MAR2023 EXAM 1 Chapter 6, 8,9

Business to Business Marekting

 marketing of products and services to companies, government or not for profit  organizations for use recreational of products & services that they can produce & market for use

Organizational Buyers/B2B

manufacturer, wholesalers, retailers, service companies, not for profit org & gov’t agencies that buy products & services for their own use or for resale 

* objective is to increase profits & lower cost

Types of Organizational Buyers

1. Industrial Buyers
2. Resellers
3. Govermmental

Industrial Buyers

buy raw matierals to reprocess it and sell it to somebody else

Resellers

Wholesalers and retailers who buy products that are already manufactured and resell them again without any processing.

Government Buyers

local,state or federal levels of the government as customer

North American Industry Classification System (NAICS)

system for classifying organizations in Canada, Mexico, and the US on the basis of major activity, good, or service they provide.

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Separated by codes:

1st & 2nd: Large industry/sector

3rd: subsector

4th:indstry

5th: specific industry

6th: indidvual country level natiional industry

Organizational Buying Behavior

decision-making process that organizations use to establish the need for products and services and to identify, evaluate, and choose from alternative brands and suppliers

Derived Demand (Organizational Buying Behavior)

an organization's demand for a product or service is based on the demand for the organization's product or service

Organizational Buying Behaviors are

* more formal decisions
* larger decision unit (buying center)
* more specific critertia
* relationship marketing

More Formal Decision Process (Organizational Buying Behavior)

Rigorous decision-making methods that include approvals, authorizations, and audits because decision makers are held more accountable and much more money is involved

Larger Decision-Making Unit (Organizational Buying Behavior)

Can include managers and engineers. Even routine purchases are made based on the needs and opinions of many people

More Specific Criteria (Organizational Buying Behavior)

Organizational purchases need to meet a number of specific (usually objective) criteria

Relationship Marketing (Organizational Buying Behavior)

An organization aims to buy more than just a product/service\-- it aims to buy a relationship with a vendor

Stages in te Organizatonal Buying Process

1. Problem Recognition: look up competitors & try to adapt & improve design → this is purchased by suppliers 
2. Info Search: design & production engineers → find suppliers of products 
3. Alternative Evaluation: Purchasing & engineering personal visit w/ suppliers, asses facilities, capacity, quality control & financial status → find vendor that match the attributes 
4. Purchase Decision


1. Use price, quality, delivery & technical capability to select suppliers 
2. Award them w/ contract
5. Postpurchase Behavior: 


1. Evaluate suppliers w/ formal vendor rating system & notify them if they are dong their job 
2. Firm drops them if they don’t fulfill requirement 

The Buying Center

organizational DMU. Includes users, influencers, purchasing agent, deciders, and gatekeepers.

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Users: ppl who use the product

Influencers: can come from various of sources

Deciders/ Purcahser: has the authority to buy things

Gatekeepers: they control the flow of hte info

Purchasing Agent in an Organizational DMU

Person who has responsibility and authority to negotiate with the vendors and make the buy. Aren't necessarily the deciders; they are told what to buy. May just be responsible for negotiation

Deciders in an Organizational DMU

people who actually make the decision. Committees typically decide on large purchases

Gatekeepers

equivalent to information gatherer. People who keep information out and let information in.

Types of Buy Classes

1. Striaght Rebuy
2. Modified Rebuy
3. New Buy

Straight Rebuy

Low involvement. Buyer reorders an existing product without even checking with users and influencers.

Modified Rebuy

Intermediate involvement. Something changes in the organizational buying process that complicates what would normally be a straight rebuy. (Ex:emergence of new vendor or similar product)

New Buy

High involvement. Organization is a first-time buyer of a product or service. Marketers have the most influence on an organization in a new buy because the company is inexperienced.

Value Analysis

a systematic decision-making tool used by organizational buyers.

* An appraisal of the design, quality, and performance of a product to reduce purchasing costs
* . What organizational buyers use to understand the expected cost savings to expect.

