Marketing 300 CSULB 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
Exchange
People giving up something to receive something they would rather have
Production orientation
A philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace
Sales Orientation
The idea that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits.
Marketing Concept
The idea that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives.
Market Orientation
A philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product. It is synonymous with the marketing concept.
Products
offering to a market for acquisition, use or consumption. Tangible
Services
benefits that are essentially intangible and don’t result in the ownership of anything .
Relationship Marketing
A strategy that focuses on keeping and improving relationships with current customers.
Societal marketing orientation
The idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives, but also to preserve or enhance individuals’ and society’s long-term best interests.
Customer value
The relationship between benefits and the sacrifice necessary to obtain those benefits.
Customer Satisfaction
Customers’ evaluation of a good or service in terms of whether it has met their needs and expectations.
Empowerment
Delegation of authority to solve customers’ problems quickly- usually by the first person that the customer notifies regarding a problem.
Teamwork
Collaborative efforts of people to accomplish common objectives.
Relationship Marketing
A strategy that focuses on keeping and improving relationships with current customers.
Buyer’s Market
One on one marketing – Customer needs/wants/loyalty
Buyers and Society’s Market
Societal Marketing Orientation
Customer Needs/Wants
Society’s Welfare
Implementing the Marketing Concept
1. Top Management to endorse concept
2. Management to encourage its spread across rank and file
3. Changes in authority and responsibility necessary. Flatten hierarchy.
4. Management should be provided with front-line experience.
4 P’s of Marketing
Product
Price
Place
Promotion
“Marketing should be introduced at the beginning rather than the end of the production cycle and integrated into each phase of the business, ” is consistent with a(n) ____________ orientation.
Market
The objective of one to one marketing is to:
build and maintain customer loyalty
Production
focuses on efficiency of internal operations
Sales
Focus on aggressive techniques for overcoming customer resistance
Market
Focuses on satisfying customer needs and wants
Societal
Focus on satisfying customer needs and wants while enhancing individuals and societal well-being
Target Market
A defined group most likely to buy a firm’s product.
Environmental Management
When a company implements strategies that attempt to shape the external environment within which it operates.
Component Lifestyles
The practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle.
Demography
The study of people’s vital statistics, such as their age, race, and ethnicity, and location.
Purchasing Power
A comparison of income versus the relative cost of a set standard of goods and services in different geographic areas.

increased standard of living are a function of purchasing power

Inflation
A measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.
Recession
A period of economic activity characterized by negative growth, which reduces demand for goods and services.
Basic Research
Pure research that aims to confirm an existing theory or to learn more about a concept or phenomenon.
Applied Research
An attempt to develop new or improved products.
CPSC
Consumer Product Safety Commission
A federal agency established to protect the health and safety of consumers in and around their homes
FDA
Food and Drug Administration
A federal agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous food and drug products.
FTC
Federal Trade Commission
A federal agency empowered to prevent persons or corporations from using unfair methods of competition in commerce.
Production Concept
Consumers favor products that are available and highly affordable
Improve production and distribution
Product Concept
Consumers favor products that offer the most quality, performance, and innovative features
Selling Concept
Consumers will buy products only if the company promotes/ sells this product(s)
Marketing Concept
Focuses on needs/ wants of target markets and delivering satisfaction better than competitors
Societal Marketing Concept
Focuses on needs/ wants of target markets and delivering superior value
Society’s well-being
Current Customers
How, Where, What, and When they buy
Decision Drivers
Cost, quality, performance, assortment, etc.
Valuable Customers
20/80, Loyalty, retention
Competition
Competition offers threats and opportunities to capture business
Values
a strongly held and enduring belief, and they are determinants of what is important and not important. INFLUENCE BUYING HABITS.
