MARKETING MIDTERM 1

marketing
an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders
2 goals of marketing
discovering the needs of prospective customers and satisfying them
marketing mix
controllable factors- product, price, promotion, place
environmental forces
not controllable-social, economic, technological, competitive and regulatory forces
customer value
the unique combination of benefits received by targeted buyers that usually includes quality, price, convenience, on-time delivery, and both before sale and after sale service
3 strategies of marketers: best price, product, or service
organization
a legal entity of people who share a common mission; 2 kinds: business firm and nonprofit
business firm
privately owned organization
non-profit
nongovernmental, serves its customers but does not have profit as a goal
3 levels of organizational strategy
an organization’s long term course of action designed to deliver a unique customer experience while achieving its goals
corporate level-where top management directs overall strategy for the entire organization
strategic business unit level-managers set a more specific strategic direction for their businesses to set value creating opportunities
functional level-groups of specialists actually create value for the organization
core values
the organization’s fundamental, passionate, and enduring principles that guide its conduct over time
mission
organization’s statement of its function in society, often identifying its customers, markets, products, and technologies
organizational culture
a set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization
business
the clear, broad, underlying industry category or market sector of an organization’s offering
organization’s goals/objectives
statements of an accomplishment of a task to be achieved, often by a specific time
maximize profit, sales, market share, quality, customer satisfaction,
marketing dashboards
used by marketing managers to visually display on one screen the essential info to make a decision to take an action or further analyze a problem
marketing metric
a measure of the quantitative value or trend of a marketing activity or result
marketing plan
road map for the marketing activities of an organization for a specified future time period
business portfolio analysis
used to assess a business’ strategic business units (SBUs), product lines, or individual products as though they were a collection of separate investments (cash cows, stars, question marks, and dogs) to determine the amount of cash each should receive
diversification analysis
a tool that helps managers use one or a combination of four strategies to increase revenues: market penetration, market development, product development, and diversification
market penetration
selling more of an existing product to existing markets
market development
selling an existing product to new markets
product development
selling a new product to existing markets
diversification
selling new products to new markets
strategic marketing process
3 steps: planning-a SWOT analysis, market product focus through market segmentation and goal setting, marketing program that specifies the budget and activities for each marketing mix element
SWOT analysis
taking stock of where the firm or product has been recently, where it is now, and where it is headed (strengths, weaknesses=internal, opportunities, threats=external)
market segmentation
grouping buyers into segments with common needs and similar responses to marketing programs
implementation phase of strategic marketing process
4 key elements: obtaining resources; designing the marketing organization to perform product management, marketing research, sales, and advertising and promotion activities; developing schedules to identify the tasks that need to be done, the time that is allocated to each one, the people responsible for eat task, and the deadlines for each task’s accomplishment; and executing the marketing strategies
marketing strategies
means by which marketing goals are to be achieved, and their associated marketing tactics
marketing tactics
detailed day-to-day operational decisions of a firm’s marketing strategies
cross functional teams
small number of people from different departments who are mutually accountable to accomplish a task or a common set of performance goals
strategic business unit (SBU)
subsidiary, division, or unit of an organization that markets a set of related offerings to clearly defined groups of customers
profit
the money left after a business firm’s total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings
market share
the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself
competitive advantage
unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation
competencies-special capabilities of a company that distinguish it from other organizations and provide customer value
points of difference
characteristics of a product that make it superior to competitive substitutes
marketing concept
the idea that an organization should strive to satisfy the needs of customers while also trying to achieve the organization’s goals
market orientation
focuses on an organizations efforts on continuously collecting info about customers’ needs, sharing this info across departments, and using it to create customer value
environmental scanning
the process of acquiring information about these changes to allow marketers to identify and interpret trends
4 forms of competition in market
pure competition, monopolistic competition, oligopoly, and monopoly
key components of competition: likelihood of new competitors, power of buyers and suppliers, and the presence of competitors and possible substitutes
ethics
personal moral principles and values that govern the actions and decisions of an individual/group-guidlines how to act rightly and justly when faced with moral dilemmas
laws
society’s values and standards that are enforceable in the courts
4 factors that influence ethical marketing behavior
1 societal culture and norms, 2 business culture and industry practices, 3 corporate culture and expectations, 4 an individual’s personal and moral philosophy
social responsibility
an organization is part of the larger society and is accountable to that society for its actions
profit responsibility
companies have responsibility to maximize profits for their owners or stockholders
stakeholder responsibility
obligations an organization has to those who can affect achievement of its objectives

stakeholders-employees, shareholders, board of directors, suppliers, distributors, creditors, unions, govt, local communities, and customers

societal responsibility
obligations that organizations have to the preservation of the ecological environment and general public
5 stages of consumer purchase decision process
problem recognition, information search, alternative evaluation, purchase decision, post purchase behavior
problem recognition
perceiving a difference between a person’s ideal and actual situation bi enough to trigger a decision
information search
remembering previous purchase experiences (internal search) and external search behavior such as seeking info from other sources
alternative evaluation
clarifies the problem for the consumer by suggesting the evaluative criteria to use for the purchase, yielding brand names that might meet the criteria, and developing consumer value perceptions
purchase decision
choice of an alternative, including from whom to buy and when to buy
postpurchase behavior
the comparison of the chosen alternative with a consumer’s expectations, which leads to satisfaction or dissatisfaction and subsequent purchase behavior
low involvement purchases
consumers engage in routine problem solving-recognize a problem, make a decision,and spend little effort seeking external info and evaluating alternatives
high involvement purchases
each of the 5 stages of the consumer purchase decision profess is used, including considerable time and effort on external info search and in identifying and evaluating alternatives
limited problem solving
consumers seek some information or rely on a friend to help them evaluate alternatives
motivation
the energizing force that stimulates behavior to satisfy a need
personality
a persons’s consistent behaviors or responses to reoccuring stiuations
perfecption
the process by which an individual selects, organizes, and interprets info to create a meaningful picture of the world
learned behavior
results from repeated experience and reasoning-brand loyalty results from this, so do values, beliefs, and attitudes
lifestyle (psychographics)
combines psychology and demographics and focuses on how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them
sociocultural influences
evolve from a consumer’s formal and informal relationships with other people, affect consumer behavior; include personal influence, reference groups, the family, social class, culture, and subculture
reference groups
people to whom and individual looks as a basis for self-approval or as a source of personal standards
industrial firms
reprocess a product or service they buy before selling it to the next buyer
resellers
wholesalers and retailers-buy physical products and resell them again without any reprocessing
government agencies
buy goods and services for the constituents they serve
characteristics of organizational buying
demand characteristics
size of the order or purchase
number of potential buyers
buying objectives
buying criteria
buyer-seller relationships and supply partnerships
multiple buying influences within organizations
buying center
a group of individuals who share common goals, risks, and knowledge important to a purchase decision
5 roles a person may play in buying center
users-people in the organization who actually use the product/service
influencers-affect buying decision by helping define the specifications for what is bought
buyers-have formal authority and responsibility to select the supplier and negotiate terms of contract
deciders-have the formal/informal power to select/approve the supplier that receives the contract
gatekeepers-control the flow of info into the buying center
environmental forces that shape global marketing efforts
cultural forces-values, customs, cultural symbols, and language
economic forces-stage in economic development and economic infrastructure, consumer income and purchasing power, and currency exchange rates
political-regulatory forces
4 approaches for entering global market
exporting, licensing, joint venture, direct investment
exporting
producing goods in one country and selling them in another
licensing
company offers the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee
joint venture
foreign company and local firm invest together to create a local business; 2 companies share ownership, control, and profits
direct investment
a domestic firm actually investing in and owning a foreign subsidiary or division
standardization
all elements of marketing program are the same across countries and cultures
customization
one or more elements of marketing program are adapted to meet the needs or preferences of consumers in a particular country or culture
5 step marketing research approach
1 define the problem-setting the research objectives and identifying possible marketing actions
