Marketing

What is the consumer decision process

Need recognition → Information Search → Alternative Evaluation → Purchase & consumption → post-purchase

What factors are consumer decisions based on

Sociology, Psychology, Chemistry, and Neuro-science

What are the 2 types of needs? Define them?

• Functional

  • related to the performance of the product or service

• Psychological

  • relates to the personal satisfaction with the product or service

Two types of searches for information? Define them

• Internal

  • The buyer examines his or her own memory and knowledge about the product or service gathered through past experience.

• External

  • The buyer seeks information outside his or her personal knowledge base to help the buying decision

What factors affect the consumers’ search processes

Cost and benefit

Define locus of control and the two types

How much control people think they have over the outcomes of various activities

• Internal—people believe they have some control over the outcomes of their actions, so they engage in more search activities

• External—people believe that fate, luck, karma or the universe controls all outcomes … so why bother searching

What are the 5 types of risk that can delay or discourage a purchase?

Performance risk, Financial risk, Social risk, Physiological or Safety risk, and psychological risk

Define performance risk?

Involves the perceived inherent in a poorly performing product or service

Define financial risk?

associated with monetary outlay and includes the initial cost of the purchase as well as the costs of using the item or service

Define social risk?

involves the fears that consumers suffer when they worry others might not regard their purchases positively

Define physiological (or safety risk) risk

refers to the fear of an actual harm should the product not perform properly

Define psychological risk?

are those risks associated with the way people will feel if the product or service does not convey the right image

What are the attribute sets?

• Universal set

  • Include all possible choices for a product category

• Retrieval set

  • The brands that can be readily brought forth from memory. This is a subset of the universal set

• Evoked set

  • Alternative brands that the consumer states they would consider when making a purchasing decision

What are the types of elvauation techniques/criteria

• Evaluation criteria

  • Consists of a set of salient, or important, attributes about a particular product

• Determinant attributes

  • are product features that are important to the buyer and on which competing brands or stores are perceived to differ

• Consumer decision rule

  • a set of criteria that consumers use consciously or subconsciously to quickly and efficiently select among several alternatives

What are the two consumer decision models?

• Compensatory Model: Considering all attributes

• Non-compensatory Model: Considering one characteristic

What are the types of choice architechure?

• Impulse products

  • products that are purchased without planning

• Nudge

  • is one element of the choice architechure that alters behavior in a predictable wayarchitecture

• Default

  • “no-action” condition by imposing a choice on a person who fails to make a decision or does not actively opt for a different alternative

What are retail incentives?

Trying to get the consumer to by the product from you, like offering price match, easy returns, or free shipping

Define conversion rates

the measure of how well sellers have converted purchase intentions into purchases

How to increase conversion rates?

• Reduce real or virtual abandoned carts

• Expand product line

• Enhance customer service

Why is the post purchase important?

Refers to real customers instead of potential customers. Marketers hope to create repeat customers.

What are possible post-purchase outcomes?

• Customer satisfaction

• Post-purchase cognitive dissonance

• Customer loyalty or disloyalty

How to ensure post purchase satisfaction?

• Build realistic expectations

• Demonstrate correct product use

• Stand behind product with a money-back guarantee

• Encourage customer feedback

Define post-purchase dissonance

AKA buyer’s remorse

What leads to post-purchase cognitive dissonance?

Expensive, infrequently purchased, Do not work as intended, Associated with high levels of risk

How do firms create loyal customers?

CRM programs

How many firms does a loyal customer have in their evoked set?

One

Maslow’s hierarchy of needs?

Physiological needs → Safety needs → Love needs → Esteem needs → Self-actualization

What is an attitude, and what are the components?

Psychological factor: A person’s enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea

• Cognitive

  • Reflects our belief system or what we believe to be true

• Affective

  • Involves emotions, or what we feel about the issue at hand, including our liking or dislike of something

• Behavioral

  • Pertains to the actions we undertake based on what we know and feel

Define Perception

Psychological factor: the process by which we select, organize, and interpret information to form a meaningful picture of the world

Define how learning and memory affect the decision-making process

• Learning

  • Refers to the change in a person’s thought process or behavior that arises from an experience and takes place throughout the consumer decision process. Learning affects both attitudes and perceptions

• Memory

  • involves encoding, storage, and retireval

Define how lifestyle is a part of the consumer decision-making process

Psychological factor: refers to the way consumers spend their time and money to live

• Involve decisions in spending time and money

• Actual vs perceived lifestyle are different

How does family affect the consumer decision-making process?

Social factor: Families often make buying decisions together

How are reference groups a part of the consumer decision-making process?

Social Factor: one or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

• Family

• Friends

• Coworkers

• Famous people

What do social groups provide?