Social Factors
Values, Time pressure, component lifestyles, changing roles of women
Demographic Factors
Age, race, ethnicity, location
Demographics affect buyer behavior
Predicts what they will buy
Tweens
Ages 8 to 12
population more than 20 million
access to information and sophistication well beyond their years and purchasing power to match
They want their own look, does not reflect parents
PARENTS IN CONTROL
Teens
25 million
Very electronic- spend roughly 72 hrs plugged in (TV, Social Media, etc.)
Real friends
Make product modern and convenient
Involve in promotions- experience, interactive contests, provide ideas
Shopping has become social sport online and/or at the mall.
Generation Y
People born between 1979 and 1994
Millennials’
75 million
impatient, family orientated, relatively stable childhood
inquisitive, tech savvy, encouraged to share opinions, ethnically diverse, time managers, street smart, much more aware of the world around them
shop less and buy more per trip
they want fulfillment, multitaskers
Generation X
People born between 1965 and 1978
40 million
Latchkey kids- dual career, divorced
Independent, resilient, cautious and skeptical- savvy consumers
more protective and involved with kids
home ownership is important goal
avid buyers of latest clothes, technology, recreational products
want honesty from retailers or they will loose gen x consumer, communication is key
they want communication on a personal level, don’t want to be grouped
Baby Boomers
People born between 1946 and 1964
75 million
Average life expectancy at all time high
typically reach spending peak at age 54
Postponing retirement
socially conscious, productive
spending cuts by boomers have left upscale retailers scrambling
Happy and confident group that looks forward to future
heavily involved in word of mouth promotion
trailblazers- challenged status quo
don’t need to be reminded of how old they’re getting
link brands with major life event
skeptical of empty promises due to tv ads
Greatest Generation
Grew up during great depression
generation before baby boomers
Hispanics
often prefer products from their native country
very brand loyal
often not aware of mainstream US brands, if native country brand unavailable they’ll choose brands that reflect their native culture and values
Technological Factors
Faster pace and lower costs
-Computer chips and Internet
High Research and Development Budget (10-20%)
– Basic Research (US) vs. Applied Research
(China)
Promote Innovation — Competitiveness
-Ideas from web, firms use teams of writers with
diverse perspective to create complex scenarios
of what future markets may look like, talk to early
adopters and innovators, find out what
customers like and dislike, create innovative
environment, cater to entrepreneurs
Economic Factors
High Unemployment- depressed demand and purchasing power, reduced disposable/ discretionary incomes
Inflation- price increases
Low — Increase efficiency, not price
High — Low prices, coupons and sales
Recession- demand reduction
improve existing and introduce new — value
Expand customer service – postpone
top of line – high priced, high value
Political and Legal Factors
Regulation for – protecting consumers and innovators, increasing competition, pricing practices, false advertising
Sherman Act, Clayton Act, FTC Act, Celler-Kefauver Anti-merger Act, Hart-Scott-Rodino ACt
were passed to regulate the competitive environment.
Robinson-Patman Act
was designed to regulate pricing practices
Wheeler-Lea Act
was created to control false advertising
Lanham Act
protects trademarks
Battle over consumer privacy
Due to growth of internet marketing, collecting consumer data has alarmed privacy- minded consumers.