2 develop the research plan-specifiying constraints, identifying data needed for marketing decisions, and determining how to collect the data
3 collect the relevant info-consider secondary data and primary data as well as using info technology and data mining
4 develop findings from the marketing research data collected-analyzing data and presenting findings of research
5 take marketing actions
secondary data
internal-orgiinate form organization, such as sales reports and customer comments
external-created by other organizations or business and trade publications
primary data
collected specifically for the project and are obtained either by observing or questioning people
neuromarketing
using high-tech braining scanning to record responses of a consumer’s brain to marketing stimuli
information technology
enables about of marketing data to be stored, accessed, and processed, results in databases for data mining to find statistical relationships useful for marketing decisions and actions
3 approaches to developing a company’s sales forecast
1 judgements of decision maker
2 surveys of knowledgeable groups
3 statistical methods-linear trend extrapolation
direct forecast
estimating the value to be forecast without any intervening steps
lost horse forecast
starts 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 a final forecast
market segmentation
aggregating prospective buyers into groups that have common needs and will respond similarly to marketing action
5 steps in market segmentation
1 group potential buyers into segments, 2 putting related products to be sold in meaningful groups, 3 organizations develop a market product grid, 4 setting the target market segments on which the organization should focus, 5 taking marketing mix actions-marketing program
bases used to segment consumer market
geographic, demographic, psychographic, and behavioral
product
a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in echange for money or something else of value
non-durable good
consumed in one or a few uses
durable good
lasts over many uses
services
intangible activities or benefits that an organization provides to satisfy consumer needs in exchange for money or something else of value
idea
thought that leads to a product or action
ways products and services can be classified
type of user, effort involved in purchase decision process, marketing mix attributes used in purchase, frequency of purchase
convenience products
items that consumers purchase frequently and with a minimum of shopping effort
shopping products
items for which consumers compare several alternatives on selected criteria
specialty product
items that consumers make special efforts to seek out and buy
unsought products
items consumers do not know about or initially want
business products
prudcts that organizations buy that assist them in providing others for resale
components-items that become part of the final product, or support products-items used to assist in producing other goods and services
classification of services
whether they are delivered by people or equipment, business firms or nonprofit organizations, or government agencies
newness
the degree of learning that a consumer must engage in to use a product
continuous innovation
no new behaviors must be learned
dynamically continuous innovation
only minor behavioral changes are needed
discontinuous innovation
consumers must learn entirely new consumption patterns
factors contributing to a product/service success/failure
insignificant points of difference, incomplete market and product protocol before product development starts, not satisfying customer needs on critical factors, bad timing, too little market attractiveness, poor product qua lit, poor execution of the marketing mix, no economical access to buyers
new product process
7 stages an organization goes through to identify business opportunities and convert them to a salable good or service
1 new product strategy development, 2 idea generation, 2 screening and evaluation, 4 business analysis, 5 development, 6 market testing, 7 commercialization
new product strategy development
defining the role for the new product within the firm’s overall objectives
idea generation
developing a pool of concepts from consumers, employees, basic r&d, ad competitors to serve as candidates for new products
screening and evaluation
evaluating new product ideas to eliminate those that are not feasible from a technical or consumer perspective
business analysis
defining the features of the new product, developing the market strategy and marketing program to introduce it, and making a financial forecast
development
producing a prototype product and testing it in the lab and on consumers to see that it meets standards set for it
market testing
exposing actual products to perspective consumers under realistic purchasing conditions to see if they will buy the product
commercialization
positioning and launching a product in full-scale production and sales with a specific marketing program
metropolitan statistical area
has at least 1 urbanized area of 50,000 people and adjacent territory that has a high degree of social and economic integration
micropolitan statistical area
has at least 1 urban cluster of 10,000-50,000 people and adjacent territory has a high degree of social and economic integration
multicultural marketing
combinations of marketing mix that reflect unique attitudes, ancestry, communication preferences, and lifestyle of different races
culture
set of values, ideas, and attitudes that are learned and shared among members of a group
value consciousness
the concern for obtaining the best quality, features, and performance of a product for a given price
disposable income
the money a consumer has left after paying taxes to use for necessities such as food, housing, etc.
discretionary income
money that remains after paying for taxes and necessities used for luxury items
electronic commerce
any activity that uses electronic form in the inventory, exchange, advertisement, distribution, and payment of goods and services
intranet
internet based network used within the boundaries of an organization
pure competition
there are many sellers with a similar product
monopolistic competition
sellers compete with substitutable products within a price range
oligopoly
few companies control the majority of industry sales
pure monopoly
only 1 firm sells the product
components to competition
barriers to entry and power of buyers/suppliers
regulation
restrictions state and federal laws place on businesses with regard to conduct of activities-used to ensure competition
exclusive dealing
arrangement between manufacturer and reseller to handle only its products and no competition, can be illegal
requirement contracts
buyer has to purchase all or part of its needs for a product from 1 seller for a time period, can be illegal
exclusive territorial distributorship
manufacturer grants a distributor the sole rights to sell a product in a specific area
tying arrangement
a seller requires the purchaser of 1 product to buy another item in the line, can be illegal
self regulation
an industry attempts to police themselves; problems: noncompliance by members and enforcement
Better Business Bureau
best known self-regulation group of companies whose goal is to help maintain fair practices
business model
the strategies an organization develops to provide value to the customers it serves
cash cows
SBUs that generate large amounts of cash-more than they can invest profitably in themselves, have dominant shares of slow growth markets and provide cash to cover the organizations overhead and invest in other SBUs
stars
SBUs with a high share of high growth markets that may need extra cash to finance their own rapid future growth
question marks
SBUs with a low share of high growth markets, require large injections of cash to maintain market share
dogs
SBUs with low shares of slow growth markets, don’t hold the promise of becoming real winners of the organization
economic espionage
the clandestine collection of trade secrets or proprietor info about a company’s competitors-illegal and unethical
code of ethics
a formal statement of ethical principles and rules of conduct
whistle blowers
employees who report unethical/illegal actions of their employers
moral idealism
a personal moral philosophy that considers certain individual rights/duties as universal, regardless of outcome
utilitarianism
a personal moral philosophy that focuses on “the greatest good for the greatest number” but assessing the costs and benefits of the consequences of ethical behavior
societal responsibility
organizations are part of a larger society and are accountable to that society for their actions
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
green marketing
marketing efforts to produce, promote, and reclaim environmentally sensitive products
cause marketing
occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of its products
social audit
a systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility
5 steps of social audit
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 the future
sustainable development
involves conducting business in a way that protects the natural environment while making economic progress
greenwashing
the practice of making an unsubstantiated misleading claim about environmental benefits of a product, service, tech, or company practice
Services
intangible activities or benefits (such as airline trips, financial advice, or automobile repair) that an organization provides to satisfy consumers’ needs in exchange for money or something else of value. In the US 42% of the GDP comes from service and the value from which has increased 70%
Four I’s of Service
Intangibility, Inconsistency, Inseparability, and Inventory
Intangibility
One of the four I’s, can’t be held, touched, or seen before the purchase decision. Because services tend to be a performance rather than an object, they are much more difficult for consumers to evaluate
Inconsistency
One of the four I’s related to developing, pricing, promoting, and delivering services is chalenging because the quality of a service is often inconsistant. Because services depend on the the people that provide them, their quality varies with each person’s capabilities and day-to-day job performance.
Inseperability
One of the four I’s related the consumer’s inability seperate the deliverer of the service from the service itself.
Inventory
the cost of paying a person used to provide a service along with any needed equipment.
Idle Production Capacity
when the service provider is available but there is no demand
Service continuum
what companies bring to the market ranges from the tangible to the intangible or good-dominant to service-dominant offerings
Classifying Services
1. they are delivered by people or equipment 2. they are profit or nonprofit 3. they are government sponsored
Profit organizations
excess in revenues over expenses are taxed and distributed to shareholders
Nonprofit organizations
excess in revenues over expenses are not taxes or distributed to shareholders. When excess revenue exists the money goes back into the organization’s treasury to allow continuation of the service.
