Marketing 300 Exam Review: Chapter 4 & 5

Front 1

What are the three basics guidelines for setting a firm's objectives?

Back 1

1. Engaging in specific activities that will perform a socially and economically useful function

2. Developing an organization to carry on the business and implement its strategies

3. Earn enough profit to survive

Front 2

What are the characteristics of a good business opportunity?

Back 2

Good opportunities must consider:

- Macro: External factors (outside of firm’s control)
• Political
• Technological
• Economic conditions
• Regulations (legal)
• Social and Cultural
- Your firms specialties
- Competition
- Barriers to entry (regulations)
- Customer needs
- Demand
- Whether you have sufficient finances
- Profitability
- Competitive advantage

Front 3

What are some examples of company resources?

Back 3

o Knowledge of people working for firm (human capital)
o Reputation and relationship with customers
o Fimilar brand names
o Financial resources
o Patents
o Good relations with established middlemen or control of good locations
o Thorough understanding of a target market
o Promotion and price resources
o Assets

Front 4

What are examples of competitive barriers (things that make it impossible to compete)?

Back 4

Patent protection, limits in access to retail shelf space, inferior product, lack of adequate logistical support systems, customer loyalty (for another product), a competitors superior economies of scale, legislation, nationalism (when entering a foreign market)

Front 5

What are the 3 major elements that form the direct marketing environment?

Back 5

1. Customers

2. The company: objectives and resources

3. Competitors: current and prospective competitors

Front 6

What are the five major elements that compose the broader external marketing environment?

Back 6

1) Economic environment: Affected by the way all of the parts of a macro-economic system interact.

2) Technological environment: Provides a base for the economic environment; It affects the way companies convert resources into output

3) Political environment: involves the attitudes and reactions of people, social critics, and governments.

4) Legal Environment: It sets the basic rules for how a business can operate in society; changes in the political environment often lead to changes in the legal environment and in the way existing laws are enforced.

5) Cultural and Social Environment: Affects how and why people live and behave the way they do, which affects customer buying behavior and eventually the economic, political and legal environments.

Front 7

What purpose do the CPSC and the FDA serve?

Back 7

CPSC
• Commission has broad power to set safety standards on consumer products and can impose penalties for failure to meet those standards; the commission has the power to force a product off the market or require costly product recalls, so safety must be a priority for manufacturers.

FDA
• Attempts to control the manufacturers of food and drug products; began with the Pure Food and Drug Act of 1906 when it banned the shipment of unsanitary and poisonous products; they require extensive testing in order for a drug to be legalized and set stringent standards for regulations on branding and labeling; they are in charge of making sure that food sold in the US is safe and properly labeled.

Front 8

What's the difference between GDP and GNI?

Back 8

GDP
• Total market value of all goods and services provided in a countries economy in a year by both residents and nonresidents of that country.

GNI
• Total market value of all goods and services provided in a countries economy in a year by residents only (formerly known as GNP)

Front 9

What are some major population trends in the U.S.?

Back 9

Though the US population is growing relatively slowly, there are high rate of growth in western states (Nevada, Arizona, Idaho, Utah) and the Sun Belt (FL, TX, GA, NC, VA)

80% of Americans live in MSA’s (economic and social unit with a large population nucleus) and 40% live in the 20 largest CMSA’s (population over one million ).

America is getting older, the median age increased from 30 to 36 from 1980-2010.

