Test 1- Marketing 3501

What is marketing?

the activity of creating, communicating, delivering, and exchanging offerings that provide VALUE to customers, the organization, its stakeholders and society

What can be exchanged?

Goods- physical products

Services- activities or benefits

Ideas- concepts promoted by non-profits or governments

Information

Experiences

What needs to be present for an exhange to take place?

1. Two or more parties with unsatisfied needs

2. Each party has a desire and ability to satisfy those needs

3. The parties have a way to communicate

4. Something of value to exchange

What is the difference between a need and a want?

A need is a necessity or requirement. Ex: food, water, shelter, safety

A want is a specific form of need that is shaped by a person's culture, personality and experiences

What is a demand?

when consumers have a want for a particular product and the ability/willingness to purchase it

What is a market?

A market consists of people or organizations that have:

1. a need or a want

2. the ability to purchase

3. the willingness to purchase

4. a specific product/service they are interested in

What does value mean? Why is it important and to whom?

customer value is the difference between the benefits received and the cost incurred by the customer.

Value= benefits-cost.

Value is important primarily to the customer, but also to the organization because providing superior customer value helps create customer loyalty and long term relationships

What is a utility?

the ability of a product or service to satisfy a customers needs or wants.

4 major types of utility

1. Form- creating the actual product (mainly concerns production)

2. place- making the product available where consumers want it

3. Time- making the product available when consumers want it

4. Possession- making it easier for consumers to obtain and use the product

What are the strategic decision making areas in marketing?

Product- what is being offered. ex: new iphone

Price- what customers pay ex: $$

Promotion- how customers are persuaded/informed ex: ads

Place- where/how the product is distributed. Ex: stores or online

The 4 P's work together to create customer value

How has the approach to marketing products and services changed over the years?

Production Orientation --> Sales Orientation ---> Marketing Orientation--> Relationship/ Societal Focus

Product Orientation- focusing on producing large quantities efficiently

Sales Orientation- focus on persuading customers to buy what the company has produced

Marketing Orientation- start with customer needs and create products to satisfy those needs

Relationship focus- build long term relationships rather than focusing only on individual transactions

What is the marketing concept?

the idea that an organization should:

1. satisfy customer needs

2. achieve organizational goals

What do responsible marketers focus on today?

customer needs

customer value

ethical behavior

stakeholders

society

sustainability

long-term relationships

what is societal marketing?

means that organizations should satisfy customer needs while also considering the long term well being of society.

customer needs+ organizational objectives + society's long term welfare

what are stakeholders?

individuals or groups that affect or are affected by an organization's decisions

exs: customers, employees, stakeholders, suppliers, government, communities, society

have marketers always behaved responsibly?

No. Some marketers have engaged in:

false advertising

deceptive pricing

misleading claims

manipulative practices

environmental greenwashing

Unethical behavior can lead too:

harm consumers

damage a companies reputation

cause legal problems

break trust

hurt stakeholders

reduce long term profitability

How do the 4 P's relate to you? (consumers)

they explain the marketing decisions that you make every day.

CH 2. What level are marketing decisions made?

they are mainly made that the business- unit/function level, while fitting into the organizations overall corporate strategy.

corporate level ---> business-unit level ---> functional level

how do marketing decisions fit with overall strategic decision-making

marketing strategy must support the organization's overall strategy

ex:

corporate goal: grow the company

marketing goal: increase market share

marketing strategy: attract new customers

marketing tactics: social media campaigns, discounts, influencer partnerships

Strategy vs. Tactic

strategy- a long term plan for achieving an organizations objectives

ex: increase sales among college students

where/how you are going

tactic- a specific action used to implement the strategy

ex: instagram advertising, student discounts, campus events, influencer partnerships

specific things you do to get there.

what are the 3 stages in business planning?

1. planning- determine where the organization is going and how it will get there

2. implementation- put the plan in action

3. evaluation- determine where the plan worked and make changes when necessary

how does a company establish its organizational foundation?

it establishes through:

organizational purpose

mission

culture

core values

ethical standards

what role does organization purpose play?

it help explains why the organization exists. it helps guide:

strategic decisions

goals

employee behavior

marketing decisions

resource allocation

why is being a visionary organization important?

to have a clear understanding of what it wants to become in the future.

it helps provide:

direction, motivation, consistency, long-term focus

this relates to mission and culture because mission is what the organization is trying to accomplish and culture is the organization's shared beliefs, values, and behaviors.

how do core values drive business decisions?

core values are fundamental beliefs that guide how an organization behaves. having core values determine which decisions are acceptable

for example: if a company values sustainability it may:

use environmentally friendly packaging

reduce waste

choose sustainable suppliers

what is the relationship between corporate culture and corporate ethics?

corporate culture influences employee behavior. If a company has a culture that emphasizes honesty and responsibility, employees are more likely to make ethical decisions.

