Intro to Marketing Final Exam

The Five Step Marketing Process

1. Understand the marketplace and customer needs/wants

2. Design a customer-driven marketing strategy

3. Construct and integrated marketing program that delivers superior value

4. Engage customers, build profitable relationships and create customer delight

5. Capture value from customers to create profits and customer equity

Needs

A state of felt deprivation (basic physiological needs)

Wants

Needs shaped by cultural and individual personality

Demands

Wants backed by buying power

Production Concept

Focus on low labor costs, mass distribution, and availability at low prices

Product Concept

Focus on product quality and features

Selling Concept

Aggressive selling/promotion

Marketing Concept

Know and satisfy target market needs better than competitors

Societal Marketing Concept

Balance company profits, consumer wants, and society’s interests

Sustainable Marketing

Meets current and future needs of customers, company, and society

Customer-Driving Marketing

Understand customers’ needs before they do

Strategic Planning

Adapting the firm to take advantage of changing marketing opportunities. Occurs at the corporate, business-unit, and market levels, deals with long-term objectives, and focuses on external and internal environment

BCG Matrix

Market attractiveness measured by market growth rate, relative market share measures competitive strength of SBU.

Time consuming, difficult to implement

• Stars: high growth, high market share, require heavy investment, should mature into cash cows

• Question Marks: high growth, low market share, riskiest; invest or cut, consume cash w/out guaranteed returns

• Cash Cows: low growth, high market share, dominant in mature market, generate more cash than they consume and can fund stars and question marks

• Dogs: low growth, low market share

Mission Statement

Marketing-oriented mission statement should on serving customer needs, not just what is sold

Microenvironment

Internal/close, the company itself, suppliers, marketing intermediaries, competitors, publics, and customers

Macroenvironment

External/broad, demographic, economic, social, natural, technological, political/legal, and cultural forces

Marketing Information Systems (MIS)

Consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers

4 Steps:

1. Assessing information needs

2. Developing marketing intelligence

3. Developing information (internal data, marketing research, competitive intelligence)

4. Making marketing decisions / distributing and using information

• Old internal data become outdated quickly

Marketing Research

The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

4 Steps:

1. Defining the problem and research objectives

2. Developing the research plan (choosing approach; observational, survey, experimental)

3. Implementing the research plan (collecting and analyzing data)

4. Interpreting and reporting the findings

Observational Research

Gathering data by observing people, actions, and situations

Survey Research

Most flexible but can be biased

Experimental Research

Testing cause-and-effect by controlling variables. Most rigorous for casual data

Focus Groups

Small discussion groups for exploratory qualitative insights

Factors Influencing Consumer Behavior

• Cultural

  • Culture: Learned values and behaviors from family

  • Subculture: Shared experiences, groups sharing value systems (nationalities, religions, geographic regions)

  • Social Class: Relatively permanent ordered divisions

• Social: Reference groups, family, roles, and status

• Personal: Age, life-cycle stage, occupation, economic situation, lifestyle, and personality

• Psychological: Motivation, perception, learning, beliefs, and attitudes

Buyer Decision Process 5 Stages

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase Decision

5. Post-Purchase Behavior

Poor Service to Disadvantaged Consumers (Consumer Rights Issues)

• Redlining: Refusing service in certain neighborhoods

• Lack of accessible stores in low-income areas

• Predatory lending

• Food Deserts: Limited healthy foods access

• Planned Obsolescence: Making products physically obsolete quickly

• Perceived Obsolescence: Making products seem outdated through style changes

Solutions; community investment programs, regulation, fair pricing, local outreach

Market Segmentation Variables

• Geographic

• Demographic: Age, gender, income, occupation, education, social class

• Psychographic: Lifestyle, values, personality

• Behavioral: Usage rate, brand loyalty, benefits sought, occasions

5 Characteristics of Effective Market Segments (MASDA)

• Measurable: Size, purchasing power, and profiles

• Accessible: Can be effectively reached and served

• Substantial: Large and profitable enough

• Differentiable: Responds differently to marketing mix elements that other segments

• Actionable: Effective programs can be designed to attract and serve the segment

Targeting Strategies

• Undifferentiated (Mass) Marketing: One marketing mix for the whole market, modern marketers have doubts about its effectiveness

• Differentiated Marketing: Different marketing mixes for different segments, higher cost but more targeted

• Concentrated (Niche) Marketing: Focus on one or a few small segments, good for limited resources

• Micromarketing: Tailoring products/programs to individuals or local customer groups

Convenience Product

Bought frequently with minimal effort

Shopping Product

Compared on price, quality, and style before purchase

Specialty Product

Unique characteristics; buyers will make special efforts to purchase without comparison shopping

Unsought Product

Ex: Life insurance or funeral service

Industrial/Capital Product

Used in production of other goods

Social Marketing

Marketing ideas that firms believe in

Idea Marketing

Promoting concepts, causes, or philosophies

Place Marketing

Attracting people to places

Person Marketing

Marketing individuals like celebrities

Organization Marketing

Building image of an organization

New Product Development Process 8 Stages

1. Idea Generation: internal sources, external: customers, competitors, distributors, suppliers, crowdsourcing

2. Idea Screening: Reducing the number of ideas

3. Concept Development and Testing

4. Marketing Strategy Development

5. Business Analysis

6. Product Development

7. Test Marketing

8. Commercialization

Reasons Products Fail

Priced too high, poorly advertised, launched at the wrong time, incorrectly positioned

