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133 Cards in this Set

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  • Back
  • 3rd side (hint)
Requirements of a Market
-Must need or desire a particular product
-Must have the ability to purchase the product
-Must be willing to use their buying power to purchase the product
-Must have the authority to buy the product
Consumer Markets (B2C)
-Purchasers and individuals in households
-Purchases are for personal consumption, not profit
Undifferentiated Targeting Strategy
-Defining an entire (homogeneous) market for a particular product as the target market
-Designing a single marketing mix for, and directing it at the total market
Segmentation Variables
Characteristics of individuals, groups, or organizations used to divide a market into segments
Market Density
The number of potential customers within a unit of land area
Personality characteristics
Marketers appeal to positive/favorable personal characteristics to influence the purchase decision
Marketers use individuals’ differing purchase motives to segment a product market.
Marketers segment markets according to how individuals choose to spend their time in various activities, their income, their interest and opinions, and their education.
Requirements for segmentation by behavior
-Benefits sought must be identifiable
-Market must be divisible into recognizable segments using the benefits
-One or more segments must be accessible to the marketing effort
Variables for Segmenting Business Markets
1. Geographic Location
2. Type of Organization
3. Customer Size
4. Product Use
Geodemographic Segmentation
Marketing segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information
An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets
Sales Estimates
based on market potential and company sales potential
Sales Potential Measurement Approaches
1. Breakdown approach: top-down analysis
2. Build-up approach: bottom-up analysis
Competitive Assessment
Who, how many, how large, and how strong?
Cost Estimates
-The expense of developing a marketing mix and
-Costs of reaching segment relative to competitors’ costs
Issues in Selecting a Target Market
-Do customers’ needs differ enough to warrant the use of market segmentation?
-In which market segment(s) should the firm participate?
-Does the firm have the resources and skills to compete effectively in the target market?
Sales Forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities
Executive Judgment
Based on the intuition of the firm’s managers
Time-Series Analysis
Patterns in historical data yield information for use analyzing trends
Regression Analysis
Predicting sales based on the relationship between past sales and one or more variables
Market Tests
Making a product available in the marketplace and measuring purchases and consumer responses
Using Multiple Forecasting Methods
A combination of forecasting methods may yield better results
Target Market Selection Process
Step 1: Identify the Appropriate Targeting Strategy
Step 2: Determine Which Segmentation Variables to Use
Step 3: Develop Market Segment Profiles
Step 4: Evaluate Relevant Market Segments
Step 5: Select Specific Target Markets
Business Markets (B2B)
-Individuals and groups that purchase products for resale, direct use to produce other products, or use in daily business operations
-Purchasers can be categorized as producers, resellers, government, and institutional markets
Concentrated Targeting Strategy
-Segmenting (dividing) the total market into groups with similar product needs (heterogeneous markets) to design marketing mixes that match those needs
-Focusing on a single market segment using one marketing mix
Differentiated Targeting Strategy
-Targeting two or more segments by developing a marketing mix for each
-Aiming marketing mixes at more people may yield a competitive advantage
Segmentation Variables for Consumer Markets
Demographic Segmentation Variables
-family size & life cycle
-social class
Geographic Segmentation Variables
-urban, suburban, rural
-city size
-county size
-state size
-market density
Market Segment Profile
-Describes the similarities among potential customers within a segment
-Covers demographic characteristics, geographic factors, benefits sought, lifestyles, brand preferences, and usage rates
Psychographic Segmentation Variables
-personality attributes
Behavioristic Segmentation Variables
-volume usage
-end use
-brand loyalty
-price sensitivity
Benefit segmentation
-The division of a market according to benefits that customers want from the product
-Individuals purchase and use products that provide them with benefits that meet their needs.
Trend Analysis
-Cycle analysis
-Seasonal analysis
-Random factor analysis
Surveys -Customer forecasting survey
-Sales force forecasting survey
-Expert forecasting survey
-Delphi technique (panel of experts)
Buying Behavior
The decision processes and acts of people involved in buying and using products
Consumer Buying Behavior
Buying behavior of people who purchase products for personal use and not for business purposes
Level of Involvement
An individual’s intensity of interest in a product and the importance of the product for that person
-Enduring involvement
-Situational involvement
Routinized Response Behavior
The process used when buying frequently purchased, low-cost items that require little search-and-decision effort
Limited Problem Solving
The process that buyers use when purchasing products occasionally or when they need information about an unfamiliar brand in a familiar product category
Extended Problem Solving
The process employed when purchasing unfamiliar, expensive, or infrequently bought products
Impulse Buying
An unplanned buying behavior resulting from a powerful urge to buy something immediately
Problem Recognition
Occurs when a buyer becomes aware of a difference between a desired state and an actual condition -- May occur rapidly or slowly
Information Search
-INTERNAL SEARCH: Buyers search their memories for information about products that might solve their problem
-EXTERNAL SEARCH: Buyers seek information from outside sources
Evaluation of Alternatives
-Consideration set
-Evaluative criteria
-Framing the alternatives
Consideration set
A group of brands that the buyer views as alternatives for possible purchase
Evaluative criteria
Objective and subjective characteristics that are important to a buyer
Framing the alternatives
Describing the alternatives and their attributes in a certain manner to make a particular characteristic appear more important especially to the inexperienced buyer
-Choosing the product or brand to be bought based on the outcome of the evaluation stage
-The choice of seller may affect the final product selection.
