Principles of Marketing - Final Exam

Market Segmentation

The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.

Concentrated targeting Strategy

A strategy used to select one segment of a market for targeting marketing efforts.

Market

People or organizations with needs or wants and the ability and willingness to buy.

NIche

One segment of a market

Positioning

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

Product Differentiation

a positioning strategy that some firms use to distinguish their products from those of competitors.

Target Market

a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

Family Life Cycle

a series of stages determined by a combination of age, marital status, and the presence or absence of children.

Demographic Segmentation

Segmenting markets by age, gender, income, ethnic background, and family life cycle.

Psychographic Segmentation

market segmentation on the basis of personality, motives, lifestyles, and geodemographics.

Benefit Segmentation

the process of grouping customers into market segments according to the benefits they seek from the product.

Geographic Segmentation

refers to segmenting markets by region of a country or the world, market size, market density, or climate.

Usage Rate Segmentation

divides a market by the amount of product bought or consumed.

What are the four criteria that are necessary to define a market?

1. composed of people or organizations

2. people or organizations have wants and needs

3. they have the ability to buy the products they seek

4. willing to exchange their resources, for desired products

Define market segmentation and discuss why market segmentation is important to the well-being of most companies.

The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.

market segmentation plays a key role in the marketing strategy of almost all successful organizations and is a powerful marketing tool. Also it helps marketers define customer needs and wants more precisely.

To be useful, a segmentation scheme must produce segments that meet four basic criteria. Name and briefly describe each of these four criteria.

1. sustainability - segment must be large enough to warrant developing and maintaining a special marketing mix.

2. Identifiability and measurability - segments must be identifiable and their size measurable.

3. Accessible - firm must be able to reach members of targeted segments with customized marketing mixes.

4. Responsiveness - market segments must respond to a marketing mix differently from other segments.

What is a segmentation base (or segmentation variable)? Name the common segmentation bases used by marketers to segment consumer markets.

characteristics of individuals, groups, or organizations to divide a total market into segments.

Common segmentation bases: Geography, Demographics, psychographics, Benefits, and Usage Rate

Name the four broad segments of the business market.

Producers, resellers, government, and institutions

Name and describe the three targeting strategies. For each strategy, name one advantage and one disadvantage of using the strategy.

Undifferentiated Targeting - views market as one big market with no segments. Adv - saving on production. Disadv - Unimaginative product offerings.

Concentrated Targeting - firm selects a market niche. Adv - strong positioning. Disadv - Segments too small

Multisegment Targeting - firm chooses two or more well-defined market segments and develops a distinct marketing mix. Adv - Greater financial success. Disadv - High costs.

Brand

a name, term, symbol, design, or combination thereof that identifies a seller's product and differentiates them from competitors' products.

Brand Equity

the value of company and brand names.

Co-Branding

Placing two or more brand names on a product or its package.

Consumer Product

a product bought to satisfy an individual's personal wants.

Labeling

persuasive labeling - focuses on a promotional theme

informational labeling - designed to help consumers make product selections.

Service

result of applying human or mechanical efforts to people or objects

Product

Everything, both favorable and unfavorable, that a person receives in an exchange

Trademark

The exclusive right to use a brand or part of a brand

Products can be classified as either business/industrial or consumer products. Explain what distinguishes business products from consumer products and why it is important to understand this distinction.

The key distinction between business and consumer products is their intended use. It is important to understand this distinction because they are marketed to different target markets and tend to us different distribution, promotion, and pricing strategies.

Name and briefly define the four categories of consumer products. For each category, list three specific examples of products that would most likely be classified in that category.

1. convenience product - inexpensive item that merits little shopping effort - Examples - candy, soft drinks, combs, and aspirin, car washes.

2. shopping products - more expensive than convenience products and found in fewer stores. Examples - homogeneous - washers, dryers, refrigerators, TVs. heterogeneous - furniture, clothing, housing, and universities.

3. Specialty products - a particular item for which consumers search extensively and are very reluctant to accept substitutes. Example - Rolex watches, Rolls-Royce autos, Bose speakers, specialized forms of medical care.

