MKTG 300 - Midterm #2 Complete Study Guide

B2B markets diagram?

• Resellers

• Instituions

• Government

• Manufacturers/Service providers

Business to Business (B2B) Markets?

• Manufacturer → Manufacturer

• Manufacturer → Reseller

• Manufacturer → Government and institutions

• Reseller → other businesses, government and institutions

• Service provider → other businesses, government and institutions

B2C vs. B2B: Which is bigger?

• While B2C dominates in terms of the number of customers and transactions, the B2B market is significantly larger in terms of total revenue and transaction value.

While B2C dominates in terms of the number of customers and transactions, the B2B market is significantly larger in terms of?

• Total revenue and transaction value

Government?

• In most countries, government is one of the largest purchasers of goods and services.

The U.S. government spends over how much annually?

• 6 trillion

The B2B process?

• Need Recognition

• Product Specification

• RFP Process

• Proposal analysis/Vendor negotiation/Selection

• Order specification 

• Vendor performance assessment using metrics

The B2B buying process could be shorter and simpler depending on these buying situations?

• New buy

• Modified buy

• Straight buy

New buy?

• Most likely when purchasing for the first time.

• Usually quite involved.

• The buying center will probably use all six steps in the buying process and it involves many people in the buying decision.

Modified buy?

• Purchasing a similar product but changing specifications such as price, quality level, customer service level, options, etc.

• Current vendors have an advantage.

• Often skips RFP (Request For Proposal) and vendor selection (steps 3 & 4).

Straight buy?

• Buying additional units of products that have been previously purchased.

• Most B2B purchases fall into this category.

• Usually, the buyer is the only member of the buying center involved.

• Skips first 4 steps

Stage 1: Need Recognition?

• The B2B process begins with need recognition.

• Can be generated internally or externally.

Stage 2: Product Specification?

• After recognizing the need and considering alternative solutions, create a list of potential specifications.

• Used by suppliers/ vendors to develop proposals.

Stage 3: Request for Proposal process?

• Vendors or suppliers are invited to bid on supplying required components and services.

• Purchasing company may simply post its RFP needs on its website, work through various B2B web portals, or inform their preferred vendors directly.

Stage 4: Proposal Analysis, Vendor Negotiation, and Selection?

• The buying organization evaluates all the proposals received in response to an RFP.

• Selection of B2B purchase usually follows compensatory rule.

• Pricing becomes an important compensatory factor.

• The government uses preferred contractor programs, designed to offer small and minority-owned firms' greater opportunity.

Stage 5: Order Specification?

• Firm places the order with its preferred supplier (or suppliers).

• It is known as PO (Purchase Order)

• The exact details of the purchase are specified, including penalties for noncompliance.

• All terms are detailed including payment.

Stage 6: Vendor Performance Assessment Using Metrics?

• Just as in the consumer buying process, firms analyze their vendors’ performance so they can make decisions about their future purchases.

• The difference is that in a B2B setting, this analysis is typically more formal and objective.

The buying center - Initiator?

• First suggests buying the product.

The buying center - Influencer?

• Influences other members in buying decisions.

The buying center - Decider?

• Ultimately determines the buying.

The buying center - Buyer?

• Handles the paperwork of the actual purchase

The buying center - User?

• Consumes or uses the product.

The buying center - Gatekeeper?

• Controls information or access to decision makers and influencers.

Example of Buying Center Roles for a Hospital?

• Influencer: Hospital pharmacy

• Decider: Hospital financial officer

• Buyer: Materials manager

• User: Patient

• Gatekeeper: Insurance company

Organizational Buying Culture - Autocratic?

• One person makes the buying decision alone even though there may be multiple participants (e.g., small private company owned by one person).

Organizational Buying Culture - Democratic?

• The majority rules (e.g., public institutions).

Organizational Buying Culture - Consultive?

• One person makes the decision but solicits input from others (e.g., large corporations).

Organizational Buying Culture - Consensus?

• All members of buying center should agree to buy (e.g., some cooperatives).

B2B buying process for a new buy follows the following process?

• Need Recognition -->

• Product specification -->

• RFP -->

• Proposal analysis and selection -->

• Purchase order-->

• Vendor performance assessment

B2B buying process is shortest when the buying situation is?

• Straight buy

Who is the person who controls information or access, or both, to decision makers and influencers?

