MKTG 400 Unit 2

Business-to-business marketing

the marketing of products and services to companies, governments, or not-for-profits organizations for use in the creation of products and services that they can produce and market to others

Organizational buyers

those manufacturers, wholesalers, retailers, service companies, nonprofit organizations, and government agencies that buy products and services for their own use or for resale

Organizational markets

industrial, reseller, government

Derived demand

the demand for industrial products and services that is driven by, or derived from, the demand for consumer products and services

Organizational buying criteria

the objective attributes of the supplier’s products and services and the capabilities of the supplier itself

Organizational buying behavior

the decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers

Buying center

the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision

Users

people in the organization who actually use the product or service

Influencers

affect the buying decision

Buyers

have formal authority and responsibility to select the supplier and negotiate the terms of the contract

Deciders

have the formal or informal power to select or approve the supplier that receives the contract

Gatekeepers

control the flow of information in the buying center

Supplier development

the deliberate effort by organizational buyers to build relationships that shape suppliers products, services, and capabilities to fit a buyer’s needs and those of its customers

Supply partnership

a relationship that exists when a buyers and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer

New buy

first-time buyer of the product or service

Straight rebuy

the buyer or purchasing manager reorders an existing product or service from the list of acceptable suppliers

Modified rebuy

the users, influencers, or deciders in the buying center want to change the product specifications, price, delivery schedule, or supplier 

E-marketplace

online trading communities that bring together buyers and supplier organizations to make possible the real-time exchange of information, money, products, and services. Also called *B2B exchanges* or *e-hubs*

Traditional auction

in an e-marketplace, an online auction in which a seller puts up an item for sale and would-be buyers are invited to bid in competition with each other

Reverse auction

in an e-marketplace, an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other

Globalization

the focus on creating economic, cultural, political, and technological interdependence among individual national institutions and economies

Gross domestic product (GDP)

the monetary value of all products and services produced in a country during one year

Balance of trade

the difference between the monetary value of a nation’s exports and imports

Protectionism

the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas

Tariffs

government taxes on products or services entering a country that primarily serve to raise prices on imports

Quota

a restriction placed on the amount of a product allowed to enter or leave a country

World trade organization (WTO)

a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions

Trade war

a situation in which countries try to damage each other's trade, typically by imposition of tariff and quota restrictions

Global competition

exists when firms originate, produce, and market their products and services worldwide

Multi-domestic marketing strategy

a strategy used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business

International firms

engages in trade and marketing in different countries as an extension of the marketing strategy in its home country

Multinational firms

views the world as consisting of unique parts and markets to each part differently

Transnational firms

views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants rather than differences

Global marketing strategy

a strategy used by transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ

Global brand

a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs

Global consumers

consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services

Cross-cultural analysis

the study of similarities and differences among consumers in two or more nations or societies

Values

represent personally or socially preferable modes of conduct of states of existence that tend to persist over time

Customs

what is considered normal and expected about the way people do things in a specific country

Cultural symbols

 things that represent ideas and concepts in a specific culture

Back translation

the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors

Cultural ethnocentrism

the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products

Economic infrastructure

a country’s communications, transportation, financial, and distribution systems- is a critical consideration in determining whether to try to market to a country’s consumers and organizations 

Exporting

a global market-entry strategy in which a company produces products in one country and sells them in another country

Direct exporting

when a firm sells its domestically produced products in a  foreign country without intermediaries

Indirect exporting

when a firm sells its domestically produced products in a foreign country through an intermediary

Licensing

a company offers the right to a trademark, patent, trade secret, or other similarly valued item of intellectual property in return for a royalty or a fee

Joint venture

a global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company

Direct investment

a domestic firm actually investing in and owning a foreign subsidiary or division

Dumping

occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost

Gray market

a situation where products are sold through unauthorized channels of distribution. Also called *parallel importing* 

Marketing research

the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions

Marketing research approach

1. Define the problem
2. Develop the research plan
3. Collect relevant information
4. Develop findings
5. Take marketing actions

