Define: Cognitive Component
A component of attitude that reflects what a person believes to be true.
Define: Affective Component
A component of attitude that reflects what a person feels about the issue at hand - his or her like or dislike of something.
Define: Behavioral Component
A component of attitude that comprises the actions a person takes with regard to the issue at hand.
In what ways is the business market different from the consumer market?
Doesn't want to just purchase goods, but practice supplier development
Describe an organizational buying center, and contrast that with a purchasing department.
Buying center: Knowledgeable participants in an organizational buying action that share in the goals and rewards resulting from the decision.
Distinguish between the 3 types of buying situations (new task, straight rebuy, modified rebuy).
New task buying
first time or unique purchase situation requiring considerable effort on the decision maker's part.
Straight rebuy
routine, low-involvement purchases.
Modified rebuy
same product from new supplier or
slightly different product from existing supplier.
Distinguish among derived demand, joint demand, fluctuating demand and inelastic demand.
Derived: demand for business product that relies on the demand for a consumer product (ATMs)
Fluctuating: Anticipation of changes in consumer demand creates large changes in industrial demand.
Joint: demand for one business product is related to demand for another product (i.e... Alloy metals).
Inelastic: price increase has minor impact on product's final cost.
What is a value chain?
The series of value-adding activities, linked together, to produce goods and services to satisfy client needs.
Compare and contrast four common bases for labeling a business market segment.
Geographic
Demographic
Usage Level
Profitability
Describe three issues supporting the idea that dealing with business buyers is more complex than dealing with consumer buyers.
different buying processes exist that affect business purchases.
organizational buying can be handled by committees, causing purchase delay.
multiple vendors may be used to protect customer from shortages.
buyers can be influenced by both rational considerations and emotional needs
Define: Request for Proposals (RFP)
A process through which buying organizations invite alternative suppliers to big on supplying their required components
Define: Gatekeeper
The buying center participant who controls information or access to decision makers and inflluences
Distinguish between the benefits and challenges of segmenting a market?
Benefits: Concentrate marketing resources on potential buyers you have the best chance to win.
Challenges: Too many small segments will lead to confusion. A segment that is too large will diminish a competitive advantage.
Evaluate whether a market segment is viable given the five criteria covered in class.
The goal is to find segments that are:
Differentiable
Identifiable
Accessible
Responsive
Significant
Compare and contrast six common bases for labeling a consumer market segment (geographic, demographic, psychographic, behavioral, profitability, and benefits sought).
Benefits Sought: Ideally, the starting point...comes closest to correlating with what will drive buyers' decisions. Based on attributes customers are seeking from a particular product class.
Geographic: Market is divided in geographic units based on physical proximity.
Demographic: Divides market by personal tangible variables such as age, gender, family size, income, occupation, education, religion, nationality, and race.
Psychographic: relates to how people think, feel, and behave. Psychographic characteristics include social class, lifestyle, opinions, and personality characteristics.
Behavioral: Divides market based on consumer's uses, knowledge, or attitudes toward product. Describes how consumers interact with the product.
Profitability
What is the difference between a product benefit and a product feature?
Product Feature: Focus is on the product. Features are represented by product characteristics or properties.
Example:
VISA is accepted in thousands of locations.
Product Benefit: Focus is on the customer.
Benefits are represented by the "job" being done.
Example:
VISA makes it easier for you to make purchases
Distinguish among undifferentiated, concentrated, and differentiated targeting approaches.
Undifferentiated: A marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone.
Concentrated: Selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs
Differentiated: A strategy through which a firm targets several market segments with a different offering for each
Distinguish between marketing research and a marketing information system.
Research: Systematic process for uncovering key knowledge needed for a specific marketing management decision.
Provided based on special requests.
Information: People and processes that provide needed information to marketing decision makers on an ongoing basis.
Once designed, automatically provided
Distinguish between primary and secondary data.