• Gatekeeper

The manager for a Kroger supermarket considers re-ordering items for his store. He will negotiate price concession and quality improvements. The manager is engaging in a(n)__________ situation?

• Modified buy

The customer whom Jemma is calling on today has a(n) ______________ buying center culture. This means that the decision process will involve reaching agreement among all members of the buying center?

• Consensus

Why do we do segmentation?

• To enhance our understanding of customers

• To aid targeting and positioning decisions

STP is not for discrimination?

• Do not do segmentation to discriminate any group especially protected characteristics, race, gender, or religion.

Before STP, marketers should have decided?

• Market boundary or “category”.

Segmentation variables?

• Split the market into groups of current or potential customers who are likely to have similar needs with respect to our product or service.

There are many variables to segment customers in the market because customers differ in their?

• Demographics

• Behaviors

• Attitudes

• Benefits they seek from the product or service

• Geographic locations 

• Aspirations

• Lifestyle

Demographic Variables?

• Demographic variables are those we can physically observe and measure.

Demographic segmentation?

• Most common segmentation strategy.

• Easy to identify and measure (age, gender, income, education)

Demographic variables have served as default segmentation variables for several reasons. Which of the following are reasons?

• Demographic information is readily available, quite often in the public sector.

• Because they are physical variables, demographics are quite reliable. This means we can use them to predict the future; if the segment of 30- to 40-year-olds is quite large this year, it is reasonable to predict that the segment of 40- to 50-year-olds will become larger over the next 10 years.

• Demographic variables are high in validity; it is relatively easy to verify their accuracy compared to that of other types of segmentation variables.

It is reasonable to predict that the segment of the 25- to 34-year-old in Chain will become?

• Much smaller over the next 10 years.

Demographic information is quite useful for initial market sizing, but it is not sufficient for truly strategic segmentation because?

• While we can react to demographic information, we cannot influence demographics with marketing tools. Thus, relying exclusively on demographics reduces our strategic power.

• Excessive reliance on demographics can sometimes unnecessarily limit the size of our potential target audience.

• Segmenting by demographics can lead to stereotyping, a practice that could be damaging to the brand franchise in the long run.

• Segmentation strategies based solely on demographics are easy for competitors to duplicate.

Behavioral Variables?

• Variable that describes the specific actions of consumers or potential consumers.

Which of the following is correct regarding behavioral segmentation?

• Behavioral information is a bit more difficult to collect than demographic information.

• Technological advances have significantly decreased its cost and increased its reliability, but behavioral data is still generally more expensive to obtain than demographic data.

• Behavioral data is increasingly available and holds great potential for behavioral segmentation.

• We can use frequent past behavior to predict future preferences without considering attitude (Machine learning & AI). This ability is the basis for Amazon and Netflix’s algorithms for making purchase recommendations to existing customers.

Non-adopters?

• Not buying our product

• Not buying competitors product

Our customers?

• Buying our product

• Not buying competitors product

Competitors customers?

• Not buying our product

• Buying competitors product

Multi-brand users?

• Buying our product

• Buying our competitors product

Attract potential non-adopters?

• Acquisition

• Stimulate demand

Increase consumption among current users?

• Retention 

• Stimulate demand

Attract competitive brand users?

• Acquisition

• Earn share

Increase consumption among multi-brand users?

• Retention

• Earn share

Attitudinal Variables?

• Attitudinal variables describe the thoughts, feelings, and beliefs of consumers.

Why attitudinal variables for segmentation?

• Marketing can change and influence attitudes of customers

• Attitudes drive behaviors (purchasing and using)

The foundation of marketing is identifying?

• Key attitude-behavior linkages

• Seeking to change behaviors 

Attitudinal data can be unreliable because?

• Attitudes may change.

Benefit variables?

• Benefits that customers seek.

Benefits variables - This is most useful way of segmenting a market?

• The segmentation method most directly related to the satisfaction of consumer needs and wants.

One of the issues with benefits variables is?

• There might be so many different benefits that customers may seek from consuming a product/service.

Among many potential benefits, marketers should choose/identify?

• Main benefit

• Dynamic benefit

Main benefit?

• Primary benefit provided by the category that differentiates the category leader.

Dynamic benefit?

• Benefit used by a competitor to take share from the category leader.

