Marketing 3000 Poor Mizzou Exam 1 F17

Marketing Subject Definition
Marketing is the study of exchange
Marketing Functional/ Activity Definition
Marketing Facilitates exchange
Which of the following is a requirement for something to be called “marketing”?
Communication
To be effective, a marketing objective needs to be which of the following?
Specific
Marketing Examples from the book
Job interview or date.
Both require marketing of your appearance, your ideas, your values, your skills and in essence yourself
Marketing Definition from class
Marketing is the study of exchange. Exchange can be political ideas or talking.
Exchange
two parties + Communication
Marketing’s first task
Discovering consumer needs
Marketing’s second task
satisfying consumer needs

Ex from class: Shake-weight was incredibly popular and successful

The placebo effect makes things more valuable to certain consumers e.g. bottled water over tap water.

Marketing Mix
Quiz answers

the 4 p’s

the set of decisions marketing managers make about an offering

product, price, distribution (place), promotion

Promotion and price are usually grouped

Product
The most important decision of the four p’s
Price
Class ex: commodity goods. tv’s & airline tickets
Promotion
Class Examples: beer, coke & pepsi, orange juice, food.
Place
Class ex: gas, vending machine products, checkout convenience products.
Ad affect
Ex: beer advertisement. Good feelings are due to ads.

Poor ” people aren’t able to tell the difference between drinks” But the affect they have on us is psychological.

Benefits and Costs Categories
Functional
Social
Personal
Experiential
Functional
Poor- “learn about marketing, get course credit”

Ex: hammer, automobile, toothbrush, glasses, jacket, pen

Social
Poor- “Meet Friends, business partner”

Ex: cellphone (also functional), social media, snapchat, school

Personal
Poor- “Feel good about learning or excelling in marketing”

Ex: Gym membership, healthy food, makeup

Experiential
Poor- “have fun…”

Ex: football games, Truman the tiger, concert, sporting events, vacation, travel, amusement park

Market Segmentation
Best marketing is serving everyone individually, next best thing is segmentation
Costs
Monetary

Temporal

Psychological

Behavioral

Monetary Costs
Ex: Tuition and book fees
Temporal Costs
Ex: Time spent in class and studying
Psychological costs
Ex: Stress from studying for exams and listening to instructor
Behavioral Costs
Ex: Expending energy walking to class or getting sick from lectures
Ikea Example*
Non montetary cost- walk throughout the store takes time (temporal), putting it together (frustration- psychological ), good furniture for decent cost (Monetary).

“what is an example of a product that has all types of costs associated with it? = IKEA *on test*

Toothpaste Example
different benefits from toothpaste (whitening vs extreme clean) behavioral
What types of macroenvironmental factors have affected the way people shop for food?
Documentaries, awareness of food production and health benefits. Buying in bulk, buying groceries online (amazons new service)
What are the implications?
More options for consumers gives more benefits to lower income areas.
Porters Five Forces Model
Industry profitability dependent on

industry competitiveness
Availability of substitute products
Potential Entrants (threat of new competition)
Supplier Power
Buyer Power

Porter’s five forces model determines which of the following?
Industry profitability
Industry competitiveness
Intensity of Current Competitors

Low intensity = High profitability

An industry has low intensity when few firms are competing.

Ex: Commercial Aircraft- low number of competitors. Boeing and Airbus

High intensity Ex: Farmers market with 10 potato dealers= low profitability

Ex. of lots of firms – fast food and grocery stores.

Availability of Substitutes
Customers can choose different product as a substitute
The more substitutes there are the less profitability.

Few or no substitutes= Higher Profitability
Ex of Few or no substitutes = Gasoline/ Gas stations (electric is a substitute)

Ex of many sub: Beer and Wine replace with water, juice, soft drinks, beer for wine and wine for beer.

Substitute for coffee=energy drink and tea. Coffee is the #1 nonalcoholic beverage
Vitamins can be substituted for vegetables

Threat of Potential Entrants
High barriers to Entry= Higher Profitability
High barriers exist when
-high capital requirements
-economies of scale are present= having to sell a certain amount to be profitable
-High product differentiation
-Network externalities (Technological or learning curve)

Examples: Internet, software
Example of network barrier- Word processing software

Network Externalities
Can be negative or positive

positive- A network of users of software, when new users join it adds value to the software. (Facebook)

Negative- gym memberships, the more who join= the less equipment available.

Supplier and Buyer Power
Lower bargaining power of suppliers/ Buyers = higher profitability

there is lower bargaining power when there is high number
low information

Ex: Low supplier power in computer industry with disk drives

Ex: Low buyer power in Medical services- low buyer power because there is low information. Inelastic demand

Less information that the buyers or suppliers have the higher the profitability

Sustainable competitive advantage
an advantage versus competition that can be maintained consistently over time.

Ex: Coke, Apple(user friendly software and marketing), McDonalds- convenience, price and Fast!

Operational Efficiency
“What do you think are the keys to McDonalds sustainable advantage?”