Government Sponsored
Although there is no direct ownership and they are non profit organizations, governments at the federal, state and local levels provide a broad range of services
Search Properties
properties such as color, size, and style which can be determined before purchase
Experience Properties
properties which can be discerned only after purchase or during consumption
Credence Properties
characteristics that the consumer may find impossible to evaluate even after purchase and consumption
Gap Analysis
a marketing research method that measures the difference between a customer’s expectation of a service quality and what actually occurred
based on reliability, tangibles, responsiveness, assurance, empathy
Customer Contact Audit
flowchart of the points of interaction between consumer and service provider
5 Dimensions of service quality
1. Reliability 2. Tangibles 3. Responsiveness 4. Assurance 5. Empathy
Reliability
Ability to perform the promised service dependably and accurately
Tangibles
Appearance of physical facilities, equipment, personnel, and communication materials
Responsiveness
Willingness to help customers and provide prompt service
Assurance
Knowledge and courtesy of employees and their ability to convey trust and confidence
Empathy
Caring, individualized attention provided to customers
Relationship Marketing
The contact between a service provider and a customer represents a service encounter that is likely to influence the customer’s assessment of the purchase. Encounters represent opportunities to develop social bonds or relationships with customers.
8 P’s of service marketing
1. Product (service) 2. Price 3. Place (distribution) 4. Promotion 5. People 6. Physical Enviornment 7. Process 8. Productivity
Product
A good , service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is recieved in exchange for money of something else of value. With regard to service branding strategies are particularly important
Price
in service, this is referred to by many different names such as, charges, fees, fares, rates, and tuition. Because of the intangible nature of services, this is often percieved by consumers as a possible indicator of the quality of the service.
Off-peak Pricing
charging different prices during different days of the week to reflect variations in demand for the service
Place
A major factor in developing a service marketing strategy because of the inseperability of services from the producer. Rarely are intermediaries involved in the distribution of service; the distribution site and the service deliverer are the tangible components of the service
Promotion
The value, especially in advertising, for many services is to show consumers the benefit of purchasing the service. It is valuable to stress availability, location, consistent quality, and efficient, courteous service, and to provide a physical representation of the service or a service encounter.
People
many services depend on this factor for the creation and delivery of the customer service experience. The nature of the interaction between employees and customers strongly influences the customer’s perceptions of the service experience.
Internal marketing
Based on the notion that a service organization must focus on it’s employees, or internal market, before successful programs can be directed at customers.
Customer Experience Management
(CEM) The process of managing the entire customer experience within the company. Experts suggest that the process should be intentional, planned, consistant so that every experience is similar, differentiated from other service offerings, and relevant and valuable to the target market.
Physical Environment
The appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer’s perception of the service The physical evidence of the service includes all the tangibles surrounding the service: the buildings, landscaping, vehicles, furnishings, sinage, brochures, and equipment.
Process
Refers to the actual procedures, mechanisims, and flow of activities by which the service is created and delivered. The actual creation and delivery steps that the customer experiences provide customers with evidence on which to judge the service.
Productivity
Most services have a limited capacity due to the inseperability of the service from the service provider and the perishible nature of the service.
Capacity Management
the service component of the marketing mix must be integrated with efforts to influence consumer demand. Service organizations must manage the availibility of the offering so that 1. demand matches capacity over the duration of the demand cycle and 2. the organization’s assets are used in ways that will maximize the return on investment.
Product Life Cycle
the stages a new product goes through in the marketplace; introduction, growth, maturity, and decline.
Introduction Stage
occurs when a product is introduced to its intended target market. during this period slaes grow slowly, and profit is minimal
Trial
the initial purchase of a product by a consumer
Primary Demand
the desire for the product class rather than for a specific brand, since there are few competitors with the same product.
Selective demand
the preference for a specific brand
Skimming strategy
setting a high initial cost to recover the costs of development as well as capitalize on the price insensitivity of early buyers.
penetration pricing
Pricing strategy in which the seller charges a low price on a new product to discourage competition and gain market share.
Growth Stage
part of the life cycle characterized by rapid increases in sales and appearance of competitors. Profits tend to peak during this stage and advertising shifts emphasis to stimulating selective demand.
Repeat Purchasers
those who tried the product, were satisfied and bought it again
Maturity Stage
part of the life cycle characterized by a slowing of total industry sales or product class revenue. Competitors begin to leave the market. sales increase at a decreasing rate and obtaining new customers becomes more costly. Market is focused on holding market share.
Decline Stage
part of the life cycle characterized by the dropping of sales, often caused by enviornmental or technological changes. results in one of two strategies, deletion or harvesting
Deletion
dropping the product from the company’s product line, is the most drastic strategy
Harvesting
when a company retains a product but reduces marketing costs. The product continues to be offered but sales people do not allocate time in selling nor are advertising dollars spent.
4 aspects of product life cycle
1. their length 2. the shape of their sales curves 3. how they vary with different levels of products 4. the rate at which consumers adopt products
length of cycle
there is no set lenght that it takes a product to move through its life cycle. Mass communication informs consumers quickly and shortens life cycles
Shape of cycle
not all products have the same shape 4 most common are 1. high learning product 2. low learning product 3. Fashion product 4. Fad product
High-learning product
one for which significant customer education is required and there is extended introduction period
Low-learning product
begins immediately because little learning is required by the consumer, and the benefits of purchase are redily understood
Fashion product
is a style of the times-life cycles appear in women and men’s apparel, introduced, decline then seem to return
Fad
experiences rapid sales on introduction and then an equally rapid decline , typically novelties and have a short life cycle
Product Class
refers to the entire product category or industry such as prerecorded music
Product Form
pertains to variations within the product class. For prerecorded music, this exists in the technology used to provide the music such as casset tapes, compact disks and digital music players
Diffusion of Innovation
The process whereby a new product, service, or idea spreads through a population
Innovators
Venturesome, higher educated, use multiple information sources
Early Adapters
Leaders in social setting, slightly above average education
Early Majority
Deliberate, many informal social contacts
Late Majority
Skeptical; below average social status
Laggards
fear of debit; neighbors and friends are informal sources
Free Sample
one of the most popular means to gain consumer trial. 71% of consumers consider this to be the best way to evaluate a new product
product/Brand manager
manages the marketing efforts for a close knit family of products or brands. Responsible for managing existing products through the life cycle. also called product manager
Product Modification
involves altering a product’s characteristics such as its quality performance or appearance to increase the products value to customer and increase sales
Product Bundling
the sale of two or more seperate products in one package
Market Modification
strategies used by companies trying to find new customers, increase a product’s use among existing customers, or create new use situations
Product repositioning
changes the place a product occupies in a consumer’s mind relative to competitive products, generally through 4 factors 1. reacting to a competitor’s position 2. reaching a new market 3. catching a rising trend 4. changing the value offered
Trading up
adding value to a product through additional features or higher quality materials
Trading down
reducing the number of features, quality or price
Branding
an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors
Brand Name
any word, device (design, shape, sound, or color), or combination of these used to distinguish a seller’s goods or services
Trade Name
a commercial legal name under which a company does business
Trademark
identifies that a firm has legally registered its brand name or trade name so the firm has exclusive use, thereby preventing others from using it
Product counterfeiting
involves low-cost copies of popular brands not manufactured by the original producer
Brand Personality
a set of human characteristics associated with a brand name. reserach shows that consumers often assign personality traits to products, traditional, rugged, sophisticated- and choose brands that are consistant with their own desired self image.
Brand Equity
The added value a brand name gives to a product beyond the functional benefits provided giving two distinct advantages, 1. provides competitive advantage 2. consumers are willing to pay a premium for these products
Brand awareness
the first step in creating Brand Equity consists of developing positive brand awareness and an association of the brand in consumers’ minds with a product class or need to give the brand an identity
Brand imagery and performance
the second step in creating Brand Equity consists of establishing a brand’s meaning in the minds of consumers through two dimensions 1. a functional, performance-related dimension and 2. an abstract image-related dimension
Consumer judgements and feelings
the third step in creating Brand Equity consists of eliciting the proper consumer responses to a brand’s identity and meaning. Here attention is placed on how consumers think and feel about the brand. Thinking is focused on a brand’s percieved quality, credibility, and superiority relative to other brands. Feeling relates to the consumer’s emotional reaction to a brand
Consumer-Brand connection
the fourth/final step in creating Brand Equity consists of creating an intense, active loyalty relationship between consumers and the brand. A deep psychological bond characterizes the connection and the personal identification consumers have with the brand.
