Business Exam 3

Marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

-Help Buyers Buy!!!! Customer-Orientation

-Need to start with what the customer wants/needs!!!

Marketing Concept

Three Components

1. Customer orientation = find out what customer wants and provide it for them

2. Service orientation = make sure everyone in the organization has the same objective: customer satisfaction. This should be a total and integrated organizational effort

3. Profit orientation = focus on the goods and services that will earn the most profit and enable the organization to survive and expand to serve more consumer wants and needs

The Four P’s

1. Product

2. Price

3. Place

4. Promotion

Steps in marketing process

Find opportunities, conduct research, identify target markets, etc.

(This is done before the four P’s can be focused on)

Marketing research

The analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions

Steps in marketing research process

1. Defining the question (the problem or opportunity) and determining the present situation

2. Collecting research data

   • Primary and secondary

3. Analyzing the research data

4. Choosing the best solution and implementing it

Primary data

Data that you gather yourself (not from secondary sources such as books and magazines)

• Specific to project

  • Surveys

  • Observations

  • Focus group = A small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, its products, or other given issues

Secondary Data

Information that has already been compiled by others and published in journals and books or made available online

• Advantages: easily accessible, no/low cost

• Disadvantages: doesn’t always coincide with your purpose, may not solve your problem

  • Company records

  • Government agencies

    • Ex. census data

  • Trade associations

  • Research companies

Marketing environment

Sociocultural, competitive, technological, global, and economic

Environmental scanning!!!

• Process of identifying the factors that can affect marketing success, and looking at changes in those environments to see whether there’s opportunities or threats arising

Consumer market segmentation

The process of dividing the total market into groups whose members have similar characteristics

Demographic segmentation = Dividing the market by age, income, and education level

Mass Marketing vs. Target Marketing

Mass = directed toward everyone

Target = directed toward those groups (market segments) an organization decides it can serve profitably

Relationship marketing

CRM = customer relationship marketing

Marketing strategy with the goal of keeping individual customers over time by offering them products that exactly meet their requirements; any transaction is not just 1 time

Last step of the consumer decision making process

Post-purchase evaluation —> Cognitive dissonance

Cognitive dissonance = the feeling of regret after making a large purchase. Whether or not you feel like you did the right thing

Why do people buy products?

• Seeking value (total product offer) by comparing benefits vs. costs

• Cost-benefit analysis is how people choose particular products

Product mix

The combination of product lines offered by a manufacturer

(Every product manufacturer offers)

Product line

A group of products that are physically similar or are intended for a similar market

• Ex. different flavors of Coca-Cola

Product differentiation

The creation of real or perceived product differences

• Actual product differences are sometimes quite small, so marketers must use a creative mix of branding, pricing, advertising, and packaging to create a unique, attractive image

• Create unique distribution strategies

Convenience goods

Products that the consumer wants to purchase frequently and with a minimum of effort

• Take intensive retail distribution strategy

Shopping goods and services

Those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers

• Take selective retail distribution strategy

Specialty goods and services

Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute, the consumer puts forth a special effort to purchase them

• Take exclusive retail distribution strategy

Packaging

• Attract buyer’s attention

• Protect the goods inside, stand up under handling and storage, be tamperproof, etc

• Be easy to open & use

• Describe and give information about the contents

• Explain the benefits of the item(s) inside

• Provide information on warranties, warnings, and other consumer matters

• Give some indication on price, value, uses

Brand

A name, symbol, or design that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors

Brand trademark

A brand that has exclusive legal protection for both its brand name and its design

Brand name

A word, letter, or group of words or letters that differentiates one seller’s goods and services from those of competitors

Brand categories

Manufacturers’ brands

• The brand names of manufacturers that distribute products nationally

Dealer/Private-Label

• Products that don’t carry the manufacturer’s name but carry a distributor or retailer’s name instead

Knockoff brands

• Illegal copies of national brand-name goods

Generic brands

• Non-branded products that usually sell at a sizable discount compared to national or private-label brands