Product Life Cycle Stages

• Introduction: High costs, low sales, losses, heavy promotion, slow growth

• Growth: Rising sales, profits start, competitors enter, improve quality, expand distribution

• Maturity: Slowing growth, most competitive stage, profit stabilizes then falls, most products here

• Decline: Sales/profits fall, consider discontinuing or harvesting

Price

The only element of the marketing mix that produces revenue, the other 3 P’s are costs

Price Ceiling

The maximum price, set by consumer perceptions of value, demand side

Price Floor

The minimum price, set by product costs, no profits below price floor, supply side

Cost-Based Pricing

Set prices based on expenses involved in producing, distributing, and selling + fair rate of return

Cost-Plus Pricing

Adds a standard markup to the cost of the product

Value-Based Pricing

Sets price based on buyers’ perceptions of value, not sellers’ cost

Good Value Pricing

Offering the right combination of quality and service at a fair price

Value-Added Pricing

Attaching value-adding features to justify higher price

Competition-Based Pricing

Setting prices based on competitors’ pricing

Break-Even Pricing

Setting a price to cover total costs at a given sales volume

Unit Cost =

Variable cost + (fixed costs / unit sales)

Markup Price =

Unit cost / (1 - desired return on sales)

ROI Price =

Price where (unit sales x (price - unit cost) - fixed costs) / investment = desired ROI

Break-Even Volume =

Fixed costs / (price - variable costs)

Break-Even Sales =

Break-even volume x price

Markup Pricing (based on selling price) =

Markup % = Markup amount / selling price

Selling price = cost / (1 - markup%)

Manufacturer Price =

Consumer price x (1 - retailer markup) x (1 - wholesaler markup)

Value Delivery Network

A company, its suppliers, distributors, and ultimately customers who partner to improve the performance of the entire system

Marketing Channel (Distribution Channel)

A set of interdependent organizations that help make a product or service available for use by consumers or business users

Marketing Intermediary

A member of the marketing channel that connects producers to end user, they do not include raw material suppliers

4 Types of Marketing Intermediaries

• Retailers: Sell directly to final consumers

• Wholesalers: Buy from producers and sell to retailers or other businesses; do not sell to final consumers

• Brokers/Agents: Represent buyers or sellers; facilitate transactions without taking title to goods

• Distributors: Similar to wholesalers; often exclusive to specific brands/territories

Key Functions Performed by Marketing Channel Members

• Information gathering and dissemination

• Promotion

• Contact

• Matching

• Negotiation

• Physical Distribution

• Financing

• Risk Taking

• (Not Production)

Corporate Vertical Marketing Systems (VMS)

One company owns and controls all levels of the channel, provides full control over product sales

Contractual VMS

Independent firms join together through contracts (franchises, retailer cooperatives, voluntary chains)

Administered VMS

Leadership by one dominant channel member through size and power, not ownership

Specialty Store

Narrow product line with deep assortment

Department Store

Wide variety of product lines

Supermarket

Large, low-cost, self-service, mainly food and household products

Convenience Store

Limited selection, long hours, neighborhood location

Discount Store

Standard merchandise at lower prices

• Big box like Walmart

• Small box like Dollar Store

Off-Price Retailer

Irregular merchandise at lower prices, includes factory outlets and warehouse clubs

Category Killer

Giant specialty store that carries deep assortment in category (like Best Buy)

Retailer Cooperative

A group of independent retailers that band together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion

Voluntary Chain

A wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising

Corporate Chain

Two or more outlets that are commonly owned and controlled

Omnichannel Marketing

Creates a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping

Marketing Channel Management Definition and 4 Key Responsibilities

The process of selecting, managing, and motivating individual channel members and evaluating their performance over time

1. Selecting channel members

2. Managing and motivating channel members

3. Evaluating channel member performance

4. Modifying channel arrangements

The 5 Elements of the Promotion Mix

1. Advertising

2. Personal Selling

3. Sales Promotion (short-term incentives)

4. Public Relations (PR)

5. Direct and Digital Marketing

Integrated Marketing Communications (IMC)

Carefully integrates and coordinates the company’s many communication channels to deliver a consistent, clear, and compelling message about the organization and it's products

New Marketing Communications Model

Strategies are more targeted, social, and engaging (not mass-media focused)

Moving away from mass-media, large segments, and print ads

Moving toward targeted, social, engaging, and digital approaches

Sales Force Structures

• Territorial

• Product

• Customer (Market)

• Complex (mix of the above)

Types of Salespeople

• Order Taker

• Order Getter (Creative Selling): Seek out customers to persuade them, find new or upgrade existing accounts

• Social Selling: Use social media

• Relationship Builder

Value Proposition

The set of benefits the company promises to deliver to customers to satisfy their needs

Customer Value

Benefits vs. costs

Customer Satisfaction

Perceived performance vs. expectations

Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place in target customers’ minds relative to competing products

Product Levels

1. Core customer value - the fundamental benefit/service the customer is buying

2. Actual product - brand name, features, quality level, design, packaging

3. Augmented product - warranty, delivery, after-sale service, installation

Direct Marketing Channel

Producer sells directly to consumers - guarantees full control over product sales