Brand Equity
the economic value of a brand name
Brand licensing
is contractual agreement whereby one company (licensor) allows its brand name (s) or trademark (s) to be used with product or services offered by another company (licensee) for a royalty fee
Picking a Good Brand Name
1. The name should suggest the product benefits 2. The name should be memorable, distinctive, and positive 3. The name should fit the company or product image 4. No legal or regulatory restrictions 5. Name should be simple.
Branding Strategies
companies can employ several different strategies including multiproduct branding, multibranding, private branding, or mixed branding
Mulitproduct branding
a company uses one name for all its products in a product class. sometimes called family branding or corporate branding. Advantages; transfer favorable image to other products, lower advertising and promotion cost. Disadvantages; other items in the product line may sacrifice exposure
Product Line Extension
practice of using a current brand name to enter a new market segment in its product class
Subbranding
combining a corporate or family brand with a new brand, to distinguish a part of its product from others
Brand extension
the practice of using a current brand name to enter a different product class. Risks include having too many uses for one brand can dilute the meaning of the brand to consumers
Co-branding
the pairing of two brand names of two manufacturers on a single product.
Multi-branding
involves giving each product a distinct name, a useful strategy when when each brand is intended for a different market segment.
Fighting Brands
introducing new brands as a defensive move to counteract competition, their chief purpose is to confront competitor brands
Private Branding
when a company manufactors products but sels them under the brand name of a wholesaler or retailer, also called private labeling or reseller branding. It is estimated that 1 in 5 items purchased at US supermarkets, drug store and mass merchandisers bears this branding
Mixed Branding Strategy
where a firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different from its own market.
Packaging
refers to the container in which a product is offered for sale and on which label information is conveyed
Label
an integral part of the package and typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.
Packaging and Labeling Cost
US companies spend more than $120 Billion annually and account for 15 cents of every dollar spent by consumers for products
Communication Benefits
a major benefit of packaging is the label information on it to conveyed to the customer, such as directions how, where and when to use the product, and the source and composition opf the product, which is needed to satisfy legal requirements of product disclosure.
Functional Benefits
a role such as storage, convenience, protection, or product quality
Perceptual benefits
package shape, color, and graphics distinguish one brand from another, convey a brand’s positioning, and brand equity, creating a perception in the consumer’s mind
Packaging Challenges
package and label designers face 4 challanges, 1. the continuing need to connect with customers 2. enviornmental concerns 3. health, safety, and security issues 4. cost reduction
Connecting with customers
packaging must be continually updated, creating a challenge in creating aesthetic and functional design features that attract customer attention and deliver customer value for their use
Enviornmental concerns
because of widespread worldwide concern about the growth of solid waste and the shortage of viable landfill sites, the amount, composition and disposal of packaging material continues to recieve attention.
Health, Safety, and Security issues
due to growing health, safety and security concerns, most US and European consumers believe companies should make sure products and their packages are safe and secure, regardless of the cost
Cost reduction
about 80% of packaging material used in the world consists of paper, plastics, and glass. as the cost of these materials rise, companies are constantly challenged to find innovative ways to cut packaging costs while delivering value to their customers
Warranty
a statement indicating the liability of the manufacturer for product deficiencies
express warranties
written statements of liabilities
limited-coverage warranty
specifically states the bounds of , areas of noncoverage
full warranty
no limits to coverage
implied warranties
assign responsibility for product deficiencies to the manufacturer
80/20 rule
A concept that suggests 80% of a firm’s sales are obtained from 20% of its customers. The percentages in the concept are not really fixed but suggets that a small fraction of customers provides a large fraction of a firm’s sales.
marketing-product grid
A framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization
market segmentation
Involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.
market segments
The relatively homogeneous groups of prospective buyers that result from the market segmentation process.
perceptual map
a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands, as well as its own product or brand to develop marketing actions to move its product or brand into an ideal position.
product differentation
a marketing strategy that involves a firm’s using different marketing mix activities to help consumers perceive the product as being different and better than competing products.
Usage Rate
The quantity consumed or patronage (store visits) during a specific period. Also called frequency marketing
Key of Marketing segmentation
1. forms meaningful groupings 2. develops specific marketing mix actions
One Product and Multiple market segments
when an organization produces only a single product or service and attempts to sell it to two or more market segments, it avoids the exra costs of developing and producing additional versions of the product
Multiple Markets and Multiple Market Segments
many firms now offer different variations of the same basic offering to high-end and low-end segments
Segments of One: Mass Customization
tailoring goods or services to the tastes of individual customers on a high-volume scale made possible by today’s internet ordering, flexible marketing and flexible manufacturing.
Built-to-order (BTO)
manufacturing a product only when there is an order from a customer.
Organizational Synergy
The increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently
Cannibalization
a situation that occurs when sales of a new product cut into sales of a firm’s existing products
5 step market segmentation process
1. Group potential buyers into segments 2. group products to be sold into categories 3. develop a market-product grid and estimate size of markets 4. select target markets 5. take marketing actions to reach target markets
Criteria for forming segments
1. simplicity and cost-effectiveness of assigning potential buyers to segments 2. potential for increased profit 3. similarity of needs of potential buyers within a segment 4. difference of needs of buyers among segments 5. potential of a marketing action to reach a segment
Geographic segmentation
Dividing a market based on different geographical units such as nations, states, regions, counties, cities, or neighborhoods
Demographic segmentation
Dividing a market based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) or perspective customers
Psychographical segmentation
Dividing a market based on some subjective mental or emotional attribute (personality), aspirations (lifestyle), or needs of perspective customers.
Behavorial segmentation
Dividing a market based on some observable actions or attributes by prospective customers, such as where they buy, what benefits they seek, how frequently they buy and why they buy.
Ways to Segment Consumer Markets
Geographical – region
Demographic – household size
Psychographic – lifestyle
Behavioral – product features and usage rate
Frequency Marketing
strategy that focuses on the usage rate of consumers
Ways to Segment Organizational Markets
Geographic – statistical areas
Demographic – North American Industry Classification System codes
Demographic – Number of employees
Behavioral – Usage rate
Select Target Markets
A firm must take care to choose its target market segments carefully. If it picks too narrow a set of segments, it may fail to reach the volume of sales and profits it needs
Target Market Criteria
Market Size, Experienced growth, Competitive Position, Cost of reaching the segment, and Compatibility with the Organization’s objectives and resources
Market Size
The estimated size of the market in the segment is an important factor in deciding whether it’s worth going after.
Expected Growth
although the size of the market in the segment may be small now, perhaps it is growing significantly or is expected to grow in the future.
Competitive position
is there a lot of competition in the segment now or is there likely to be in the future? The less competition, the more attractive the segment is.
Cost of reaching the segment
a segment that is inaccessible to a firm’s marketing actions should not be pursued. For example, if few people in the marketing area are reachable by newspaper or print ads, don’t waste advertising money.
Compatibility with objectives and resources
judging the cost of pursuing and obtaining a particular market in contrast with the current goals and regulations/resources of the company
This chapter
is crap and won’t shut up about Wendy’s
Take Marketing Action
Step 5 in the segment and targeting process. The purpose of developing a market-product grid is to trigger marketing actions to increase sales and profits. This means that someone must develop and execute an action plan in the form of a marketing program.
Immediate Strategy
Using the current or past information to formulate a current approach to advertising and marketing.
Future Strategy
Changing customer tastes and competition mean you must alter your strategies when necessary. This involves 1. Looking at company headquarters 2. What competitors are doing and 3. What might be changing in your area.
Marketing Synergies
Running horizontally across the grid, each row represents an opportunity for efficiency in terms of a market segment. Often these come at the expense of product synergies because a single customer segment will likely require a variety of products, each of which will have to be designed and manufactured. The company saves money on marketing but spends more on production.
Product Synergies
Running vertically down the market-product grid, each column represents and opportunity for efficiency in research and development and production.
