Marketing Midterm

Social forces

include the demographic characteristics of the population and its culture

Demographics

describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation

Generational Cohorts

Baby Boomers, Generation X, Generation Y/Millenials, Generation Z

metropolitan statistical area

one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration

micropolitan statistical area

has at least one urban cluster of at least 10,000 but less than 50,000 people and adjacent territory that has a high degree of social and economic integration

multicultural marketing programs

combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races

culture

incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group

value consciousness

the concern for obtaining the best quality, features, and performances of a product or service for a given price (drives consumption behavior for products at all price levels, and recession and economic crisis makes consumers more aware)

The Economy

The income, expenditures, and resources that affect the cost of running a business and household

the two economic forces

macroeconomic view, and microeconomic perspective

Macroeconomic Conditions

gross domestic product (GDP), uinemployment, price changes (inflation or deflation)

consumer spending is affected by expectations of the future

inflation

cost to produce and buy products and services escalates as prices increase

spending decreases if prices rise faster than income

recessions

periods of declining economic activity

businesses decrease production, unemployment rises, and many consumers have less money to spend

consumer income

consumer ability to buy is related to income, which consists of gross, disposable, and discretionary components

gross income

the total amount of money made in one year by a person, household, or family unit

disposable income

the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation

discretionary income

the money that remains after paying for taxes and necessities, increases by reducing savings

Technology

inventions or innovations from applied science or engineering research

Technology of Tomorrow

technological changes are difficult to predict because it’s the result of research

technology’s impact on customer value

cost of technology decreases

technology provides value through the development of new products

marketspace

an information and communication based electronic exchange environment occupied by sophisticated computer and telecommunication technologies and digital offerings 

Electronic commerce

activities that use electronic communication in the inventory, promotion, distribution, purchase, and exchange of products and services 

Intranets

to communicate within the organization 

Extranets

to communicate with suppliers, distributors, and other partners such as advertising agencies 

Internet of things

network of products embedded with connectivity enabled electronics 

Competition

the alternative firms that could provide a product to satisfy a specific market’s needs 

There are four basic forms of competition - forms a continuum 

pure competition, monopolistic competition, oligopoly, pure monopoly

Factors that drive competition

• Entry 

• Bargaining power of buyers and suppliers 

• Existing rivalries 

• Substitution possibilities 

competition factors may…

• Create a barrier to entry 

• Increase brand awareness 

Possible barriers to entry:

capital requirements, advertising expenditures, product identity, distribution access, cost to customers of switching suppliers

barriers can be expensive, deterring new entrants

powerful buyers

few in number, low switching costs, product represents a significant share of the buyer’s total costs

regulations

restrictions state and federal laws place on business with regard to the conduct of its activities

sherman antitrust act

forbids contracts, combinations, or conspiracies in restraint to trade

actual monopolies or attempts to monopolize any part of trade or commerce

clayton act

forbids certain actions that are likely to lessen competition

Robinson-Patman Act

makes it unlawful to discriminate in prices charged to different purchasers of the same product

patent law

companies can protect its competitive position in new and novel products

digital millennium copyright act

improves protection of copyrighted digital products

consumer product safety commission

monitors product safety and establishes uniform product safety standard

consumerism

grassroots movement started to increase the influence, power, and rights of consumers in dealing with institutions

trademarks

protects both the firm selling a trademarked product and the consumer buying it

Lanham Act

Provides registration of a company’s trademarks

exclusive dealing

an arrangement a manufacturer makes with a reseller to handle only its products and not those of competitors

Requirement contracts

requires a buyer to purchase all or part of its needs for a product from one seller for a time period 

Exclusive territorial distributorship

a manufacturer grants a distributor the sole rights to sell a product in a specific geographical area 

Tying arrangement

a seller requires the purchaser of one product to also buy another item in the line 

FTC Act of 1914

promotion and advertising are aspects of marketing closely monitored by the FTC 

Ethics

the moral principles and values that govern the actions and decisions of an individual or group 

An Ethical/Legal Framework for Marketing

• There is distinction between the legality and the ethicality of marketing decisions 

• Ethics - deals with personal moral principles and values 

• Laws - society’s values and standards that are enforceable in the courts 

• Judgement plays a large role in numerous situations in defining ethical and legal boundaries 

Caveat emptor

let the buyer beware

Consumer Bill of Rights

codified the ethics of exchange between buyers and sellers

• Right to safety, to be informed, to choose, and to be heard  

Two common unethical behaviors:

Economic Espionage

Corruption

Economic Espionage

Clandestine collection of trade secrets or proprietary info about a company’s competitors

• illegal and unethical

Corruption

unethical conduct by a person entrusted with a position of authority, often to acquire a personal benefit

