MKT 2210 Exam I Review

Chapters 1 to 8

Role of Marketing

• brands need to be differentiated and marketers are challenged to stay current to ensure their strategies and messages resonate with customers

• people want to buy from a brand they trust/have a good experience with

• department relates to many people, organizations, and forces

• focused on customer needs and wants, developing programs that engage consumers and inspire customer loyalty

Needs

occurs when a person feels deprived of basic necessities

Want

a need that is shaped by a person’s knowledge, culture, and personality

Importance of Focusing on Needs and Wants

• customers do not always know what they need or want

• digital world adds to complexity; initial point of contact with a brand is often online, consumers have unlimited opportunities to become informed or distracted, must be able to quickly find the site through search engines

Customer Value Proposition

• a unique combination of benefits received by targeted buyers that will satisfy their needs

• product design, pricing strategies, service elements

Target Market

• a specific group (or segment) of existing and potential consumers to which marketers direct their marketing efforts

• with limited funds, it’s better to channel resources to a specific group of consumers who are most interested in purchasing a product, rather than target everyone and squander funds

Marketing Mix (4 P’s)

• product, price, place, promotion

• carefully managed to ensure they are well-coordinated and appeal to the distinct characteristics of the target market

• marketers gather extensive info on their target markets, allowing them to identify purchase motivation that goes beyond age and gender into behavioural and psychological motivation

Product

to identify, select, and develop a product (encompasses goods, services, and ideas)

Price

determining the price of the product

Place

select a distribution channel to reach a customer’s place

Promotion

develop and implement a promotional strategy

Exchange

the trade of things of value between buyers and sellers so that each benefits (more than just money)

Marketing Process

1. identify consumer needs (need to find a sizeable need or want, large population)

2. manage the marketing mix to meet these needs

3. reach potential customers or the market

Marketing

process through which goods and services move from concept to customer, it includes the coordination of the 4 P’s

Market

• is used to describe potential consumers who have both the willingness and ability to buy a product

• sometimes the market, target market, and consumers are different groups of people

• marketers need to decide on a balance of who should be targeted for their programs

Relationship Marketing

consists of 3 elements, (1) social media, (2) customer relationship management (CRM), and (3) corporate social responsibility (CSR)

Corporate Social Responsibility Initiatives

• sponsorship and/or spearheading of community programs

• sponsorship and/or involvement in fundraising initiatives for charitable organizations

• business philosophy that implements socially responsible business practices

Marketing Today

focuses on…

• meeting short term consumer needs and generating immediate company profits

• long-term viability and sustainability of a business through the transparent connections it makes with its business partners

• creating meaningful customer relationships and community initiatives

Evolving Areas of Marketing

• digital marketing (content marketing, mobile marketing, proximity marketing, social media marketing)

• augmented reality

• experiential marketing

• influencer marketing

• partnership marketing (promotional partnerships, strategic alliance)

• metrics and analytics

• new marketing regulations and ethical considerations (regulations that safeguard people, communities, the environment, privacy)

Marketing Careers

• starting point is to get an education and create a network of business professionals

• develop a personal marketing strategy

Marketing Environment

environmental forces include…

• demographic

• socio-cultural

• economic

• technological

• competitive

• regulatory

SWOT Analysis

• strengths, weaknesses, opportunities, threats

• involves taking stock of an organization’s marketing plans and the external forces and trends affecting it

• translate the results into specific marketing actions

Environmental Scan

• the process of continually acquiring information on events occurring outside an organization to identify external trends that are opportunities or threats to a business

• often the first step of developing a more extensive SWOT

Demographic Forces

• understanding ensures marketing efforts are well placed and opportunities are not overlooked

• e.g. using a census

Socio-Cultural Forces

• not easy to identify, tend to be gradual and sometimes subtle

• refer to cultural values, ideas, and attitudes (society’s morals and beliefs)

• marketers monitor changes to capitalize on new opportunities

Economic Forces

• macroeconomic forces refer to the state of a country’s economy as a whole (i.e. GDP, inflation rate, unemployment rate)