Product positioning
the place a product occupies in consumers’ minds on important features relative to competitive products
product repositioning
changing the place a product occupies in a consumer’s mind relative to competitive products
Head-to-head positioning
competing directly with competitors on similar products attributes in the same target market
Differentiation positioning
Seeking a less competitive smaller market niche in which to locate a brand. Companies also follow this strategy among brands within their own product line to minimize the cannibalization of a brand’s sales or market share
Positioning Statement
A succinct written statement describing the ideas for the product or the brand that is not only used internally within the marketing department, but also for those in areas such as research and development and advertising
Customer positioning steps
1. identify the important attributes for a productor brand class 2. Discover how target customers rate competing products or brands with respect to these attributes 3. Discover where the company’s product or brand is on these attributes in the minds of potential customers 4. Reposition the company’s product or brand in the minds of potential customers
Simplicity and Cost-effectiveness
a marketing manager must be able to put a marketing segmentation plan into effect. This means identifying the characteristics of potential buyers in a market and then Cost-effectively assigning them to a segment
Potential for increased Profit
The best segmentation approach is one that maximizes the opportunity for future profit and return on investment (ROI). If this potential is maximized without segmentation, don’t segment! For non-profit organizations, the criterion is the potential for serving clients more effectively.
Similarity of needs
Potential buyers within a segment should be similar in terms of common needs that, in turn, leads to a common marketing action, such as product features sought or advertising media used.
Difference of needs
If the needs of the various segments aren’t very different, combine them into fewer segments. A different segment usually requires a different marketing action that, in turn, means greater costs. If increased sales don’t offset extra costs, combine segments and reduce the number of marketing actions.
Reaching a segment
Reaching a segment requires a simple but effective marketing action. If no such action exists, don’t segment.
PRIZM
Designed by Nielsen Claritas, this lifestyle segmentation system classifies every household in the US into one of 66 unique market segments based on the concept that, “birds of a feather flock together.”
Usage Index
This emphasizes the importance of the Heavy-user segment. For example, giving light users an index of 100 and the heavy users an index of 640 means that for every $1 spent by light users, heavy users are spending $6.40. This is why business owners focus on the heavy-user segment.
Grouping
Combining the products a firm sells into meaningful categories is as important as grouping customers into segments. When a firm has dozens or hundreds of products, they must be grouped in some way so buyers can relate to them.
Constraints
in a decision the restrictions placed on potential solutions to a problem
data
the facts and figures to a problem that are divided into two main parts: secondary data and primary data.
data mining
the extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions.
decision
a conscious choice from among two or more alternatives
information technology
involves operating computer networks that can store and process data
marketing research
the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions
measures of success
criteria or standards used in evaluating proposed solutions to a problem
observational data
facts and figures obtained by watching, either mechanically or in person, how people behave
primary data
facts and figures that are newly collected for the project
questionnaire data
facts or figures obtained by asking people about their attitudes, awareness, intentions, and behaviors
sales forecast
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 effort. Also called company forecast
secondary data
facts and figures that have already been recorded before the project at hand
Ethnographic Research
specialized observational approach in which trained observers seek to discover subtle behavioral/emotional reactions as consumers encounter products in their nature use environment
5 steps of Marketing Research
1. define problem 2.determine research plan 3. collect relevant information through secondary and primary data 4. develop finding 5. take marketing actions
Define the problem
Set research Objectives; Identify possible marketing actions
Develop the research plan
Specify constraints; identify data needed for marketing actions; determine how to collect data
Collect Relevant Information
Obtain secondary data; Obtain Primary Data; Use Information technology and data mining
Develop Findings
Analyze the data; present the findings
Take Marketing Actions
Make action recommendatons; implement action recommendations; evaluate the results
Exploratory research
provides ideas about a relatively vague problem
Descriptive research
generally involves trying to find the frequency that something occurs or the extent of a relationship between two factors
Causual research
the most sophisticated, tries to determine the extent to which the change in one factor changes another
Causation
A cause and effect relationship in which one variable controls the changes in another variable.
Correlation
a reciprocal relation between two or more things, ex. swamp and malaria (really caused by mosquitos)
Between Subjects Experiment
an experimental design in which the independent variable is made to vary across >two or more groups < of subjects.
Within Subjects Experiment
Experiment in which each subject of a >single group< receives all the variables/stimuli.
Key Elements to collect data
1. Concepts 2. Methods
Concepts
ideas about products or services.
Methods
approaches that can be used to collect data to solve all or part of the problem
Sampling
a technique to select a group of distributors, customers, or prospects and treating the information they provide as typical of all those in whom they are interested.
Statistical Inference
generalizes the results from the sample to much larger groups of distributors, customers, or prospects to help decide on marketing actions
Secondary Data: Internal
Examples include detailed sales breakdowns by product line, by region, by customer, and by sales representative, as well as customer inquiries and complaints. Often a starting point for research
Secondary Data: External
Published data from outside the organization. Examples include, US Census, Trade Association studies, business periodicals
Census Bureau
Population poll every 10 years; Economic Census every 5 years
NAICS
North American Industry Classification System-provides common industry definitions for Canada, Mexico, and US which makes it easier to measure economic activity in the 3 member countries
Advantages of Secondary Data
1. Tremendous time savings because the data have already been collected andpublished 2. the low cost such as free or inexpensive census reports
Disadvantages of Secondary Data
1. Out of date data (census every 5-10 years) 2. Definitions or categories might not be quite right 3. Data may not be specific enough
Primary Data: Watching People
Observing people and asking them questions are the two principal ways to collect new or primary data for a marketing study. 3 main methods, Mechanical (including electronic), Personal, and Neuromarketing methods.
Mechanical Methods
Ratings system for TV, Anytime Anywhere Media Measurement (A2/M2) Initiative
Personal Methods
Personal shoppers, watching consumers in person or videotaping, Ethnographic research
Neuromarketing Methods
use of brain scanning to analyze buying processes, mixing the study of the brain with marketing
Primary Data: Asking people
Asking consumers to gather data. Divided into 1. Idea Generation methods and 2. Idea Evaluation Methods
Idea Generation Methods
Individual interview, Depth Interviews, Focus Groups
Idea Evaluation Method
the process by which the marketing researcher tries to test the ideas discovered earlier to help marketing manager recommend marketing actions.
CATI
Computer Assisted Telephone Interviewing
open-ended question
allows respondent to express opinions, ideas and behaviors
Closed-end or fixed alternative Question
require respondent to select one or more predetermined choices
Dichotomous question
simple form of a fixed alternative question that allows only a yes or no answer
semantic differential scale
five point scale using 1-2 word adjectives with opposite meanings
Likert Scale
respondant expresses the extent to which they agree or disagree with a statement
Wording Problems
Leading questions, Ambiguous question, unanswerable question, 2 questions in one, non-mutually exclusive answers
Panel
A sample of consumers or stores from which researchers take a series of measurements
Experiment
Obtaining data by manipulating factors under tightly controlled conditions to test cause and effect, an example of causal research
Marketing Drivers
independent, variables of interest, often one or more of the marketing mix elements such as price, product features, or promotion
Data Warehouse
Databases at the core where the ocean of info is collected and stored.
Sensitivity Analysis
querying the database with “what if” questions to determine how a hypothetical change in driver such as advertising can affect sales.
Actions
Delivering results in a clear picture and if possible, a single page
Sales Forecasting Techniques
1. Judgments of the decision maker (99%0 2. surveys of knowladgeable groups 3. Statistical methods
Direct Forecast
estimating the value to be forecast without any intervening steps ex.. “How many quarts of milk should i buy?”
Lost-horse Forecast
involves 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
Survey of Buyers Intentions Forecast
asking prospective customers if they are likely to buy the product during some future time period
Salesforce Survey Forecast
involves asking the salespeople to estimate sales during a coming period
Trend Extrapolation
involves extending a pattern observed in past data into the future
back translation
The practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.
balance of trade
the difference between the monetary value of a nation’s exports and imports
bottom of the pyramid
the largest, but poorest socioeconomic group of people in the world
consumer ethnocentrism
the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products
countertrade
the practice of using barter rather than money for marketing global sales
cross-cultural analysis
the study of similarities and differences among consumers in two or more nations or societies
cultural symbols
things that represent ideas and concepts
currency exchange rate
The price of one country’s currency expressed in terms of another country’s currency.
customs
what is considered normal and expected about the way people do things in a specific country
direct investment
a global market-entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division
dumping
when a firm sells a product in a foreign country below its domestic price or below its actual cost
Economic Espionage Act (1996)
A law that makes the theft of trade secrets by foreign entities a federal crime in the United States. the act perscribes prison sentances up to 15 years and $500,000 fines for individuals. Agents of foreign governments can face 25 years and up to $10 million
exporting
A global market-entry strategy in which a company produces goods in one country and sells them in another country.
