Principles of Marketing Part 2

When identifying target markets, the characteristics used to identify them need to be __________.
measurable
Measurable characteristics should be used when segmenting markets into target markets, whether they be demographic, geographic, psychographic, or behavioral characteristics.
Personal demographics are identifiable _______________ of individuals and groups of people including age, sex, ethnicity, income, education, occupation, family size, religion, social class, etc..
characteristics
Personal demographics, and are one of the types of characteristics used by marketers in market segmentation because they are often closely linked to customers’ product needs and purchasing behavior and because they can be readily measured.
A consumer’s ability to buy is related to ______, which consists of gross, disposable and discretionary income.
income
The _____ amount of money made in a year by an individual, household or family is called gross income.
total
Disposable income is money a consumer has for paying for ___________ such as food, shelter, clothing and transportation.
necessities
Disposable income is what a consumer has left after taxes.
_____________ income is the money that is left over after paying for taxes and necessities.
Discretionary
Discretionary income is used for luxury items, such as vacations. To calculate discretionary income use the following formula: Gross Income – (Taxes + Necessities) = Discretionary income.
Psychographics refers to the mental profiles of consumers; it allows the marketer to define consumer __________ in measurable terms.
lifestyles
To define consumer lifestyles, marketers examine consumer activities, interests and opinions (AIOs).
Geographic Demographics are identifiable characteristics of towns, cities, states, _______, and countries, and include characteristics such as climate, terrain, natural resources, population density, etc..
regions
These are known as geographic demographics. Out of the four types of measurable characteristics used to identify target markets, two are demographic–personal demographics and geographic demographics.
Psychographics refers to one of the types of characteristics used to identify target markets, and includes things which affect consumers’ patterns of living such as personality characteristics, motives, and __________.
lifestyles
For example, certain products are made to appeal to people with specific lifestyles. Pyschographics often encompasses numerous characteristics related to people’s activities, interests, and opinions.
Behavioral dimensions are used to identify target markets, and involve characteristics of behavior towards a specific product, such as user ______, user rate, brand loyalty, etc..
status
These are behavioral dimensions, such as whether a group of people use the product or not (user status) and how often they use it (user rate). Frequent flier miles benefits used by airlines are an example of market segmentation based on behavioral variables.
Markets made up of individuals with diverse product needs are called _____________ markets.
heterogeneous
Heterogeneous markets exist because not everyone wants the same type of car, furniture, clothes, etc.. Heterogeneous markets are broken up into multiple target markets through the process of Market Segmentation.
Market segmentation involves dividing a large, heterogeneous market into smaller, homogeneous market segments, in which the customers’ needs are _______.
similar
A homogeneous market is one in which the potential buyers have similar wants and needs, at least when evaluated from the perspective of a potential product. This is in contrast to a heterogeneous market, in which the individuals have diverse product needs.
To be most effective, a marketing mix should be designed for a specific, clearly defined target market. Market ____________ is used to define target markets which are homogenous.
Segmentation
Market segmentation divides larger markets made up of individuals with diverse needs into smaller target markets made up of people with similar needs.
Once the market segmentation process is complete, target markets for the company are chosen in a process called Market _________.
Targeting
After Market Segmentation comes Market Targeting. The market has been broken up into market segments, and the company now chooses which of those segments it will target.
There are three conditions for a market segment to be suitable to be chosen as a target market. Each segment must be identifiable and divisible, it must be reachable with a particular marketing mix, and it must have sufficient profit _________.
potential
First, the segment must be clearly identifiable, second it must be reachable through existing channels, and finally it must have enough profit potential to justify developing and maintaining a marketing mix just for that segment.
One of the benefits of ______ marketing is the ability to reach niche markets.
direct
Direct marketing, which includes in-home retailing, telemarketing, mail-order retailing, etc., is good for reaching niche markets because it can be much more targeted than other forms of marketing.
The process of market segmentation begins with choosing segmentation bases, also known as segmentation _________.
variables
Segmentation variables are chosen, and then the markets are divided along those dimensions. Segmentation variables can be demographic or behavioral dimensions.
When performing market segmentation, using one segmentation variable, or base, is usually not very __________. Segmenting using one variable is known as Single-variable Segmentation.
meaningful
Single-variable segmentation is rarely useful, because in most cases, the resulting market segment is too broad and is not going to be homogeneous. For example, using just one variable such as gender, to split up the total toy market is too broad–toys that appeal to toddlers will not appeal to teens–the market segment is still too diverse to be considered a target market.
As opposed to using one segmentation variable in the market segmentation process, multi-variable segmentation looks at relationships between more than one variable to ______ market segments.
define
Multi-Variable Segmentation uses more than one characteristic to split up a market, which results in more tightly defined market segments. For example, age, income, and education are often used together to choose a target market.