CAN-SPAM Act of 2004
Protects consumers against unwanted email, or spam. Does not ban spam but prohibits using a false address and presenting false misleading information
Gramm-Leach-Bliley Act
aimed at financial companies, requires corporations to tell their customers how they use their personal information
Identity Theft
9 million Americans have identity stolen each year
Health Insurance Portability and Accountability Act
aimed at the health care industry
limits disclosure of individuals medical information and imposes penalties on organizations that violate privacy rules
Competitive Factors
-as US population growth slows, global competition increases, cost rise and available resources tighten
-firms must work harder to maintain profits and market share
-Technology advances can usher in a whole new set of competitors that can change a firms business model
Global Marketing
Marketing that targets markets throughout the world
Global Vision
Recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets
Environmental Differences
Cultural
Values, Religion, Roles, Status
Colors symbolic- Coca Cola
Customs and Traditions
Time, Space
Relationships – Trust
Economic and Technological
Development
Traditional —> Industrialized
Agriculture –> Mfg. –> Services
Per capita income -GDP per capita
US vs. India/China
Buying power, underground economy
Income distribution – skewed
Rich and Middle classes
Importance of Global Marketing
U.S. exports a fifth of industrial production
U.S. is leading exporter of farm products- 60 billion in agricultural exports
Also exports chemicals, computers, autos, aircraft, electrical and industrial machinery
Exports create 10 million jobs for Americans and represent 13% of GDP
Trade and Investment- 1/3 of profits
U.S. is the world’s largest importer
Imperative to compete
GDP
Gross Domestic Product
the total market value of all final goods and services produced in a country for a given time period
Multinational corporation
A company that is heavily engaged in international trade, beyond exporting and importing
Multinational firms
Operate in several Countries
straddle boundaries- Goods, Services
Overcome Trade Barriers
Sidestep regulatory problems
-lower labor costs
leverage ideas globally – sharing
larger than many countries
politics
Capital-intensive
using more capital than labor in the production process
Exchange rate
the price of one country’s currency in terms of another country’s currency
Global marketing standardization
production of uniform products that can be sold the same way all over the world
Multidomestic strategy
when multinational firms enable individual subsidiaries to compete independently in domestic markets
EU
European Union
a free trade zone encompassing 27 European countries
Mercosur
the largest Latin American trade agreement; includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela
Uruguay Round
an agreement to dramatically lower trade barriers worldwide; created the World Trade Organization
WTO
World Trade Organization
a trade organization that replaced the old General Agreements on Tariffs and Trade (GATT)
GATT
General Agreements on Tariffs and Trade
a trade agreement that contained loopholes that enabled countries to avoid trade-barrier reduction agreements
NAFTA
North American Free Trade Agreement
an agreement between Canada, the United States, and Mexico that created the world’s largest free trade zone
CAFTA
Central America Free Trade Agreement
a trade agreement, instituted in 2005, that includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States
World Bank
an international bank that offers low-interest loans, advice, and information to developing nations
IMF
International Monetary Fund
an international organization that acts as a lender of last resort, providing loans to troubled national, and also works to promote trade through financial cooperation
G-20
Group of Twenty
a forum for international economic development that promotes discussion between industrial and emerging- market countries on key issues related to global economic stability
Exporting
selling domestically produced products to buyers in another country
Buyer for export
an intermediary in the global market that assumes all ownership risks and sells globally for its own account
Export broker
an intermediary who plays the traditional broker’s role by bringing buyer and seller together
Export agent
an intermediary who acts like a manufacturer’s agent for the exporter. The export agent lives in the foreign market
Licensing
the legal process whereby a licensor agrees to let another firm use its manufacturing process, trademarks, patents, trade secrets, or other proprietary
Contract manufacturing
private-label manufacturing by a foreign company
Joint venture
when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity
Direct foreign investment
active ownership of a foreign company or of overseas manufacturing or marketing facilities
Dumping
the sale of an exported product at a price lower than that charged for the same or a like product in the “home” market of the exporter
Countertrade
a form of trade in which all or part of the payment for goods or services is in the form of other goods or services
Global Vision
Take advantage of international marketing opportunities – addl. profits
Be aware of threats from foreign competitors
