marketing exam 2

What does marketing research do?

reduces uncertainty

How does marketing research reduce uncertainty?

by systematically collecting and analyzing information to support marketing decisions.

What are challenges in marketing research?

defining the actual decision problem, obtaining representative and accurate information, avoiding bias, balancing time and cost, protecting privacy, and translating findings into actions

What are the steps in in marketing research approach?

1. Define the problem.

2. Develop the research plan.

3. Collect relevant information.

4. Develop findings from the data.

5. Take marketing actions.

• Distinguish the managerial decision (what to do)

• from the research question (what must be learned).

Secondary data

data that already exists

Census tables, industry reports, company sale records, syndicated data

examples of secondary data

What are the advantages of secondary data?

fast, inexpensive, useful for identifying trends and framing questions

limitations of secondary data

may be outdated, collected for another purpose, or use unsuitable categories.

primary data

collected for the current research question such as a new survey or experiment

Observation

records actual behavior rather than relying solely on self-reports (surveys + questionaires)

Mechanical observation includes

(Using Technology) This uses machines and tech tools to track what people do automatically. traffic counters, checkout scanners, eye tracking, or website clickstream tracking

observation and ethnographic research

watching how people actually behave instead of just asking them questions.

Ethnography

(Watching in real life) studies consumers in their natural settings to uncover routines, context, and unmet needs

pros and cons of ethnography

gives rich insight but can be time-consuming and hard to generalize

Questionnaires

measure attitudes, preferences, awareness, intentions, and reported behavior.

leading questions, double-barreled questions, ambiguous terms, loaded language, confusing negatives, non exhaustive response options, and biased question order.

bad things to have in questionnaire

Well worded question in questionnaire

neutral, specific, and asks one thing at a time

primary focus of marketing research

To understand why or what consumers think and do

What is a Marketing Metric?

A numerical indicator used to track, measure, and evaluate performance over time.

If an exam question asks you to measure "Awareness," "Retention," "Conversion," or "Market Share," what concept is it testing?

Marketing Metrics (quantifiable data points)

How do you choose between Research vs. Metrics on a test?

• Research = Consumer thoughts, attitudes, and motivations ("Why/What").

• Metrics = Performance tracking, numbers, and percentages ("How much").

What is the purpose of market segmentation?

To divide a heterogeneous market into groups with similar needs or responses so a firm can select target segments and design a relevant marketing mix.

When is segmentation worthwhile for a firm?

When customer differences are meaningful and the firm can serve those segments profitably.

What are the criteria for forming a useful/practical segment?

Measurable, substantial enough to pursue, accessible through marketing channels, differentiable in needs/responses, and actionable with company resources.

What is the difference between a segmentation "base" and a "variable"?

A base is the broad dimension (e.g., demographic), while a variable is its specific measure (e.g., household income).

What are the four main categories of segmentation bases?

Geographic, Demographic, Psychographic, and Behavioral.

What are common examples of Demographic segmentation variables?

Age, income, and household composition.

What are common examples of Behavioral segmentation variables?

Usage rate, benefits sought, loyalty, and occasion.

What are the steps in segmentation, targeting, and positioning?

1. Group potential buyers into segments.

2. Group products into categories.

3. Develop a market-product grid and estimate segment size.

4. Select target markets.

5. Take marketing actions to reach target markets.

What are the four main segmentation strategy choices?

• Undifferentiated: One offering for a broad market.

• Concentrated: Focus on one specific segment.

• Differentiated: Distinct offers and marketing mixes for multiple segments.

• Micromarketing: Localized or individual tailoring.

How is brand positioning defined?

The place a brand occupies in the target customer's mind compared with competitors.

What are the four key components of a useful positioning statement?

The target customer, frame of reference, point of difference, and reason to believe.

What is repositioning?

Intentionally changing existing customer perceptions of a brand or offering relative to alternatives.

What are common ways a firm can achieve product differentiation?

Through features, quality, design, service, convenience, image, or customer experience.

What is the difference between marketing synergies and product synergies?

Marketing synergy saves money and builds power in the market, while product synergy saves money and increases efficiency in the factory.

Marketing synergy

happen when you use the same brand, ads, or sales team to sell different items.

Product synergies

happen when different items share the same technology, factories, or parts behind the scenes

Geographic segmentation examples

religion, climate, density

Psychographic segmentation examples

lifestyle, personality, values

Undifferentiated segmentation strategy

You offer one product and use one message for everyone in the entire market. You do not divide customers into groups.