Types of Costs

1. Initial Purchase: price of the device
2. Swithcing Cost: the price to switch to another product


1. switching btw vendors
3. Operating: the cost to operate the product
4. Life Cylce: What is the warranty of the product?

A seller can use value analysis to persuade a buyer to switch to their product by...

-Understanding how the customer uses the product
-Showing cost savings: must show monetary advantages. Must analyze initial purchase costs, switching costs (switching from PCs to Macs, employees must be trained), operating costs (labor, electricity, water), lifestyle costs (everything above totaled)

Vendor Analysis

process companies use to analyze vendors from whom they are considering purchasing products. Formal multi-attribute model approach that compares vendors

* they look at the product quality
* delievery schedule
* reliability
* price

Sole Source Problem

problem that arises when a firm uses just one vendor and something goes wrong with it. Firm becomes overly dependent on supplier.

Bidder's List

list of qualified vendors the firm has preapproved

Recipricity

industrial buying practice in which 2 organizations agree to purcahse each others products/services

Benefits of Technology

1. Buyers depend on timely supplier info that describe availability, tech specification application, delievery schedule
2. Tech decrease processing cost
3. Digtial Tech decrease marekting cost

Traditional Auction

seller puts an item for sale & would buyers are invited to bid in the competition (highest bidder is the winner)

* allows companies to reach to ppl that they would have done better

Reverse Auction

buyer commuinicates a need for a product or sevice & would be suppliers are invested to bid in copmeition w/ each other

* con: price appears to be the most important feature

Market Segmentation

the search for relative homogenous clusters in a heterogenous market

Product Differentation

existence of different market segments has caused firms to use a marketing strategy

Segement

a group of customers, existing, & potienital w/ common needs, values & responsivness to makreting variables

Distinctiveness Across

the overlap of segments

Homogeneity Within

the tightness of the segements

Market Product Grid

framework to relate the market segments of potential buyers to products offered or potential marketing actions 

Segmentation Criteria

Measurability, reachability, profitability, differential response

Measurability as a Segmentation Criteria

firms must have some basis by which they segment the market.

* how do they assign ppl to those segements

(Ex: gender, age)

Reachability as a Segmentation Criteria

marketer's ability to communicate with and reach the segments once they are identified, either by targeting or self-selection.

Selective Targeting

firms communicate thier message with a very specfiic target audience

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Ex: Markters wanting to reach Midwestern farmers advertise in magazines such as National Hog Farmer, Soybean Digest, etc) More efficient and less error-prone than self-selection

Self-Selection

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firm uses a more general media able to reach alot of people & hopes people self-select the ad

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Communicate to a mass audience and count on people in the target segment to respond differently than everyone else to the ads they see.

(Ex: many different perfume ads in Cosmopolitan, readers pay attention to those that catch their eyes)

Profitability

Making sure the cost of reaching a market segment is less than the revenues generated from doing so.

Differential Response

People in different market segments should respond differently to controllable marketing variables


\-Price: Elasticity (charge more for high-end products targeted at affluent segments)

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Marketing Mix

-Product: Firms can modify product to different segments (different types of Gatorade)

\-Promotion: Firms can modify promotional efforts to reach different segments

\-Place: People respond differently to how the product is distributed. (Igloo sold low-end coolers at discount stores under a different name)

General vs. Specific measures

segmentation basis describing how the variable relates to the product class or brand.


General: apply to the individual consumer, regardless of product category (age, sex)


Specific: relate expressly to the product category (past purchases; color shirts you've bought in the past won't be of help when predicting what car you're gonna buy)

Objective vs. Subjective measures

degree to which the dimension is easily, quantifiably measurable.
Objective: age, sex, weight

Subjective: internal psychological states (attitudes, beliefs, perceptions). Can only be measured using tools such as questionnaires and surveys

Objective, general variables

demographics, socioeconomic status such as age, sex, ethnicity, income, region

* easiest to group ppl

Customer Lifetime Value

**financial worth of a customer to company over the course of their relationship** 

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Indexing

used to measure the preferences of one region relative to those of other regions. Region is compared to national average for a specific characteristic. An index number above 100 means the region is above the national average

