Notes from the Book - Exam 2 Marketing

Organizational buyers are divided up into 3 markets

• industrial

• reseller

• government

industrial firms

reprocess a product or service they buy before selling it again to the next year

resellers

wholesalers and retailers that buy physical products and resell them again without any reprocessing

government

federal, state, and local agencies that buy goods and services for the constituents they serve

Derived demand

based on expectations of future consumer demand

The side of the purchase involved in organizational buying is typically

much larger than that in consumer buying

For business firms, what is the buying objective?

Is usually to increase profits through reducing costs or increasing revenues

What is the necessary first step in marketing to organizations

Successful business marketers recognize that understanding a company’s buying objective

What is the organizational buying criteria

The objective attributes of the suppliers products and services and the capabilities of the supplier itself

What is supplier development

The deliberate effort by organizational buyers to build relationships that shape suppliers products, services, and capabilities to fit a buyers needs and those of its customers

Organizational buying is more likely to involved what

complex negotiations concerning delivery schedules, price, technical specifications, warranties, and claim policies

Buyer-seller relationships evolve into supply partnerships, what is a supply partnership

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

What is the primary buying function in an organization

Responsible for facilitating the selection and purchase of products and services for the organizations own use or resale to consumers

Individuals responsible for the selection and purchase of goods and services are typically

called purchasing managers or agents, procurement managers, or sourcing managers

Buying center: Users

Are the people in the organization who actually use the product or service such as a secretary who will use a new word processor

What is the first thing that organizational buyers depend on

Time supplier information that describes product availability, technical specifications,

What is the second thing that organizational buyers depend on

Reducing buyer order processing costs

Buying centers: Influencers

Affect the buying decision, usually by helping define the specifications for what is bought. The information technology manager would be a key influencer in the purchase of a new mainframe computer

Buying center: Buyers

They have formal authority and responsibility to select the supplier and negotiate the terms of the contract

Buying center: Deciders

Have the formal or informal power to select or approve the supplier that receives the contract. In routine orders the decider is usually the buyer or purchases it is more likely to be someone from R&D

Buying center: Gatekeepers

Control the flow of info in the buying center. Purchasing personnel, technical experts, and secretaries can all keep salespeople or info from reaching people performing the other for roles

New buy

Many people involved, the decision time is long, the problem definition is uncertain, the buying objective is good solution, the suppliers considered are new/present, and the buying influence is technical/operating personnel

Straight rebuy

The people involved is one, the decision time is short, the problem definition is well-defined, the buying objective is low-priced supplier, the suppliers considered are present, and the buying influence is purchasing agent

Modified rebuy

The people that are involved are two or three, the decision time is moderate, the problem definition is minor modifications, the buying objective is low-priced supplier, the suppliers considered is present, and the buying influence is purchasing agent and others

Product differentiation

This strategy involves a firm using different marketing mix actions, such as product features and advertising, to help consumers perceived the product as being different and better than competing products

Market segmentation leads to what

It leads to tangible marketing actions that can increase sales and profitability

What does market segmentation first stress

the importance of grouping people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase

What is the second thing market segmentation stresses

Needs and benefits must be related to specific marketing actions that the organization can take, such as providing a new product or offering a special promotion

A business firm segments its marketing so it can

respond more effectively to the wants of the groups of potential buyers and thus increase its sales and profits

Non-profit organizations also do what

segment the clients they serve so they can satisfy client needs more effectively while achieving the organizations goals

Market segments are what

the relatively homogeneous group of prospective buyers that result from the market segmentation process

Who benefits from e-marketplaces

Small businesses and sellers.

What is the key to successful product differentiation and market segmentation strategies

Is finding the ideal balance between satisfying a customers individual wants and achieving organizational synergy

What is organizational synergy

the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently

What is the point of a market-product grid

This tells pillow manufacturers the relative importance of each of the three market segments, which is critical info when scheduling production

What are the three specific segmentation strategies

1. One product and multiple market segments

2. multiple products and multiple market segments

3. segments of one, or mass customization

An example of single offering for multiple segments include what

Books; the twilight saga, divergent, hunger games.

An example of multiple products aimed at multiple market segments are

Ford Motor Company. It has different lines of cars: SUVs, trucks, crossovers

What is captured by the financial relevance of customer patronage

the concept of customer lifetime value

Inconsistency is more of a problem in

services than it is with tangible goods

Inseparability means that

the consumer cannot distinguish the service provider from the service itself

AA major characteristic of business products is that their sales are often the result of

dervied demand, that is sales of business products frequently result (or are derived) from the sale of consumer products

Toyota car is what

A consumer product, as consumer demand for Toyota cars (a consumer product) increases the company may increase its demand for paint spraying equipment (business product)

Business products may be classified as what

components or support products

continuous innovation

Requires no new learning by consumers

New improved shaver, detergent, and toothpaste

Market strategy: gain consumer awareness and wide distribution

dynamically continuous innovation

Disrupts consumers normal route but does not require totally new learning

Ex: Electric toothbrush, LED HDTVs, and smartphones

Marketing strategy: Advertise points of difference and benefits to consumers

Discontinuous innovation

Requires new learning and consumption patterns by consumers

Ex: Wireless router, digital video, recorder, and electric car

Marketing strategy: educate consumers through product trial and personal selling

Organizational product levels, which is the lowest level

Product line extension, the one that involves the least risk. This is an incremental improvement of an existing product line the company already sells

the second level is what

Brand extension, involving putting an established brand name on a new product in an unfamiliar market

Ex: It puts its brand name on a line of frozen dinners called Colgates kitchen entrees

the third and highest level is what

radical invention, a truly revolutionary new product that creates value for the consumer

Effective new product development in firms exists at all three levels

What are the three steps you need to identify in the protocol process

1. well defined target market

2. specific customers needs, wants, and preferences

3. what the product will ne and do to satisfy customers

what is crowdfunding

is a way to gather an online community of supporters to financially rally around a specific project that is unlikely to get resources from traditional sources such as banks or venture capital firms

concept tests

external evaluations with consumers that consist of preliminary testing of a new product rather than an actual finished product

Business analysis

Is the last checkpoint before significant resources are invested to create a prototype—a full scale operating model of the product or service

Many firms obtain ideas

externally using open innovation

how do internal and external screening and evaluation approaches differ?

Internal:

Company employees evaluate the technical feasibility of new-product ideas to determine whether they meet the objectives defined in the new product strategy development stage

for services: employees are assessed to determine whether they have the commitment and skills to meet customer expectations and sustain customer loyalty

how do internal and external screening and evaluation approaches differ?

External:

evaluation consists of preliminary concept testing of the new product idea (not the actual product itself) using written descriptions, sketches, mockups, or promotional literature with consumers