Primary: Data collected to address specific research needs.
Secondary: Pieces of info that have already been collected from other sources and are readily available.y
Distinguish among the different types of formal basic research. For which type of research purpose is each best suited?
Direct Observation
Experimentation
Analysis of Purchase Data
Survey Research
Focus Groups
Individual interviews
Describe two basic ways for identifying customer preferences (concept tests and conjoint analysis). You should be able to describe the method and how it can help marketers.
Concept tests: Presents product idea and then, through a survey or interview, gauges level of interest
Conjoint: To work, respondents are asked to provide preference judgments for different product attributes, and then mathematical analysis is used to "tease out" the individual's underlying value system.
Describe the market research process.
Define the problem
Develop the research plan
Collect and analyze the data
Develop findings and recommendations
Conduct follow-up
Define: Marketing
ongoing process
creating, communicating, and delivering customer-valued offerings so that exchanges are created and the objectives of customers, the organization, partners and society are satisfied.
Marketing Process
UNDERSTAND the company, customers, competition
PLAN objetives, target markets, etc
IMPLEMENT product, price, promotion, distribution
FOLLOW UP
How does marketing add value to a company?
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Distinguish between a 'market-driven' and 'market-driving' approach
Market Driven (Classic Approach):
-"Give customer what they want"
-Matches well with markets containing products with high buyer familiarity
Market Driving (Alternative Approach)
-"Helps customers learn what they want"
-Matches well with rapidly evolving markets with growing number of novel products
-Assumes buyers can learn and evolve with new value concepts
What is value? What is a value proposition?
Value: Reflects the relationship of benefits to costs, or what the consumer GETS for what he or she GIVES
Value Proposition: A statement that summarizes why a consumer should buy a product or use a service.
What is a market-oriented approach? What are its limitations?
A business reacts to what customers want. The decisions taken are based around information about customers' needs and wants, rather than what the business thinks is right for the customer.
Limitations: development of truly breakthrough products can be difficult. Market opportunities can pass during the over analysis of customer needs.
Define utility, and be able to describe spatial utility, knowledge utility, value utility, temporal utility, and ownership utility.
Utility: total satisfaction received from consuming a good or service
Spatial - (overcoming the geographic spread between product & distribution points)
Knowledge - (providing information that aids buyers)
Value - (selling perceived benefits that exceed perceived costs)
Temporal - (making the product available when the buyer wants it)
Ownership - (transferring ownership to ultimate buyers)
Why is customer satisfaction important to marketers?
Value of Customers: Customer satisfaction -> Customer loyalty -> Lifetime value of customer
Describe effective ways for measuring customer satisfaction (we covered 8).
Pre-Experience: Mystery shops, Involve customers in business decision making, Listen to frontline personnel
Post-Experience: Satisfaction scales, Customer feed-back (especially complaints), Intent to refer, Product penetration, Price sensitivity
Identify and describe the four tactical elements of the marketing mix.
Product (quality, style, packaging, features)
Price (discounts, payment period, list price)
Place (eg distribution, transportation, availabity)
Promotion (advertising, promotion, publicity)
Controllable set of activities that the firm uses to respond to the wants of its target markets.
Distinguish among the elements within the marketing macro-environment and micro-environment.
Micro-environment: Forces close to a company that have ongoing influence on how a company serves its customers. Management has some control.
-Owners, employees, suppliers, collaborators, channel intermediaries (independent organizations that help deliver the company's product to buyers)
Macro-environment: Large external forces that impact an organization's decisions. Management has very little control.
-Technology, resources, legal/political, social cultural (beliefs, values), economic, demographic, physical (environmental)
Define: Services
Intangible costumer benefits that are produced by people or machines and cannot be separated from the producer.
Define: Ideas
Thoughts, opinions, philosophies that can be marketed.
