Principles of Marketing and Supply Chain Exam #2

Consumer decision process model

The steps consumers go through before, during, and after making purchases.

Need recognition

The start of the consumer decision process, when consumers recognize an unsatisfied need and want to move from an actual state to a desired state.

Needs

The difference between a consumer's actual (current) state and desired state.

Wants

Goods or services that are not necessarily needed but are desired.

Functional needs

Needs that pertain to the performance of a product or service.

Psychological needs

Needs that pertain to the personal gratification consumers associate with a product or service.

Internal search for information

When a buyer examines their own memory and knowledge about a product/service, gathered from past experiences.

External search for information

When a buyer seeks information outside their personal knowledge base (influencers, reviews, ads, salespeople).

Internal locus of control

The belief that one has some control over the outcomes of one's actions, leading to more search activity.

External locus of control

The belief that fate or external factors control outcomes, leading to less search activity.

Performance risk

The perceived danger inherent in a poorly performing product or service.

Financial risk

Risk associated with a monetary outlay, including the initial cost and the costs of using the item.

Social risk

The fear that others might not regard a purchase positively.

Physiological (safety) risk

The fear of actual physical harm should a product not perform properly.

Psychological risk (Ch. 6)

Risk associated with how people will feel if a product or service does not convey the right image.

Universal set

All possible choices for a product category.

Retrieval set

The brands or stores that can be readily brought forth from memory.

Evoked set

The alternative brands or stores a consumer states they would consider when making a purchase decision.

Evaluative criteria

Salient, important attributes about a particular product used to compare options.

Determinant attributes

Product/service features important to the buyer and on which competing brands or stores are perceived to differ.

Consumer decision rules

The set of criteria consumers use to quickly and efficiently select among alternatives.

Compensatory decision rule

A rule where a consumer trades off one characteristic against another, so good characteristics compensate for bad ones.

Noncompensatory decision rule

A rule where a consumer chooses a product based on one characteristic or subset, regardless of other attributes.

Multi-attribute model

A model that uses importance weights and performance ratings to evaluate products across several attributes.

Choice architecture

The methods marketers use to present different choices to consumers.

Impulse products

Products purchased without any prior planning.

Nudge

A tactic that alters behavior in a predictable way without forbidding options or offering economic incentives.

Conversion rate (Ch. 6)

A measure of how well a firm has converted purchase intentions into actual purchases.

Postpurchase cognitive dissonance

An internal conflict arising from an inconsistency between two beliefs, or between beliefs and behavior (buyer's remorse).

Negative word of mouth

When consumers spread negative information about a product, service, or store to others.

Motive

A need or want that is strong enough to cause a person to seek satisfaction.

Maslow's hierarchy of needs

A paradigm categorizing five groups of needs: physiological, safety, love, esteem, and self-actualization.

Physiological needs (Maslow)

Basic biological necessities of life such as food, drink, rest, and shelter.

Safety needs (Maslow)

Needs pertaining to protection and physical well-being.

Love needs (Maslow)

Needs that relate to our interactions with others.

Esteem needs (Maslow)

Needs that allow people to satisfy inner desires and maintain a satisfied outlook.

Self-actualization (Maslow)

When a person feels completely satisfied with their life and how they live, without caring what others think.

Attitude

A person's enduring evaluation of their feelings and behavioral tendencies toward an object or idea.

Cognitive component

The part of an attitude that reflects our belief system, or what we believe to be true.

Affective component

The part of an attitude that involves emotions, or what we feel about an issue.

Behavioral component

The part of an attitude comprising the actions we undertake based on what we know and feel.

Perception

The process by which we select, organize, and interpret information to form a meaningful picture of the world.

Learning

A change in a person's thought process or behavior that arises from experience.

Memory (consumer)

Information that has been acquired and stored in the brain to be available and utilized when needed.

Lifestyle

The way consumers spend their time and money to live.

Reference group

One or more persons an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

Situational factors

Factors specific to a situation that override or influence psychological and social factors.

Temporal state

A person's state of mind at a particular time that can alter their buying behavior.

Involvement

A consumer's degree of interest in a product or service.

Elaboration likelihood model

A model proposing that high- and low-involvement consumers process aspects of a message or ad differently.

