Principles of Marketing ch 4 and 6

marketing mix

is a unique combination of product, place (distribution), promotion, and price strategies.

under the firm’s control and is designed to appeal to a specific group of potential buyers, or target market

target market

a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges

knowledge of customer needs and desires by age segment, helps companies

save promotional funds, retain existing customers, acquire new customers

20 percent of a firms customers produce..

80 percent of the firm’s revenue

goal of environmental scanning

identify internal strengths and weaknesses

determine which of the four Ps to focus on

identify future market opportunities and threats

try to control elements in the external environment that continually mold and reshape the target market

social factors influence

the products people buy, the prices paid for products, the effectiveness of specific promotions, how, where, and when people expect to purchase products

value

a strongly held and enduring belief

a person’s values are determinants of

what is important and not important

what actions to take or not to take

how one behaves in social situations

values influence

our buying habits

US consumers rank the characteristics of product quality as

reliability, durability, easy maintenance, ease of use, a trusted brand name, a low price

component lifestyles

the practice of choosing goods and services that meet one’s diverse needs and interests rather than conforming to a single, traditional lifestyle

component lifestyles increase the complexity of consumers’ buying habits

demography

the study of people’s vital statistics, such as age, race, and ethnicity, and location

strongly related to consumer buying behavior in the marketplace

population

are directly or indirectly the basis of all markets, making population the most basic statistic in marketing

tweens

their high spending power makes this age group very attractive to many markets. 9-12 ages

gen-z

entering the workforce tend to be more competitive and pragmatic.

three economic areas of greatest concern to most marketers

consumers’ incomes, inflation, recession

purchasing power

a comparison of income versus the relative cost of a standard set of goods and services in different geographic areas

income minus the cost of living

takes into consideration housing, foo and groceries, transportation, ultilities, health care, and other expenses such as clothing, services, etc.

varies from state to state

discretionary income

more money to spend on nonessential items

Inflation

a measure of the decrease int he value of money, expressed as the percentage reduction in value since the previous year.

eg. an inflation rate of 5% mean that you can expect that, on average, prices have risen about 5 percent since the previous year.

hyperinflation

when inflation is ultra-high

recession

a period of economic activity characterized by negative growth which reduces demand for goods and services. when the GDP falls for two consecutive quarters.

Gross Domestic Product (GDP)

the total market value of all final goods and services produced during a period of time.

basic research

pure research that aims to confirm an existing theory or to learn more about a concept or phenomenon

applied research

research that attempt to develop new or improved products

stimulating innovation

companies attempting to innovate often limit their searches to areas they are already familiar with

this can lead to incremental progress but rarely leads to a dramatic breakthrough

the cost of basic research has continued to grow

government needs business because

the marketplace generates taxes that support public efforts to educate our youth, pave our roads, protect our shores, and the like.

every aspect of the marketing mix is

subject to laws and restrictions

sherman act of 1890

makes trusts and conspiracies in restraint of trade illegal; makes monopolies and attempts to monopolize illegal.

clayton act of 1914

outlaws discrimination in prices to different buyers; prohibits tying contract (which require the buyer of one product to also buy another item in the line makes illegal the combining of two or more competing corporations by pooling ownership of stock.

federal trade comission act

created the federal trade commission to deal with antitrust matters'; outlaws unfair methods of competition.

robinson-patman act of 1936

prohibits charging different prices to different buyers of merchandise of like grade and quantity; requires sellers to make any supplementary services on allowances available to all purchasers on a proportionately equal basis.

wheelers-lea amendments to FTC Act of 1938

broadens the federal trade comimssion’s power to prohibit practices that might injure the public without affecting competition; outlaws false and deceptive advertising.

lanham act of 1946

establishes protection for trademarks

celler-kefauver antimerger act of 1950

strengthens the clayton act to prevent corporate acquistitions that reduce competition

hart-scott-rodino act of 1976

requires large companies to notify the government of their intent to merge

foreign corrupt practices act of 1977

prohibits bribery of foreign officials to obtain business

the four federal agencies most directly and actively involved in marketing affairs are:

the consumer product safety commission (CPSC)

the consumer financial protection bureau (CFPB)

the federal trade commission (FTC)

the food and drug administration (FDA)

consumer product safety commission (CPSC)

federal agency established to protect the health and safety of consumers in and around their homes

Food and Drug Administration (FDA)

a federal agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous food and drug products

federal trade commission

a federal agency empowered to prevent person or corporations from using unfair methods of competition in commerce

responsibilities

the bureau of competition

the bureau of consumer protection

the bureau of economics

consumer privacy

congress passed the CAN-SPAM Act in attempt to regulate unsolicited email advertising. It prohibits commercial emails from using false addresses and presenting false or misleading information, among other restrictions.

