychological influences?
motivation and personality, perception, learning, values, beliefs, and attitudes, and lifestyle
Motivation
the energizing force that stimulates behavior to satisfy a need
Physiological needs
are basic to survival and must be satisfied first.
Safety needs
involve self-preservation as well as physical and financial well-being
Social needs
are concerned with love and friendship
Personal needs
include the need for achievement, status, prestige, and self-respect.
Self-actualization
needs involve personal fulfillment
Perception
the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world
Perceived Risk
represents the anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences
Word of mouth
The influencing of people during conversations
cognitive learning
involves making connections between two or more ideas or simply observing the outcomes of others’ behaviors and adjusting your own accordingly
Opinion leaders
are considered to be knowledgeable about or users of particular products and services, so their opinions influence others’ choices
What is the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy?
word of mouth
Brand Community
is a specialized group of consumers with a structured set of relationships involving a particular brand, fellow customers of that brand, and the product in use
Business to business marketing
is the marketing of products and services to companies, governments, or not-for-profit organizations for use in the creation of products and services that they can produce and market to others
Organizational Buyers
are those manufacturers, wholesalers, retailers, service companies, not-for-profit organizations, and government agencies that buy products and services for their own use or for resale.
industrial firms
in some way reprocess a product or service they buy before selling it again to the next buyer
Resellers
Wholesalers and retailers that buy physical products and resell them again without any reprocessing
Government units
are the federal, state, and local agencies that buy goods and services for the constituents they serve.
North American Industry Classification System (NAICS)
provides common industry definitions for Canada, Mexico, and the United States, which makes it easier to measure economic activity in the three member countries of the North American Free Trade Agreement (NAFTA)
Explain the parts of the six digit coding system that the NAICS uses.
The first two digits designate a sector of the economy
The third digit designates a subsector
The fourth digit represents an industry group.
The fifth digit designates a specific industry and is the most detailed level at which comparable data are available for Canada, Mexico, and the United States.
The sixth digit designates individual country-level national industries.
Derived demand
means that the demand for industrial products and services is driven by, or derived from, demand for consumer products and services
What are the most commonly used criteria?
price
ability to meet the quality specifications required for the item
ability to meet required delivery schedules technical capability
warranties and claim policies in the event of poor performance
past performance on previous contracts production facilities and capacity
Organizational Buying Criteria
the objective attributes of the supplier’s products and services and the capabilities of the supplier itself.
Organizational buying behavior
is the decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers
Reciprocity
is an industrial buying practice in which two organizations agree to purchase each other’s products and services
Traditional Auction
a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other. As more would-be buyers become involved, there is an upward pressure on bid prices
Reverse Auction
a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other.
Mass Marketing
“one-size fits all”
organizational synergy
the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently.
Head-to-head positioning
involves competing directly with competitors on similar product attributes in the same target market
cannibalization
When the increased customer value involves adding new products or a new chain of stores, the product differentiation-market segmentation trade-off raises a critical issue
Product Positioning
refers to the place a product occupies in consumers’ minds based on important attributes relative to competitive products
Product Repositioning
changing the place a product occupies in a consumer’s mind relative to competitive products.
Differentiation positioning
involves seeking a less-competitive, smaller market niche in which to locate a brand
Hedonic consumption
is defined as the multisensory, fantasy, and emotional aspects of consumers’ interactions with products.
Bounded Rationality
We are what we wear, We are what we drink, We are what we drive, self concept, Hedonic Consumption