B2C (Business to Consumer) Marketing
The process in which businesses sell to consumers
B2B (Business to Business) Marketing
The process of selling merchandise or services from one business to another
C2C Marketing
The process in which consumers sell to other consumers
Define: Value Co-Creation
A method of providing additional value by offering the opportunity for consumers to collaborate in creating the product or service.
Define: Customer Relationship Management (CRM)
A business philosophy and set of strategies that focus on identifying and building loyalty among the firm's most valued customers.
Describe why a firm might want to pursue international markets.
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Describe options companies have for expanding overseas (indirect exporting, direct exporting, etc.)
Indirect exporting:
Direct exporting:
Foreign licensing:
Joint venture:
Direct Ownership:
Hybrids:
Which potential pitfalls exist for companies selling into world markets?
Insufficient Research
Poor Follow-Up
One Marketing Formula for All
Forcing Adoption
Describe how the following terms relate to international trade: WTO, GATT, Dumping.
WTO: (World Trade Organization) Replaced GATT; an established institution instead of simply an agreement; represents the only international organization that deals with the global rules of trade among nations
GATT: (General Agreement on Tariffs and Trade) Organization established to lower trade barriers, such as high tariffs on imported goods and restrictions on the number and types of imported products that inhibited the free flow of goods across borders.
Dumping: The practice of selling a good in a foreign market at a price that is lower than its domestic price or below its cost.
Define: Trade Deficit
Results when a country imports more goods than it exports
Define: Trade Surplus
When a country exports more good than it imports
Define: Gross Domestic Product (GDP)
Defined as the market value of the goods and services produced by the country in a year; the most widely used standardized measure of output
Define: Gross National Income (GNI)
Consists of GDP plus the net income earned from investments abroad
Define: Infrastructure
The basic facilities, services and installations needed for a society to function, such as transportation and communication systems, water and power lines, and public institutions.
Define: Tariff
A tax on a good imported into a country
Define: Quota
The maximum quantity of a product that may be brought into a country during a specified period of time
Define: Trade Agreements
Intergovernmental agreements designed to manage and promote trade activities for specific regions
Define: Trading Bloc
Consists of those countries that have signed a particular trade agreement
Define: Strategic Alliance
A collaborative relationship between independent firms but NOT an equity partnership (they don't invest in each other)
Define: Direct Investment
When a firm maintains 100% ownership
Global Entry Strategy (Least Risk to Most Risk & Least Control to Most Control)
Export
Franchising
Strategic Alliance
Joint Venture
Direct Investment
List and describe 7 steps within the marketing planning process.
1. Define your business
2. Make preliminary identification of market opportunities (Identify potential customer groups)
3. Complete market analysis (company, customers, competitors)
4. Determine objectives (should be quantifiable & attached to a timeline)
5. Develop business case
6. Finalize marketing mix and implement
7. Follow-up
What is an SBU? Which key strategic decision areas are critical to the success of an SBU?
Strategic Business Unit - Defined as a part of the firm that can be managed separately for marketing purposes - almost like a free standing business within a business.
Decision Areas:
-Targeted customers the SBU seeks to serve.
-The products and/or services the SBU is able to provide.
-The SBU's value-adding competencies not provided by others in the market chain.
Define and create a simple mission statement.
A mission statement is a brief general description defining the basic needs the SBU hopes to fill in the marketplace.
Distinguish among the four different SWOT attributes.
Internal: Strengths, Weaknesses
External: Opportunities, Threats
Identify characteristics of a strong objective and be able to write a sample marketing objective.
Should be quantifiable and attached to a timeline.
Ex. Ensure awareness scores for new Brad Pitt movie reach 85% before premiere.
Distinguish among the qualitative and quantitative forecasting techniques covered in class.