Use international distribution networks
Leverage a unique product or technological advantage
Utilize “economies of scale”
The Negatives of Global Trade
Millions of Americans have lost jobs- imports, outsourcing. New jobs pay less
Millions fear loosing jobs
Workers face pay-cut demands, if not, face outsourcing
Service and white-collar jobs are vulnerable to operations moving offshore
Advantages of Global Trade
Rise from poverty for underdeveloped nations
Productivity and living standards increase
Competition keeps inflation low
Open economy spurs innovation
Export jobs pay more
The goal of the Free Trade Area of the Americas (FTAA) is to:
establish a free trade zone throughout the Western Hemisphere
In the context of global marketing, when a company either creates a new product for a market or dramatically changes an existing product, the company is using a ______________ strategy
product invention
Marketer’s Checklist for identifying Potential Market
1. Demographic characteristics
2. Geographic characteristics
3. Economic factors
4. Technological factors
5. Sociocultural factors
6. National goals and plans
Global Marketing into the 21st century
Global competition is intensifying
No company is immune
U.S. companies are
continuously improving products
expanding into foreign markets
becoming Global Firms
Global Firms
Face several major problems:
-variable exchange rates
-unstable governments
-protectionist tariffs and trade barriers
Consumer Behavior
The process consumers go through when they make purchases. It involves factors that influence their decision and usage
Factors that influence the Consumer’s Decision-Making Process
Individual/ Psychological Factors: Perception, Motivation, Learning, Beliefs and attitudes, Lifestyles
Consumer decision-making process
Buy or Don’t Buy
Social/ Culture factors: Reference groups, opinion leaders, family, culture and subculture
Consumer Decision-Making Process
The consumer decision-making process consists of five steps:
1. Need recognition
2. Information search
3. Evaluations of alternatives
4. Purchase
5. Post-purchase behavior
Consumer Decision-Making process
Need recognition due to stimulus (SSTTH)
-Internal, external
Information search
-Internal (memory)
-External (seeking information in outside environment)
-Risk, Knowledge, Experience
-Result in an evoked set options
-most preferred alternatives
Evaluation of Alternative
-analyze product attributes
-what is the most important (quality, price, location, option, etc.)
-use cutoff criteria (could be financially based- will not spend more than)
Purchase- buy or not to buy
Postpurchase Behavior
-cognitive dissonance- is the inner tension that a consumer experiences after recognizing an inconsistency between behavior, value and opinions.
-warranties, communication, justification
Satisfaction
-expectation
-performance
Need Recognition
Very first step in the process is when consumers realize that they have a need for something.
Marketers want to create an imbalance between their present status and their preferred status. Need recognition occurs when a consumer is faced with a difference between an actual and desired state
Internal stimuli
a need can occur immediately and can be a very basic impulse that you experience, example hunger pains.
External stimulus
is when you are affected by outside influences, such as a friend recommending a movie, restaurant, or an ad for a car.
There are three ways that consumers recognize unfulfilled wants:
1st- is when a consumer becomes frustrated with the fact that a product he or she has is not performing properly. Perhaps the car that the consumer owns is now requiring time in the shop for repairs, or the jeans he owns have developed holes. The consumer now has developed a want and need for a new car and new jeans. Marketers will even act fast and use advertising and sales to further move the consumer to a new purchase. Car brochures, test drives, sales, promotions and rebates are all ways for the consumer to be drawn further into the need recognition process.

2nd- a consumer recognizes an unfulfilled want is when the consumer runs out of the product. This can be as simple as an empty shampoo bottle or a need for more bread. Marketers can tempt consumers to purchase their products through coupons, deals, contests and promotions.

3rd- consumers can recognize an unfulfilled need is if they become aware of a product that is better than their current product. Marketers love to create newer versions of their product in order to tempt consumers to upgrade their old versions, such as technology and automobile companies, which consistently upgrade to newer models.

Marketers can prevent _________ ___________ by excellent communication of their product’s benefits and features, customer service follow up by email and even small gifts, such as calendars or pens with the company name.
Cognitive dissonance
Culture is the chief shaper and transmitter of:
Values
Types of Consumer Decision Behavior
Routine Response Behavior
-Low involvement, time, cost, search options
Limited Decision Making
Extensive Decision Making
-High involvement, time, cost, search, options
On any given day, a person may be subjected to over 1,500 advertising messages but may only be aware of ten to twenty of them. This is called:
selective exposure