• microeconomic forces refer to the supply and demand of goods and services and how this is impacted by individual, household, and company decisions to purchase

Technological Forces

• some dramatic technological changes include artificial intelligence, automation, internet of things, wearables

• consumers want consistent interactions with brands (e.g. seamlessly move from one device to another)

• marketers need to understand online consumer behaviour

Competitive Forces

• marketers must monitor the competitive activity of products that compete head-to-head with its brands and the competitive nature of the industry

• marketers need to have a clear understanding of the competitive nature of the industry in which they function (i.e. monopoly, oligopoly, monopolistic competition, perfect competition)

Monopoly

one firm (e.g. regional electricity companies)

Oligopoly

few firms (e.g. airlines)

Monopolistic Competition

many firms, similar products (e.g. running shoes)

Perfect Competition

many firms, identical products (e.g. apple farmers)

Regulatory Forces

• put in place to protect consumers from unscrupulous business practices, set acceptable standards of practice, encourage fair competition

• ethical business practices should be followed to avoid consumer backlash and negative publicity

• regulatory bodies include competition, advertising, CRTC, privacy, online behavioural advertising

Steps in an Environmental Scan

1. Collect the facts and identify trends (gather data and information, conduct competitive reviews, cluster info into facts and trends)

2. Determine the impact that this fact/trend will have on the business (set business objectives, analyze the external trends to determine their impact)

3. Brainstorm, evaluate, and implement ideas to meet business objectives (brainstorm, evaluate and implement alternatives)

Consumer Purchase Decision Process

• a consumer’s involvement in the purchase decision process varies based on the complexity of the decision

• involves problem recognition, information search, evaluating alternatives, purchase decision, post-purchase behaviour

Problem Recognition

• perceiving a need

• when a person realizes that the difference between what they have and what they would like to have is big enough to actually do something about it

Information Search

• seeking value

• clarifies the problem for the consumer

• uses an internal search to scan their memory for knowledge of previous experiences

• uses and external search if lacking experiences; may include personal sources, public sources, or marketer-dominated sources

Evaluating Alternatives

• assessing value

• information search can suggest evaluative criteria for the purchase

• may include evaluating objective criteria like features and attributes

• may include evaluating subjective criteria like status and feelings

• results in an evoked set

Showrooming

• using mobile devices in-store to check online

  competitive product reviews and prices

• opportunity to experience a product before buying it

• e.g. going to the Apple Store to test out an iPhone

Purchase Decision

• having examined the alternatives, three choices remain…

  • 1. What brand?

  • 2. Who to buy from?

  • 3. When to buy?

Post-Purchase Behaviour

• value in consumption or use

• satisfied buyers tell 3 people; dissatisfied buyers complain to 9 people

• mobile technology expedites the communication

• cognitive dissonance (you choose one product, but after purchasing you feel you should have chosen another product)

Involvement

• personal, social, and economic significance of a purchase to the consumer

• a high level of involvement means the purchase is expensive, reflects on one’s social image, and is bought infrequently

Routine Problem-Solving

• one brand examined

• few sellers considered

• one product attribute evaluated

• no eternal information sources

• minimal time spent searching

Limited Problem-Solving

• several brands examined

• several sellers considered

• moderate number of product attributes evaluated

• few number of eternal information sources

• little time spent searching

Extended Problem-Solving

• many brands examined

• many sellers considered

• many product attributes evaluated

• many eternal information sources

• considerable time spent searching

Situational Influences on Consumer Behaviour

• purchase task (e.g. purchasing for a friend? parent?)