4. Unsought products - unknown to potential buyers. Example - insurance, burial plots

Services have four unique characteristics that distinguish them from goods. Name and briefly define each of these four characteristics. Use the example of an airline to help describe each of the four characteristics.

1. Intangibility - inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed.

2. Inseparability - inability of the production and consumption of a service to be separated.

3. Heterogeneity - variability of inputs and outputs, tend to be less standardized and uniform than goods.

4. Perishability - cannot be stored, warehoused, or inventoried.

The Crayola brand is currently placed on a wide variety of products, including crayons (standard and fluorescent colors packaged in a wide variety of box sizes), markers (regular and washable), paints (watercolor and acrylic), scissors, glue, and children's clothing. Using Crayola as an example, describe the concepts of product item, product line, and product mix.

1. product item - specific version of a product - Crayola Crayons

2. Product line - group of closely related product items - standard and fluorescent, regular and washable, water color and acrylic.

3. product mix - all products that an organization sells.

crayons, markers, paints, scissors, glue, and children's clothing

What purpose does branding serve?

product identification, repeat sales, and new-product sales.

Packaging is an important component of the product strategy. List and briefly describe the four major functions of packing.

1 . to contain and protect products - most obvious function of packaging.

2. promoting products - differentiates a product from competing products

3. Facilitating storage, use, and convenience - easy to handle, open, and reclose

4. facilitating recycling and reducing environmental damage - compatibility with the environment.

Adopter

consumer who was happy enough with his or her trial experience with a product to use it again

Product Development

marketing strategy that entails the creation of marketable new products, the process of converting applications for new technologies into marketable r products.

Product Life Cycle

a biological metaphor that traces the stages of a product's acceptance, from its introduction (birth) to its decline (death).

Test Marketing

the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.

Explain why some products fail and others succeed.

Products fail because they do not offer any discernible benefit compared to existing products. Poor match between product features and customer desires.

Products succeed because they offer a good match between the product and market needs. Deliver a meaningful and perceivable benefit to a sizable number of people or organizations.

Describe how a multinational corporation can most efficiently and effectively meet the needs of the global market.

a firm starts with a global strategy and are better able to develop products that are marketable worldwide. Every product is developed for potential worldwide distribution, and unique market requirements.

There are five categories of adopters that participate in the diffusion process. Name and briefly describe each of these five categories in the correct order from earliest adopter to last adopter.

1. innovators - obsessed with trying new ideas and products

2. Early adopters - the do not adopt early in the product's life cycle

3. Early Majority - weighs the pros and cons before adopting a new product.

4. Late Majority - adopts a new product because most of their friends have already adopted it.

5. Laggards - do not rely on group norms, independence is rooted to their ties to tradition.

List the four stages of the product life cycle and discuss the typical characteristics for each stage.

1. Introductory stage - launch of a new product into the marketplace.

2. Growth Stage - sales grow at an increasing rate, competitors enter the market, profits are healthy

3. Maturity Stage - sales increase at a decreasing rate, longest stage of the PLC.

4. Decline Stage - dying slowly

Advertising

Impersonal, one-way mass communication about a product or organization that is paid for by a marketer.

AIDA Concept

a model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message; the acronym stands for attention, interest, desire, and action.

Competitive Advantage

One or more unique aspects of an organization that cause target consumers to patronize that firm rather than competitors.

Promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response.

Promotion Mix

The combination of promotional tools - including advertising, public relations, personal selling, and sales promotion - used to reach the target market and fulfill the organization's overall goals.

Define promotion and discuss its role in a company's marketing mix.

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response.

The manager determines the goals of the company's promotional strategy in light of the firm's overall goals for the marketing mix - product, place, promotion, and price.

What are the three basic tasks of promotion? For each of these three tasks, give two specific promotions examples of how that task might be accomplished.