Once market segments have been identified as suitable to be potential target markets, a firm is going to choose among them by looking at _______ factors. The segment’s characteristics, the competitors within that market segment, and how good of a match it is with the company.
several
The three factors that are going to affect the firm’s decision are the segment’s characteristics (it’s size, and potential for growth and profit), the competitors within that segment (how many are there, and how strong is the competition), and how suited the market segment is for the company–does it go along with the firm’s objectives, match its strengths, etc..
When a firm decides to focus on only one market segment as a target market by creating and maintaining one marketing mix, this is known as using a _____________ strategy.
concentration
This is known as concentration strategy, and is sometimes called single-segment strategy. An example is the car manufacturer Lamborghini, which focuses on the super high-end luxury sports car segment.
Disadvantages of concentration strategy towards choosing target markets is that the company is putting all of its eggs in one basket, and it may become entrenched in that one market and be unable to branch out to _____ market segments.
other
Concentration strategy is where a company focuses on only one market segment. This allows the company to specialize for that one market, and compete with larger organizations; however, its success depends on demand remaining strong in that one market. Also, it can develop an image associated with that segment, making it difficult to appeal to other segments when it wants to expand later.
The multisegment strategy is where a company has more than one ______ market and develops and maintains marketing mixes for each of them.
target
This is known as multisegment strategy, and is sometimes called differentiated strategy. The costs of planning, organizing, implementing, and controlling marketing activities increase as a company tries to target more market segments; however, there can also be more potential for profit, and more customers to appeal to.
When a company designs a single marketing mix and directs it at the entire market for a particular product, it is using an ________________ approach.
undifferentiated
This is called a total market approach, also known as an undifferentiated approach, or mass marketing. Products with little or no variation such as sugar and salt are often marketed successfully using the undifferentiated approach.
A good understanding of the forces that shape consumer behavior is helpful in reaching profitable market segments. Buying ________ is the decision processes and acts of people involved in buying and using products.
Behavior
A big part of buying behavior is the decision process used in making purchases, and consists of five stages: recognizing a problem, searching for information, evaluating alternative products, purchasing and postpurchase evaluation.
The individuals level of ___________ affects consumer buying decisions, and refers to the importance and intensity of interest in a product in a particular situation.
involvement
Level of involvement is the primary determinant of how consumers reach purchase decisions. When making an expensive purchase, for example, consumers typically have a high level of involvement, and spend a lot of time and effort researching their purchase beforehand, whereas low-involvement buyers often evaluate a product’s features after purchasing it.
____ buying decisions, especially those involving frequently-purchased, low-priced goods, are low-involvement decisions.
Most
Most decisions are low involvement decisions–the consumer may form an attitude about a product, and evaluate its features after purchasing it, rather than before.
Qualitative Research is any kind of research that produces findings not arrived at by means of statistical procedures or other means of ______________.
quantification
An example of qualitative research is asking a group of people what their feelings were about a new product. The information collected from respondents takes the form of verbal descriptions or direct observations, in contrast to quantitative research, where the information collected is converted into numbers.
Products which typically entail a high level of involvement are personally important, relatively _________, or have high risks associated with making a bad decision.
expensive
High-involvement decision-making behavior is typically associated with non-routine purchases which for one reason or another are important enough to warrant time and energy spent making a careful purchasing decision.
The consumer buying decision process includes five stages. The first stage is problem ___________.
recognition
The first stage is problem recognition, what is the problem or need that needs to be satisfied? The first three steps of the buying decision process take place before the purchase, the fourth is purchasing, and the fifth is postpurchase. Most of the time, people omit one or more steps–all five steps are associated with high involvement or extensive decision-making.
The second step of the consumer buying decision process is information ______.
search
Information search is the second step. The first three steps are to identify the need or problem, search for information, and based on that information to evaluate the options. Only for high-involvement purchases to consumers go through all these steps; for many purchases, they will jump straight from identifying a need to purchasing a product.
There are only _____ steps associated with low-involvement decision-making.
three
There are three steps associated with low-involvement decision making–identifying a need or problem, making the purchase, and postpurchase evaluation. These are steps 1, 4, and 5 of the high-involvement decision-making process, which includes steps for information search and evaluating alternatives.
Cognitive __________ are the doubts that occur because the buyer questions whether the right decision was made in purchasing the product.
dissonance
Cognitive dissonance often occurs shortly after the purchase of an expensive product. The buyer continues to evaluate alternatives after making the purchase, and remains uncertain and less than fully satisfied about his decision.
One of the major categories of influences which affect the consumer buying decision process are _____________ forces, and include perception, motives, ability and knowledge, attitudes, and personality.
psychological
These are the five major psychological forces which affect consumer buying decisions. These psychological factors operate internally, but are often affected by social forces.
One of the three major categories of influences which affect the consumer buying decision process is social factors, and includes family influences, _________ groups, social classes, and culture.
reference
These are social factors. Our roles in society, our relationships, and society and culture affect our buying decisions. For example, upper-class Americans often prefer luxury cars such as Mercedes Benz to symbolize their status and income.