-Factors such as terms of sale, price, delivery, and warranties may affect the sale.
Cognitive dissonance
A buyer’s doubts shortly after a purchase about whether the decision was the right one
Situational Influences
Factors that can influence a buyer’s purchase decision and may cause the buyer to short, lengthen, or terminate the process
Major Situational Factors
-Physical surroundings
-Social surroundings
-Time perspective
-Reason for purchase
-Buyer’s momentary mood and condition
Psychological Influences
Factors that in part determine people’s general behavior, thus influencing their behavior as consumers
The process of selecting, organizing, and interpreting information inputs to produce meaning
Information Inputs
Sensations received through the sense organs
Selective Exposure
The process of selecting inputs to be exposed to our awareness while ignoring others
Selective Distortion
An individual’s changing or twisting of information when it is inconsistent with personal feelings or beliefs
Selective Retention
Remembering information inputs that support personal feelings and beliefs and forgetting inputs that do not
Perceptual Organization
Organizing and integrating new information with what is already stored in memory.
Perceptual Interpretation
The assignment of meaning to what has been organized based on what is expected or what is familiar
Attempts to influence interpretation can fail because
-consumers block out seller’s information.
-consumers interpret seller’s information differently than intended.
-consumers discard information that is inconsistent with prior beliefs.
An internal energizing force that directs a person’s behavior toward satisfying needs or achieving goals
Maslow’s Hierarchy of Needs
The five levels of needs that humans are motivated to seek and satisfy, from least to most important:
-Physiological needs—food, water, sex, clothing, shelter
-Safety needs—security, freedom
-Social needs—love, affection, belonging
-Esteem needs—respect, recognition, self-worth
-Self-actualization needs—personal growth needs
-Changes in an individual’s thought processes and behavior caused by information and experience
-Behaviors that produce satisfying consequences are likely to be repeated.
How consumers learn about products
-experiencing the products personally.
-gaining additional product knowledge from seller-provided information.
-indirect information from other purchasers/users
An individual’s enduring evaluation of, feelings about, and behavioral tendencies toward an object or idea
Attitudinal Components
Knowledge and information about the object or idea
Feelings and emotions toward the object or idea
Individual’s action regarding the object or idea
Attitude Scale
A means of measuring consumer attitudes by gauging the intensity of an individual’s reactions to adjectives, phrases, or sentences about an object
A set of internal traits and distinct behavioral tendencies that result in consistent patterns of behavior in certain situations
Self-concept (self-image)
Perception or view of oneself
An individual’s pattern of living expressed through activities, interests, and opinions
Social Influences
The forces other people exert on one’s buying behavior
-Actions and activities that a person in a particular position is supposed to perform based on expectations of the individual and surrounding persons
-Multiple role-expectation sets affect behavior.
-Roles influence both general and buying behaviors.
Consumer socialization
The process through which a person acquires the knowledge and skills to function as a consumer
Family Decision-Making Processes
-Autonomic—equally shared decision-making
-Husband-dominant—husband makes decisions
-Wife-dominant—wife makes decisions
-Syncratic—decisions made jointly
Reference Groups
Any group that positively or negatively affects a person’s values, attitudes, or behavior:
Opinion Leader
A knowledgeable, accessible individual who provides information about a specific sphere of interests to followers
Social Class
-An open group of individuals with similar social rank
-Individuals in the same social class
develop and assume common behavioral patterns.
have similar attitudes, values, language patterns, and possessions.
-Influences many major life decisions
-Influences shopping patterns and spending habits
The accumulated values, knowledge, beliefs, customs, objects, and concepts of a society
Groups of individuals whose characteristic values and behavior patterns are similar and differ from those of the surrounding culture
Consumer Buying Decision Process
-Problem recognition
-Information search
-Evaluation of alternatives
-Postpurchase Evaluation
Psychological Influences on the Buying Decision Process
Perception - Motives - Learning
Attitudes - Personality and self-concept - Lifestyles
Social Influences on the Buying Decision Process
Roles - Reference groups and opinion leaders
Family Influences - Social Classes
Culture and Subcultures
Business Markets
Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in daily operations
Producer Markets
Individuals and business organizations that purchase products to make profits by using them to produce other products or using them in operations
Reseller Markets
Intermediaries who buy finished goods and resell them for profit:
-Wholesalers purchase products for resale to retailers.