1. Informing - explaining how the product works. Suggesting new uses for a product.

2. Persuading - influencing customers to buy now. Encouraging brand switching.

3. Reminding - reminding consumers where to buy the product. Maintaining consumer awareness.

The promotional mix is made up of a blend of four promotional tools. Name and briefly define each of these four tools.

1. Advertising - ability to communicate to a large number people at one time.

2. Public Relations - public image

3. Personal Selling - paid-for communication between two people in an attempt to influence each other.

4. Sales Promotion - use to stimulate increases in demand

Describe the promotional strategies used in each stage of the product life cycle.

1. introduction stage - to inform the target audience that the product is available.

2. growth stage - to emphasize the product's differential advantage over the competition.

3. maturity stage - promotion comes back into focus as product sellers try to increase their market share.

4. decline stage - advertising is reduced. Personal selling and sales promotion efforts may be maintained, in the retail level.

Define advertising and explain why new brands with small market share tend to spend proportionately more for advertising and sales promotion than those with a large market share.

Impersonal, one-way mass communication about a product or organization that is paid for by a marketer.

New brands spend proportionately more because beyond a certain level of spending for advertising and sales promotion diminishing returns set in. Called the advertising response function. A certain minimum level of exposure is needed to measurably affect purchase habits.

Name five major advertising media. List two advantages and disadvantages associated with the use of each.

1. Newspaper - Adv. - News value, Short lead time. Disadv. - Expensive, limited color capabilities.

2. Magazines - Adv. - Good reproduction for color, long advertising life. Disadv. - Long-term advertiser comments, slow audience build-up.

3. Radio - Adv. - Low cost, highly portable. Disadv. - No visual treatment, commercial clutter.

4. Television - Adv. - Ability to reach a wide audience, low cost per thousand. Disadv. - Short life of message, high campaign cost.

5. Internet - Adv. - Fastest growing medium, moderate cost. Disadv. - consumer access, Difficult of measure ROI.

Discuss social media marketing and describe how marketers use it to promote a product.

Social media marketing is the collaboration and sharing of online content between the sender and receiver. The primary objective is to promote brand awareness.

Cause related marketing

involves the association of a for-profit company with a nonprofit organization. the product of service is promoted, and money is raised for nonprofit.

Public relations

The marketing function that evaluates public attitudes, identifies areas within the organization the public may be interested in, and executes a program of action to earn public understanding and acceptance.

Publicity

Public information about a company, product, service, or issue appearing in the mass media as a news item.

Relationship selling

A sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships.

Sales promotion

Marketing activities that stimulate consumer buying and dealer effectiveness.

Importance of advertising

Advertising informs consumers about products and services. Advertising helps to increase sales. Advertising help to enhance a company's image. Stimulates demand for a product or service.

Is traditional advertising dead? Why or Why not?

Traditional advertising is not dead, it has evolved into the use of many other medium to increase the awareness of a product or service. Examples: social media. A business or brand can still be successful by using direct mail, news paper and billboards.

Consumer sales promotion seeks to reach new users, keep current users, and entice users to stock up. It can also be use to reinforce advertising for the good or service. Name and define five consumer sales promotional tools.

1. Coupons and rebates - offer the customer price reductions

2. Premiums - An extra item is offered to the consumer.

3. Loyalty Marketing programs - builds long-term relationships between a company and its key customers.

4. Contest and Sweepstakes - designed to create interest in a good or service, encourages brand switching.

5. Sampling - consumer has the opportunity to try a product for free.

Discuss the customer and product conditions that suggest personal selling is more important than advertising sales promotion.

The product has a high value.

It is a custom-made product.

There are few customers.

The product is technically complex.

Customers are concentrated.

Points from the Guest Speaker

The use of social media to market the fairgrounds.

Create a catching marketing appearance to develop awareness.

Take something old and make it new with a marketing strategy.

Changing the mindset of traditional customer and company execs.

Points from the Google video about Blurring the Lines

Points from the supermarket: $500 Billion Industry

Larger shopping carts, makes consumers buy more. Designed to lure customers in. Advertising within supermarkets, on shopping carts. Layout. Track consumer activities. Free samples. Tempting products using winding isles.