Concentrated segmentation strategy

You focus all your time, money, and effort on just one specific group of customers.

Differentiated segmentation strategy

you target multiple different groups and create a unique product or a different ad style for each group.

Micromarketing segmentation strategy

You tailor your products and ads to very small groups, local neighborhoods, or even single, individual people.

What is the general sequence of the new-product development process?

1. New-product strategy

2. Idea generation

3. Screening/evaluation

4. Business analysis

5. Development

6. Market testing

7. Commercialization

How does the product development process change from the early stages to the later stages?

• Early stages: Filter out bad ideas quickly.

• Later stages: Require deeper financial evidence and investment.

What is a High-Learning Product?

A product that is unfamiliar to consumers. It requires a lot of customer education, meaning people take longer to try and adopt it.

What is a Low-Learning Product?

A product that is easy to understand. It fits right into existing customer habits, so people adopt it very quickly.

How should marketing promotions match the product's learning level?

The promotion and demonstrations must match the learning burden. High-learning needs heavy demonstrations; low-learning needs much less.

What are common barriers that stop customers from buying a new product?

• Perceived risk or high price

• Clash with current habits

• Complexity

• Hard to test out first

• Poor awareness

How can a company reduce adoption barriers for customers?

By offering demonstrations, free samples, money-back guarantees, educational content, easy onboarding, and trusted reviews.

What is Product Inertia?

The customer's reluctance to change their existing behavior. Even a great product can fail if switching to it feels too inconvenient.

What key factors drive a new product to succeed?

• Clear customer value and distinct advantage

• Clearly defined target market

• Strong execution and perfect timing

• Good organizational fit

What key risks cause a new product to fail?

• Weak differentiation (too similar to competitors)

• Poor demand estimates or high costs

• Low consumer awareness

• Quick competitive response

• Consumer resistance to change

What are the 4 main types of consumer products?

1. Convenience (frequent, low-effort purchases)

2. Shopping (buyer compares price/quality)

3. Specialty (strong buyer preference, special effort)

4. Unsought (not actively looked for by buyers)

What categories make up business products?

• Components/parts (become part of the final product)

• Raw materials

• Installations

• Accessory equipment

• Supplies

• Services

How do promotion needs differ between convenience and shopping products?

• Convenience: Needs broad availability and frequent reminder ads.

• Shopping: Benefits from comparative info and helpful sales assistance.

How do promotion needs differ between specialty and unsought products?

• Specialty: Emphasizes brand differences and selective sales channels.

• Unsought: Requires heavy awareness-building and personal selling.

What happens in the Introduction stage Product Life Cycle?

Slow sales, high launch costs, heavy focus on awareness and product trials.

What happens in the Growth stages of the Product Life Cycle?

Rising sales, more competitors entering the market, and expanding distribution.

What happens in the Maturity stage of the Product Life Cycle?

Slower growth, intense competition, focus on differentiation and efficiency.

What happens in the Decline stage of the Product Life Cycle?

Falling sales.

What are a company's options when a product enters the Decline stage?

• Maintaining it

• Harvesting it (reducing costs to maximize remaining profit)

• Repositioning it

• Dropping the product entirely

Is the Product Life Cycle (PLC) a strict schedule?

No. The PLC is a planning model, not a fixed timetable.

Market modification strategies goal

To extend maturity, seek new users, new geographic or demographic markets, increased usage, or new uses.

What is the difference between Market Modification and Product Modification?

• Market Modification: Changing who uses the product or how often (finding new users, locations, or uses).

• Product Modification: Changing the actual features, quality, or design of the item.

How can services be classified?

by type of customer or delivery

• Consumer vs business services

• people vs equipment based

• for profit vs nonprofit

What are the 4 distinctive characteristics of a service?

1. Intangibility (cannot be touched)

2. Inseparability (cannot separate service from the provider)

3. Inconsistency / Variability (quality can vary)

4. Inventory / Perishability (cannot be stored for later)

Why does service inconsistency happen, and how do you manage it?

• Why: Quality varies by employee, time, or location.

• Fix: Use employee training, standardized processes, and clear service recovery plans.

What 4 factors must a company consider when setting prices?

1. Costs (sets the financial floor)

2. Demand/Customer value (sets the maximum ceiling)

3. Competition (creates reference points)

4. Profit/Organizational objectives (shapes the final decision)

What is the difference between Fixed Costs and Variable Costs?

• Fixed Costs: Do not change with production levels (e.g., rent, manager salaries).