What is a good mission statement?

it should:

identify the organization's purpose

focus on customers/needs rather than just products

be clear

be specific enough to guide decisions

being meaningful

provide direction

what factors are important when companies make strategic decisions?

factors to consider are:

mission

objectives

resources

strengths and weakness

customers

competitors

environment

opportunities

threats

stakeholders

do all organizations have the same objectives?

no. different businesses have different goals where they put emphasis on different objectives

revenue vs. profit

revenue- the money a company receives from selling goods and services

profit- the money remaining after expenses are subtracted from revenue.

profit= revenue- expenses

what is market share?

it is the percentage of total market sales accounted for by a particular company or brand.

ex: if the entire market sells $1 mil worth of products and your company sells $200,000 your market share would be 20%

how are good objectives set?

they should be:

specific

measurable

achievable

relevant

time-bound

what are smart objectives?

s- specific

m- measurable

a- achievable

r- relevant

t- time-bound

ex: "increase online sales by 10% within the next six months"

what other objectives could organizations pursue?

Organizations can pursue:

Profit

Revenue

Market share

Customer satisfaction

Customer loyalty

Brand awareness

Employee satisfaction

Social responsibility

Sustainability

Growth

These objectives aren't mutually exclusive.

A company can pursue profit while also improving customer satisfaction and sustainability.

How can a business grow?

one important framework is diversification analysis, which considers exsisting/new products and existing/new markets

Market Penetration

existing product + existing market

the company sells more of its existing product to its existing customers/market

ex: coca-cola encourages existing customers to drink coke more frequently

tactics:

discounts

advertising

loyalty programs

increased distribution

Market Development

existing product + new market

the company takes an existing product and sells it to a new market

ex: us company begins selling its product in another country

product development

new product + existing market

the company creates a new product for customer it already serves.

ex: apple introduces a new product designed for its existing customer base.

diversification

new product + new market

this is generally the riskiest of the four because the company is entering both a new product area and a new market

ex: a restaurant company starts selling an unrelated tech product to a completely different customer group

what must we always acknowledge in strategic marketing

we have to acknowledge that the environment is constantly changing. a strategy that works today may not work tomorrow

they have to consider:

customer

competitors

technology

economy

government regulation

society/culture

internal resources

what happens in the planning process?

the company:

1. analyzes the situation

2. identifies opportunities/problems

3. defines objectives

4. selects a target market

5. develops a marketing strategy

6. creates a marketing mix

7. develops a value proposition

what is a value proposition

a value proposition is the unique combination of benefits a company promises to provide to customers.

essentially: why should customers choose us instead of a competitor?

example: a hotel might promise: convenient locations + affordable price + excellent service + clean rooms

what happens in implementation?

implementation= putting the marketing plan into action.

this includes:

assigning responsibilities

allocating resources

executing marketing programs

launching promotions

distributing products

setting prices

what happens in evaluations?

involves:

measuring actual results

comparing results with objectives

identifying differences

correcting problems

you start evaluating during implementation- not only after everything is finished

CH 3- Should we ever make business decisions without information?

no, not if reliable information is available.

marketing decisions should be based on research and analysis rather than assumptions.

good decisions require understanding:

-customers

-competitors

-internal capabilities

-external environment

what is situational analysis?

situational analysis examines the organization's current situation.

it looks at internal environment- factors within the company & external environment- factors outside the company that may affect it.

the purpose is to understand where the organization currently stands before making decisions

what should a company examine in its internal environment?

examples include:

employees

management

financial resources

production capabilities

marketing capabilities

brand reputation

company culture

research and development

technology

organizational structure

what is an environmental scan?

an environmental scan is the process of continually acquiring information about external forces that could affect an organization.

the goal is to identify:

opportunties

threats

changes

trends

what are the six environments?

1. social- ex: changing lifestyles

2. demographic- ex: aging population

3. economic - ex: inflation

4. technological - ex: AI

5. competitive- ex: new competitor

6. regulatory- ex: new advertising laws

how do changes in demographics affect marketing?

changes in demographics can change the size and characteristics of markets.

ex: an aging population can create opportunities for healthcare, retirement services, and accessible products

what dangers exist with using demographics?

the danger is assuming that everyone within a demographic group behaves the same.

for example: all college students like the same products

demographics help identify potentials customers but marketers should combine them with other information like: lifestyle, attitudes, behaviors. and psychographics

what is a generational cohort?

a generational cohort is a group of people born during a particular period who experience similar major events and social influences

ex: baby boomers, gen x, millenials, and gen z

generational information helps marketers understand potential differences in values, media usage, spending, technology adoption, and lifestyle.

what is culture and how does it influence marketing?