Feature-benefit-value ladder?

• We build feature-benefit-value ladders by first listing the most important brand features, and then listing their connected benefits and values.

Benefit variables that make it to our segmentation short list?

• Are most important to the customers in the category.

• Are something our brand features can support to provide.

• Have the potential to differentiate our brand in the category.

Targeting strategies?

• Undifferentiated targeting strategy (mass marketing).

• Differentiated targeting strategy (multi-segments marketing).

• Concentrated targeting strategy.

• Micro-marketing or one-to-one marketing.

Undifferentiated targeting (mass marketing) - When to adopt?

• When consumer tastes, needs, wants are same.

  • Homogeneous market

• When the company has a strong marketing power and a lot of resources.

• When no strong competitor.

Evaluate Segment Attractiveness - When marketers have to select one or several target segments, assess each segment is?

• Identifiable

• Substantial

• Reachable

• Responsive

• Profitable

Identifiable?

• Firms must be able to identify who is within their market to be able to design products or services to meet their needs.

Substantial?

• The market segment size should be substantial.

Reachable?

• Firms should be able to reach customers in the market segment.

Responsive?

• Customers in the market segment must react similarly and positively to the firm’s offering.

Profitable?

• The market segment should be profitable.

Which of the following is correct?

• The target audience description is rich and detailed and specific enough to generate a mental picture of the target audience.

• It should be shared and validated with those charged with execution, including

  • Communications

  • Product development

  • Sales

• To write a target audience description we will, in essence, pluck a person from the pool that makes up our potential market and describe this person in substantial detail.

• To bring this person to life for the people who are charged with creating value for him or her, we will include a name, a habitat, revealing behaviors, and consumption habits.

Positioning?

• The answer to how product/brand should be perceived in the market among target customers.

Positioning statement?

• A statement of the desired image/value/benefit of offering to be perceived by customers.

Segmentation informs us?

• How we will define and segment our market.

Targeting describes specifically?

• Whom we will attempt to reach.

Our positioning statement outlines?

• What we will say to them.

The positioning statement is much more than a simple hand-off to the communications agency; it is the final step on the?

• Bridge between strategy and execution.

Ideal positioning?

• The best is if a company’s product offering overlaps with customer needs and wants but no overlap with competitor’ offerings.

Two practical ways to do positioning?

• Positioning Statement

• Five Box Positioning Tool 

Positioning Statement?

• A single, crisp consumer proposition.

• This message is sometimes called a “brand promise” or “value proposition”

Positioning Statement - This statement will marry our entity’s?

• Core competence & understanding of the target customer. 

Five Box Positioning Tool Box positions?

• Current do

• Current belief

• Customer proposition

• Desired belief

• Desired do

Current do?

• What key behaviors are our target customers engaging in right now that we want to change?

Current belief?

• Why we believe our audience is doing what they are doing?

Desired do?

• What do we want our target customers to do?

Desired belief?

• What attitude might drive our target audience to do what we want them to do?

Customer proposition?

• Most importantly, we will identify a simply persuasive sentence that will move our target from the current belief to the desired belief, and therefore from the current-do to the desired-do.

Customer proposition - This sentence is written in?

• The company’s voice as it is a persuasive appeal from the firm to the consumer.

What does the customer proposition contain?

• The main or dynamic variable but will never have an “and” because it will never reference both simultaneously.

Customer proposition should be backed by?

• Marketing mix and core competence

What informs us how we will define and segment our market?

What describes specifically whom we will attempt to reach?

What outlines means what we will say to them?

• Segmentation

• Targeting

• Positioning statement

What should be consistent with positioning?

What should support fulfilling and strengthening the positioning?

What decisions should be guided by positioning?

• Marketing mix

Which of the following is NOT correct about target audience description?

• It includes a name, a habitat, revealing behaviors, and consumption habits, but it excludes demographics, attitudes, values and aspirations.

Ideally the value proposition?

• Should be a benefit of company’s product, which overlaps with customer needs and wants but does not overlap with the benefits that competitors offer.

What is the primary benefit provided by the market category that differentiates the category leader?

• Main benefit

Market Research Process?

• Define the research need and objectives

• Design the method of the research

• Collect the data

• Analyze data and communicate results

• Evaluate the research

For acquisition/stimulate demand, we are interested in learning from?

• People outside the category.