Marketing Exam 1

What is marketing and what is its purpose

Marketing stresses customer satisfaction. It is a philosophy, perspective, attitude, management orientation and a set of activities. It is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large.

The marketing concept

• Social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational goals. 

  • Focus on customer’s wants and needs

  • Share information about customer’s wants/needs across departments 

  • Use information to create customer value

• Customer is the center of our marketing decision!!!!

Elements of an exchange

2+ parties with unsatisfied needs, 2+ parties with something of value, Desire and ability to satisfy needs, A means to communicate with each other

Production era

Focus on internal capabilities of the firm - product innovation (do NOT consider needs of customer)

Sales era

focus is on aggressive sales techniques and belief that high sales result in high profit (do NOT consider needs of customer)

Market era

satisfying customer needs and wants while meeting objectives (DO consider needs of the customer)

Societal ear

organizations should satisfy customer needs/wants in a way that provides for the society’s well-being (DO consider needs of customer). Etc. less toxic, more durable

How firms create customer value

Unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price. Some ways are best price, product, service

Value

The ratio of perceived benefits to perceived costs

Relationship marketing

A strategy that links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit

Discovering customer needs

Customer surveys, concept tests, other marketing research. Crowdsearching

Satisfying customer needs

By successfully implementing a marketing program possessing the right combination of the four P’s

Needs

Occur when a person feels deprived of necessities (food, clothing, shelter, safety, social, etc.)

Wants

Shaped by knowledge, culture, and personality

Customer relationship management (CRM)

The best way to generate repeat business is to create customer value and satisfying exchanges

Social responsibility

View that organizations should satisfy the needs of customers in a way that provides for society’s well-being

Product

A good, service, or idea to satisfy a customer’s needs

Place

A means of getting the product to the consumer

Promotion

A means of communication between the seller and buyer

Pricing

What is exchanged for the product

Who markets

Everyone (business firms involved in manufacturing and providing

What is marketed

Goods, services, and ideas

Who buys what is marketed

individuals and organizations

Who benefits

customers that buy, organizations that sell, and society at large

How do consumers benefit

Utility - value received from the exchange (form, place, time, and possession)

Target market

One or more specific groups of potential consumers toward which an organization directs its marketing program

Environmental elements

Social factors, economic conditions, legal and regulatory, competition, technology

Environmental management

The attempt to influence things in the environment

Culture

Values, ideas, and attitudes that are learned and shared among members of a group

Demographics

Information about the characteristics of human populations and segments, especially those used to identify consumer markets

Demographic categories

Age, gender, ethnicity, income, and occupation

Marketing to grouping ethnic markets

Products geared towards specific ethnic groups and create targeted promotions as these groups grow

Macroeconomic conditions

Performance of the economy, GDP, unemployment

Gross income

Total income

Disposable income

After taxes to use for neccessities

Discretionary income

What remains after taxes and necessities

Technological factors

New technologies create opportunities or long-term competitive advantage

Basic research

Attempts to expand frontiers of knowledge but is not aimed at a specific business problem

Applied research

Attempts to solve a specific problem for the organization - such as developing new or improved products of processes

Competition

The alternatives from which the target may choose

Consider for competition

Entry, power of buyers and sellers, existing competitors and substitutes

Regulatory and legal forces protect

Competition, consumers, producers/businesses, society

Pure monopoly

1 seller controls market (this does not require only 1 seller in the market)

Oligopoly

small number of sellers, each with a substantial share of the market

Monopolistic competiton

many sellers compete for buyers, each offering a slightly different product

Pure compeition

Many sellers offering the same product

Level 1 competition

General: competition for discretionary income, competition for different needs

Level 2 competition

Indirect: product competition in which different products attempt to satisfy the same needs or wants, satisfy the same need, but in a different way

Level 3 competition

Direct: brand competition in which competitors offering similar products compete for consumer choice, satisfying the same needs, in a similar way

Influences on personal moral philosophy and ethical behavior

Societal culture and norms, business culture and industry practices, corporate culture and expectations

Why is ethical decision making so difficult

There are a lot of influential factors such as the extent of problems, top management actions, potential consequences, social consensus, probability of harm, time until consequences, and the number affected

Moral idealism

personal moral philosophy that considers certain individuals rights or duties as universal, regardless of the outcome

Utilitarianism

personal moral philosophy that focuses on “the greatest good for the greatest number” by assessing the costs and benefits, if the benefits outweigh the costs, then the behavior is ethical