They provide information, rewards, and self-image

How is culture a part of the consumer decision-making process?

Social factor: the shared meanings, beliefs, morals, values, and customs of a group of people with similar heritage (i.e. American culture, European Culture, etc)

What are the components of culture that members share?

Beliefs, values, and customs

What are types of subcultures?

Geography, ethnicity, Religion, Nationality, and occupation

What are the situational factors?

Purchase situation, Sensory situation, and temporal state

How does temporal state affect the decision-making process

Often, the time of day and the type of person a consumer is affect the level of appeal in a purchasing situation

What are the types of buying decisions depending on the level of involvement?

Extended problem solving and Limited problem solving (including impulse purchases and habitual decision-making)

What are the components in the formal country market analysis?

Economic analysis → Infrastructure & Tech Analysis → Government actions → and sociocultural analysis

Name the metrics discussed in class to evaluate an economic environment

• Trade deficit or surplus

• Gross domestic product

• Gross national Income

• Purchasing power parity (PPP)

Define GDP

Gross domestic product

• Most widely used metric. Market value of all goods and services produced by a country in a year

Define GNI

Gross national income

• This consists of GDP plus the net income earned from investments abroad minus any payments made to nonresidents who contribute to the domestic economy

Define PPP

Purchasing power parity

• Used to assess the relative economic buying power among nations. If exchange rates are equal between two countries, the cost of the item should be the same in those two countries

  • Big Mac Index

What countries are in BRIC(S) and what are their political systems and economies like?

Brazil

• Democratic and welcomes foreign investment

Russia

• Many conflicts and wild upturns and downturns

India

• Highly skilled population in technical fields. Fluent in English.

China

• Known for its thriving e-commerce industry, where over 55% of global online sales occur.

  • Downside —Unequal economic distribution connected to government policies

  • Rapidly aging population

Define real income

money earned that has been adjusted for inflation

Define purchasing power

Money’s ability to buy goods and services

Define inflation and its relationship with purchasing power and real income

Inflation causes the prices of goods and services to go up lowering real income and purchasing power

Define infustructure

Defines as basic facilities, services, and installations needed for a community or society to function, such as transportation and communications systems, water and power lines, and public institutions such as schools, post offices and prisons

What are the key elements of infustructure?

• Transportation

  • Affects the supply chain

• Distribution Channels

  • Impacts supply chain, revenues, and profits

• Communication

  • Advertising/marketing mix

• Commerce

  • How we go to market to deliver value to consumers

If the value of the U.S. dollar goes up compared to other currencies, what happens to international trade

U.S. businesses and consumers will buy more imports, but since the dollar is worth more, exports will go down

Define exchange control

The control of the value of one currency compared to others

Define a trade agreement and a trade bloc

Agreement: Intergovernmental agreement designed to manage trade
Bloc: consists of countries in a particular trade agreement

What portion of international trade is from RTAs? (regional trade agreements)

more than half

When was the US-Mexico-Canada trade agreement made, and what are its highlights?

2020 and protected US workers and improved rules for many products

What are the levels to understanding another culture?

• Visible artificats

• Underlying values

What are Hofstede’s cultural dimensions?

Power Distance, uncertainty avoidance, Individualism, Masculinity, Time orientation, and indulgence

Define Masculinity in the context of Hofstede’s cultural dimensions

the extent to which dominant values are male-oriented. A lower masculinity ranking indicates that men and women are treated equally in all aspects of society

Define time orientation

How long does the culture wait before expecting results

What are the entry strategies in order of risk?

Exporting, Franchising, strategic alliance, joint venture, and Direct Investment

Define strategic alliance

A collaboration between independent firms that does not create an equity partnership

Define joint venture

When a firm entering a market pools it resources with those of a local firm

What are the global product or service strategies?

Same product or service (Glocalization), Similar product or service with minor adaptations, totally new product or service

What are factors influence global pricing strategies?

Tariffs, Quotas, Anti-dumping laws, currency exchange policies, and competitive factors

What are the steps in the STP process

Segmentation Steps (1) Establish strategy or objectives → (2) Use Segmentation Methods

Targeting Steps (3) Evaluate segment attractiveness. (4) Select target market

Positioning Step (5) Identify & develop position strategy

What must the strategies and objectives be consistent with

Mission and objectives and SWOT

What are the segmentation methods

• Geographic (Chocolate vs banana from class)

• Demographic

• Psychographic

• Benefit

• Behavioral

What is the most common segmentation stragegy?

Demographic Segmentation

Define psychographic segentation

Segmentation that delves into how consumers describe themselves

What are the components of psychographic segmentation?

