Marketing Exam 2

A student is happy with a phone whose battery lasts all day, then sees ads for a new model that lasts two days and starts to feel her phone falls short. What has the advertising done?

Created a gap between her actual state and a desired one

5 Steps of the Consumer Decision-Making Process

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase

5. Post purchase behavior

Consumers don’t necessarily go in order and may not even end in a purchase.

Why consumers can skip or stop at any step in the CDMP?

Consumers can skip steps on routine, low-involvement buys, or stop at any point if the want–got gap is too small, the item is sold out, or there are too many choices.

Need Recognition

An imbalance between an actual state and a desired state. Marketers create or reveal it.

How marketers create or reveal needs recognition

Ads, promotions, and social media make consumers notice a want–got gap, and surveys and data mining reveal what consumers want. Marketers can also create wants, as Apple Watch Ultra ads did by showing an active lifestyle

Internal and external information search

Internal, from memory, or external, from friends' reviews and sellers. (what drives it)

What drives how much a consumer searches?

Higher perceived risk and higher interest increase search. More knowledge, more confidence, and positive past experience reduce or narrow search

Consideration set (evoked set)

The short list of a consumer's most preferred alternatives that they actually compare. The marketer's first job at this step is to get into the set.

What are the attributes that decide evaluating alternatives?

The features that decide the choice, like price, quality, or location. Buyers often set cutoffs and drop any option that fails a must-have.

Postpurchase satisfaction

Depends on whether the product meets expectations, not on how good it is in absolute terms. The more you pay, the more you expect.

Cognitive dissonance

Buyer's remorse, or the inner tension when a purchase conflicts with your values or opinions. It is strongest for expensive, high-involvement buys

How do firms reduce cognitive dissonance?

Thank-you notes, guarantees, reassuring follow-ups, and easy customer service.

Jilting effect

When a highly desired item is unexpectedly unavailable, such as being sold out. It lowers preference for that brand and raises preference for competitors.

Three types of buying decisions

Routine response (low involvement, bought out of habit), limited decision making (comparing a few options), and extensive decision making (high involvement, used for expensive or unfamiliar buys like a car or home).

Five factors that classify buying decisions

Level of involvement (the most important factor), time, cost, amount of information search, and number of alternatives considered.

Culture

the values, norms, attitudes, and symbols passed from one generation to the next, and it is pervasive, functional, learned, and dynamic.

Values

the enduring beliefs about what conduct is preferable, are its most defining element.

Subculture

A homogeneous group that shares the broader culture but has its own unique elements based on region, ethnicity, religion, or interests, such as Cajuns or Harley bikers.

Social Class

A group of people with roughly equal status who share behavioral norms, measured by occupation, income, education, and wealth. Education is the most reliable indicator.

Reference groups

All formal and informal groups that influence a person's buying. They are primary or secondary membership groups, aspirational groups (ones you want to join), or nonaspirational groups (ones you want to avoid).

Opinion Leaders

The most informed and vocal members of a group who influence others, such as experts, celebrities, and social media influencers. Endorsements work best when the person is credible, attractive, familiar, and fits the product.

Family roles in buying

Initiator (suggests the purchase), influencer (shapes the choice), decision maker (makes the final call), purchaser (pays), and consumer (uses it).

Gender Individual Influences

effect on buying is shrinking as brands go gender-neutral.

Age Individual Influences

shapes tastes in food, clothes, cars, and recreation.

Life-cycle stage Individual Influences

The orderly stages of a household, such as young singles, parents, and empty nesters, each with different spending patterns. Life events like moving, a new baby, or retirement create new buying needs.

Personality Individual Influences

how a person typically reacts to situations, and it is one of the least useful buying predictors.

Self-concept Individual Influences

how you see yourself, and people buy to close the gap between their real and ideal self-image.

Lifestyle individual Influences

How a person lives, shown through their activities, interests, and opinions.

One shopper buying a first used car reads reviews, asks friends, and test-drives four models; another grabs his usual toothpaste without thinking. What explains the difference?

Risk and past experience shape how much outside search people do

Perception

How a person selects, organizes, and interprets stimuli into a meaningful picture. People act on their perceptions even when these don't match reality.

Selective exposure

Choosing which stimuli to notice and tuning out the rest, such as ignoring most of the thousands of ads seen each day.

Selective distortion

Twisting information that conflicts with your beliefs, such as a loyal airline flyer dismissing praise for a competitor.

Selective retention

Remembering only information that supports your beliefs and forgetting what doesn't.

Motivation and Maslow's hierarchy

A motive is the drive to act to satisfy a need. Maslow's needs from bottom to top are physiological, safety, social, esteem, and self-actualization, and social is the most-used ad appeal.

Warby Parker case

Free home try-on and easy returns lower perceived risk and cognitive dissonance for an online, high-involvement purchase.

Domino's case

Domino's admitted its pizza was bad and remade it, which illustrates postpurchase behavior and managing expectations. The Pizza Tracker keeps customers engaged after they buy.

Stanley case

The cup went viral on TikTok and frequently sold out, which illustrates opinion leaders, reference groups, social visibility, limited availability, and the jilting effect.

KFC in Japan case

A marketing campaign turned KFC into a Christmas tradition, which shows that culture is learned and dynamic.

Pepsi Challenge case

Blind taste tests favored Pepsi, but people preferred Coke when they could see the brand, which shows that perception and brand cues shape what we experience.

4. Test William C. Davis

Credibility, Reliability, Making people feel safe , and Who its really about

What is business marketing?

is marketing goods and services to individuals and organizations for purposes other than personal consumption.

How do business and consumer markets differ?

The basic philosophy and practice of marketing are the same whether the customer is a business organization or a consumer. Business markets do, however, have characteristics different from those of consumer markets.