• Variable Costs: Change directly with the number of units sold (e.g., raw materials, packaging).

What is the formulas for Total Cost?

Total cost = fixed cost + total variable cost

What is the formula for unit contribution margin?

price − variable cost per unit

What is the formula for break-even units?

fixed costs ÷ unit contribution margin

What are the three main cost-oriented pricing methods?

standard markup, cost-plus, target profit

standard markup pricing

adds a markup to costs

cost-plus pricing

adds a specified amount or percentage to estimated cost

target-profit pricing

sets a price/volume combination to meet a desired profit

What is the main flaw of cost-oriented pricing methods?

They are easy to calculate, but they completely overlook customer demand and competitor pricing.

What is the formula for Price Elasticity of Demand?

percentage change in quantity demanded ÷ percentage change in price

How do you classify Elastic, Inelastic, and Unit Elastic demand using absolute values | E |

• | E | > 1 Elastic (Quantity changes a lot when price changes)

• | E | < 1 Inelastic (Quantity barely changes when price changes)

• | E | = 1 Unit Elastic (Changes are exactly proportional)

How does a price increase affect Total Revenue for elastic vs. inelastic demand?

• Elastic Demand: Price increase → Reduces total revenue.

• Inelastic Demand: Price increase → Increases total revenue.

What are some standard pricing policies used by companies?

• One-price vs. Flexible-price: Fixed price for everyone vs. negotiable prices.

• Everyday low pricing (EDLP) vs. High-low pricing: Constant low prices vs. high regular prices with frequent promotions.

• Price lining: Pricing a line of products at specific price points (e.g., $20, $40, $60).

• Odd-even pricing: Pricing items just below whole numbers (e.g., $9.99 instead of $10.00).

What are Trade, Seasonal, Quantity, and Cash discounts?

• Trade: Pays retail/wholesale partners for performing sales functions.

• Seasonal: Rewards buying ahead of time or outside peak periods.

• Quantity: Rewards larger volume purchases.

• Cash: Rewards customers who pay their bills promptly.

What is the Robinson-Patman Act, and what should you associate it with for exams?

• What it is: A U.S. law targeting anticompetitive price discrimination among competing business buyers.

• Exam takeaway: Price differences aren't always illegal if justified by costs or meeting competition, but associate it directly with discriminatory pricing.

What is the difference between a Direct Channel and an Indirect Channel?

• Direct Channel: The producer sells straight to the customer with no middleman.

• Indirect Channel: Includes independent middlemen like wholesalers, agents, or retailers.

What are the three main paths for consumer channels?

1. Producer → Consumer

2. Producer → Retailer → Consumer

3. Producer → Wholesaler → Retailer → Consumer

What is the main trade-off when using longer distribution channels?

Longer channels provide wider market reach, but they reduce the producer's direct control over sales and branding.

What two types of intermediaries are unique to business channels?

1. Industrial distributors

2. Agents

What are the 3 main functions that channel intermediaries perform?

1. Transactional: Buying, selling, and taking risks.

2. Logistical: Gathering assortments, storing, sorting, and transporting.

3. Facilitating: Financing, quality grading, and providing market information

What 4 types of market utility (value) do intermediaries create for buyers?

1. Time value

2. Place value

3. Possession value

4. Form value

What key criteria should a firm look at when choosing channel members?

• Market coverage and customer fit

• Capabilities and service quality

• Reputation and financial stability

• Cost and willingness to cooperate

What is a Strategic Channel Alliance?

An agreement where one firm uses another company's already-established distribution network, usually to enter a new market without building its own setup from scratch.

Inventory decisions are a balancing act between which conflicting priorities?

Balancing high service levels & product availability against carrying costs (holding stock) and stockout costs (running out of stock

What is Replenishment Time (Lead Time)?

The exact time interval between placing an inventory order and receiving that stock ready to use.

How do longer or highly unpredictable lead times affect a supply chain?

They require the company to hold a larger amount of safety stock to avoid running out of products. Forecasting and coordination help balance supply and demand.

What is blockchain in a supply chain, and what are its main benefits?

• What it is: A shared, tamper-resistant digital ledger.

• Benefits: Improves traceability, verifies product movements, tracks provenance (origin), and boosts transparency.

What are the main limitations or hurdles of using blockchain in supply chains?

• Human error during initial data entry

• High implementation costs

• Interoperability (getting different software systems to talk to each other)

• Requiring full adoption across all business partners