Marketing Clep!

1. The 4 Ps of Marketing (The Marketing Mix)

Everything in marketing circles back to these four pillars:

  • Product: Goods, services, or ideas.

    • Goods vs. Services: Services are intangible, perishable, variable, and inseparable (produced and consumed at the same time).

    • Product Line: Group of related products (e.g., iPhone 13, 14, 15).

    • Product Mix: ALL product lines a company sells (e.g., Apple selling iPhones, MacBooks, iPads, Services).

  • Price: What the buyer exchanges for the product.

  • Place (Distribution): How the product gets from manufacturer to final consumer.

  • Promotion: Communication methods (advertising, PR, direct sales, sales promotions).

2. Core Concepts & Terms (Must Know)

  • Target Market: The specific group of customers a business aims its marketing efforts toward.

  • Market Segmentation: Breaking a large market into smaller groups based on:

    • Geographic: Location (city, region, climate).

    • Demographic: Age, gender, income, education, family size.

    • Psychographic: Lifestyle, personality, values, social class.

    • Behavioral: Brand loyalty, usage rate, benefits sought.

  • SWOT Analysis: Internal (Strengths, Weaknesses) vs. External (Opportunities, Threats).

  • Value Proposition: The full positioning of a brand—the set of benefits or values it promises to deliver.

3. Product Life Cycle (PLC)

Every product moves through 4 distinct stages. Know the characteristics of each:

Stage

Sales Volume

Profits

Main Goal

Marketing Focus

Introduction

Low

Negative/Low

Create Awareness

Inform consumers, stimulate initial demand

Growth

Rising Fast

Peak/High

Gain Market Share

Differentiate from emerging competitors

Maturity

Peak/Slowing

High but plateauing

Defend Share

Retain loyal customers, brand loyalty, sales promos

Decline

Falling

Dropping

Harvest or Divest

Cut costs, phase out product



Introduction: High costs, negative/low profits, focus on building awareness and informing consumers.

Growth: Sales surge, profits peak/rise, focus shifts to building market share and differentiating from competitors.

Maturity: Sales level off, competition is fierce, profits stabilize or decline due to price-cutting; focus shifts to defending market share and finding new uses.

Decline: Sales and profits drop; focus shifts to harvesting, cutting costs, or eventually phasing out the product.



4. Key Pricing Strategies

  • Skimming Pricing: Start with a high price to clear initial high-value demand, then lower it over time (e.g., new tech like the latest smartphone).

  • Penetration Pricing: Start with a very low price to quickly gain market share and discourage competitors (e.g., new streaming services).

  • Odd-Even Pricing: Setting prices just below whole numbers (e.g., $9.99 instead of $10.00) to make the product psychologically feel cheaper.

  • Bundle Pricing: Packaging multiple products or services together for a single, lower combined price (e.g., internet + cable packages).

  • Captive Pricing: Pricing the core product low (like a printer), but pricing the necessary supplies high (like ink cartridges) to lock in ongoing profit.

  • Cost-Plus Pricing: Adding a standard markup to the cost of producing the product.

  • Psychological Pricing: Pricing at $\$9.99$ instead of $\10.0010.00.

  • Dynamic Pricing: Adjusting prices continuously based on demand (e.g., airline tickets, Uber surge pricing).

5. Distribution Channels (Place)

  • Direct Channel: Producer Consumer (e.g., buying directly from a company website).

  • Indirect Channel: Producer Wholesaler Retailer Consumer.

  • Distribution Coverage Strategies:

    • Intensive: Available everywhere (e.g., Coca-Cola, candy bars).

    • Selective: Available at selected outlets (e.g., appliances, brand-name clothes).

    • Exclusive: Only one or very few retailers in a geographic area (e.g., luxury car dealerships, high-end designer goods).

6. Promotion & Communication

  • Push Strategy: Pushing products through distribution channels to retailers using trade promotions, personal selling, and incentives.

  • Pull Strategy: Directing marketing (advertising, consumer promos) directly at end consumers so they demand the product from retailers.

  • Promotional Mix:

    • Advertising: Paid, non-personal mass communication.

    • Personal Selling: Personal face-to-face or phone presentation (best for high-ticket business sales).

    • Public Relations (PR): Unpaid media coverage, building goodwill, managing crisis communication.

    • Sales Promotion: Short-term incentives (coupons, discounts, buy-one-get-one).

    • Advertising: Paid, non-personal mass communication (TV, digital, print) designed to build broad awareness.

    • Personal Selling: Two-way, personal communication (sales reps) heavily used in B2B or high-ticket, complex items.

    • Sales Promotion: Short-term incentives (coupons, rebates, flash sales) designed to spark immediate purchase action.

    • Public Relations (PR): Unpaid, earned media and publicity focused on building a positive corporate image.

7. Business-to-Business (B2B) vs. Business-to-Consumer (B2C)

  • B2B Demand Characteristics:

    • Derived Demand: B2B demand comes directly from consumer demand (e.g., demand for car tires depends on demand for new cars).

    • Inelastic Demand: Total demand for product components isn't heavily affected by short-term price changes.

  • Buying Center: The group of individuals in an organization who make purchase decisions (Users, Influencers, Buyers, Deciders, Gatekeepers).

8. Consumer Behavior & Legal/Ethics

  • Maslow's Hierarchy of Needs: Physiological Safety Social/Belonging Esteem Self-Actualization.

  • Cognitive Dissonance: Buyer's remorse/post-purchase anxiety ("Did I buy the right thing?").

  • Regulatory Bodies:

    • FTC (Federal Trade Commission): Regulates deceptive advertising and anti-competitive/unfair business practices.

    • FDA (Food and Drug Administration): Regulates labeling and safety of food/drugs.


Buzzwords to know: 

  1. Disintermediation: Cutting out the middleman (e.g., a farmer selling apples directly on a website instead of through a grocery store).

  2. Cannibalization: When a company launches a new product that steals sales from its own existing product.

  3. Loss Leader: Selling a product at a loss or rock-bottom price just to get customers through the door (e.g., $\$4.99$ Costco rotisserie chicken).

  4. Primary vs. Secondary Data:

    • Primary: Data you collect directly for your specific problem (surveys, focus groups).

    • Secondary: Data that already exists (census data, past reports, Google searches). Always use secondary first because it's cheaper!

  5. Concentrated (Niche) Marketing: Focusing all marketing efforts on one small, highly specific market segment (e.g., making shoes specifically for high-altitude rock climbers).

  6. Inelastic vs. Elastic Demand:

    • Inelastic: Price changes don't change demand much (gasoline, medicine).

    • Elastic: A small price increase causes demand to drop sharply (luxury items, brand-name snacks).