Foreign Corrupt Practices Act (1977)
a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country
global brand
a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs
global competition
Exists when firms originate, produce, and market their products and services worldwide.
global consumers
consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services
global market strategy
the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ
gray market
a situation where products are sold through unauthorized channels of distribution. Also called parallel importing.
gross domestic product (GDP)
the monetary value of all goods and services produced in a country during one year
joint venture
a global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company
microfinance
the practice of offering small, collateral- free loans to individuals who otherwise would not have access to the capital necessary to begin small businesses or other income-generation activities
multidomestic marketing strategy
multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business
protectionism
the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas
quota
A restriction placed on the amount of a product allowed to enter or leave a country.
semiotics
a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people
strategic alliances
a practice whereby one firm’s marketing channel is used to sell another firm’s products
tariffs
government tax on goods or services entering a country, primarily serve to raise prices on imports
values
a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time
World Trade Organization
formed in 1995, a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions. Includes 153 member countries which account for 90% of world trade. The WTO reviews over 200 disputes annually
Dynamics of World Trade
The dollar value of worl trade has more than doubled in the past decade and will exceed 20 trillion in 2012. Manufactured goods account for 75% and service industry accounts 25%
Countries accounting more than 2/3 of world trade
US, Europe, Canada, China, and Japan
Trade Feedback effect
imports affect exports and vice versa
US role in Marketplace
percentage of US exports over the past 30 years has shifted downward whereas its percentage of imports has increased causing its role as world supplier to diminish
Surplus
when a country’s exports exceed its imports
Deficit
when a country’s imports exceed it’s imports
4 largest importers of US goods and services
Canada, China, Mexico and Japan. These countries purchase approximately 67% of US exports. They are also the the 4 largest exporters TO the United States
Factor Conditions
these reflect a nation’s ability to turn its natural resources, education, and infrastructure into a competitive advantage
Demand Conditions
these include both the number and sophistication of domestic customers for an industry’s product
Related and Supporting Industries
firms and industries seeking leadership in global markets need cluster of world class suppliers that accelerate innovation
Company strategy, structure, and rivalry
these factors include the conditions governing the way a nations businesses are organized and managed, along with the intensity of domestic competition
Economic Espionage
the clandestine collection of trade secrets or proprietary information about a company’s competitors. Common among high-technology industries such as electronics, specialy chemicals, industrial equip, aerospace, ect.. estimated to cost firms $250 BILLION a year
Global Economic Trend 1
Gradual decline of economic protectionism by individual countries
Global Economic Trend 2
Formal economic integration and free trade of nations
Global Economic Trend 3
Global competition among global companies for global customers
Global Economic Trend 4
Emergence of networked global marketplace
General Agreement on Tariffs and Trade (GATT)
International treaty intended to limit trade barriers and promote world trade through the reduction of tariffs, which it did. However, GATT did not address nontariff trade barriers, such as quotas and world trade in services, which often sparked heated trade disputes between nations
Transnational Trade Groups
Countries with similar trade goals forming unions or signing trade agreements for the purpose of promoting free trade among member nations and enhancing their individual economies. Examples; European Union (EU), NAFTA, and the Asian Free Trade Areas
European Union (EU)
consists of 27 member nations, houses more than 500 million consumers with a combined GDP larger than that of the US. 16 countries have adopted common currency called the EURO.
Little Dragons
refers to four countries in the Asian Free Trade Market; Hong Kong, Singapore, South Korea and Taiwan
Types of Companies in Global Marketplace
1. International Firms 2. Multinational Firms 3. Transnational firms; All 3 employ people in different countries and many have administrative marketing and manufacturing operations (divisions or subsidaries) around the world
International Firm
engages in trade and marketing in different countries as an extension of the marketing strategy in its home country. uses same marketing strategy to market products internationally and domestically. AVON
Multinatinal Firm
views the world as consisting of unique parts and markets to each part differently. Use a multidomestic marketing strategy… Lever/Unilever, Proctor and Gamble MR Clean/Mastro Limpio
Transnational Firm
views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants more than differences. Employ a Global Marketing Strategy. Nike, McDonalds
Networked Global Marketplace
enables the exchange of goods, services, and information from sellers Anywhere to buyers Anywhere at Any time and at a lower cost.
Schuld
German word for debt, also the german word for guilt!
Cultural Ethnocentrism
The belief that one’s own culture is superior to that of another
Global Market Scan
Should include 1. a comparative analysis of the economic development in different countries, 2. an assessment of the economic development in different countries, 3. measurement of consumer income in different countries, and 4. recognition of a country’s currency exchange rates.
Developed Countries
have somewhat mixed economies. Private enterprise dominates, although they have substancial public sectors as well. US Canada Japan and most Western Europe
Developing Countries
in the process of moving from agricultural to an industrail economy. Includes 2 subgroups, 1. those who have already made the move (Brazil, Poland, India, China) and 2. those that remained locked in a preindustrial economy (Afghanistan, Ethopia, Tanzania) As a whole 86% of the world’s population (6.9 bil) reside in this group and comprise 1/5 of total world income.
Economic Infrastructure
a country’s communications, transportation, financial and distribution systems
Political Stability
Billions of dollars have been lost in the Middle East and Africa as a result of internal political strife, terrorism, and war. Losses such as these encourage careful selection of countries and regions for world trade
PRS Group
an agency that monitors, tracks and rates the political stability and assigns risk ratings to countries
Means of Market Entry
4 general options exist 1. Exporting 2. Licensing 3. Joint Venture 4. Direct investment. the amount of financial commitment, risk, marketing control, and profit potential increases as the firm moves from exporting to direct investment.
Indirect Exporting
When a firm sells its domestically produced goods in a foreign country through an intermediary
Direct Exporting
when a firm sells its domestically produced goods in a foreign country without intermediaries. Boeing is the world’s largets aerospace company and the largest US exporter
Licensing
a company offers the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or fee. Benefits include low-cost and capital-free entry into a foreign country. Disadvantages include loss of control of products reducing potential profits gained.
Contract Manufacturing
a US company may contract with a foreign firm to manufacture products according to stated specification
Contract Assembly
the US company may contract with a foreign firm to assemble (not manufacture) parts and components that have been shipped to that country.
Franchising
one of the fastest growing market-entry strategies. A contractual agreement that specifies the methods by which a dealer can prooduce and market a supplier’s good or service
Product Promotion Strategies
1. Product extension strategy 2. Product adaptation strategy 3. Product Invention 4. Dual Adaptation Strategy 5. Product invention strategy
Product Extension
Selling virtually the same product in other countries. Works best when the consumer market target for the product is alike across countries and cultures
Product Adaptation
changing a product in some way to make it more appropriate for a country’s climate or consumer preferences.
Production Invention
companies can invent totally new products designed to satisfy common needs across countries
Product adaptation strategy
Adapting a product to meet local conditions or wants in foreign markets
Dual Adaptation Strategy
Adapting both a product and the promotion message to meet local conditions or wants in foreign markets
Distribution Steps
Seller > Seller’s international marketing headquarters > Channels between Nations > Channels within foreign nations > Final Consumer
bidder’s list
a list of firms believed to be qualified to supply a given item
business marketing
the marketing of goods and services to companies, governments, or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others
buy classes
consists of three types of organizational buying situations: straight rebuy-buyer/purchasing manager reorders an existing product/service from the list of acceptable suppliers, probably without even checking with users
new buy-the organization is a first time byre of the product or service
modified rebuy-users, influencers, or deciders in the buying center want to change the product specifications, price, delivery schedule, or supplier
buying center
the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.
derived demand
the demand for business products and services is driven by, or derived from, demand for consumer products and services
e-marketplaces
online trading communities that bring together buyers and supplier organizations to make possible the real time exchange of information, money, products and services. Also, called B2B exchanges or e-hubs
ISO 9000 standards
standard for registration and certification of manufacturer’s quality management and assurance system based on an on-site audit of practices and procedures developed by the International Standards Organization (ISO)
make-buy decisions
an evaluation of whether components and assemblies will be purchase from outside suppliers or built by the company itself
North American Industry Classification System (NAICS)
a detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes
Organizational buyers
those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale
3 types: industrial markets, reseller markets, government markets
Organizational buying behavior
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.
