MKT 300 ASU Eaton Exam 1

Marketing

an organizational function and collection of processes designed to plan for, create, communicate, and deliver value to customers and build effective customer relationships

Concept of Exhange

Requires two or more parties; something of value; desire; freedom to accept or reject;

4P's (Marketing Mix) tactics

Product
Price
Promotion
Place(distribution)

Demographics

group people by similar characteristics

Psychographics

differences: individual opinions, actions, skill sets, ...

Marketing Concept

philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition through creation of VALUE
Value->Customer relationships->Customer Loyalty

Buyer's Market

The best time for consumers to buy; characterized by large supply, small demand, and low prices.
ex. buying a house: when available properties for sale exceeds the number of buyers seeking to purchase properties

Seller's Market

The best time for producers to sell; characterized by large demand, small supply, and high prices
ex. buying a house: there are more buyers seeking to purchase properties than there are available homes on the market

Marketing Concept Philosophies

Production
Sales
Market
Societal

production orientation

focus on efficiency of internal operations
What can we make or do best?

Sales Orientation

the belief that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits
how can we sell more aggressively?

Market Orientation

Focus on satisfying customer needs and wants
What do they need/ want?

Societal Orientation

satisfying customer needs and wants while enhancing individual and societal well-being
What do they need/ want & how does it satisfy society?

Value-Driven Marketing

Customer Value = Customer Benefits - Customer Costs

Marketing Map

Segmenting, Targeting, Positioning--->
Branding (marking tactics, mkt strategy)--->
Customer Value

STP Marketing

segmenting, targeting, positioning

Segmenting

dividing the customers in the market who share similar needs and wants based on needs and benefits; demographics; lifestyle; behaviors

segmentation bases

Criteria used to classify and divide buyers into different groups
1. Demographics
2. Psychographics
3. Behavioral
4. Needs

Behavioral Segmentation

dividing market on the amount of product bought or consumed
80/20 rule

80/20 rule

A marketing rule of thumb that 80% of your company sales/ demand come from 20% of your customers

Targeting

evaluating the segments and choosing one or more segments to enter that the company will compete in

When selecting their target markets, companies have to make a choice of whether

they are going to be focused on one or few segments or they are going to cater to the mass market.

Four Targeting Strategies

1. undifferentiated
2. differentiated
3. concentrated
4. micro

undifferentiated targeting strategy

a marketing approach that views the market as one big market (mass market) with no individual segments and thus uses a single marketing mix

undifferentiated example

Target Market: Everyone
ex. Target
- T Ford Model. This model was available in only black color in 1930s.

Undifferentiated advantages

Potential savings on production and marketing costs
-since only one product is produced achieve mass production and Marketing costs are also lower as only one product has to be promoted and there is a single channel of distribution

Undifferentiated disadvantages

- hardly ever a well considered strategy
-unimaginative product offerings which have little appeal to consumers
-company more susceptible to competition b/c the competition will invade the market with more appropriate products for smaller different segments

Differentiated targeting strategy

-multi-segment targeting strategy
-serves two or more well- defined segments
-develops a distinct marketing mix for each one of them
-Separate brands are developed to serve each of the segments.

Differentiated example

Target Market: Groups within total market
McDonalds: they have developed unique menus suited for consumers in different countries in the world

Differentiated Advantages

most sought after target market strategy
-Greater financial success
-Economies of scale in manufacturing and marketing

Differentiated disadvantages

-High costs- product design, production, promotion, inventory, marketing research and management costs
-Cannibalization- occurs when sales of a new product cut into sales of a firm's existing products

The reason to believe is a statement providing compelling evidence and reasons why customers in your target market can have

confidence in your differentiation claims

Concentrated targeting strategy

a marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs
-several segments may be identified
-company may not serve all of them b/c unattractive or out of line with the company's business strengths
- A company may target just one segment with a single marketing mix b/c it understands the needs, and motives of the segment's customers and designs a specialized marketing mix.

Concentrated example

Target Market: Smaller specialized segments
Starbucks became successful by focusing exclusively on customers who wanted gourmet coffee products

Concentrated Advantages

-Concentration of resources and meets narrowly defined segment: more profitable than spreading resources over several different segments
-Small firms can compete
-Strong positioning

Concentrated Disadvantages

-Segments too small: If their chosen segments were to become unprofitable or shrink in size, the companies will be in problem
-Changing segments: The association with one particular segment should not be allowed to become so strong that customers cannot imagine the company doing something else
-Large competitors: may try to market to ones niche segment in the industry if they are deemed very successful

Micromarketing targeting strategy

one-to-one marketing; tailors a product or service to suit an individual customer's wants or needs with hopes to increase customer loyalty

Micromarketing example

Clothes: each piece is tailored to specific person

What a company needs to select a target market & questions they should be asking

Align companies core competencies to target selection
1. Do customers needs differ? Market segmentation?
2. Which segments should company participate in?
3. Can company compete in target market?
4. Long term growth potential?

core competencies

-key abilities or strengths that a company has developed that give it a competitive advantage over its peers and contribute to its long-term success
-difficult for competing businesses to duplicate

Positioning

the placement of a product or service offering in the minds of consumer targets

value proposition

-the value a company promises to deliver to customers should they choose to buy their product.
- statement that introduces a company's brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.