• No brand attached to the product aside from what’s inside (usually comes with white or black wrapping paper)

New product development process

1. Idea generation (based on consumer wants and needs)

2. Product screening = A process designed to reduce the number of new-product ideas being worked on at any one time

3. Product analysis = Making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas

4. Development (including building prototypes

5. Concept testing = Taking a product idea to consumers to test their reactions

6. Commercialization (bringing product to market) = Promoting a product to distributors and retailers to get wide distribution, and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers

Product life cycle

A theoretical model of what happens to sales and profits for a product class over time; the four stages of the cycle are introduction, growth, maturity, and decline

4 stages

1. Introduction

2. Growth

3. Maturity

4. Decline

Skimming price strategy

Strategy in which a new product is priced high to make optimum profit while there’s little competition (charge maximum price at the beginning)

Penetration price strategy

Strategy in which a product is priced low to attract many customers and discourage competition

Non-price competition

• Add value and offer high quality

• Educate consumers

• Establish relationships

• Can offer additional services

Marketing intermediaries

Organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C)

• Wholesaler = A marketing intermediary that sells to other organizations

• Retailer

• Agents/Broker = marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don’t take title to the goods

Why do intermediaries matter?

• Create exchange efficiency

• Value vs. Cost 

  • Intermediaries can be eliminated, but their functions can’t

  • Someone always has to do the intermediaries functions

Non-store retailing

• Electronic retailing

• Telemarketing

  • The sale of goods and services by telephone

• Vending machines, kiosks, carts

• Direct selling

  • Selling to consumers in their homes or where they work

• Multi Level marketing

  • Not illegal, but very difficult to make business sense

• Direct marketing

  • Any activity that directly links manufacturers or intermediaries with the ultimate consumer

Contractual distribution

A distribution system in which members are bound to cooperate through contractual agreements

• Franchise systems (ex. McDonalds)

• Wholesaler-sponsored chains (ex. Ace Hardware)

• Retailer cooperatives (ex. Associated Grocers ; KeyFood for example)

Supply chain management

The sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

• ***Channel of distribution does not include suppliers' plants. When suppliers’ plants is included, you have a supply chain****

Integrated Marketing Communication (IMC)

A technique that combines all the promotional tools into one comprehensive and unified promotional strategy

Advertising

Paid, non-personal communication through various media by organizations and individuals who are in some way identified in the advertising message

• Ex. infomercials (a full-length TV program devoted exclusively to promoting goods or services)

Advertising purpose

To inform, persuade, and remind consumers

Personal selling

The face-to-face presentation and promotion of goods and services

Steps

1. Prospect and Quality

   • Researching potential buyers and choosing those most likely to buy and in the selling process, making sure that people have a need for the product, the authority to buy, and the willingness to listen to a sales message

2. Pre-approach

   • Learn as much as possible about the consumer and their wants

3. Approach

4. Make a presentation

5. Answer objections

6. Close the sale

   • Most important step (no closing = no commission)

7. Follow up

   • LAST STEP OF PROCESS!!!!

Promotional Strategies

Push strategy

• Promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise

  • Pushed through channel members

Pull strategy

• Promotional strategy in which heavy advertising and sales promotion efforts are directed toward consumers so that they’ll request the products from retailers

  • Pulled by stimulating consumers to ask retailers about your products

Retail distribution strategies

Intensive

• Distribution that puts products into as many retail outlets as possible

  • Used by manufacturers of convenience goods such as soft drinks and candy

Selective

• Distribution that sends products to only a preferred group of retailers in an area

  • Used by manufacturers of appliances, furniture, and clothing (shopping goods)

Exclusive

• Distribution that sends products to only one retail outlet in a given geographic area

  • Used by luxury auto manufacturers, for example

Consumer (B2C) Market

All the individuals or households that want goods and services for personal consumption or use and have the resources to buy them

Business-to-Business (B2B) Market

All the individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others

Utilities brought in by intermediaries

• Form

• Time

• Possession

• Place

• Information

• Service