Organizational buying criteria
the objective attributes of the supplier’s products and services and the capabilities of the supplier itself
serve the same purpose as evaluation criteria
reciprocity
an industrial buying practice in which two organizations agree to purchase each other’s products and services
reverse auction
in an e-marketplace, it is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other
supplier development
the deliberate efforts by organizational buyers to build relationships that shape suppliers’ products, services and capabilities to fit the buyer’s needs and those of its customers
supply partnership
buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer., a relationship that exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer
traditional auction
in an e-marketplace, it is an online auction in which a seller puts an item up for sell and would-be buyers are invited to bid in competition with each other
value analysis
a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs
Industrial Market
reprocess a product or service before selling it to next buyer; Physical goods make up 25% of market and Services make up 75%
Reseller Market
wholesalers and resellers that buy physical products and resell them again without reprocessing. in the US there are about 2 million resellers and 430,000 wholesalers
Government Market
federal, state, and local government agencies that buy goods and services for the constituents they serve. about 89,500 in the US
Global Market
Largest exporting organizations focus on organizational buyers. Capital equipment and industrial supplies account for 46% of US product exports
NAICS
North American Industry Classification System provides common industry definitions for Canada, Mexico and the US which makes it easier to measure economic activity in the members of NAFTA
NAFTA
North American Free Trade Agreement, Trade agreement , North American Free Trade Agreement; allows open trade with US, Mexico, and Canada
NAICS coding system
six-digit system; first 2 digits represent sector, 3rd digit represents subsector, 4th represents industry group, 5th designates a specific industry and is the most detailed level at which comparable data is available for Canada, Mexico and the US, 6th digit designates the individual country. p.142 figure 6-1
NAPCS
North American Product Classification System, provides a classification system for for products and services across North America
Key Characteristics of Organization Buying
Market Characteristics, Product or Service Characteristics, Buying Process Characteristics, Marketing Mix Characteristics
Marketing Characteristics
Demand for industrial products and services is derived, Few customers typically exist and their purchase orders are large
Product or service Characteristics
Products or services are technical in nature and purchased on the basis of specifications; many goods purchased are raw and semi-finished; Heavy emphasis is placed on delivery time, technical asistance, and postsale service
Buying Process Characteristics
Technically qualified and professional buyers follow established purchasing policies and procedures; Buying objectives and criteria are typically spelled out, as are procedures for evaluating sellers and their products; There are multiple buying influences and mulitple parties participate in purchase decisions; There are reciprocal arrangements, and negotiation between buyers and sellers is commonplace; online buying is widespread
Marketing Mix Characteristics
Direct Selling to organizational buyers is the rule and distribution is very important; Advertising and other forms of promotion are technical in nature; Price is often negotiated, evaluated as part of broader seller and product or service qualities, and frequently affected by quality discounts.
Attitude
learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way
Beliefs
A consumer’s subjective perception of how a product or brand performs on different attributes based on personal experience, advertising, and discussions with other people.
Brand Loyalty
a favorable attitude toward and consistent purchase of a single brand over time
Cognitive dissonance
The feeling of postpurchase psychological, the feeling of post-purchase psychological tension or anxiety consumers may experience when faced with two or more highly attractive alternatives
consideration set
The group of brands that a consumer would consider acceptable from among all the brands of which he or she is aware in the product class
consumer behavior
The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions
consumer socialization
the process by which people acquire the skills, knowledge, and attitudes necessary to function as consumers. Children learn how to purchase 1. by interacting with adults in purchase situations and 2. through their own purchasing and product usage experiences
evaluative criteria
factors that represent both the objective attributes of a brand and the subjective ones a consumer uses to compare different products and brands
family life cycle
the distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors.
involvment
the personal, social, and economic significance of the purchase to the consumer
learning
Those behaviors that result from (1) repeated experience and (2) reasoning
lifestyle
a mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them.
motivation
the energizing force that stimulates behavior to satisfy a need
opinion leader
Individuals who exert direct or indirect social influence over others. about 10% of US adults are opinion leaders. study by popular mechanics showed 18 million opinion leaders responsible for influencing the purchases of some 85 million consumers.
perceived risk
the anxieties felt because the consumer cannot anticipate the outcomes of a purchase but believes that there may be negative consequences.
perception
The process by which an individual selects, organizes, and interprets information to create an meaningful picture of the world
personality
a person’s consistant behaviors or responses to recurring situations
purchase decision process
the five stages a buyer passes through in making choices about which products and services to buy: (1) problem recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, and (5) postpurchase behavior.
reference groups
people to whom an individual looks as a basis for self-appraisal or as a source of personal standards
self-concept
the way people see themselves and the way they believe others see them
situational influences
the five aspects of the purchase situation that impacts the consumer’s purchase decision; (1) the purchase task, (2) social surroundings, (3) physical surroundings, (4) temporal effects, and (5) antecedent states
social class
the relatively permanent, homogenous divisions in a society into which people sharing similar values, interests and behavior can be grouped
subcultures
subgroups within the larger or national culture that have unique values, ideas, and attitudes. 3 largest US subcultures are Hispanics, African-Americans, and Asian-Americans. They account for 1 in 4 of US consumers and are expected to spend about 3.4 TRILLION in 2013.
subliminal perception
seeing or hearing messages without being aware of them
word of mouth
the influencing of people during conversations. Most powerful and authentic information source for consumers, typically involves friends viewed as trustworthy. 67% of US sales are based directly on word-of-mouth among friends, family and collegues
Problem Recognition
the initial step in the purchase decisionis perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision
Information Search
after recognizing a problem, a consumer begins to search for information to clarify by 1. suggesting criteria for purchase 2. yielding brand names to meet criteria 3. developing consumer value perceptions
Internal Search
scanning your memory for previous experiences with products or brands
External Search
when personal knowledge is insufficient, consumers look to external sources for information including 1. personal sources; friends and relatives 2. public sources; rating organizations, consumer reports 3. marketer-dominated sources; info from sellers including, advertising, company web-sites ect..
Alternative Evaluation
assessing value, The stage of the buyer decision-making process in which the consumer uses information to evaluate alternative brands in the choice set
Purchase Decision
the decision of whether or not to buy and which competing product to buy, which is made after carefully weighing the alternatives. 1. From whom to buy 2. When to buy
Postpurchase behavior
The stage of the buyer decision process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction
3 to 1 ratio
Satisfied buyers tell 3 other people about their experience. Dissatisfied buyers complain to 9 people.
High-involvement purchase
usually have at least one of these characteristics 1) expensive 2) can have serious personal consequences 3) could reflect on ones social image. For these consumers usually engage in extensive info search, consider many attributes and brands, form attitudes and participate in word-of-mouth communication
Low-involvement purchases
purchases that have little importance or relevance for the customer
Extended problem solving
each of the five stages of the consumer purchase decision process is used, including considerable time and effort on external information search and in identifying and evaluating alternatives. Used in high-involvement purchases and decisions involving risk
Limited problem solving
consumers typically seek some information or rely on a friend to help them evaluate alternatives
Routine problem solving
for products such as table salt and milk, consumers recognize a problem, make a decision, and spend little effort seeking external information and evaluating alternatives.
Low Involvement Marketing Strategy
companies who are market leaders place attention on 1. maintaining quality 2. avoiding stockout situations so buyers don’t substitute competing brands 3. repetitive advertising messages that reinforce a consumer’s knowledge or assures buyers they made the right choice
High Involvement Marketing Strategy
marketers know their consumers constantly seek and process information about objective and subjective brand attributes, form evaluative criteria, rate product attributes in various brands and combine these for overall brand evaluation. Market leaders ply consumers with product info through advertising and personal selling and create chat rooms and communities on company or brand websites
Psychological influences
Motivation and personality, perception, learning, values, beliefs and attitudes, lifestyle
Sociocultural influences
Personal Influence, Reference Groups, Social Class, Culture and Subculture.