4 types of business customers

producers, resellers, governments, and institutions

Producers

includes profit-oriented individuals and organizations that use purchased goods and services to produce other products, to incorporate into other products, or to facilitate the organization’s daily operations (construction, manufacturing, transportation, finance, real estate, and foodservice firms)

Resellers

includes retail and wholesale businesses that buy finished goods and resell them for a profit.

Institutions

businesses that seek to achieve goals other than the standard business goals of profit, market share, and return on investment. (schools, hospitals, colleges and universities, churches)

4 kinds of business demand

derived, inelastic, joint, and fluctuating

Derived Demand

The demand for business products because organizations buy products to be used in producing their customers’ products

Inelastic demand

means that an increase or decrease in the price of the product will not significantly affect demand for the product.

Joint demand

occurs when two or more items are used together in a final product

Fluctuating Demand

A small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.

6 roles of buying center

Initiator, Influencers/evaluators, Gatekeepers, Decider, Purchaser, Users

3 buying situations

new buy, a modified rebuy, or a straight rebuy

New Buy

a situation requiring the purchase of a product for the first time

Modified Rebuy

the purchaser wants some change in the original good or service

Straight Rebuy

The purchaser is not looking for new information or other suppliers. An order is placed, and the product is provided as in previous orders.

Main business buying criteria

quality, service, and price.

Relationship Marketing

entails seeking and establishing long-term alliances or partnerships with customers.

Strategic alliance

a cooperative agreement between business firms

keiretsu

a network of interlocking corporate affiliates

7 types of business goods and services

Major equipment, accessory equipment, raw materials, component parts, processed materials, supplies, and business services. accessory

Reciprocity

a practice whereby business purchasers choose to buy from their own customers

Market Segmentation

enables marketers to tailor marketing mixes to meet the needs of particular population segments.

Why firms segment

helps marketers identify consumer needs and preferences, areas of declining demand, and new marketing opportunities.

4 criteria a segment must meet to be useful?

Substantiality, Identifiability and measurability, Accessibility, Responsiveness

Job-based segmentation

geography, demographics, psychographics, benefits sought, behavioral patterns and usage rate

Undifferentiated target strategy

One mix for the whole market. Effficent, but leaves you open to focused rivals.

Concentrated target strategy

One-segment, served deeply. Specilized, but all eggs in one basket.

Multisegmented

Two or more segments, each with its own mix. Wider reach, higher costs. (risk cannibalization

Cannibalization

a situation that occurs when sales of a new product cut into sales of a firm’s existing products

Positioning

developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general

Perceptual Mapping

a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds

Repositioning

changing consumers’ perceptions of a brand in relation to competing brands

Marketing research

a process of collecting and analyzing data for the purpose of solving specific marketing problems.

3 roles of marketing research

Its descriptive role includes gathering and presenting factual statements. Its diagnostic role includes explaining data, such as determining the impact on sales of a change in the design of the package. Its predictive function is to address “what if” questions.

Steps of a marketing research project

Step 1: Identify and formulate the problem or opportunity. Step: 2. Plan the research design and gather primary data. Step 3: Specify the sampling procedures. Step 4: Collect primary data. Step 5: Analyze the data. Step 6: Prepare and present the report. Step 7: Follow up.

management decision problem

a broad-based problem that uses marketing research for managers to take proper actions

marketing research problem

determining what information is needed and how that information can be obtained efficiently and effectively

marketing research objective

the specific information needed to solve a marketing research problem; the objective should be to provide insightful decision-making information

big data

the exponential growth in the volume, variety, and velocity of information and the development of complex, new tools to analyze and create meaning from such data

scaled-response question

a closed-ended question designed to measure the intensity of a respondent’s answer

observation research

a research method that relies on four types of observation: people watching people, people watching an activity, machines watching people, and machines watching an activity

mystery shoppers

researchers posing as customers to gather observational data about a store

random error

an error that occurs when the selected sample is an imperfect representation of the overall population

frame error

an error that occurs when a sample drawn from a population differs from the target population

Reliability

means consistency—whether a tool gives the same result every time.

Validity

means accuracy—whether a tool measures what it is supposed to measure

cross-tabulation

a method of analyzing data that lets the analyst look at the responses to one question in relation to the responses to one or more other questions

scanner-based research

a system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy

neuromarketing

a field of marketing that studies the body’s responses to marketing stimuli

Deciding when marketing research should/shouldn’t be conducted

Deciding to acquire additional decision-making information depends on managers’ perceptions of its quality, price, and timing

Data mining

Finding patterns in huge customer databases that no one thought to ask about.

Learning

A change in behavior through experience (experiential) or reasoning (conceptual), strengthened by reinforcement and repetition.

A new snack brand has solid taste scores, but shoppers never mention it when naming what they'd consider buying. What should its marketing prioritize first?

Getting onto shoppers' short list of options

A week after buying an expensive laptop, a customer keeps reading reviews to reassure herself she chose well. What's the seller's best move?

Reinforce the choice with setup help, warranty reminders, and tips

Which purchase is most likely to involve extensive decision making?

A young couple choosing their first home

A brand of paper towels competes in a category most shoppers buy without much thought. Which tactic fits that buying behavior best?

Bold shelf displays and a simple, repeated message

A U.S. snack brand enters a new country where meals are long, shared, and centered on family. Which change best fits that culture?

Offer larger sizes built for eating together at the table

A running-shoe brand features elite marathoners in its ads, even though most buyers are casual joggers. Why does this work?

Buyers are drawn to products used by groups they aspire to join

A camera company sends early units to a few photographer hobbyists whose reviews many follow, instead of running broad ads. What is it relying on?

People whose judgment others trust in that product category