• social surroundings (e.g. looking at who’s eating at restaurants)

• physical surroundings (e.g. music in stores)

• temporal effects (e.g. urge to buy something quickly)

• antecedent states (e.g. you’re in a mood)

Psychological Influences on Consumer Behaviour

• motivation and personality

• perception

• learning

• values, beliefs, and attitudes

• lifestyle

Motivation and Personality

• energizing forces that stimulates behaviour to satisfy a need; person’s character traits that influence behavioural responses

• self-concept involves the actual self, which is how people actually see themselves, and the ideal self, which is how people would like to see themselves

Perception

process by which an individual selects, organizes and interprets information to create a meaningful picture of the world

Selective Perception

• filters information so that only some of it is understood or remembered, or even available

• includes…

  • selective exposure (e.g. flipping to specific pages in a magazine)

  • selective comprehension (e.g. how much you absorb based on personal experience)

  • selective retention (e.g. remembering different things from the same experience)

Perceived Risk

• represents the anxieties felt because the consumer cannot anticipate the outcomes of a purchase, but believes that there may be negative consequences

• dealing with perceived risk includes…

  • obtaining seals of approval

  • securing endorsements from influential people

  • providing free trials of the product

  • providing illustrations

  • providing warranties and guarantees

Learning

• behaviours that result from repeated experience and reasoning, a continual process

• types include behavioural, cognitive, and brand loyalty

Behavioural Learning

developing automatic responses to a type of situation built up through repeated exposure (cue, drive, response)

Cognitive Learning

involves making connections between two or more ideas or simply observing the outcomes of others’ behaviours and adjusting your own accordingly

Brand Loyalty

favourable attitude toward and consistent purchase of a single brand over time

Values

socially preferable modes of conduct or states of existence that tend to persist over time

Beliefs

• consumer’s perception of how a product or brand performs

• formation and change of beliefs are impacted by and impact marketers

Attitude

tendency to respond to something in a consistently favourable or unfavourable way, leads to behaviour

Psychographics

the analysis of consumer lifestyles that offers insight into behaviours

Socio-Cultural Influences on Consumer Behaviour

• evolve from a consumer’s formal and informal relationships with other people

• personal, reference groups, family influence, culture, subculture

Personal Influence

• influenced by the views, opinions, or behaviours of others

• opinion leaders (e.g. influencers, a friend who knows a lot about computers)

• word of mouth (e.g. you see people talking about a product)

  • buzz marketing, product seeding, viral marketing

Reference Groups

• group of people who influence a person’s attitudes, values, behaviours

• can include membership groups (e.g. I am a UM student), aspiration groups (I want to join young professionals when I get a job), or dissociative groups (I don’t want to be associated with high school students)

Family Influence

• results from…

  • consumer socialization

  • family life cycle

  • family decision-making (e.g. sales people being nice to kids of a family)

Culture and Subculture

set of values, ideas, and attitudes that are learned and shared among the members of a group, can develop subcultures

Cross-Cultural Analysis

study of similarities and differences in values, customs, cultural symbols, and language among consumers

Marketing Research

• the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions

• can reduce risk of (and thereby improve) marketing decisions

Marketing Research Challenges

• how can marketing research determine if consumers will buy a product they have never seen, and never thought about, before?

• how can marketing research obtain answers that people know but are reluctant to reveal?

• how can marketing research help people accurately remember and report their interests, intentions, and purchase?

Five Step Marketing Research Approach

1. Define the problem, issue, or opportunity

2. Develop the research plan

3. Collect relevant information

4. Develop findings

5. Evaluate the results

Step 1: Define the Problem, Issue, or Opportunity

• most market research issues stem from poorly defined problems and objectives that are vague and unclear; defining a problem is a difficult task

• need objectives, which are specific, measurable, and achievable goals that the decision maker seeks to achieve

• need measures of success, which are criteria or standards used in evaluating proposed solutions to the problem

Step 2: Develop the Research Plan

• identify which approach will be taken to complete the project

• gather information requirements, which are relevant to addressing the problem and objectives

• figure out collection methods and their cost, efficiency, and accuracy

• identify your sample

Sampling

• process of gathering data from a subset of the population, rather than from all members of that particular group

• increasing the sample size can help decrease sampling error, but the larger the sample size, the higher the cost (probability sampling, non-probability sampling)

Step 3: Collect Relevant Information

• facts and figures related to the project are divided into two main parts, secondary data and primary data

• forms of qualitative primary research include…

  • focus groups

  • in-depth interviews

  • online research communities

  • online research bulletin boards

  • social listening

• forms of quantitative primary research include

  • observational research

  • surveys and questionnaires

  • experiments

• foundation of all research using questionnaires is developing precise questions that get clear, unambiguous answers from respondents