Index Number

% of Customers in Designated Market Area / % of Customers in the United States * 100

Subjective, general variables (psychographic data)

Opinions and interests/ lifestyles

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Marketers must use surveys or questionnaires.Typically encompassed by a typical lifestyle study that includes AIOs, product usage (why and how consumers use products), media usage (how different consumers use different media), demographic/socioeconomic status

Objective, specific variables

**Past purchases** (products and frequency/volume of purchases) is most important variable.

Subjective, Specific variables

Benefits, **brand ratings, im**portance rates, brand loyality , product class

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Used to segment market in two ways: benefit segmentation and usage segmentation.

Brand Loyal

*  most of the consumer purchase are of one brand 

Split Loyal:

* ½ of the consumer purchases are btw 2 brands 

Variety Seeker:

variety of brands in the consumer purchase

Shifting Loyal

* consumer that switches loyalty of consumer 

80/20 Rule (Heavy Half)

* 20% of customer make up 80% of the revenue 

Benefit segmentation

segmenting markets based on the various benefits that are important to different customers (

Think: multi-attribute model, but importance weights are different for each customer)

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* best tool for differiential response
* how can I show you the benefit

Personas

* character descriptions of a brand typical customers 
* Bring target data by creating fictional character narratives/ capture personalities 

Usage Situation

market can be segmented based on how consumers use he product (Ex: different ankle support for athletic shoes, Alienware computers for gamers, Sriracha to go)

4 Strategies of Targeting

1. Mass Marketing
2. Concentration
3. Multisegment
4. Mass customization

Mass Marketing as a targeting strategy

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Using one particular approach to sell a single product to whoever wants to buy it.

* You market a product & hope ppl will like it
* Not popular anymore.

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One Product & Multiple Market Segements

Org provides a single product/ service & attempts to sell to **2+ market segments**

Market Concentration/Niche Marketing as a targeting strategy

Focusing on a **single, specific segment** of the market.

* Effective for start-ups or firms that don't have a lot of resources. (Apple started by targeting educational institutions, Allegiant Air's two vacation destinations, dating websites)

Mutlitple Products Multi-segment Marketing as a targeting strategy

multiple brands/products to reach many segements

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.Requires firms to develop products and marketing strategies that fit each segment. (Tide being offered in different forms, cell phones & computers for different segments)

Mass Customization as a targeting strategy

Involves serving customers efficiently and uniquely. Provides highest form of utility possible (Build-a-Bear, NikeiD, custom M&M's)

Important Considerations in Targeting Market Segments

\-E**xpected Size and Growth (**ex: growth of Gluten-Free market)
**-Competition** (majority fallacy: firm blindly pursues largest market segment thinking it will yield most profit, but not likely bc segment already has competitors)
\-**Cost**: must weight cost of targeting a segment vs profit
\-**Compatibility:** segment that may seem attractive may not be compatible with firm's strengths

Majority Fallacy

blindly pursuing the **largest** segmen

Product Positioning Map/Perceptual Map

*  the location a brand occupies in a consumer mind’s (on a perceptual map) relative to competitors 

Points of Parity

**Features or benefit**s deemed "necessary" by consumers for a brand to be a viable entry into a product category. Basic features (Ex: Coke Zero was marketed as tasting just like Coke)

* point of reference

Points of Difference

**Unique and desirable b**rand features or benefits that differentiate a single product from the competitors in the product category. (Ex: Mac is cooler and more user-friendly than PC) Used more than points of parity when positioning products

Perceptual Maps

* tools that help position the brand locations in the people’s mind 
* 2D map of the competitors (see a segment of these people)

Data are collected from consuemrs to develop a perceptual map for a particular product category by using

1. identificaiton of the important attributes for a product class
2. judgements of existing brands w/ respect to these important attributes

ratinig of an “ideal” bran’d s attributes

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Market Synergy

* Running horizontally across the grid → opportunity for efficient in terms of market segment 
* Only targeting on a particular segment 
* Expenses of product bc single customer segments will require more variety of products 
* It saves money but spends more on production 
* a lot of products