culture is a set of values, ideas, attitudes, and behaviors shared by a group.

it affects what people eat, wear, products they consider appropriate, how they communicate, spend money, and what they consider to be important.

marketing must be culturally sensitive

how does the economy affect marketing?

economic conditions affect consumers' ability and willingness to purchase.

important factors include: inflation, employment, interest rates, income, consumer confidence, economic growth/ recession

consumer confidence refers to how optimistic or pessimistic consumers feel about their economic situation. if consumers feel confident, they're generally more willing to spend. if they feel uncertain they save money to reduce purchases.

gross income vs. disposable income vs. discretionary income

gross income- total income earned before taxes

disposable income- income remaining after taxes

discretionary income- income remaining after paying for necessities

why is shrinking/growing discretionary income important?

because discretionary income represents money consumers can spend on nonessential products and services.

if discretionary income increases consumers can spend more on restaurants, entertainment, clothing, etc.

if discretionary income decreases consumers may cut back on these purchases

why monitor the technological environment?

technology can:

create new products

change how products are sold

change consumer behavior

create new competitors

improve efficiency

create new communication channels

ex: social media, smart phones, ai, e-commerce, mobile payments

companies that fail to adapt can become obsolete.

what are four types of competition?

1. pure competition- many sellers offer essentially identical products ex: agricultural commodities

2. monopolistic competition- many sellers offer products that are similar but differentiated. ex: restaurants

3. oligopoly- a small number of large firms dominate the market. ex: airlines or automobile manufactures

4. monopoly- one company dominates the entire market. ex: a local utility provider in a market where there is only one provider.

what marketing decisions are associated with competition?

companies must determine:

how to differentiate

how to price

how to promote

where to distribute

how to position themselves

how to respond to competitors

the more competitive the market the more important differentiation and customer value become

why monitor the regulatory environment?

government regulations can affect:

advertising

product safety

pricing

labeling

privacy

competition

environmental practices

companies must comply with laws or face penalties

what is the FTC?

the federal trade commission is a US government agency that helps protect consumers and promote competition.

for marketers the FTC is especially important because it addresses issues involving:

deceptive advertising

unfair business practices

consumer protection

competition

why is ethical marketing important

ethical marketing helps maintain:

consumer trust

brand reputation

customer relationships

employee trust

long-term success

unethical marketing can result in:

lawsuits

government penalties

bad publicity

lost customers

damaged reputation

what should you do when you see a company behaving unethically?

from a consumer perspective possible responses include:

stop purchasing from the company

report the behavior

contact the company

file a complaint with the appropriate agency

inform others appropriately

companies should investigate unethical behavior

what drives corporate ethics?

corporate ethics can be influenced by:

leadership

corporate culture

core values

employees

stakeholders

laws/regulations

industry standards

personal moral standards

leadership is particularly important because employees often look to management for behavioral standards

what are the two moral philosophies?

moral idealism- the belief that certain actions are inherently right or wrong and that ethical principles should be followed.

utilitarianism- the belief that the ethical choice is the one that produces the greatest good for the greatest number of people

idealism= principles/rules

utilitarianism- consequences/results

how do companies balance profit, stakeholders, and society

profit responsibility- remain financially successful

stakeholder responsibility- consider employees, customers, suppliers, owners, etc.

societal responsibility- consider society and the environment

the goal is to not necessarily choose one over the other but to find sustainable ways to create value for multiple groups

what is green marketing?

involves marketing products or practices based on their environmental benefits

ex:

recyclable packaging

energy-efficient products

reduced waste

sustainable materials

be careful of greenwashing- where a company exaggerates or falsely claims environmental benefits

what is cause marketing?

it connects a company's marketing efforts to a social cause

ex: for every product sold is $1 to a local children's shelter

the company promotes both the product and the cause

why is sustainable marketing important?

it focuses on meeting present needs while protecting the ability of future generations to meet their needs

it considers: economic sustainability, environmental sustainability, and social responsibility

it can also strengthen long term customer relationships and protect resources.

CH 4- what is consumer behavior?

consumer behavior is the actions a person takes in purchasing and using products and services, including the mental and social processes that occur before and after those actions.

what are the 5 steps of the consumer purchase decision process?

1. problem recognition

2. information search

3. alternative evaluation

4. purchase decision

5. post purchase behavior

what is a need?

a basic requirement necessary for survival or well-being.

ex: food, water, shelter

in the purchase decision process, a consumer recognizes a need when there is a gap between their ideal situation and actual situation.

how does motivation relate to problem recognition?

motivation is the force that stimulates behavior to satisfy a need.

problem recognition occurs when a consumer notices the difference between an actual state vs. ideal state

ex: actual state- my laptop is slow

ideal= i want a fast laptop

that difference motivates the consumer to consider getting a new laptop.

what is maslow's hierarchy of needs?