Situational influences
Purchase task, social surroundings, physical surroundings, temporal effects, antecedent states
Marketing mix influences
product, price, promotion, place
Physiological needs
the most basic human needs to be satisfied- water, food, shelter, and clothing
Safety Needs
freedom from harm, financial security
Social Needs
friendship, belonging, love
Personal needs
status, respect, prestige
Self-actualization needs
self-fulfillment
Key Traits
enduring characteristics witin a person or in his or her relationship with others. Assertiveness, extroversion, compliance, dominance, and aggression
Ideal Self
describes how people would like to see themselves
Selective perception
the brain’s attempt to organize and interpret information. a filtering exposure, comprehensionand retention
Selective exposure
occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent
Selective Comprehension
interpreting information so that it is consistent with your attitudes and beliefs.
Selective Retention
consumers do not remember all the information they see, read, or hear, event minutes after exposure to it.
Strategies to reduce consumer’s risk
Obbtaining seal of approval, Securing Endorsements from influential people, providing free trials of the product, giving extensive usage instructions, Providing warranties and Gaurantees
Behavioral Learning
the process of developing automatic responses to a situation built up through repeated exposure to it
Learning Variables
Drive, Cue, Response, Reinforcement
Drive
a need that moves an individual to action. Examples such as hunger might represent motives
Cue
a stimulus or or symbol percieved by customers
Response
the action taken by the consumer to satisfy the drive
Reinforcement
the reward recieved by a consumer as a result of a successful response
Stimulus Generalization
occurs when a response elicited by one stimulus (cue) is generalized to another stimulus
Stimulus Discrimination
refers to a person’s ability to percieve differences in stimuli
Cognative learning
involves making connections betewwn two more ideas or simply observing the outcomes of others’ behavior and adjusting one’s own accordingly
Attitude Change
marketers use 3 approaches to change consumer attitude toward products. 1. Changing beliefs about the extent to which a brand has certain attributes 2. Changing the percieved importance of attributes 3. Adding new attributes to the product
Psychographics
an analysis of consumer lifestyle, combining psychology, lifestyle and demographics, that provides insight into consumer needs and wants. Used to uncover consumer motivations for buying and using products and services
VALS
prominent Psychographic system, developed by SRI Consulting, that identifies eight consumer segemnts based on 1. primary motivation for buying and having certain products and services 2. their resources
VALS Primary motivations
Ideals, Achievment, Self-expression
Ideals-motivated Groups
consumers guided by knowledge and principle.
Thinkers
High-resource group, mature, reflective, and well-educated people who value order, knowledge, and responsibility. Deliberate information-seekers who value durability and functionality in products over styling and newness
Believers
low-resource group, conservative, conventional people with concrete beliefs based on traditional, established codes, family, religion, community. They choose familiar products and brands, favor american products, generall loyal costomers
Achievement-motivated Groups
Consumers look for products and services that demonstrate sauccess to their peers or to a peer group they aspire to.
Achievers
High-resource group, Busy, goal directed lifestyle and a deep commitment to career and family. Image is important to them. They favor established, prestige products and services and are interested and time-saving devices given their hectic schedules
Strivers
low-resource group, Trendy, fun-loving, and less self-confident than Achievers. They also have lower levels of education and household income. Money defines success for them. They favor stylish products and are as impulsive as their financial circumstances permit.
Self-expression-motivated Groups
consumers that desire social or physical activity, variety and risk
Experiencers
high-resource group, young, enthusiastic, and impulsive consumers that become excited about new possibilities but are equally quick to cool. They savor the new, the offbeat, and the risky, enjoy exercise, sports outdoor recreation and social activities. spend income on fashion items, entertainment, and socializing
Makers
low-resource group of those who are motivated by self-expression. They are practical people who value self-sufficiency. They are focused on the familiar-family, work, and physical recreation-and have little interest in the broader world. As consumers, they appreciate practical and functional products.
High- and Low-resource groups
The seperation of the VALS groups based on and seperated by a group’s resources
Innovators
Successful, sophisticated, take-charge people with high self-esteem and abundant resources of all kinds. Image is important to the, not as evidence of power or status, but as an expression of cultivated tastes, independence, and character. They are receptive to new ideas and technologies
Survivors
Least resources of any segment. They focus on meeting basic needs (safety and security) rather than fulfilling desires. They represent a modest market for most products and services and are loyal to favorite brands, especially if they can be purchased at a discount.
Teaser advertising
run in advance advance of new-product introductions to stimulate conversation
Buzz
Popularity created by consumer word-of-mouth. BzzAgent, a company of 600,000 people who go out and channel their chatter toward products they deem authentically worth talking about
Membership group
a group to which a person actually belongs, including fraternities, and soroities, social clubs, and family
Aspiration group
a group that a person wishes to be a member of or wishes to identify with, such as a professional society
Dissociative group
a group that a person wishes to maintain a distance from because a difference in values or behaviors
Traditional Family
a married couple with children younger than 18 years constitutes just 22% of all US households. 78% of US households include single parents, unmarried couples, divorced, never married or widowed individuals and older couples whose children no longer live at home
Spouse-dominant descision making
those descisions for which the husband or wife is more responsible. Wives tend to have more say in groceries, children’s toys, clothing, and medicines. Husbands tend to be more influential in home and car maintenance purchases
Joint descsion making
common decision process for cars, vacations, houses, home appliances and electronics, and medical care.
Family descision making Roles
1. information gatherer 2. influencer 3. descision maker 4. purchaser 5. user. 89% of wives make descisions or purchases of men’s clothing. More than 40% of all food-shopping dollars are spent by males. Increasingly Teens and preteens are information gatherers, descision makers and purchasers given the prevelance of working parents and single-parent homes.
Hispanic buying patterns
quailty and brand concious, willing to pay a premium price for premium quality and are often brand loyal. Prefer buying American-made products, buying preferences strongly influenced by family and peers, consider advertising a credible product info source, convience is not an important product attribute with respect to food preparation or consumption
African American buying patterns
1. Spend more on boy’s clothing, rental goods, audio equipment 2. Twice as likely to own a pager and spend twice as much for online services 3. African American women 3x more on health and beauty products 4. Typical family is 5 years younger 5. Strongly motivated by quality and choice 6. Respond more to products such as apparel and cosmetics 7. Respond more to advertising that appeal to African American pride and heritage
Asian American buying patterns
difficult to make generalizations due to diverse subculture. Divided into two groups 1. Assimilated, conversant in english, highly educated, good jobs and exibit buying patterns typical of the American consumer 2. Nonassimilated, those who prefer their native tongue and customs
difference between marketing and business plan
business contains detail on research and development (R and D), marketing within the business
currency exchange rates
the price of 1 country’s currency, such as the US $ expressed in another country’s
market-product grid
a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization
mystery shopper
paid by company to check quality and pricing of products and the integrity of and customer service by employees
consumer products
products purchased by the ultimate consumer
product item
a specific product that has a unique brand, size or price
stock keeping unit (SKU)
a unique identification number that defines an item for ordering or inventory purposes
product line
a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range
product mix
consists of all the product lines offered by an organization
protocol
a statement that before product development begins, identifies: a well defined target market, specific consumers’ needs, ants and preferences, and what the product will be and do
organizational problems in new product failure
1 not really listening to the voice of the consumer, 2 skipping stages in new product process, 3 pushing a poorly conceived product into the market to generate quick revenue, 4 encountering group thing, 5 not learning critical takeaway lessons from past failures
open innovation
an organization finds and executes creative new product ideas by developing strategic relationships with outside individuals and organizations
test marketing
offering a product for sale on a limited basis in a defined area-done to determine whether consumers will actually buy a product and try different ways to market
simulated test markets (STM)
technique that simulates a full-scale test market but in a limited fashion
slotting fee
payment manufacturer makes to get space on grocery shelf
failure fee
penalty payment a manufacturer makes to compensate a retailer for sales and valuable shelf space failed to make
time to market
Ttm-vital in introducing new product
parallel development
cross functional team members who conduct simultaneous development of both product and production process stay with the product from conception to production
fast prototyping
do it, try it, fix it
services in the future
expanding scope of global economy and new technology