mktg exam 2

Business-to-business marketing (B2B)

the marketing of products and services to companies, governments, or not-for- profit organizations for use in the creation of goods and services that they can produce and market to others

Organizational buyers

those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale

Derived demand

the demand for industrial products and services that is driven by, or derived from, the demand for consumer products and services

Example: ball bearings for fidget spinners

Organizational buying criteria

the objective attributes of the supplier’s products and services and the capabilities of the supplier itself

What are the six organizational buying criteria?

• Price.

• Ability to meet quality specifications.

• Ability to meet delivery schedules.

• Technical capability.

• Past performance.

• Production facilities and capacity

Supplier Development

the deliberate effort by organizational buyers to build relationships that shape suppliers’ products, services, and capabilities to fit a buyer’s needs and those of its customers

Reciprocity

an industrial buying practice in which two organizations agree to purchase each other’s products and services

Supply partnership

a relationship that exists when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer

Organizational buying behavior

the decision-making process that organizations use to establish the need for product and services and identify, evaluate, and choose among alternative brands and suppliers

buying center

consists of the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision

People change depending upon what you will buy

Buy Classes

consist of three types of organizational buying situations: straight rebuy, new buy, and modified rebuy

E-marketplaces

online trading communities that bring together buyers and supplier organizations to make possible the real time exchange of information, money, products, and services. Also called B2B exchanges or e-hubs

Traditional auction

in an e-marketplace, is an online auction in which a seller puts an item up for sale and would-be buyers are invited to bid in competition with each other

Reverse auction

in an e-marketplace, is an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other

Trek Video Buying Criteria

Quality

Delivery Capabilities

Price

Environmental Impact

Trek Video Types of Buying

Straight Buy: ordering more of the same (handlebars)

New Buy: New seat design and new material

Modified Buy: Same seat design but new material

countertrade

the practice of using barter rather than money for making global sales

Gross Domestic Product (GDP)

the monetary value of all products and services produced in a country during one year.

Balance of trade

the difference between the monetary value of a nation’s exports and imports

Protectionism

the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas

Tariffs

government taxes on products or services entering a country that primarily serve to raise prices on imports

Quota

a restriction placed on the amount of a product allowed to enter or leave a country

Globalization

the focus on creating economic, cultural, political, and technological interdependence among individual national institutions and economies

Multidomestic Marketing Strategy

involves multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business

• As many countries, they have as many strategies

• Doritos are spicier in Mexico

• Absolutely completely different in every country

Global Marketing Strategy

transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

• Standardized things throughout the world

  • Golden Arches, Hello Kitty (Logos, advertising, campaigns, mascots,)

• Looks the same but slightly different in details

Global brand

a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.

Cross-cultural analysis

involves the study of similarities and differences among consumers in two or more nations or societies

Values

a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time

Customs

what is considered normal and expected about the way people do things in a specific country

Cultural symbols

things that represent ideas and concepts.

Back translation

the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors

Consumer ethnocentrism

the tendency to believe that it is inappropriate, indeed immortal, to purchase foreign-made products

Currency exchange rate

the price of one country’s currency expressed in terms of another country’s currency

Exporting

a global market-entry strategy in which a company produces products in one country and sells them in another country

Joint venture

a global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share the ownership, control, and profits of the new company

Direct investment

a global market-entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division

Dumping

when a firm sells a product in a foreign country below its domestic price or below its actual cost

Gray Market

a situation where products are sold through unauthorized channels of distribution. Also called parallel importing

Three largest countries of exports and imports

United States, China, Germany

Economic espionage

Costs U.S. firms $600 billion/year.

Product extension

Same product sold in different countries.

Product adaptation

Change products for different countries.

Product invention:

New product for different countries

Marketing research

the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions

Measures of success

criteria or standards used in evaluating proposed solutions to the problem

• Lego Mindstorm: How long did it take for kids to do what they wanted successfully (Playtime)

Constraints

in a decision, the restrictions placed on potential solutions to a problem

Data

the facts and figures related to the project that are divided into two main parts: secondary data and primary data

Secondary Data

the facts and figures that have already been recorded prior to the project at hand

Primary Data

the facts and figures that are newly collected for the project

Observational Data

the facts and figures obtained by watching, either mechanically or in person, how people actually behave

• most popular of primary data

Questionnaire Data

the facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors

Information Technology

operating computer networks that can store and process data

Sales Forecast

the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts

Question for in-class Coke example

Which taste do you prefer

Market segmentation

involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action

Product differentiation

a marketing strategy that involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products

Market-Product Grid

a framework to relate the market segments of potential buyers to products offered or potential marketing actions.

