RU 33:011:100 Mittra: Introduction to Business - Exam 2

Marketing

Activity, set of institutions and processes for creating, communicating, and exchanging offerings that have value to customers.

Exchange process

Activity in which two or more parties exchange some of value to satisfy their perceived needs.

Utility

Ability for a good or service to satisfy a customer's needs

4 Ps of marketing

Product

- Development of a product

- What problem does the product solve?

Price

- Pricing the product

Place

- Distribution of the product to the customers' places

Promotion

- Advertising the product

Types of utility

(FPOT)

Form utility

Place utility

Ownership utility

Time utility

Marketing utility

(POT)

Place utility

Ownership utility

Time utility

Place utility

Making a product available for purchase at a convenient location

Ownership utility

The easy transfer of the product to the customer

Time utility

Making good or service available when the customers want to purchase it

80/20 rule

A concept that suggests 80 percent of a firm's sales are obtained from 20 percent of its customers

Lifetime value of a customer

The tangible value of a customer (Total money they spent on the brand) + the intangible value of a customer (word of mouth)

Intangible value

Provides value but cannot be quantified with a monetary price.

ie. word of mouth

Marketing Concept

Company-wide philosophy of tailoring their products and promotions to consumer's needs

Nontraditional marketing

PEPCO

Person marketing

Event marketing

Place marketing

Cause marketing

Organization marketing

Person marketing

Use of marketing to attract interest to a particular person

OR

Using the status of a person to promote an organization

Place marketing

Use of marketing to attract interest to a particular place, such as a city or a nation

Event marketing

Marketing or sponsoring of short-term events

Cause marketing

Marketing that promotes a certain social issue

Organization marketing

Marketing that influences consumers to accept the goals of, receive the services of, or contribute in some way to an organization

Environmental scanning (marketing)

Analyzing external factors that may impact business and marketing decisions

Marketing mix

Blending of 4 marketing strategies (4 Ps of marketing)

Product, Price, Place, Promotion

Standardization (Marketing)

Not adapting marketing mix to international business.

Works best for B2B products/services, since they often require little sensitivity to a nation's culture

Adaptation (Marketing)

Making new marketing mix that adapts to international business

Mass customization

Mass producing products that have customized features tailored to individual or small groups of orders.

Marketing research

Collecting and evaluating information to make effective marketing decisions

Big data

Information collected in massive quantities from both traditional and digital sources that is used for marketing

Internal data

Data collected by the company

Ex. Financial records, consumer transactions, etc.

External data

Data collected by outside organizations

Ex. Trade organizations, advertising agencies, etc.

Secondary data

Information that was previously collected and published. Usually inexpensive to obtain.

Primary data

Information collected firsthand by the company.

Usually expensive to obtain.

Primary data may be obtained from a focus group.

Focus group

8 - 12 people gathered in a room or over the Internet to discuss a particular topic. Lets companies identify flaws in and possible improvements for their products/services.

Business intelligence

Field of research focused on gathering, storing, and analyzing data to help companies make better competitive decisions

Data mining

Part of business intelligence. Using computer-based technologies to analyze data.

Ex. Target using purchasing decisions to predict pregnancies

Data warehouse

Customers databases that allow analysts to combine data from disparate sources to identify trends.

Market segmentation

Division of a large homogeneous market into several relatively homogeneous groups. Attempts to distinguish certain groups of customers by grouping customers by certain traits.

Criteria for market segmentation

(MASU)

Measurable - The number of customers in the segment is measurable

Accessible - The segment is reachable by the company — the company should be able to distribute to them

Sizeable or substantial - The market segment should be able to offer enough sales and profits

Unique or differentiable needs - Differences between market segments should be clearly identified

Geographical segmentation

Dividing a market into groups based on their location

Demographic segmentation

Dividing a market into groups based on demographic or socioeconomic factors

Psychographic segmentation

Dividing a market into groups based on psychological characteristics, values, and lifestyles

Ex. Lifestyle, opinions, behaviour patterns, personality

Product-related segmentation

Dividing a market into groups based on customer's relationship to a good or service

Ex. Benefits sought by the customers, product usage rates, brand loyalty

End-use segmentation

B2B segmentation by the precise way businesses will use the product

Ex. Springs are used differently in bikes, watches, and cars

Consumer behavior

Actions of consumers involved in purchasing, using, and disposing of products/services and the decisions that precede and follow these actions.

Interpersonal determinants of consumer behaviour

Cultural influences

Family influences

Social influences

Personal determinants of consumer behaviour

Needs and motives

Perceptions/Attitudes

Learning

Self-concept

Self-concept

Idea about yourself constructed from your own beliefs and the responses of others

Steps in the Consumer Behavior Process

Consumer...

Has a need

Searches for solutions

Evaluates alternatives to a company's product

Purchases the company's product

Evaluates the purchasing decision

Relationship marketing

Developing and maintaining long-term, cost-effective, relationships with customers

Frequency marketing

Marketing initiative that rewards frequent purchases with cash, rebates, merchandise, and other premiums.

Affinity programs

Marketing effort sponsored by another organization which attracts individuals interested in that organization.