Framework for ethical decision making

1. Identify the issue

2. Gather information and identify stakeholders

3. Brainstorm and evaluate alternatives

4. Choose a course of action 

Publicity test

Do I ant to see this on the front page

Moral mentor/admired observer test

Would the person I admire most do this

Transparency test

Can I give a clear explanation, including an honest account of motivations

Person in the mirror test

Will I be able to look at myself in the mirror and respect who I see

Golden rule test

Would I want this done to me

Consumer bill of rights

The right to safety, to be informed, to choose, and to be heard

Corporate social responsibility

The idea that organizations are part of a larger society and are accountable to that society for their actions

three concepts of social responsibility

• Profit responsibility: obligation to maximize profits for stockholders

• Stakeholder responsibility: obligations to those who can affect achievement of objectives

• Social responsibility: obligations to preserve environment and to the general public 

Green marketing

marketing efforts to produce, promote, and reclaim environmentally sensitive products

Green washing

dishonestly marketing products as environmentally friendly OR spending more money promoting being “green” than actually spending on green initiatives

Sustainable development

Involves conducting business in a way that protects the natural environment while making economic progress

Benefits of social corporate responsibility

Some believe that socially responsible companies will outperform their peers by focusing on the world’s social problems and viewing them as opportunities to build profits and help the world at the same time

Consumer behavior

Actions a person takes in purchasing and using (and disposing of) products and services, including mental and social processes that come before and after these actions

Consumer/purchase decision process

Problem recognition, information search, alternative evaluation, purchase decision, post-purchase behavior

Problem recognition

whenever a consumer recognizes a difference between the actual state and the ideal or desired state

Purchase decision

Consumer makes a choice, although a purchase decision is not always made

Not available, change mind, decide to wait

Decision on what (or if) to buy and where to buy

Conversion rate: percentage of viewers who buy a product after viewing it

Internal information search

1st search, fastest because we don’t need to do anything

External information search

Personal sources, marker-dominated sources, public sources

Factors that affect consumer’s search processes

Performance, financial, social, physical, psychological

Evoked/consideration set

A group of brands a consumer considers acceptable from among all brands (in a product class) of which they are aware

How do consumers evaluate alternatives?

Narrow list and compare pros and cons, identify evoked/consideration set, evaluative criteria, determinant attributes

Salient attributes

important attributes consumers use to compare competing alternatives

Determinant attributes

the attributes that actually result in the preference of one product over others, not necessarily the most important attributes for that customer

Compensatory decision rule

consumer trades off one characteristic against another, such that good characteristics compensate for bad characteristics

Noncompensatory decision rule

consumer is not willing to make trade offs for important attribute(s)

Heuristics

Rules of thumbs/ short cuts. Brand loyalty, country of origin, liking, price v. quality, it’s what my mom used

Satisfaction and dissatisfaction

Determined by expectations, outcomes, influence of others

Cognitive dissonance

Post-purchase psychological tension or anxiety

Arises from an inconsistency between two beliefs or between beliefs and behavior

Encourage post purchase

Seeking information that reinforces positive ideas about the purchase

Avoiding information that contradicts the purchase decision

Minimize cognitive dissonance by

Effective communication, follow-up, guarantees, warranties

Involvement in decision making

Extended, limited, routine

What determines consumers’ level of involvement

Numbers of brands examined, number of sellers considered, number of product attributes evaluated, number of external information sources used, and the time spend searching

Psychological influences

• Motivation and personality

• Perception

• Values, beliefs, and attitudes

• Lifestyle 

Motivation

Energizing force that stimulates behavior to satisfy a need

Maslow’s hierarchy of needs

• Self-actualization needs: self-fulfillment

• Personal needs: status, respect, prestige

• Social needs: friendship, belonging, love

• Safety needs: freedom from harm, financial security

• Physiological needs: food, water, shelter, oxygen 

Perception

Process by which we select, organize, and interpret information to form a meaningful picture of the world

Personality

Person’s consistent behaviors or responses to recurring situations

Self-concept

Way people see themselves and believe others see them

Actual self-concept

How people truly see themselves

Ideal self-concept

How people would like to see themselves

Behavioral learning

Learning by doing, developing automatic responses through expereience

Stimulus generalization

Response elicited by one stimulus is generalized to another stimulus

Stimulus discrimination

Ability to perceive differences in stimuli

Cognitive learning

Thinking, reasoning, and mental problem solving

Brand loyalty

Habit formation: through behavior or cognitive learning

Attitude

Learning predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way