Product Synergy

* Running vertically down 
* Opportunity for efficient in research & development 
* Marketing would have to address the different variety of consumers 

Product Positioning

 the place a product occupies in a consumer’s **mind** based on **important attributes** relative to competitive products 

**Production Repositioning:**

**changing** the place a product occupies in a consumer’s mind

Head-to Head Positing

1. competing directly w/ competitors on a similar product attributes to same target marketing 

Differentiation Positing:

1. seeking a less-competitive, smaller market niche in which to locate a brand

Product Position Using Perceptual Maps

1. **Identify** important **attributes** for a product or brand class
2. Discover how target c**ustomer rate competing** products or brands w/ respect to these attributes 
3. Discover **where** the company’s product or brand is on attributes in the **minds** of potential **customers** 
4. **Reposition company’s product** or brand in the minds of potential customers 

Approaches to Positioning

\-By **product feature:** characteristic of product itself that promotes product as better than competition (Ex: Now 100 cigarettes have less tar than any other brand)

\-By **product benefit:** what the consumer gets from using the product (Ex: Crest and tooth decay prevention, other toothpastes focus on whiter teeth, fresher breath)

\-By u**ser category:** firms emphasize who should use the product (Ex: Dos Equis and Most Interesting Man in the World)

\-**Against other brands** (comparative advertising): making direct comparisons (Ex: Mac vs PC ads)

\-**Against product categories**: (Ex: Ranch has positioned itself against ketchup as a dipping sauce)

* By specific use: (Ex: Excedrin PM for nighttime headaches bc first pain medicine without caffeine)

Position Statement

Who are the customers

What are the needs that the product/service fulfills

Why is the product/service the best option to satisfy your needs?

Marketing Research

set of activities that provides information for marketing decision making

5 Marketing Research Approach

1. Define the Research Objectives
2. Develop the Research Plan
3. Collect Relevant Indo
4. Develop Finding
5. Take Marketing Actions

Uses of Marketing Research

\-**Demand Forecasting:** gives a firm an idea of how much of a product it will sell (Ex: Tide Pods underestimated demand, had to delay release)


\-**Market Segmentation:** (Ex: Females prefer Lays Wavy, males prefer ruffles, Lays changed packaging)


**-Market Tracking:** follows sales over time to see how a product is selling and to determine if adjustments are needed


\-**New Product Testing:** less expensive way to see if product will succeed (Ex: concept testing: testing idea of product before building prototype, Think Fisher Price toy)


\-**Ad pretesting**: testing advertisements using eye-tracking technology and FMRI (neuromarketing research that tracks blood flow and electrical activity in the brain

Approaches to Marketing Research

1. Define Problem (why is no one clicking the button)
2. Develop Research Plan: 
3. Collect Info
4. Develop Findings & Recommendations
5. Take Action, Evaluate Results 

Marketing Information System

integrated, ongoing decision support system that organizes data used in decision making.

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Pulls together a huge amount of data from a variety of resources, organizes, it, and deploys it in a way that is useful to managers

Internal Data

gathered from within the organization

External Data

gathered from outside the firm

Secondary Data

pre-existing and originally gathered for a purpose other than the one at hand

Primary Data

gathered specifically for the task at hand

Internal, Primary Data Examples

Idea generated from brainstorming session with employees (Ex. Kraft's Foodii app)

Internal, Secondary Data Examples

Data produced within the firm for some reason other than marketing (Ex: billing records, think Williams-Sonoma sending more specific catalogs to consumers)

External, Secondary Data

Data gathered by an external organization for some reason other than a specific firm's marketing efforts (Ex: US Census, census tracts: detailed demographic information about the population in specific areas; Syndicated data)

Syndicated Data

generated by outside companies for the specific purpose of selling information to other firms. Account for largest share of all marketing research expenditures today

External, Primary Data

"classic" marketing research. Includes Consumer surveys, test markets, and focus groups