Corporate culture

the set of values, ideas, and attitudes that is learned and shared among the members of an organization

code of ethics

formal statement of ethical principles and rules of conduct

whistleblowers

employees who report unethical or illegal actions of their employers

Personal moral philosophies relevant to marketing

• Moral idealism 

• Utilitarianism

Moral Idealism

personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome 

Utilitarianism

personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior 

Social responsibility

organizations are part of a larger society and are accountable to that society for their actions 

Three concepts of social responsibility

profit responsibility, stakeholder responsibility, societal responsibility

profit responsibility

companies have a simple duty: to maximize profits for their owners or stockholders 

Stakeholder responsibility

focuses on the obligations an organization has to those who can affect achievement of its objective

Societal responsibility

obligations that organizations have to the preservation of the ecological environment and to the general public

Triple bottom line

recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable long term growth

Sustainable marketing

seeks to meet today’s economic, environmental, and social needs without compromising the opportunity for future generations to meet theirs 

Green marketing

marketing efforts to produce, promote, and reclaim environmentally sensitive products

Cause marketing

charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products

Incorporates all three concepts of social responsibility by addressing public concerns and satisfying customer needs 

Social Audit

systematic assessment of a firm’s objectives, strategies, and performance in terms of social responsibility

Five Steps of Social Audit

• Recognition of a firm’s social expectations and the rationale for engaging in social responsibility endeavors 

• Identification of social responsibility causes or programs consistent with the company’s mission 

• Determination of organizational objectives and priorities for programs and activities it will undertake 

• Specifications of the type and amount of resources necessary to achieve social responsibility objectives 

• Evaluations of social responsibility programs and activities undertaken and assessment of future involvement 

Sustainable Development

conducting business in a way that protects the natural environment and embraces diversity, equity, and inclusion in its business practices while making economic progress 

Consumer behavior

the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions 

Purchase decision process

stages a buyer passes through in making choices about which products and services to buy 

1. problem recognition

2. info search

3. alternative evaluation

4. purchase decision

5. postpurchase behavior

Problem recognition

initial step, perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision

information search

seeking value - customers do an internal or external search for products or brands 

Sources of external info: 

Personal sources - people close and social networking websites 

Public sources - product rating organizations, government agencies, TV consumer programs 

Marketer dominated sources - info from sellers 

alternative evaluation

assessing value, developing consumer value perceptions

Evaluative criteria

represents both the objective attributes of a brand and the subjective ones you use to compare different products and brands 

Consideration set

a group of brands a consumer considers acceptable out of all brands of that product

purchase decision

there are two choices when make the decision: from whom to buy, and when to buy

postpurchase behavior

realizing value

customers compare it with personal expectations and are either satisfied or dissatisfied

Involvement

the personal, social, and economic significance of the purchase to the consumer

High involve purchases are

• expensive 

• Can have serious personal consequence 

• Can reflect on one’s social image 

low involvement purchase

low research/consideration

3 general variations in the consumer purchase decision process

extended problem solving

limited problem solving

routine problem solving

extended problem solving

Each of the 5 stages of the consumer purchase decision process is used and considerable time and effort are devoted to the search for external info and the identification and evaluation of alternatives

Limited problem solving

Consumers seek some info or rely on a friend to help them evaluate alternatives

Routine problem solving

Purchase process is a habit, low involvement decision

Low involvement product w/brand as market leader- attention is placed on…

• Maintaining product quality 

• Avoiding stockout situations so that buyers don’t substitute a competing brand 

• Using repetitive advertising messages to reinforce a consumer’s knowledge or assure buyers they made the right choice 

high involvement products

Consumers constantly seek and process info about objective and subjective brand attributes, form evaluative criteria, rate product attributes of various brands, and combine these ratings for an overall brand evaluations

MOMENTS OF TRUTH

moments in time and place that influence how purchase decisions are triggered

Consumer touchpoint

a marketer’s product, service, or brand points of contact with a consumer from start to finish in the purchase decision process

creates a consumer experience whenever consumers and companies engage to exchange information, provide service, or handle transactions

Consumer journey map

visual representation of all the touchpoints for a consumer who comes into contact with a company’s products, services, or brands before, during, and after a purchase

Motivation

energizing force that stimulates behavior to satisfy a need

Maslow’s Hierarchy of Needs

• Physiological needs - basic to survival and must be satisfied first 

• Safety needs - self preservation + physical and financial well being 

• Social needs - love and friendship 

• Personal needs - achievement, status, prestige, and self respect 

• Self actualization needs - personal fulfillment 

Personality

a person’s consistent behaviors or responses to recurring situations

Key traits

enduring characteristics within a person or in relationships with others 

Self concept

the way people see themselves and the way they believe others see them 

Actual self concept

how people actually see themselves 

Ideal self concept

how people would like to see themselves