Measures of success

criteria or standards used in evaluating proposed solutions to the problem

Constraints

in a decision, the restrictions placed on potential solutions to a problem

Primary data

the facts and figures that are newly collected for the project

Secondary data

the facts and figures that have already been recorded prior to the project at hand

Observational data

the facts and figures obtained by watching how people actually behave, using mechanical, personal, or neuromarketing data collection methods

Questionnaire data

 the facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors

Big data

describes large amounts of data collected from a variety of sources

Data mining

extracting hidden predictive information to find patterns and links

Sales forecast

consists of the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts

Cross tabulation

a method of presenting and analyzing data involving two or more variables to discover relationships in the data. Also known as *cross tab*

Steps in segmenting and targeting markets

1. Group potential buyers into segments
2. Group products to be sold into categories
3. Develop a market-product grid and estimate size of markets
4. Select target markets
5. Take marketing actions to reach target markets

Ways to segment consumer markets

1. Geographic
2. Demographic
3. Psychographic
4. Behavioral

Criteria for grouping potential buyers into segments

1. Simplicity and cost-effectiveness of assigning potential buyers to segments 
2. Potential for increased profit
3. Similarity of needs of potential buyers within a segment
4. Difference of needs of buyers among segments
5. Potential of a marketing action to reach a segment 

Criteria for selecting target markets

1. Market size
2. Expected growth
3. Competitive position
4. Cost of reaching the segment
5. Compatibility with the organization’s objectives and resources

Product positioning

the place a product occupies in consumers’ minds based on important attributes relative to competitive products

Product repositioning

changing the place a product occupies in a consumer’s mind relative to competitive products

Head-to-head positioning

involves competing directly with competitors on similar product attributes in the same target market

Differentiation positioning

involves seeking a less-competitive, smaller market niche in which to locate a brand

Perceptual map

a  means of displaying in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how they perceive competing products or brands, as well as the firm’s own product or brand

Product

a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value

Services

intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value

Consumer products

products purchased by the ultimate consumer

Convenience products

items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort

Shopping products

items for which the consumer compares several alternatives on criteria such as price, quality, or style

Currency exchange rate

the price of one country’s currency expressed in terms of another country’s currency

Countertrade

the practice of using barter rather than money for making global sales

Define the problem

1. Set research objectives
2. Identify possible marketing actions

Develop the research plan

1. Specify constraints
2. Identify data needed for marketing actions
3. Determine how to collect data

Collect relevant information

1. Obtain secondary data
2. Obtain primary data

Develop findings

1. Analyze the data
2. Present the findings

Take marketing actions

1. Make action recommendations
2. Implement action recommendations
3. Evaluate results

Market segmentation

involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action

Product differentiation

a marketing strategy that involves a firm using different marketing mix actions to help consumers perceive the product as being different and better than competing products 

Market-product grid

a framework to relate the market segments of potential buyers to products offered or potential marketing actions

Segmentation strategies

1. One product and multiple market segments
2. Multiple products and multiple market segments
3. Segments of one- “mass customization”

Business products

products organizations buy that assist in providing other products for resale. Also called *B2B products* or *industrial products*

Product line

a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range

Product mix

consists of all product lines offered by an organization

Product item

a specific product that has a unique brand, size, or price

Commercialization

the stage of the new-product development process that positions and launches a new product in full-scale production and sales

Protocol

a statement that, before product development begins, identifies (1) a well-defined target market; (2) specific customers’ needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers

Open innovation

practices and processes that encourage the use of external as well as internal ideas and internal as well as external collaboration when conceiving, producing, and marketing new products and services

New-product strategy development

the stage of the new-product development process that defines the role for a new product in terms of the firm’s overall objectives

Idea generation

the stage of the new-product development process that develops a pool of concepts to serve as candidates for new products, building upon the previous stage’s results

Screening and evalution

the stage of the new-product development process that internally and externally evaluates new-product ideas to eliminate those that warrant no further effort

Development

the stage of the new-product development process that turns the idea on paper into a prototype

Market testing

the stage of the new-product development process that exposes actual products to prospective consumers under realistic purchase conditions to see if they will buy