Comarketing

Cooperative arrangement in which two businesses jointly market each other's products

Cobranding

Cooperative arrangement in which two businesses team up and closely link their brands on a single product

Customer relationship management (CRM) software

Software that helps businesses gather, sort, and interpret data about customers

Advertisement

Promotion paid by the company

What did Chobani do to gain good publicity?

Chobani gave employees stock options

What did Levi's do to expand the number of distributors?

Levis partnered with Target, Walmart, Dicks Sporting Goods, and Tractor Supply Company.

Product

Bundle of physical, service, and symbolic characteristics that satisfy customer wants.

Convenience products

- Products that consumers purchase often and immediately with little effort

- Low price

Ex. Coffee, newspapers, eggs, milk

Shopping products

- Products purchased after a consumer has compared it with competitors.

- Medium price.

Ex. Sofas, clothing, electronics, appliances

Specialty products

- One of a kind products that consumers are familiar with and which have no other reasonable substitute

- High price

- Oftentimes specialty products are not compared with each other.

Ex. Lamborghinis, wedding dresses, handbags

Unsought products

- Products/services that consumers do not know or think about until the need for them arises

- Price varies

Ex. Funeral services, home security systems

Capital items

Products bought by businesses that last and are in use for a long time. Oftentimes expensive.

Ex. Copying machines, manufacturing machines

Expense items

Less costly products that are consumed by a business within a year.

Ex. Subscription licenses to programs

Categories of B2B products

Installations

Accessory equipment

Raw materials

Component parts and materials

Supplies

Installations

Major capital items that often require planning and approval from many individuals before a purchase.

Ex. Factories, heavy machinery, custom-made machinery

Accessory equipment

Smaller equipment that is shorter-lived compared to installations and requires fewer procedures to approve the purchase

Ex. Hand tools, printers

Raw materials

Mostly unprocessed materials used to make a product

Ex. Wood, steel, milk, soybeans

Component parts and materials

Premanufactured materials used to make a product

Ex.Hard drives used to build a laptop.

Supplies

Products that are used by the company but do not appear in the final product

Ex. Lighting for the factories

Properties of services

- Services fall into the same categories that products go under

- Services are often more difficult to evaluate prior to purchase because they are intangible

- Services are difficult to standardize because they are oftentimes tailored made for the customer's needs

Product line

A group of related products owned by a company that are marked by similar characteristics or intended for a similar market

Product mix

The assortment of product lines and individual goods and services that a company offers.

Product life cycle

Introduction

Growth

Maturity

Decline

Introduction stage

- Company attempts to promote demand for their product, by giving free trials and explaining how the product benefits the customer

- This is a costly stage, therefore some companies try to create the lowest budget product first

- Limited to no competition

Growth stage

- Sales increase as new customers join the existing customer base, who may now be repurchasing the product

- Word-of-mouth referrals and continued advertising attract new customers

- The company that created the product now earns profits

- Competition in the product's field increases as more companies start producing similar products

Maturity stage

- Sales begin to plateau as the market gets saturated with the product

- Competition is fierce

- Aggressive marketing to capture market share

Decline stage

- Sales drop

- Companies start to exit the industry

How do you extend the life cycle of a product?

- Add new users

- Increase customers' frequency of use

- Find new uses for the product

Test marketing

Introduces a new product supported by a marketing campaign into a selected city or geographical area

Brand

Name, term, sign, or symbol, or some combination that identifies the products of one company and differentiates them from competitors' offerings

Brand name

Part of a brand consisting of words or letters

Trademark

Brand that has been given legal protection

National/manufacturer's brand

Brand offered and promoted by a manufacturer

Private/store brand

Brand linked to a wholesaler

Family brand

Using a single brand name for a "family" of related products. Helps promote a product by leveraging customers' familiarity with the brand

Individual branding

Giving each product a unique name

Ex. Proctor & Gamble naming their cleaning products Tide, Cheer, and Gain.

Stages of brand loyalty

Brand recognition, brand preference, brand insistence

Brand recognition

Customers are aware of a brand but hold no preference to it

Brand preference

Customers choose one brand over another

Brand insistence

Customers go out of their way to purchase from the brand

Brand equity

Added value that a successful and respected name gives to a product. High brand equity lets companies command a larger market share

Brand awareness

The product is the first one that comes to mind when a product category is mentioned

Category advisor

Vendor assigned by a business that is in charge of dealing with other vendors for the business's project

Distribution strategy

Deals with the marketing activities and institutions involved in getting the right good or service to the company's customers

Distribution channel

Paths that products take to get from producer to consumer

Physical distribution

Physical movement that gets the product from producer to consumer

Ex. Customer service, transportation, inventory control

Direct distribution

Company is in charge of distributing their own products directly to consumers

Marketing intermediary

Company that moves goods between producers and consumers.

Marketing intermediaries provide utility for the consumers by making buying the product easy.

Ex.Retailer, wholesaler

Wholesaler

Distribution channel member that primarily sells to retailers, other wholesalers, or to businesses.

Manufacturer-Owned Wholesaling Intermediary

Manufacturers may want to control the distribution of their own products, so they may set up their own wholesaling operation

Sales branch

Stocks products and fill orders from their inventories