Marketing 3010 Exam 1

Marketing

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

Creating Value

We must always look for ways to create value for our customers

Customer Value

Perceived benefits, both monetary and nonmonetary, customers perceive from a product compared to cost to obtain product; must provide benefits to meet their needs and wants before the competition does

Communicating Value

The process of conveying the benefits and features of a product or service to customers, ensuring they understand its value and relevance to their needs.

Delivering Value

The act of providing customers with a product or service that meets or exceeds their expectations, ensuring satisfaction while addressing their needs effectively

Supply Chain

A set of multiple companies including manufacturers, wholesalers, retailers, transportation companies and others directly linked from a source to a customer

History of Marketing

Product Orientation, Sales Orientation, Marketing Concept

Product Orientation

Post industrial revolution prior to 1920, focused on efficient processes and production levels

Sales Orientation

Post 1920s and through WW2, firms realized they needed to persuade customers

Marketing Concept

Early 1950s marked the need to listen to consumer wants; continues to evolve today

Need

States of felt deprivation: hunger, thirst, transportation

Want

the form needs take as they are shaped by personality, culture, and the buying situation

Marketing Mix

The Four P’s (Product, Price, Place, Promotion)

Product

Combination of goods, services, or ideas offered to consumers: the product creates value

Price

The amount of something a buyer exchanges with the seller to obtain the product. It captures the value and conveys the products quality

Place

The activities performed to get product to consumers (distribution)

Promotion

The activities to communicate the value, persuading consumers to buy the product

Brand

The name, term, symbol, design, or any combination of these that identifies and differentiates a firm’s products

Global Marketing

Global marketing is the practice of planning, creating, promoting, and selling products or services to customers worldwide while considering cultural, economic, and regional differences.

Marketing Analytics

The practice of measuring, managing, and analyzing market performance.

Ethics

The moral standards of a society

Nonprofit Organization

Have motives other than making profits (Examples: Hospitals, colleges, zoos, churches, charities)

Strategic Planning

The process of defining a firm’s objectives and developing a method for achieving the objectives: typically includes the plans for key areas, such as marketing finance, risk management, and human resources

Mission Statement

A concise affirmation of the firm’s long-term purpose

Marketing Plan

An action orientated document to guide the marketing strategy: must be consistent with overall strategic plan while containing input and review from all departments. (Five main components: Executive summary, situation analysis, competition analysis, financials, and controls)

Executive Summary

Synopsizes (1-2 pages) the marketing plan’s main points

Situation Analysis

The systematic collection of data to identify the trends, conditions, and competitive forces that have the potential to influence the performance of the firm and the choice of appropriate strategies. (Three subsections: Market Summary, BCG Matrix, SWOT Analysis)

Market Summary

Describes the current state of the market

SWOT Analysis

Strengths: Internal, Positive (Help us reach our objective)

Weakness: Internal, Negative (Limitations that may hurt us from completing our objective)

Opportunities: External, Positive (External factors that a company may exploit to its advantage)

Threats: External, Negative (External factors that challenge a company’s performance)

BCG Matrix

Dogs: Low Market Share/ Low Market Growth

Question Marks: Low Market Share/ High Market Growth

Cash Cows: High Market Share/ Low Market Growth

Stars: High Market Share/ High Market Growth

Competition Analysis

Looks at direct and indirect competitors in the marketplace

Direct Competitors

Firms who offer the same options compete against each other; substitute products can offer an alternative

Indirect Competitors

Products or services that provide an alternative solution to the same market (Example: Chipotle to Chick-Fil-A)

Marketing Strategy

List the actions the firm must take to accomplish the marketing objectives it established in its mission statement and strategic planning (Must be specific, realistic, and measurable)

Sales Forecast

How many units we will sell in a specific period of time?

Expense Forecast

What costs will we incur with this product?

