Marketing Management Exam 2 Study Guide

Microenvironment

The factors close to a company that affect its ability to serve customers, including the company itself, customers, competitors, suppliers, marketing intermediaries, and other stakeholders.

Competitors

Other businesses offering similar products, satisfying similar customer needs, or competing for the same consumer dollars.

Competitive Advantage

An advantage gained by delivering greater customer value than rival businesses, either through lower prices or additional benefits that justify higher prices.

Sustainable Competitive Advantage

A superior market position that a company can maintain over time by consistently delivering greater customer value and satisfaction than its rivals.

Competitor Analysis

The process of identifying, assessing, and selecting key rival businesses.

Three Steps of Competitor Analysis

Identify the company's rivals, assess their objectives, strategies, strengths, weaknesses, and likely reactions, and select which rivals to attack or avoid.

Identifying Competitors

Recognizing companies that offer similar products, satisfy the same customer needs, or compete for the same consumer spending.

Assessing Competitors

Examining rival businesses' objectives, strategies, strengths, weaknesses, and expected responses to competitive actions.

Selecting Competitors to Attack or Avoid

Determining which rival businesses a company should challenge or avoid based on their strengths, weaknesses, customer value, and market behavior.

Competitor Objectives

The goals rival businesses seek to achieve, such as profitability, market share growth, cash flow, technological leadership, or service leadership.

Strategic Group

A group of firms within an industry that follow the same or similar competitive strategies.

Benchmarking

Comparing a company's products, services, and business processes with those of industry leaders to identify opportunities for improvement.

Customer Value Analysis

The process of identifying the benefits target customers value and evaluating how customers rate a company's offerings compared with alternatives.

Good Competitors

Rival businesses that follow industry rules, encourage differentiation, support industry development, and help legitimize new technologies.

Bad Competitors

Rival businesses that break industry rules, take excessive risks, or attempt to gain market share through damaging competitive practices.

Competitive Marketing Strategies

Approaches developed through evaluating rival businesses and creating superior customer value to build profitable relationships.

Entrepreneurial Marketing

An approach involving identifying opportunities and developing flexible, innovative methods to pursue them.

Formulated Marketing

An approach involving developing formal strategies and following established plans.

Intrapreneurial Marketing

An approach that attempts to restore creativity and innovation within an established organization.

Overall Cost Leadership

A strategy focused on achieving the lowest production and distribution costs to offer lower prices and gain market share.

Differentiation Strategy

A strategy focused on creating products and marketing programs that customers perceive as meaningfully different or superior.

Focus Strategy

A strategy in which a company concentrates on serving a small number of market segments exceptionally well.

Middle-of-the-Road Strategy

A lack of clear positioning in which a company fails to establish a strong advantage through cost, differentiation, or specialization.

Michael Porter's Three Successful Competitive Positioning Strategies

Overall cost leadership, differentiation, and focus.

Product Leadership

A strategy emphasizing continuous innovation and the introduction of superior products that customers are willing to pay premium prices for.

Operational Excellence

A strategy emphasizing efficient processes, streamlined operations, automation, and cost reduction.

Customer Intimacy

A strategy emphasizing personalized services, customized products, and close relationships with customers.

Three Value Disciplines

Product leadership, operational excellence, and customer intimacy.

Market Leader

The company holding the largest market share within an industry or market.

Market Challenger

A company that aggressively attempts to increase market share by competing against the industry leader or other established businesses.

Market Follower

A company that maintains its position by following or improving upon established products and strategies rather than directly challenging the leader.

Market Nicher

A company that concentrates on serving a narrowly defined segment with specialized products or services.

Three Main Market Leader Strategies

Expand total market demand, protect existing market share, and increase market share.

Expanding Total Market Demand

Increasing overall demand by attracting new users, encouraging new uses, or increasing product usage among existing customers.

Protecting Market Share

Defending an existing position through innovation, competitive pricing, strong customer relationships, and eliminating weaknesses.

Expanding Market Share

Increasing a company's percentage of total industry sales through superior products, customer service, and stronger customer relationships.

Second-Mover Advantage

An advantage gained by entering a market after another business and learning from the first company's experiences, mistakes, and innovations.

Market Follower Strategy

Avoiding aggressive confrontation while offering products that imitate or improve upon established offerings.

Market Nicher Strategy

Achieving profitability by specializing in segments that larger businesses may overlook or consider unattractive.

Ideal Market Niche

A specialized segment large enough to be profitable, with favorable growth potential and relatively little interest from major rivals.

Customer Orientation

A business approach that emphasizes understanding and satisfying customers' needs and preferences.

Competitor Orientation

A business approach that emphasizes monitoring rival businesses' actions, strategies, strengths, and weaknesses.

Market Orientation

A business approach that balances understanding customers with awareness of rival businesses to deliver superior value.

Marketing Myopia

Focusing too narrowly on existing products instead of understanding the underlying customer needs those products satisfy.

Competitor Myopia

Focusing too narrowly on existing rivals while overlooking emerging threats, new technologies, or alternative ways of satisfying customer needs.

Why Did Kodak Decline?

The company focused too heavily on traditional film products, underestimated digital photography, failed to respond quickly to technological changes, and lost sight of evolving customer needs.