1. physiological. ex: food

2. safety ex: insurance

3. social ex: community

4. personal/esteem ex: luxury products

5. self-actualization ex: education/personal growth

can one product satisfy multiple needs?

yes, for example a cellphone.

safety --> emergency communication

social --> staying connected

esteem --> status/brand image

self-actualization --> customization

marketers can emphasize different benefits of the same product to appeal to different needs

what's important when consumers search for information?

consumers want information that helps them:

reduce uncertainty

reduce risk

compare alternatives

determine value

they many conduct:

internal search- recall information already stored in memory

external search- seek new information from outside sources

where do consumers look for credible information?

external sources include:

personal sources- friends, family, etc.

public sources- reviews, news, consumer reports

marketer-dominated sources- advertising, salespeople, company websites

generally personal and public sources are viewed as more independent/ credible than marketer controlled sources

what is the least biased source?

personal sources are often considered highly credible because they are generally independent of the marketer.

why do marketers need to understand how consumers assess value?

because consumers don't necessarily evaluate products using the same criteria marketers think are important.

understanding customer value allows marketers to

improve products

design advertising

set prices

position products

emphasize important benefits

what are evaluative criteria?

evaluative criteria are factors consumers use to compare different alternatives.

ex: for a hotel criteria may include: price, location, cleanliness, amenities, reviews, safety

objective vs. subjective criteria

objective- can be measured relatively easily

ex: hotel room price= $150

subjective- depends on individual perception

ex: "this hotel feels luxurious"

different consumers can evaluate the same product differently

what happens if marketers don't understand evaluative criteria?

they may emphasize benefits customers don't care about.

ex: hotel advertises a nice lobby, but customers care more about free parking, location, wifi, etc.

what is a consideration set?

a group of brands/products that a consumer actually considers when making a purchase.

who cares most about the actual purchase?

retailers and marketers care heavily about the purchase stage because they want to make it easy for the consumer to complete the purchase.

customers are more concerned with:

price

payment methods

availability

delivery

conveince

purchase location

marketers need to make sure the purchase process is as easy as possible

what question is asked during post-purchase evaluation?

the consumer usually asks "did I make the right decision?"

they compare the actual performance of the product with their expectations

what is cognitive dissonance/buyer's remorse?

cognitive dissonance is the anxiety or doubt a consumer experiences after making a purchase.

ex: buying an expensive laptop then seeing another online that looks better

how can marketers reduce it?

follow-up emails

customer support

return policies

positive reviews

what determines how long the purchase process takes?

the amount of purchase involvement.

involvement is the personal, social, and economic significance of a purchase to the consumer

high involvement --> longer decision process

low involvement --> shorter decision process

what is purchase involvement?

it is the importance/significance of a purchase to the consumer

gum--> low involvement

a house --> extremely high involvement

what types of risk can customers perceive?

financial risk- losing money

performance risk- product doesn't work

social risk- others dont approve

psychological risk- product doesnt fit self image

physical risk- product causes harm

time risk- wasting time

how does risk relate to involvement?

generally:

higher perceived risk--> higher involvement

lower perceived risk --> lower involvement

a $2 snack doesn't require as much research as buying a $30,000 car does

Routine Problem Solving

used for low-involvement, frequent purchases

characteristics- little thought, little information search, familiar brands

ex: gum, milk, paper towels, toothpaste

limited problem solving

moderate involvement

the consumer has some experience but still compares alternatives

ex: choosing a restaurant, buying new clothes, choosing headphones

extended problem solving

high involvement

the consumer spends significant time researching alternatives

ex:

buying a car

buying a house

choosing a college

purchasing expensive electronics

what should marketers do for low-involvement products

make the purchases easy and convenient

use:

frequent advertising

discounts

coupons

product availability

brand recognition

point of purchase displays

what should marketers do for high involvement products?

provide lots of credible information

use:

detailed websites

reviews

comparisons

demonstrations

salespeople

guarantees

testimonials

what are the five situational factors?

1. purchase task- buying for yourself vs. buying a gift

2. social surroundings- shopping with friends

3. physical surroundings- store lighting/music/layout

4. temporal effects- time available to shop

5. antecedent states- mood, fatigue, hunger, etc.

what is self-concept?

self concept is the way a person sees themselves

consumers often choose products that fit their self-concept

ideal self vs. actual self

actual self- who you believe you currently are

actual self purchases- products that reinforce your actual identity

ideal self- who you would like to become

ideal self purchases- products that help someone become closer to their desired identity. ex: buying expensive workout clothes.

what is perception?

it is the process through which people select, organize, and interpret information to create a meaningful picture of the world.

the process begins when a person is exposed to information

what is selective perception?

consumers don't process all available information.

they selectively:

expose themselves

comprehend information

retain information