-Retailers purchase products and resell them to final customers.
Factors affecting resellers’ purchase decisions:
-Level of demand
-Profit potential (sales per square foot)
-Supplier’s ability to provide goods on demand
-Ease of ordering and producer support
-Competing or complementary product characteristics
Government Markets
Federal, state, county, and local governments
-Purchase a broad variety of goods and services
-Public accountability results in complex buying procedures requiring bids and negotiated contracts
Institutional Markets
Organizations with charitable, educational, community, or other non-business goals
-Churches, hospitals, fraternities and sororities, charities, and private colleges
Characteristics of Transactions with Business Customers
-Orders are much larger and more costly/expensive.
-Purchases are made more frequently.
-Terms of sales contracts are longer.
-Several people or committee may be involved in the purchase decision.
-A buyer and a seller purchase from each other (reciprocity).
Attributes of Business Customers
-Better informed about products purchased
-Demand more detailed product information
-Personal goals (in support of organizational goals) may influence buying behavior
Primary Concerns of Business Customers
-Price of goods affecting ability to compete
-Return on investment in product
-Price of product compared to the benefits it provides
-Quality of the product in meeting specifications
-Quality of services offered by suppliers in support of their products
Methods of Business Buying
Products standardized by certain characteristics
Products with particular characteristics
Product is homogenous and a single specimen can be evaluated as representative of the entire product
Sellers are asked to bid on specified product characteristics and purchasers negotiate with successful bidders
Types of Business Purchases
-New-task purchase
-Straight rebuy purchase
-Modified rebuy purchase
New-task purchase
An initial item purchase to be used to perform a new job or solve a new problem
Straight rebuy purchase
The routine purchase of the same products by a business buyer
Modified rebuy purchase
A new-task purchase that is changed on subsequent orders or when requirements of a straight rebuy are modified
Demand for Business Products
-Derived demand
-Inelasic demand
-Joint demand
-Fluctuating demand
Derived demand
Demand for industrial products that stems from demand for consumer products
Inelastic demand
Demand that is not significantly altered by a price increase or decrease
Joint demand
Demand involving the use of two or more items in combination to produce a product
Fluctuating demand
Demand that varies directly as consumer demand varies
Business (Organizational) Buying Behavior
The purchase behavior of producers, government units, institutions, and resellers
Buying Center
The people within an organization who make business purchase decisions
The people within an organization who actually use the products
The people within an organization who help develop the specifications and evaluate alternative products
The people within an organization who select suppliers and negotiate terms of purchase
The people within an organization who actually choose the products
The people within an organization who control the flow of information to others in the buying center
Stages of the Business Buying Decision Process
-Problem Recognition
-Development of product Specifications
-Search for and Evaluation of potential products and Suppliers
-Selection of Product and Supplier
-Evaluation of Product and Supplier Performance
Problem Recognition
Arises under a variety of circumstances both internal and external
Development of Product Specifications
Involves assessing the problem or need and determining what is necessary to resolve or satisfy it
Value Analysis
An evaluation of each component of a potential purchase
Vendor Analysis
A formal systematic evaluation of current and potential vendors
Multiple Sourcing
An organization’s decision to use several suppliers
Sole Sourcing
An organization’s decision to use only one source
Evaluation of Product and Supplier Performance
May result in adjustment of product specifications, corrective action from the supplier, or search for a new supplier
Influences on the Business Buying Decision Process
-Environmental Factors
-Organizational Factors
-Interpersonal Factors
-Individual Factors
Environmental Factors
Competitive and economic forces, political forces, legal forces, technological changes, and sociocultural issues
Organizational Factors
The company’s objectives, purchasing policies, resources, and the size and composition of the firm’s buying center
Interpersonal Factors
Relationships among people in the buying center
Individual Factors
The personal characteristics of participants in the buying center
Systems for classifying industrial, commercial, financial, and service organizations
-Standard Industrial Classification (SIC)
-North American Industry Classification System (NAICS)
Identifying Potential Business Customers
-Census of Business
-Census of Manufacturers
-County Business Patterns
-Standard & Poor’s Register
-Dun & Bradstreet’s Million Dollar Directory
Estimating Purchase Potential
The size of the purchase potential of business customers may be estimated using a variable in the business classification data that is correlated with size of customer purchases.