Self-values (self-worth), Self-concept (mental picture of youself), and lifestyle (outward enactment of these views through behavior

Define benefit segmentation

groups customers based on the benefits they derive from products (Low cal, Low fat, no keto example)

Define behavioral segmentation and its types

Occasion segmentation

• Based on when a product or service is purchased or consumed

Loyalty segmentation

• Loyal customers are the most profitable

• Lifetime value (LTV)

What is geodemographic segmentation

Uses a combo of geographic, demographic, and lifestyle characteristics to classify consumers

What are the factors affecting segment attractiveness?

Identifiable, Substantial, Reachable, Responsive, and Profitable

What questions are asked to evaluate how identifiable a segment is?

Who is in their market, and are the segments distinct from each other?

Does each segment require a unique marketing mix?

What questions are asked to evaluate how substanial a segment is?

How large is the segment in terms of size and buying power

What question is asked to evaluate how reachable a segment is?

Can the market be reached through persuasive communication and product distribution?

The customer must:

• Know the product exists

• Understand what it can do

• Recognize how to buy

What makes a segment responsive?

Customers react similarly and positively to the firm’s offering

If a firm cannot provide products and services to the segment, it should not be targeted

How is the profitability of a segment measured?

Current market growth rate, Future growth rate, market competitiveness, and market access costs

What are the different targeting strategies?

• Undifferentiated targeting (mass marketing; everyone can be a potential user)

• Differentiated targeting (target market segments with different offerings for each, like coke vs coke zero)

• Concentrated marketing (focus all your energy on a single target market)

• Micromarketing (one-to-one marketing; tailors a product to suit an individual customer’s wants), like Edweard jones or USAA

What are two parts of identifying and developing position strategies?

Market positioning — Define marketing mix variables so target customers have a clear, distinctive, desirable understanding of what the product’s image or identity is (so that consumers perceive it in a certain way)

Value proposition—Communicates the customer benefits to be received from a product or service

Define USP and its principles

Unique Selling (Value) Proposition

• Each ad must make a proposition: “Buy this, and you get these benefits.”

• The proposition must be unique: something that your competitors do not, cannot, or will not do

• The proposition must sell; it must be something prospects really want; it pulls them over to your product

What are position methods

Value proposition—Price-to-quality comparison

Salient attributes—attributes most important to target audience

Symbols—Nike swoosh, Tiffany Blue box

Competition—Head-to-head comparison to competition

Define perceptional mapping

Displays in two or more dimensions the position of products or brands in the consumer’s mind. Like a scale with light to sweet tasting on one axis and Less to more natural on the other axis

What questions must a marketer ask when analyzing a perceptual map?

Where a particular market segment’s ideal product would lie, and where the competition falls on the map

Define marketing research

a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved in marketing goods, services, or ideas

Define data

Raw numbers or factual information

What are the steps in the marketing research process?

(1) Defining the objective and research needs → (2) Designing the research → (3) Collecting the data → (4) Analyzing data and developing insights → (5) Developing and implementing an action plan

Do marketers follow the order of the marketing research process?

Not always, they do what they need going back and forth

What questions are asked when defining objective and research needs?

What information is needed to answer the specific question, and how should that information be obtained?

What are the types of research examples?

Surveys, focus groups, interviews, and customer observation

What are the two types of data?

Secondary

• Collected prior to the start of the research project

• External as well as internal data sources

Primary

• Collected to address specific research needs

• Examples: Focus groups, in-depth interviews, and surveys

Define syndicated secondary data

Scanner Data

• Data from scanners reading UPC labels at checkout

• Provided and sold by leading research firms

  • IRI

  • Nielsen

Panel Data

• Information collected from a group of consumers, organized into panels, over time

• Data collected from panelists often includes

  • Records of what they have purchased

  • Responses to survey questions

Primary data collection techinques?

Qualitative and Quantitative

What is notable about observation research?

Qualitative - Examining purchase and consumption behaviors

• Personal or video camera scrutiny

• Tracking movements electronically

• Microsoft Kinect and heat maps

• Best method to determine how customers interact with and use products

What is notable about in-depth and focus group interviews?

Qualitative

In-depth Interviews

• Trained researchers ask open-ended questions to a customer

• Expensive and time-consuming

Focus group interviews

• Small group of 8-12 people with a trained moderator

• Now often takes place online

• Unstructured, qualitative data about new or existing products or services

What is notable about surveys and questionnaires?

Quantitative

• Most popular type of quantitative primary data collection method

• Developing a questionnaire is part art and part science

• Questions must be carefully designed to address the specific set og research questions

• For a questionnaire to produce meaningful results, its questions cannot be misleading in any fashion (e.g., open to multiple interpretations), and they must address only one issue at a time

What is the difference between a structured vs. unstructured response?

Unstructured = Fill in the blank

Structures = On a scale of 1-10

What is notable about panel- and scanner-based research?

Can be either secondary or primary data