Qualitative: Uses judgmental opinion & insight (survey of buyers' intentions, industry expert opinion)
Quantitative: Uses historical data to calculate trends (market tests, statistical demand analysis)
Define: Marketing Strategy
A firm's target market, marketing mix, and method of obtaining a sustainable competitive advantage
Define: Sustainable Competitive Advantage
Something the firm can persistently do better than its competitors
The Marketing Plan
Planning Phase:
-Business Mission and Objectives
-Situation Analysis (SWOT)
Implementation Phase:
-Identify Opportunities (Segmentation, Targeting Positioning)
- Implement Marketing Mix (4 Ps)
Control Phase:
- Evaluate performance
Define: Sustainable Competitive Advantage
Something the firm can persistently do better than its competitors
Define: Situation Analysis
Second step in a marketing plan; uses a SWOT analysis
Define: STP
The process of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits
Define: Target Marketing
The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market
Define: Market Positioning
Involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products
What is a competitor?
Anyone who competes for customers, resources, revenues, and/or future opportunities with you
Distinguish between a market and an industry.
A "market" is a mechanism for buyers and sellers to exchange goods and services,
while an "industry" is a collection of companies that compete with one
another.
Describe the 5 competitive forces that Porter said impacts an industry's competitive intensity
Threat of Entry
Threat of Substitute Products
Bargaining Power of Buyers
Bargaining Power of Suppliers
Rivalry Among Firms
What is a sustainable competitive advantage?
Something the firm can persistently do better than its competitors
-Reputation for quality
-Customer service
-Retention of strong mgmt
-Low cost production
Distinguish between the three standard business strategies covered in class.
Cost Leadership
-Reduces bargaining power of suppliers/buyers
-Makes substitutes less attractive
Differentiation
-Reduces bargaining power of buyers
-Makes substitutes less attractive
-Reduces rivalry
Focus
-Makes substitutes less attractive
-Reduces rivalry
Define a strategic alliance and explain why collaborators are often sought.
Strategic Alliance: Any arrangement in which two or more firms combine resources outside of the market in order to accomplish a particular task or set of tasks.
Common Reasons Supporting Collaboration: Co-marketing Alliances, Product Development Alliances, Global Distribution Alliances, Product Development & Foreign Market Access
Describe three different ways that these alliances can be formed.
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Define: Demographics
Information about the characteristics of human populations and segments, especially those used to identify consumer markets such as by age, gender, income and education.
Describe the four broad influences (marketing mix influences, psychological influences, situational influences, and socio-cultural influences) on consumer buyer behavior.
Marketing Mix influences - marketers try to influence consumers by presenting an appealing marketing mix. Try to craft a combination of product, price, promotion, and distribution to meet the target audience's needs.
Psychological influences are internal influences, or influences that are within us.
Situational influences describe the circumstances under which buying decisions are made.
Socio-cultural influences are based on the influential direct and indirect relationships individuals have with other people.
Name and describe the psychological influences on consumer behavior.
Self-Concept (Age, Occupation)
Motivations
Perceptions
Beliefs & Attitudes
Lifestyles
Learning Patterns (Low Involvement, High Involvement)
Describe 5 socio-cultural influences on consumer behavior.
Culture
Sub-culture
Family
Reference Groups (one or more people whom an individual uses as a basis for comparison regarding beliefs, feelings and behaviors)
Social Class
Project how marketing strategies can be influenced by level of learning involvement.
High Involvement:
- Low emphasis on price. High price may mean high quality.
- Buyers are interested in marketing messages.
- Less intensive distribution required.
Low Involvement:
- High emphasis on price. Consistent low price can hold customers.
- Buyers not interested in marketing messages. Communications need to be clear and bold.
- Convenience is an important consideration in designing distribution channels.
Contrast the two different consumer purchase decision processes we covered in class. How do the steps impact the development of a marketing strategy?
Psychological vs Socio-cultural
Maslow's Hierarchy of Needs
Self-Actualization, Esteem, Social, Safety, Physiological
Define: Internal Locus of Control
Refers to when consumers believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities
Define: External Locus of Control
Refers to when consumers believe that fate or other external factors control all outcomes.