Extended problem solving

A purchase decision process common when the customer perceives the purchase entails a lot of risk.

Limited problem solving

A purchase decision that calls for at most a moderate amount of effort and time.

Impulse buying

A buying decision made by customers on the spot when they see the merchandise.

Habitual decision-making

A purchase decision process in which consumers engage in little conscious effort.

Business-to-business (B2B) marketing

The process of buying and selling goods or services to be used in producing other goods/services or for resale.

Derived demand

The link between consumers' demand for a company's output and the company's purchase of inputs to make that output.

Resellers

Marketing intermediaries that resell manufactured products without significantly altering their form.

Request for proposals (RFP)

The process through which organizations invite alternative vendors or suppliers to bid on supplying required components or specifications.

Web portal

An Internet site whose purpose is to be a major starting point for users when they connect to the web.

Buying center

The group of multiple people responsible for buying decisions in an organization.

Initiator (buying center)

The person who first suggests buying the particular product or service.

Influencer (buying center)

The person whose views influence other members of the buying center in making the final decision.

Decider (buying center)

The person who ultimately determines any part of or the entire buying decision.

Buyer (buying center)

The person who handles the paperwork of the actual purchase.

User (buying center)

The person who consumes or uses the product or service.

Gatekeeper (buying center)

The person who controls information or access to decision-makers and influencers.

Group purchasing organization (GPO)

An organization that leverages the combined purchasing power of many businesses to obtain better pricing.

Organizational culture

The set of values, traditions, and customs that guide a firm's employees' behavior.

Autocratic buying center

A buying center in which one person makes the decision alone.

Democratic buying center

A buying center in which the majority rules.

Consultative buying center

A buying center in which one person makes the decision but solicits input from others.

Consensus buying center

A buying center in which all members must reach a collective agreement.

White papers

A promotional technique where B2B sellers provide information about a product/service in an educational context.

New buy

A B2B situation in which a customer purchases a good or service for the first time.

Modified rebuy

A B2B situation in which a buyer has purchased a similar product before but decides to change some specifications.

Straight rebuy

A B2B situation in which the buyer simply buys additional units of products previously purchased.

Trade deficit

When a country imports more goods than it exports.

Trade surplus

When a country has a higher level of exports than imports.

Gross domestic product (GDP)

The market value of goods and services produced by a country in a year; the most widely used economic metric.

Gross national income (GNI)

GDP plus the net income earned from investments abroad, minus payments to nonresidents.

Purchasing power parity (PPP)

A theory that if two countries' exchange rates are in equilibrium, a product costs the same in both when expressed in the same currency.

Big Mac Index

A PPP measure using the price of a McDonald's Big Mac as the market basket to compare purchasing power across countries.

BRICS

The developing countries Brazil, Russia, India, China, and South Africa.

Bottom of the pyramid

The large, lower-income population that wants consumer goods but cannot pay the prices wealthier consumers can.

Infrastructure

The basic facilities, services, and installations needed for a community or society to function.

Tariff (duty)

A tax levied on a good imported into a country.

Quota

A designated maximum amount of a product that may be brought into a country during a specified time period.

Exchange control

The regulation of a country's currency exchange rate.

Exchange rate

The measure of how much one currency is worth in relation to another.

Trade agreement

An intergovernmental agreement designed to manage and promote trade activities for a specific region.

Trading bloc

The group of countries that have signed a particular trade agreement.

Power distance

A cultural dimension: the willingness to accept social inequality as natural.

Uncertainty avoidance

A cultural dimension: the extent to which a society relies on orderliness, consistency, structure, and formalized procedures.

Individualism (Hofstede)

A cultural dimension: the perceived obligation to and dependence on groups.

Masculinity (Hofstede)

A cultural dimension: the extent to which dominant values are male oriented.

Time orientation (Hofstede)

A cultural dimension: short- versus long-term orientation.

Indulgence (Hofstede)

A cultural dimension: the extent to which a society allows the gratification of fun and enjoyment needs.

Exporting

Producing goods in one country and selling them in another; the entry strategy with the least financial risk.

Franchising

A contractual agreement in which a franchisor lets a franchisee operate a business using the franchisor's name and format.

Strategic alliance

A collaborative relationship between independent firms that do not create an equity partnership.