Secondary Data

• facts and figures already recorded prior to the project

• comes in two forms…

  • internal data, which includes marketing input data, which relates to effort expended to make sales, and marketing outcome data, which is the results of marketing efforts

  • external data, which comes from published sources outside the organization

Primary Data

• facts and figures newly collected for the project

• useful because secondary data may be out of date, definitions or categories of preexisting data may not be right for the project, or data may not be accurate or specific enough to the study

Experiment

involves measuring changes in consumer behaviour over time to determine reactions to new product introductions or new promotional offers

Test Markets

• can provide a more realistic evaluation of product or promotional success than other research options; simulated or in-market test markets

• time consuming, costly, and visible to the competition

Step 4: Develop Findings

after data has been collected, it has to be compiled, analyzed, and summarized so that it can be turned into actionable information

Metrics

numerical data that is collected and grouped to track performance; easy to understand, available on a regular basis, actionable and impact the business

Market Share

percentage of sales volume for a product, relative to the entire sales volume of the category in which it competes; tracked over time and compared to competitive market share levels

Brand Development Index (BDI)

shows how well a brand’s sales are developed in a region relative to the region’s population size

Big Data

large amounts of data collected from a variety of sources and analyzed with an increasingly sophisticated set of technologies

Information Technology

• includes all of the computing resources that collect, stores, and analyze the data

• challenge is to efficiently transform the huge amount of data into useful information (data visualization)

Data Mining

the practice of examining large databases to find statistical relationships between consumer purchasing patterns

Predictive Modelling

statistical models that use data mining and probability analysis to foretell outcomes

Descriptive Findings

• what has happened

• can be found on the web by looking at visits, visitors, and page views, on social media by looking at social media interactions, and through RFM (recency, i.e. where purchase, frequency, i.e. how often purchased, and monetary value, i.e. dollar value of transaction)

Predictive Findings

• what might happen

• data can be combined from CRM databases, social media analytics, marketing program metrics, customer service databases, and purchased data to reveal groupings of customers with common attitudes and purchase patterns

Step 5: Evaluate the Results

• evaluating the decision itself involves monitoring the marketplace to determine if action is necessary in the future

• evaluating the decision process used involves asking: was the marketing research and analysis used to develop the recommendations effective? was it flawed?

Future of Market Research

• sees a continued growth in online market research approaches as well as the increased use of analytics platforms to help manage big data and obtain insights

• ethically and legally, privacy should be top-of-mind

Business Marketing

• marketing products to organizational buyers

• buyers purchase and lease large volumes of equipment, raw materials, manufactured parts, supplies, and business services

• different markets include industrial, resellers, government, non-profit

North American Industry Classification System (NAICS)

provides common industry definitions for Canada, Mexico, and the US which facilitate the measurement of economic activity

Content Marketing

• keeps potential customers engaged by ensuring that relevant and valuable content is available at various touch points

• provides opportunity to share feedback and monitor discussions about products and services

• e.g. social media, e-newsletters, videos, research reports

Derived Demand

demand for industrial products and services is driven by demand for consumer products and services

Inelastic Demand

not sensitive to price change

Fluctuating Demand

relying on consumers’ demand

Organizational Buying Objectives

• increase profits through reducing costs or increasing sales

• non-profit firms and government agencies need to meet the needs of the groups they serve

Buying Criteria

• detailed specifications for the product or services they want to buy and the characteristics of the supplier

• i.e. price, quality, delivery schedules, technical capability, warranties and claims policies, past performance on previous contracts, and production facilities and capacity

Reverse Marketing

work with suppliers to make their products, services, and capabilities for the buyer’s needs

Reciprocal Arrangements

organizations agree to purchase each other’s products and services

Supply Partnership

buyer and its supplier adopt mutually beneficial objects, policies, and procedures to lower the cost or increase the value

Organizational Buying Behaviour

decision making process used to establish the need and identify, evaluate, and choose among alternative brands and suppliers