Kodak Case Key Lesson

Businesses must anticipate technological changes, understand emerging competition, and focus on customer needs rather than remaining attached to existing products.

Omnichannel Experience

An integrated shopping experience across physical stores, websites, mobile applications, and other sales channels.

Showrooming

The practice of examining products in physical retail stores before comparing prices or purchasing from an online retailer.

Blue Ocean Strategy

Creating or entering a relatively uncontested market space by offering innovative customer value rather than competing directly in an established market.

Red Ocean Strategy

Competing in an established market where businesses fight for existing customers and market share, often through aggressive pricing and differentiation.

First-Mover Advantage

An advantage gained by entering a market early, establishing customer relationships, building brand recognition, and creating barriers for later entrants.

Value Innovation

Creating greater customer value while simultaneously reducing or eliminating unnecessary costs or features.

Consumer Market

All individuals and households that buy or acquire goods and services for personal consumption.

Consumer Buyer Behavior

The purchasing behavior of final consumers who obtain goods and services for personal use.

Consumers

Individuals or households who purchase, use, or consume goods and services to satisfy personal needs and wants.

Consumer Behavior

The study of how individuals and households select, purchase, use, and respond to goods and services.

Why Is Consumer Behavior Difficult to Predict?

People may not fully understand their own motivations, do not always make rational decisions, and differ in their needs, preferences, and purchasing habits.

Utility Maximization

An economic approach assuming individuals rationally evaluate available alternatives and select the option providing the greatest satisfaction or value.

Why Is the Traditional Utility Maximization Model Limited?

People cannot evaluate every alternative, do not always make rational decisions, seek different types of value, and have different characteristics and motivations.

Heterogeneous Consumers

Buyers who differ in their needs, preferences, characteristics, motivations, and purchasing behaviors.

Model of Consumer Behavior

A framework explaining how marketing and environmental stimuli enter the buyer's decision-making process and produce purchasing responses.

Marketing Stimuli

Influences such as product, price, place, and promotion that affect purchasing decisions.

Environmental Stimuli

External influences such as economic, technological, political, and cultural conditions that affect purchasing decisions.

Buyer's Black Box

The internal characteristics and decision processes through which individuals interpret stimuli and make purchasing decisions.

Buyer Responses

Decisions concerning product choice, brand choice, retailer choice, purchase timing, and purchase amount.

Buying Roles

The different responsibilities individuals or groups perform during a purchasing decision.

Initiator

The person who first recognizes a need or suggests purchasing a particular product.

Influencer

The person whose opinions, advice, or recommendations affect a purchasing decision.

Decider

The person who determines whether to purchase a product and what, where, or how to buy.

Buyer

The person who actually completes the purchase transaction.

User

The person who ultimately consumes or uses the purchased product or service.

Four Major Factors Influencing Consumer Behavior

Cultural, social, personal, and psychological factors.

Cultural Factors

Shared values, perceptions, preferences, and behaviors learned from family, institutions, and society that influence purchasing decisions.

Culture

Learned values, perceptions, wants, and behaviors acquired from family and other important institutions.

Subculture

A group of people within a larger society who share value systems based on common experiences or situations.

Social Factors

Influences on purchasing decisions arising from family, reference groups, social roles, and status.

Reference Group

A group that serves as a direct or indirect point of comparison in shaping a person's attitudes or behaviors.

Membership Group

A group to which an individual belongs that directly influences their behavior.

Aspirational Group

A group an individual wishes to join or be associated with.

Avoidance Group

A group whose values, beliefs, or behaviors an individual wants to avoid being associated with.

Family Influence

The effect family members have on an individual's purchasing decisions, preferences, and consumption habits.

Role and Status

A person's position within a social group and the behaviors or expectations associated with that position.

Personal Factors

Individual characteristics such as age, life-cycle stage, occupation, economic circumstances, lifestyle, personality, and self-concept that influence purchasing decisions.

Lifestyle

A person's pattern of living as expressed through activities, interests, and opinions.

AIO

Activities, Interests, and Opinions, three dimensions used to describe how individuals live and spend their time.

Personality

The unique psychological characteristics that lead to relatively consistent responses to a person's environment.

Self-Concept

The way individuals perceive themselves, which can influence their preferences for particular products and brands.

Psychological Factors

Internal influences on purchasing decisions, including motivation, perception, learning, beliefs, and attitudes.

Motivation

A need sufficiently strong to direct an individual toward seeking satisfaction.

Motivation Research

Qualitative research designed to uncover hidden or subconscious influences on purchasing decisions.

Perception

The process through which individuals select, organize, and interpret information to create a meaningful understanding of the world.

Learning

Changes in an individual's behavior resulting from experience.

Belief

A descriptive thought an individual holds about something based on knowledge, opinion, or faith.

Attitude

A person's relatively consistent evaluations, feelings, and tendencies toward an object or idea.

Selective Attention

The tendency to screen out most of the information to which a person is exposed.

Selective Distortion

The tendency to interpret information in ways that support existing beliefs.

Selective Retention

The tendency to remember positive information about preferred brands while forgetting favorable information about competing brands.

Five Steps of the Consumer Purchase Decision Process

Need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior.

Need Recognition

The first stage of purchasing, when individuals recognize a problem or an unmet need.