Three segmentation strategies

One product and multiple market segments

Multiple products and multiple market segments

Segments of one–“mass customization”

One product and multiple market segments

• (Example: Harry Potter Book series)

  • Designed for teens and tweens

    • Not the only group who read it

  • Parents read it to younger kids

  • Grandparents read them too

  • Teachers, librarians, etc

Multiple products and multiple market segments

• (Example: Cars)

  • Mini-van for soccer moms

    • Some college kids may have to drive the minivan

    • Or dads

  • Soccer moms also like SUVs

  • Soccer moms could also drive a four-door, two-door, pickup, etc

Segments of one–“mass customization” (Example: Build-to-order)

• (Example: Build-to-order)

  • Chipotle

  • Custom T-shirts

  • Custom Nikes

If it doesn’t help you move the business forward

Then segmentation should not be included

personas

character descriptions of a brand’s typical customers

geographic segmentation

location/zip code

demographic segmentation

objective attributes

Census data

Product positioning

the place a product occupies in consumers’ minds based on important attributes relative to competitive products

Product repositioning

changing the place a product occupies in a consumer’s mind relative to competitive products

• Old Spice

Perceptual map

a means of displaying in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how they perceive competing products or brands, as well as the firm’s own product or brand

• two dimensions

Product

a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value

Services

the intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value

Consumer products

products purchased by the ultimate consumer

Convenience products

items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.

Shopping products

items for which the consumer compares several alternatives on criteria such as price, quality, or style

Speciality products

items that a consumer makes a special effort to search out and buy

Unsought products

items that the consumer either does not know about or knows about but does not initially want

Business products

products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products

Product item

a specific product that has a unique brand, size, or price

• barcode, sku, etc

Product line

a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range

• Nike

Product mix

consists of all of the product lines offered by an organization

• P&G

Continuous innovation

Requires no new learning by consumers

• New and improved deodorant

Dynamically continuous innovation.

Disrupts consumer’s normal routine but does not require totally new learning

• teens purchasing a new phone

• New TV, a new update on a game

• electric toothbrush

Discontinuous innovation

Requires new learning and consumption patterns by consumers

• grandma using a new phone

Protocol

a statement that, before product development begins, identifies: (1) a well-defined target market; (2) specific customers’ needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers

Marketing reasons for new-product failures:

• Insignificant point of difference.

• Incomplete market and product protocol.

• Failure to satisfy customer needs on critical factors.

• Bad timing

• No economical access to buyers.

• Poor execution of the marketing mix.

• Too little market attractiveness.

• Poor product quality

Groupthink

gained momentum with new product, don’t want to interrupt flow with bringing up an issue

Open innovation

consists of practices and processes that encourage the use of external as well as internal ideas, as well as internal and external collaboration when conceiving, producing, and marketing new products and services

The new-product process

consists of the seven stages an organization goes through to identify opportunities and convert them to salable products or services

New-Product Strategy Development

the FIRST stage of the new-product process that defines the role for a new product in terms of the firm’s overall objectives

• SWOT analysis.

• Environmental scanning.

• Protocol and strategic role defined.

• Disruptive innovation can occur.

Idea generation (places where we get information)

• Open innovation.

• Suggestions from employees and friends.

• Customer and supplier suggestions.

• Crowdsourcing

• Research and development laboratories.

  • Industrial design.

  • Outside labs: IDEO

• Competitive products.

• Smaller nontraditional firms, universities, and inventors.

• Crowdfunding.

  • Example: Pebble smartwatch

Business analysis

the stage of the new-product process that specifies the features of the product and the marketing strategy needed to bring it to market and make financial projections

Stage 4 of the new product development process

business analysis

Stage 6 of the new product development process

market testing

market testing

the stage of the new-product process that exposes actual products to prospective consumers under realistic purchase conditions to see if they will buy

Stage 7 of the new product development process

commercialization (most expensive stage)

commercialization

the stage of the new-product process that positions and launches a new product in full-scale production and sales (most expensive stage)

types of organizational buyers

• Industrial markets.

• Reseller markets:

  • Wholesalers.

  • Retailers.

• Government markets

industrial markets

buying goods or services that enter production for other goods or services

reseller markets

• Wholesalers.

• Retailers.

government markets

a market consisting of federal, state, or local governments as the target consumers

Organizational buying function process

• Buying function in an organization is responsible for:

  • Selection and purchase of products & services.

  • For the organization’s use or resale.

  • Formal bids.

  • Purchasing contract awards.