The FTC and the Children’s Online Privacy Protection Act

requires website operators to post a privacy policy on their home page and a link to the policy on every page where personal information is collected.

the competitive environment encompasses

the number of competitors a firm must face

the relative size of the competitors

the degree of interdependence within the industry

13 percent of US consumers were fully

loyal

to create a proper marketing mix, marketers must understand

that consumer preferences are constantly changing

how consumers make purchase decisions

consumer behavior

processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use

deciding to purchase any product or service is based on

value, perceived value, utilitarian value, hedonic value

value

a personal assessment of the net worth one obtains from making a purchase, of the enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct

perceived value

the value a consumer expects to obtain from a purchase

utilitarian value

a value derived from a product or service that helps the consumer solve problems and accomplish tasks

hedonic value

a value that acts as an end in itself rather than as a means to an end

need recognition

result of an imbalance between actual and desired states

want

recognition of an unfulfilled need and a product that will satisfy it

stimulus

any unit of input affecting one or more of the five senses: sight, smell, taste, touch, hearing

a marketing manager’s objective is to get

consumers to recognize the “want-go gap”

information search

the process of recalling information stored in the memory

external information search

the process of seeking information in the outside environment

non-marketing-controlled information source

a product information source that is not associated with advertising or promotion

marketing-controlled information source

a product information source that originates with marketers promoting the product

the extent to which an individual conducts an external search depends on his or her

perceived risk, knowledge, prior experience, level of interest in the good or service

evoked set

a group of brands resulting from an information search from which a buyer can choose.

searching yields an

evoked set

evaluation of alternatives and purchase

a consumer will use the information stored in memory and obtained from outside sources to develop a set of criteria

the environment, internal information, and external information help consumers evaluate and compare alternatives

the process is not always rational

nudge

a small intervention that can change a person’s behavior

the consumer has to decide

whether to buy, when to buy, what to buy, where to buy, how to pay

planned purchase

typically made after the consumer has collected a large amount of information (home, car)

partially planned purchase

typically made when the consumer knows the product category but waits until shopping to choose a specific style or brand (clothing, furniture)

impulse or unplanned purchase

often low-priced items or items on sale or purchased with a coupon, sometimes triggered by a nudge (food or snack item)

psychological ownership

when consumers feel a sense of ownership of a product, they are willing to pay more for it and are more likely to tell other consumers about it

consumers develop this kind of relationship with a product when they are able to control it, when they invest themselves in it, or when they come to know it intimately

how well consumers’ expectations of a purchase are met determines

whether the consumer is satisfied or dissatisfied with the purchase

jilting effect

anticipation of receiving a highly desirable option only to have it become inaccessible

cognitive dissonance

inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions.

marketers can reduce any lingering doubts about the purchase decision in the mind of the buyer by

engaging in postpurchase communications

providing excellent postpurchase customer service

involvement

the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior

routine response behavior

the type of decision making exhibited by consumers buying frequently purchase, low-cost goods and services; requires little search and decision time

limited decision making

the type of decision making that requires a moderate amount of time for gathering information and deliberating about and unfamiliar brand in a familiar product category

extensive decision making

the most complex type of consumer decision making, used when buying an unfamiliar, expensive product or an infrequently bought item; requires use of several criteria for evaluating options and much time for seeking information

factors determining the level of consumer involvement

when consumers have had previous experience with a good or service, the level of involvement typically decreases

involvement is directly related to consumer interests and the degree of interest

as the perceived risk (loss of wealth or status, or increase anxiety) in purchasing a product increases, so does a consumer’s level of involvement

types of involvement

product, situational, shopping, enduring, emotional

product

a product category has high personal relevance

situational

the circumstances of a purchase may temporarily transform a low-involvement decision into a high-involvement one

shopping

represents the personal relevance of the shopping experience

enduring

represents an ongoing interest in a product

emotional

represents how emotional a consumer gets during some specific consumption activity

marketing implications of involvement

for high involvement product purchases, marketing managers should engage in extensive and informative promotions

for low-involvement product purchases, in store promotion and targeted mobile ads are important tools

offering products on a “limited availability” basis is one way marketers can increase involvement

to minimize or eliminate the “consider and evaluate” phases, a company must

automate to streamline journey steps, including re-ordering

proactively personalize by using info to instantaneously customize customer experience

contextualize interaction by delivering a consumer to the next set of interactions

innovate by extending customer interactions to new sources of value, such as related products or partnered businesses

researchers have found two loyalty levels among customers

the satisfied are those who buy regularly often out of habit, because they are satisfied with the brands performance over a long period

the committed have a more intense, involved, emotional relationship with the brand, often becoming brand ambassadors

culture

the set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted form one generation to the next

cultural factors exert

the broadest and deepest influence on purchase decisions

underlying elements of culturre

values, language, myths, customs, rituals, and laws that guide consumer behavior

culture is

persuasive, functional, learned, dynamic

pervasive

to ingrained that we are unaware of it

functional

giving order to society

learned

handed down through generations

dynamic

adaptive and evolving

subculture

a homogenous group of people who share elements of the overall culture as well as unique elements of their own group

they are distinguished by identifiable attitudes, values, and needs

by understanding subcultures

marketers can design special marketing strategies to serve the needs of a subculture

social class

a group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms

measured as a combination of occupation, income, education, wealth, and other variables

social class is important to marketers for two main reasons

often indicates which medium to use for promotion

helps determine where to best distribute products