Principles of Marketing Midterm

Marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

B2C (Business-to-Consumer)

Commercial transactions between businesses and final individual consumers.

B2B (Business-to-Business)

Commercial transactions conducted between businesses, such as between a manufacturer and a wholesaler.

Needs

Basic human requirements arising from a gap between a buyer’s current condition and ideal state.

Wants

The specific form that human needs take as they are shaped by culture and individual personality.

Demands

Human wants that are backed by individual or collective purchasing power.

Product

A good, service, or idea offered to satisfy consumer needs, encompassing quality, attributes, and packaging.

Price

Everything a buyer gives up—including money, time, and energy—in exchange for a product.

Place

All activities required to deliver the product to the target customer at the right place and time.

Promotion

Communication activities used by marketers to inform, persuade, and remind potential buyers.

Intangibility

A service characteristic meaning services cannot be seen, touched, or held before purchase.

Inseparability

A service characteristic meaning services are produced and consumed simultaneously.

Variability

A service characteristic meaning service quality depends on who provides it, as well as where and when.

Perishability

A service characteristic meaning services cannot be saved or stored for future sale or use.

Customer Value Proposition (CVP)

The unique combination of benefits promised by a company to satisfy specific target customer needs.

Perceived Customer Value

The evaluation of total benefits received relative to the total price or costs incurred.

Customer Satisfaction

The extent to which a product’s perceived performance matches or exceeds a buyer’s expectations.

Customer Delight

The state achieved when a product’s perceived performance significantly exceeds customer expectations.

Production Era

A marketing philosophy focusing on high manufacturing efficiency, mass distribution, and low cost under the assumption that production creates its own demand.

Sales Era

A marketing philosophy characterized by overproduction where firms focus on aggressive personal selling and advertising.

Marketing Concept Era

A customer-centered philosophy stating businesses should determine and satisfy customer needs at a profit before producing goods.

Customer Relationship Management (CRM)

The process of building and maintaining profitable long-term customer relationships by delivering superior value and satisfaction.

Pareto Principle (80/20 Rule)

The rule stating that approximately 80% of a firm's profits or sales come from 20% of its loyal customers.

Barnacles

Highly loyal customers who generate low profitability due to heavy service demands, discount usage, and small order sizes.

Strategic Planning

The process of maintaining a strategic fit between organizational goals, capabilities, and changing external market opportunities.

Mission Statement

A market-oriented statement defining an organization's core purpose, scope, and values.

Marketing Myopia

Defining a business too narrowly in terms of goods and services rather than fundamental customer benefits.

Stars

Strategic Business Units with high market share in high-growth markets that require heavy investment.

Cash Cows

Strategic Business Units with high market share in low-growth markets that generate more cash than they consume.

Question Marks

Strategic Business Units with low market share in high-growth markets that require significant cash to maintain or build.

Dogs

Strategic Business Units with low market share in low-growth markets that generate limited profits.

Market Penetration

A growth strategy focused on increasing sales of existing products in existing target markets.

Market Development

A growth strategy focused on selling existing products to new geographic or demographic markets.

Product Development

A growth strategy focused on offering new or modified products to current target markets.

Diversification

A high-risk growth strategy focused on developing entirely new products for entirely new markets.

Environmental Scanning

The process of continually acquiring information on external events and trends to identify opportunities and threats.

Gross Income

The total amount of money made in one year by a person, household, or family unit.

Disposable Income

The money remaining after paying taxes, used primarily for basic necessities like food and housing.

Discretionary Income

The money remaining after paying taxes and basic necessities, available for optional purchases.

SWOT Analysis

A framework evaluating internal Strengths and Weaknesses alongside external Opportunities and Threats.

Strengths

Internal capabilities, resources, and positive situational factors that help a firm serve its customers.

Weaknesses

Internal limitations or negative situational factors that interfere with a firm's performance.

Opportunities

External environmental trends or conditions that a firm can leverage to gain an advantage.

Threats

External environmental trends or conditions that present obstacles to organizational performance.

Problem Recognition

The first stage of the purchase decision process, triggered by perceiving a difference between actual and ideal states.

Internal Search

Scanning memory to recall previous experiences or stored knowledge about products.

External Search

Gathering information from personal, public, or marketer-dominated sources during a purchase decision.

Evaluative Criteria

The objective and subjective attributes used by a consumer to compare competing products.

Consideration Set

The group of acceptable brands a consumer actively evaluates during a purchase decision.

Cognitive Dissonance

The post-purchase psychological tension or anxiety felt when choosing between attractive alternatives.

Selective Exposure

A psychological process where consumers pay attention only to messages that align with their beliefs.

Opinion Leaders

Individuals who exert direct or indirect social influence over the purchasing decisions of others.

Membership Groups

Reference groups to which a consumer currently belongs, including family and close social circles.

Aspiration Groups

Reference groups that a consumer desires or seeks to join in the future.

Dissociative Groups

Reference groups with which a consumer wishes to maintain distance or avoid association.

Trade Feedback Effect

The economic dynamic where increased exports boost national income and subsequently increase import demand.

Tariffs

Government taxes or duties levied on goods imported into a country.

Quotas

Physical limits imposed by a government on the quantity of a product that can be imported or exported.

International Firm

A company that treats foreign operations as simple extensions of its domestic marketing strategy with minimal adaptation.

Multinational Firm

A company using a multi-domestic strategy to offer custom product variations and advertising across individual foreign markets.

Transnational Firm

A company using a global marketing strategy to standardize activities across similar cultures and adapt where cultures differ.

Back Translation

The practice of retranslating a translated phrase back into the original language to verify accuracy and cultural context.

Exporting

Producing goods in one country and selling them in another with relatively low financial risk.

Licensing

Selling the rights to intellectual property, trademarks, or patents to a foreign firm in exchange for royalties.

Joint Venture

An entry strategy where a foreign company and local business invest jointly to establish a local business with shared control.

Direct Investment

Establishing or acquiring a foreign division or subsidiary directly, involving maximum control and financial risk.

Product Extension

Selling the exact same core product across all international target markets without modification.

Product Adaptation

Modifying product attributes or packaging to better suit local preferences or regulatory standards in foreign markets.

Product Invention

Creating entirely new products specifically targeted to meet unique needs in foreign markets.

Communication Adaptation

Retaining the same physical product while modifying promotional messages for local cultural contexts.

Dual Adaptation

Modifying both the core product features and promotional messages to fit a foreign target market.