One of the three major categories of influences which affect consumer buying decision processes is ___________ forces, which include advertisers, product rating services, etc..
information
Informational forces affect consumers buying decisions by providing them with relevant views on products. Informational forces often tie in with social and psychological forces.
Products sold to organizational customers are called __________ products.
industrial
Industrial products are sold to business customers, as opposed to consumer products sold to consumers. Consumer goods are usually purchased for final consumption, whereas industrial products are purchased for resale or further production.
One of the big differences between organizational markets and consumer markets is in the demand for products. Organizational markets are based on _______ demand, where the demand for materials is based on the anticipated demand by consumers for the finished products.
derived
This is known as derived demand. The demand for industrial products results from the demand for consumer products. For example, a company that produces transistor radios buys the electronic parts to build the radios to sell to consumers. If sales for the radios drop, the manufacturer in turn cuts back on orders for parts.
When trying to gain a large market share quickly, a marketer will often engage in penetration _______.
pricing
Penetration pricing involves setting a price below the prices of competing brands and is used when the marketer is trying to gain market share quickly.
There are three bases, or variables, which are not used for consumer markets, but used exclusively for segmenting organizational markets. They are ________ Type and Size, and Buying Situation.
Customer
Customer Type, Customer Size, and Buying Situation are the three characteristics–they are used exclusively for organizational markets. Customer Types include producer, reseller, government, and institutional. Customer Size measures the purchasing power of buyers, whereas in consumer markets a firm typically looks at the number of buyers, not the purchasing power of each.
______ Situation is one of the bases used exclusively for segmenting organizational markets, and can be one of three types of situations.
Buying
The Buying Situation can be one of three types: new-task buying, straight rebuy, and modified rebuy. The decision making process for the firm usually entails different levels of involvement for these three types.
New-task buying is one of the three organizational Buying Situations, and is where an organization makes an _______ purchase of an item to be used to perform a new job or to solve a new problem.
initial
This is known as new-task buying, and usually involves the most complex decision-making process for the firm making the purchase. If the organizational buyer is satisfied with the product, the supplier may be able to sell the buyer large quantities of the product for a period of years, so new-task purchases are important to the seller.
A ______________ is one of the three organizational Buying Situations and is where a buyer purchases the same products routinely under the same terms of sale.
Straight Rebuy
This is known as a Straight Rebuy, and the buyer requires little information to make these purchases. It is a process used to purchase inexpensive, low-risk products, and alternative products or suppliers are not usually considered.
A ________ Rebuy is one of the three organizational Buying Situations, and is where a company changes the requirements for a new-task purchase or the requirements for a routinely purchased product are modified.
Modified
This is known as a Modified Rebuy. For example, an organizational buyer may decide to look for faster delivery or lower prices, and consider alternative suppliers. The decision process associated with a Modified Rebuy purchase is more complex than a Straight Rebuy, but less complex than a New-Task purchase.
The buying decision process for high-involvement consumer purchases is similar to that of ________ purchases by organizations (one of the three Buying Situations).
new-task
New-task purchases use a similar five-step process as high-involvement consumer purchases. Both require much research and information gathering, and evaluating alternatives.
Low-involvement consumer purchases involve a similar buying decision process as ________ rebuy purchases made by organizations (one of the three Buying Situations).
straight
Straight Rebuy purchases are routine purchases made by companies, just like low-involvement purchases are routine, low-risk purchases made by consumers. They involve a similar three-step processes.
There are five different categories of people who affect the decision making process in organizational purchases. ______ are responsible for selecting suppliers and actually negotiating the terms of purchase.
Buyers
The buyers are the ones who carry out the purchasing procedures. The four other categories are users, influencers, gatekeepers, and deciders.
Users are one of the five categories of people involved in the buying decision-making process in an organization, and are the ones who actually use the _______ being acquired.
product
The users are the ones who will use the products being acquired. The four other categories are buyers, influencers, gatekeepers, and deciders.
___________ are one of the five categories of people in an organization who affect the buying decision-making process, and are usually technical personnel, such as engineers, who help develop the specifications and evaluate alternative products.
Influencers
These people are known as the influencers. When the products being considered involve new, advanced technology, technical personnel are especially important influencers.
Gatekeepers are one of the five categories of people in an organization who affect the buying decision-making process, and are people such as secretaries and technical personnel who control the flow of purchase-related ___________ within the organization.
information
The Gatekeepers control the flow of information. The four other types of people are buyers, users, influencers, and deciders.
The Deciders are the people in an organization who make the buying decision, actually choosing the products and _______.
vendors
The Deciders are those individuals who make the final purchase decision. The other four types of individuals in an organization who affect the buying decision-making process are the buyers, users, influencers, and gatekeepers.
The Buying ______ is a word used to describe the group of people within an organization who are involved in making organizational purchase decisions, and includes five categories of people: users, influencers, buyers, deciders, and gatekeepers.
Center
All the people who participate in or influence the buying decision-making process are known as the Buying Center of an organization.