Break-even analysis

An estimate of how much the company needs to sell to cover its expenses (break-even)

Implementation

Provides a detailed act of how the specific actions of the marketing plan will be carried out and who will be responsible for doing so

Organizational Structure

An outline of the organization structure assigns specific responsibility for the parts of the marketing plan

Contingency Plan

The actions the company will take if the initial marketing strategy falls short of expected results

Segmentation

The process of dividing a larger market into smaller groups, or market segments, based on meaningfully shared characterisitics

Target Markets

The group of customers toward which an organization has decided to direct its marketing efforts

Positioning

The activities a firm undertakes to create a certain perception of its product in the eyes of the target market

Global marketing Strategy

How to share our message globally and how to enter those markets, five options: exporting, licensing, franchising, joint ventures, direct ownership

Marketing Analysis

The practice of measuring, managing, and analyzing market performance to maximize marketing effectiveness

Marketing Environment

The external factors and forces that affect a company’s ability to meet its marketing goals. Those forces include:

-Political

-Economic

-Demographic

-Sociocultural

-Technological

-Legal Factors

Environmental Scanning

The act of monitoring developments outside the firm’s control with the goal of detecting and responding to threats and opportunities

Economic Factors

-Gross Domestic Product (GDP): Size and health of a country’s economy

-Income Distribution: How income is distributed across U.S

-Inflation: Increase in the general level of prices of products in an economy over a period of time

-Consumer Confidence: Measures how optimistic consumers are about the overall state of the economy and their own personal finances

Demographic Factors

Age, gender, ethnicity, and education level (all can influence the products a consumer buy)

Age

Plays a big role in how we process information, which affects the strategies used to reach consumers.

-Baby Boomers (Disposable income and free time/Control over 50% of nation’s wealth)

-Generation X (Big savers, didn’t have a lot of children)

-Generation Y/Millennials (Have the greatest familiarity with and most use for digital communication, social media, and other forms of technology)

-Generation Z (More diverse, more highly educated, and less likely to move than previous generations)

Gender

Women account for 85% of all consumer purchase decisions in the US

Education

Educated consumers are more likely to be employed as well as earn higher wages than those less educated

Ethnicity

Ethnic composition of the US is changing rapidly

Sociocultural Factors

Combination of social and cultural factors that shape our beliefs, values, and norms, which all help define our purchase habits

Political Factors

Political climate can change government policy quickly which can affect how firms position their products to consumers

Political Action Committees (PACs)

Raise money to help elect individuals who regard their organization positively or to promote a particular issue related to their industry

Legal Factors

Many laws are enacted on the federal, state, and local level to ensure businesses compete fairly and aren’t taking advantage of customers

Sherman Antitrust Act (1890)

Combats anticompetitive practices, reduces market domination by individual corporations and preserves unfettered competition as the rule of trade

Robinson-Patman Act (1936)

Prohibits firms from selling the same product at different prices in interstate commerce unless the price is based on a cost difference or if the goods are not of similar quality

Wheeler-Lea Amendment/Advertising Act (1938)

Authorizes the Federal Trade Commission power to include protection of consumers from false advertising practices

Fair Packaging and Labeling Act (1966)

Applies to labels on many consumer products as requires the label to state the identity of the product; the name and place of business of the manufacturer, packer, and the net quantity of contents

Telephone Consumer Protection Act (1991)

Limits commercial solicitation calls to between 8 am and 9 pm. Requires telemarketers to maintain a do-not-call list and honor any request to not be called again

Credit Card Accountability, Responsibility, and Disclosure Act (2009)

Protects consumer rights and abolishes deceptive lending practices

Technological Factors

Technology is both a challenge and an opportunity for firms as it influences how consumers satisfy their needs and wants

Global Marketing Environment

-International trends, events, and competitors affect large and small companies

-Currency Fluctuation

-Income distribution

-Trade agreements and organizations

-Technology

-Cultural fit

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs, and the impacts these processes have on the consumer and society

Business-to-consumer (B2C) Marketing

Selling goods and services to end-user customers

Business-to-business (B2B) Marketing

Marketing to organizations that acquire goods and services in the production of other goods and services that are then sold or supplied to others