Value is the relationship between

price and quality
- More quality for more/ same/ less price
- same quality for lower price
-less quality for much lower price

Perceptual Mapping

means of displaying or graphing the location of products, brands, or groups of products in customers' minds
-The positioning of a brand is influenced by customer perceptions rather than by those of businesses.

positioning statement

a brief description of a product or service and target market, and how the product or service fills a particular need of the target market. It's meant to be used as an internal tool to align marketing efforts with the brand and value proposition

Positioning Statement Format

For (target market), (brand) is the (point of differentiation) among all (frame of reference) because (reason to believe).

ex. For snickers, Snickers is the brand of candy bar that satisfies your hunger because it is packed with peanuts

the point of differentiation (POD) describes how your brand or product

benefits customers in ways that set you apart from your competitors

The frame of reference (FOR) is the segment or category in which

your company competes.

Repositioning

changing consumers perceptions of a brand in relation to competing brands
-includes changes to the marketing mix, such as product, place, price and promotion
-done to keep up with consumer wants and needs
ex. Campbells soup added a "whats in my food" database giving customers access to all ingredients b/c consumers love transparency

Weber's Law

the stronger the internal stimulus, the greater the added intensity needed to perceive a difference
- A consumer normally don't know differences when they are subtle. Though, they identify the differences when they are extreme.
-The Difference Threshold (or "Just Noticeable Difference") is the minimum amount by which stimulus intensity must be changed in order to produce a noticeable variation in sensory experience

Perceptual Organization

the processes that put sensory information together to give the perception
- Figure and Ground
- Grouping
-Closure

Figure and ground

How do you see the figure in the context of the background it is shown in

Grouping

the perceptual tendency to organize stimuli into meaningful groups
-is a thing we do to attach components to create a complete package so it stands out

Closure

- Zeigernik effect: psychological tendency to remember an uncompleted task rather than a completed one
- A person beginning a task needs to complete it
- When one is prevented from doing so, a state of tension is created that manifests itself in improved memory for the incomplete task
- someone who starts a task has the desire to finish the task
- Ex: movie cliff hangers, want to see the second one b/c need to know what happens
- Keeps people coming back

Categorizing

Experimenting= Controlling for all variables, and you are just changing on variable
Mitsubishi and Chrysler came out with an identical car and price identical, but still sold different amounts
Chryslers were known for "older people" but Mitsubishi had no image so they sold more of the "younger sport car" then Chrysler did

Social Changes

Values
Household
Component
Women

Competition

Generic - same price
Form - same purpose
Industry - same category, different price
Brand -similar product, same price, same customer

Consumers

generational and ethnic differences/changes

Porter's 5 Environmental Forces

Threat of Entry
Supplier Power
Buyer Power
Threat of Substitutes
competitive Rivalry

Segment Criteria

homogeneous
heterogeneous
substantial
identifiable
responsive

Strategic Market Plan

managerial process of creating and maintaining a fit between the organization's objectives and resources and evolving market opportunities

SWOT Analysis

Strengths
Weaknesses
Opportunities
Threats

BCG Matrix

Market Strategy Focus

Aggressive: high internal strengths, high external opportunities
Diversification: high internal strengths, high external threats
Turnaround: high internal weakness, high external opportunities
Defensive: high internal weaknesses, high external threats

Competitive Advantage

unique features of a company and products that are perceived by target market as significant to competition

Competitive Advantage Types

Cost
Differentiation
Niche
Product Leadership

Strategic Opportunity Matrix

Consolidation Strategies

Retrenchment - lower advertising and distribution
Pruning - discontinue
Divesting - sell off

Marketing Plan Sections

Title page, Executive Summary, Business Overview, Market Overview, Competitive Summary, Operational Overview, Management Overview, Financial Overview

Consumer Culture

sum total of learned beliefs, values, and customs that serve to direct the consumer behavior of members of a particular society

Environmental Consumerism

Unconcerned
Drifters
Conventional
Naturalites
LOHAS

Enculturation

gradual acquisition of a culture

Acculturation

cultural modification

Regulatory Bodies

CPSC, FCC, ICC, EPA, FDA

Corporate Social Responsibility

concern for how a company's actions might affect the interest of others

Sustainability

socially responsible companies that focus on world social problems and view them as opportunities

Ethical Developmental Levels

Pre-Conventional
Conventional
Post-Conventional

Business to Business Marketing

products used to manufacture other products

Demand Types

Derived
Inelastic
Joint
Fluctuating

Buying Situations

Straight Rebuy
Modified Rebuy
New Task

Entering the Global Marketplace

Export
Licensing
Contract Manufacturing
Joint Venture
Direct Investment

5 Step Consumer Decision-Making Process

1. Need Recognition
2. Information Search
3. Evaluate Alternatives (multiattribute, conjunctive, lexicographic)
4. Purchase
5. Post-Purchase Behavior

Cognitive Dissonance

the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.

Social Factor

Group - direct (primary and secondary) and indirect (aspirational and non)
Social Class - upper, middle, lower

Personal Factor

Personality - internal
image congruence hypothesis
Lifestyle - external

Psychological Factor

Behavior
Perception
-selective exposure
-selective distortion
-selective retention

Situational Factor

time, environment, context

Theory of Reasoned Action

Consumer beliefs and attitudes

A(act)

Bi x Ei

SN

NBj x MCj

Marketing Research Process

1. Define Problem
2. Develop Research
3. Conduct Research
4. Analyze Research
5. Address the Problem

BDI

CDI

Brand

identifying name, term, design, symbol, feature, that identifies one marketers product as distinct

Brand Equity

the marketing and financial value associated with a brand's strength

Intangible Value

method of valuing a company's intangible assets. This calculation attempts to allocate a fixed value to intangible assets that does not change according to the company's market value. Examples of intangible assets include brand equity and proprietary technology

Brand Asset Valuator

Branding Strategies

Individual: name stands alone
Family: use company name
Combination: both names are displayed

Packaging

protection, economy, safety, convenience