Answer= operational Efficiency

McDonald’s operational efficiency is better than anyone else.

On Test

Relationship Marketing
an alliance of participants who share decision-making responsibility

using the internet

valuing repeat purchases

According to the text, which of the following external environmental forces affects almost all marketing programs?
Economic Trends
Category Membership
Usually established before a point of difference is communicated
In the U.S., the emergence of many “hard cider” brands to compete with beer brands is most likely due to changing consumer taste. This is related to which type of trend?
Sociocultural
Dividing the population up into groups based on a common characteristic and then taking a random sample from each group is done in which of the following?
Stratified Sampling
Area Sampling
According to the text’s criteria, which of the following would not be a good marketing objective?
taking 5% of Brazilian market share away from the market leader
According to the text, which of the following is most likely to have a sales orientation?
a lettuce grower
People like to buy from people/businesses they _______.
Like and trust
Which of the following marketing research methods is inexpensive?
Telephone survey
Which of the following marketing research methods has the advantage that it is cost effective?
Mail survey
Which of the following is a characteristic of the marketing orientation?
Customer focus
long term success
According to class discussion, “good” marketing research needs to be which of the following?
scientific or unbiased
Market leader
40% of market
Ex: leader -McDonalds
Challenger- wendy’s
follower- 5 guys
nicher- in and out
DJ Gallo
D.J. Gallo attacked beer to bring younger consumers to wine
*On Test*
Nichers started out as specialized
Ex: Samuel Adams beer
10% of market
What type of growth strategy is it when in one particular marker a firm; lowers price, increases distribution, and increases profitability
Market Penetration
key to long term profitability
New product development
syndicated research services
market wide research that is sold to individuals
Market information system (MkIS)
consists of people, equipment, and procedures to gather, sort analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers.
Big data
big data analysis is a huge area of marketing

-walgreens reward program
-gerbes loyalty rewards
my coke rewards
-restaurants use big data to offer more personalization.

Privacy concerns

Marketing Research process*
1. defining the problem and research objectives
2. developing the research plan
3. collect the information
4. analyze the information
5. present the findings
Focus group
Ex: Rob’s pizza

looking to expand into college markets

-what do college studetns look for?
taste, price, HOURS, late night service

Find out how important these things are

Survey
Most common form

different types include
mail, telephone, personal, mall, internet

Internet survey is inexpensive
mail survey is cost effective
mall survey has moderate to high costs
telephone survey has moderate costs

Experimental research
lab experiments are controlled
field experiments are done ~in the field~ or in store

Test market experiment is done in a store in a specific region which are done for new products

Secondary-Data Sources
include internal sources, government publications (u.S. Census), periodicals and books, commercial data, on-line business information and associations.

*ALWAYS CHEAPER* in terms of cost and time, use if available.

Good marketing research is
Scientific ( be unbiased)
creative
uses multiple methods
realizes the interdependence of models and data
acknowledges the cost & value of information
maintains healthy skepticism
is ethical- debriefs the subject after
market share
sales/industry sales

expressed in $ or units

sales forecast
based on a specific marketing plan
typically covers a 1 year period
Market factor analysis
demand for a product assumed to be related to the behavior of certain sales activity.
survey of buyers intentions
a sample of current or potential customers are asked how much of a particular product they would buy at a given price during a specified future time period.
past sales and trend analysis
flat % increase applied to past volume or past volume average.
market segmentation
1. identify segmentation variables and segment the market
2. develop profiles of resulting segments
market targeting
3. evaluate attractiveness of each segment
4. select the target segments
Market positioning
5. identify possible positioning concepts for each target segment
6. select, develop, and communicate the chosen positioning concept
Why segment?
differences in buying habits
differences in how to good or service is used
different motives for buying
marketing focuses on and serves individuals differences.

research is used efficiently

geodemographic segmentation
shotguns and pickups
bluecollar jobs
-least affluent
-northeast, southeast, great lakes
-married with young children
purchase behavior
usage- light, medium or heavy users

loyalty status- brand loyal or variety seekers
user status- users vs nonusers, former users

benefit- importance of a particular product benefit.

Former ticket purchasers are targeted by sports teams trying to sell tickets/ season tickets

guidelines
the marketer should be aware of the interrelationships among segmentation characteristics. demography can be overlapped

the first seg. should be chosen because it provides the clearest and most distinctive division of the market

needed to be profitable
identifiable
substantial
reachable
responsive
Points of difference
how is the brand superior to others?
categories
hierarchical order of categories
lowest to highest
pepsi-> diet soft drinks-> soft drinks -> non alcoholic beverages

Ex: McDonalds- brand
Fast food- category

correlation inferences
tendency to infer one thing based on another.
Ex: high price = high quality
stress one benefit in promotion
Risky to stress more than one benefit in an ad.
lose credibility with more benefits

Ex: eat fresh = eat healthy

goal positioning
brand essence
-laddering up
points of parity
the state or condition of being equal