ADM 1300 Chapter 12: Understanding Marketing Principles and Developing Products

Marketing

organization function and a set of process for creating, communicating and delivering value to customers and for managing customer relationships

marketing concept

idea that the whole firm is directed towards serving present and potential customers at a profit

relationship marketing

strategy that emphasizes building lasting relationships with customers and suppliers

customer relationship management (CRM

Organized methods that a firm uses to build better information connections with clients so that stronger company-client relationships are developed

data warehousing

compiling and storing customer's data to gather information that lets them find new clients

data mining

automates the massive analysis of data by using computers to find what customers are looking for and how they can be influenced

marketing plan

detailed strategy for focusing marketing efforts on consumers' needs and wants

develop marketing plan

1. identify objective
2. plan for what will happen and when it will happen
3. evaluate resource requirements
4. adjust plans as needed
5. improve from experience

marketing objectives

goals marketing intends to accomplish in its marketing plan

marketing strategy

all the marketing programs and activities that will be used to achieve the marketing goals

marketing managers

people responsible for planning, organizing, leading and controlling toward supporting and accomplishing the organization's overall mission

marketing mix

combination of product, pricing, promotion and place strategies used to market products

product

good, service or idea that is marketed to fill consumer's needs and wants

product differentiation

creation of a product feature or image that differs enough from existing products to attract customers

pricing

process of determining the best price at which to sell a product

place

part of the marketing mix concerned with getting products from producers to consumers

promotion

concerned with the most effective techniques for communicating information about products

market segmentation

process of dividing a market into categories of customer types

target markets

group of people who have similar wants and needs and can be expected to show interest in the same products

product positioning

process of fixing, adapting and communicating the nature of a product to appeal to the selected target markets

identifying market segments

members of a market segment share common traits that influence purchasing decisions

demographic segmentation

characteristics of populations that may be considered in developing a segmentation strategy

geographic segmentation

geographic units that may be considered in developing a segmentation strategy

geo-demographic segmentation

combination of geographic and demographic traits used in developing a segmentation strategy

psychographic segmentation

consumer characteristics that may be considered in developing a segmentation strategy; lifestyles, opinions, interests and attitudes

behavioural segmentation

dividing a market into groups based on consumer knowledge, use or response to a product

marketing research

study of what customers need and want and how best to meet those needs and wants

consumer behaviour

study of the decision process by which people buy and consume products

psychological influences

individual's motivations, perceptions, ability to learn and attitudes

personal influences

lifestyle, personality and economic status

social influences

family, opinion leaders, reference group and professional associates

cultural influences

culture, subculture and social class

consumer buying process

1. need recognition
2. information seeking
3. evaluation of alternatives
4. purchase decision
5. post-purchase evaluation

rational motives

one motivation of a purchase decision; logical evaluation of product attributes: cost, quality and usefulness

emotional motives

one motivation of a product decision; non-objective factors: sociability, imitation of others and aesthetics

industrial market

organizational market consisting of firms that buy foods that are either converted into products or used during production

reseller market

organizational market consisting of intermediaries that buy and resell finished goods

institutional market

organizational market consisting of nongovernmental buyers of goods and services

B2B buying behaviour

long term buyer-seller relationships; decisions are based on rational motives

value package

bundle of attributes received from a product

product features

tangible and intangible qualities that a company builds into its products

convenience goods and services

inexpensive good or service purchased and consumed rapidly and regularly

shopping goods and services

moderately expensive, infrequently purchased good or service

specialty goods and services

expensive, rarely purchased good or service

production items

organizational product used directly in the production process

expense items

organization products that are consumed within a year by firms producing other goods or supplying other services

capital items

organizational products that are a permanent good or service, purchased infrequently by the firm

product mix

group of products that a firm makes available for sale

product line

group of products that are closely related due to functioning in a similar manner or being sold to the same customer group who will use them in similar ways

seven step development process

1. product ideas
2. screening
3. concept testing
4. business analysis
5. prototype development
6. product testing
7. commercialization

product ideas

comes from a variety of places; consumers, sales force, R&D, engineering

screening

eliminates all product ideas that do not mesh with the firm's abilities, expertise or objectives

concept testing

companies use market research to solicit consumers' input

business analysis

comparison of costs and benefits for the product

prototype development

produce preliminary version of the product to identify potential production problems

product testing

company begins limited production of the item to see how it performs and the customer response

commercialization

company begins full-scale production and marketing

stages in the product life cycle

1. introduction
2. growth
3. maturity
4. decline

introduction

product reachers marketplace; marketers must make consumers aware of the product

growth

when the new product attracts customers it begins to show a profit

maturity

sales growth begins to slow, increased competition begins to affect business

decline

sales and profits continues to fall; firm ends advertisements

product extension

existing product is marketed globally

product adaptation

product is modified for greater appeal in different countries

reintroduction

products that are becoming obsolete in older markets become revived in new markets

branding products

process of using symbols to communicate the qualities of a product made by a particular producer

adding value through brand equity

added value a brand name provides to a product beyond its basic functional benefits

product placement

promotional tactic for brand exposure in which characters in media use a real product with its brand visible

buzz marketing

marketing that relies on word of mouth to spead "buzz" about a product or idea

viral marketing

buzz that relies on social networking on the internet to spread information from person to person

national brands

products distributed by and carrying a name associated with the manufacturer

licensed brands

company with a well-known brand sells another company the right to place that brand on its products

private brands

products promoted by and carrying a name associated with the retailer or wholesaler, not the manufacturer

generic brands

no-frills products sold under the general category name rather than a specific company name

packaging products

physical container in which a product is sold, advertised or protected

labelling products

part of a product's packaging that identifies the product's name and contents and sometimes its benefits