Categories: Producers, resellers (wholesalers/retailers), governments, institutions

Habitual Decision Making

Consumer decisions made out of “habit”, without much deliberation/thought or product comparison

Limited Problem Solving

Refers to situations in which the consumer has established basic criteria for evaluating the product category, but is unfamiliar with suppliers, product options, prices, and so on

Extended Problem Solving

Consumer decisions requiring considerable cognitive activity, thought, and behavioral effort

The Consumer Decision-Making Process

Step 1. Problem Recognition: Occurs when consumers find a gap between their current situation and a desired end state, must lead to action to resolve it

Step 2. Information Search: Consumers look for info to help them identify and compare alternatives

Step 3. Evaluating Alternatives: Using evaluative criteria, consumers review the attributes most important to them; these can be tangible or intangible

Step 4. Outlet Selection and Purchase: Once a product is selected, the retailer is chosen and the product is purchased

Step 5. Post-purchase Processes: This is critical in determining future purchases as it will affect those purchases

Evoked Set

The brands or products a person will evaluate as options for the solution of a particular consumer problem. Also known as a consideration set.

Internal Information Search

Consumers’ use of past experiences with items from the same brand or product class as sources of information.

External Information Search

Consumers’ search for information beyond their personal knowledge and experience, to support them in their buying decision.

Search Marketing

A form of Internet marketing that promotes websites by increasing their visibility in search engine results pages.

Cognitive Dissonance

The mental conflict that people undergo when they acquire new information that contradicts their beliefs or assumptions

Culture

The broad set of knowledge, beliefs, laws, morals, customs, and any other capabilities or habits acquired by humans as members of society

Social Network

A set of social actors (such as individuals or organizations) along with the set of ties between each pair of actors

Persoanlity

The set of distinctive characteristics that lead an individual to respond in a consistent way to certain situations

OCEAN Personality Framework

The “Big 5” model of openness, conscientiousness, extroversion, agreeableness, and neuroticism

Lifestyle

A person’s typical way of life as expressed by their activities, interests, and opinions

Values

A consumer’s belief that specific behaviors are socially or personally preferable to other behaviors

Sensation

The physical process during which our sensory organs-those involved with hearing, smell, sight, touch, and taste-respond to external stimuli

Perception

The psychological process by which people select, organize, and interpret sensory information to form a meaningful picture of the world

Stimuli

A detectable change in the internal or external environment that can elicit or evoke a physiological response from an organism

Sensory Marketing

Marketing that engages consumers’ senses and affects their behaviors

Motivation

The inward drive to get what we need or want

Maslow’s Hierarchy of Needs

First. Physiological: Breathing, food, water, sleep

Second. Safety: Security of body, employment, resources, family, health, property

Third. Love/Belonging: Friendship, family, sexual intimacy

Fourth. Esteem: Self-esteem, confidence, achievement, respect of others, respect by others

Fifth. Self-Actualization: Creativity, Spontaneity, problem solving, lack of prejudice

Attitude

A relatively enduring organization of beliefs, feelings, and behavioral tendencies toward socially significant objects, groups, events, or symbols, typically expressed through general liking or disliking of the attitude target.

ABC Model

Affective, Behavioral, Cognitive

Physical Surroundings

Physical or online environment

Social Surrondings

Presence of others in the environment

Task Definition

Nature of the task to fulfill need or intended use of the product

Involvement

The personal, financial, and social significance of the decision being made.

Low-involvement products

Inexpensive products that can be purchased without much forethought and that are purchased with some frequency.

High-involvement products

Significant purchases that carry a greater risk to consumers if they fail.

Request for Proposal (RFP)

Specifies what the customer is looking for and describes each evaluation criterion on which a vendor’s proposal will be assessed.

New Buy

A buying situation in which a business customer is purchasing a product for the very first time.

Straight Rebuy

A buying situation in which a business customer signals its satisfaction by agreeing to purchase the same product at the same price.