Sr. Citizen population (people over age 65) is increasing

Front 10

Sherman Act (1890):

Back 10

Outlawed monopoly or conspiracy to control a product, monopoly or conspiracy to control distribution channels (place), and monopoly or conspiracy to fix or control prices
• Impacts: Product, Place, Price

Front 11

Clayton Act (1914):

Back 11

Outlawed acts that substantially lessen competition, including forcing a sale of some products with others in the form of tying contracts (product); exclusive dealing contracts, limiting buyers’ sources of supply (place); Price discremenation by manufacturers (price).
• Impacts: Product, Place, Price

Front 12

Federal Trade Commission Act (1914):

Back 12

Outlawed unfair methods of competition including unfair policies (place), deceptive ads or selling practices (promotion), and deceptive pricing (price).
• Impacts: Place, Promotion, Price

Front 13

Antimerger Act (1950):

Back 13

Limited the ability to buy competitors (product) or ability to buy producers and distributors (place).
• Impacts: Product, Place

Front 14

Robinson-Patman Act

Back 14

• Prohibits actions that injure competition.
• Prohibits paying allowances to direct buyers,
• Prohibits fake advertising allowances or discrimination in help offered,
• Prohibits price discrimination on goods of “like grade and quality” without cost justification, and limits quantity discounts.

Front 15

Wheeler Lea Amendment

Back 15

Prohibits unfair or deceptive practices such as deceptive packaging/branding, ads or selling claims, and pricing.

Front 16

What is discretionary income and how is it calculated?

Back 16

Discretionary income
• Income that is left after paying taxes and paying for necessities

Disposable income
• Gross income minus income tax on that income.

Front 17

How is income concentrated across the US population?

Back 17

o The top 20% of the families whose incomes are over $100K – receive almost 48% of the total income.
o Families whose incomes are over $173K are the top 5% of nationally – but account for 21% of the total income.
o Families whose incomes are less than $25K account for 20% of the population – but receive only 4% of total income.

Front 18

What is the difference between and “need’ a “want” and a “drive”.

Back 18

Needs
• Are the basic forces that motivate a person to do something.

Wants
• Are needs that are learned during a persons life
• You need water, you want iced tea.

Drive
• Is a strong stimulus that encourages action to reduce a need

Front 19

What is selective exposure?

Back 19

Our eyes and minds seek out and notice only information that interests us. How often have you closed a pop-up ad at a website without even noticing what it was for?

Front 20

What is selective perception?

Back 20

We screen out or modify ideas, messages, and information that conflict with previously learned attitudes and beliefs.

Front 21

What is selective retention?

Back 21

We remember only what we want to remember.

Front 22

What is the difference between a Belief and an Attitude?

Back 22

Attitude
• A person’s POV toward something.
• Liking or disliking.
• Action-oriented

Belief
• A person’s opinion of something.
• Not so action-oriented
• May help shape a consumer’s attitudes but don’t necessarily involve any liking or disliking.

Front 23

What are the social influences that affect consumer behavior?

Back 23

o Family
o Social Class (class/position in society)
o Reference groups (individuals someone likes to compare with)
o Culture

Front 24

What are the steps in the problem-solving continuum?

Back 24

o Extensive problem solving
o Limited problem solving
o Routinized response behavior

Front 25

What is Extensive problem solving?

Back 25

Used when consumers put too much effort into deciding how to satisfy a need – as is likely for a completely new purchase or to satisfy an important need.

Ex) Adam deciding between NBA Live and NBA2K. Puts way toooooooo much time into it.

Front 26

What is Limited Problem solving?

Back 26

Used by consumers when some effort is required in deciding the best way to satisfy a need. This is typical when the consumer has some previous experience with a product but isn’t quite sure which choice to make at the moment.

Ex) Me buying NBA2K. I know I like the product, just checking a few points before purchase.

Front 27

What is Routinized Response behavior?

Back 27

Used when a consumer regularly selects a particular way of satisfying a need when it occurs. Is typical when a consumer has considerable experience in how to meet a specific need and requires no new information.

Ex) Brunetti bought Madden 10 as soon as it came out.

Front 28

What is dissonance?

Back 28

o After making a purchase, buyers often have second thoughts and wonder if they made the right choice (the resulting tension is dissonance).
o A feeling of uncertainty about whether the correct decision was made.

Front 29

What are the steps in “the hierarchy of needs” model?

Back 29

Personal needs (need for personal satisfaction)

Social needs (needs for interactions with other. Love, friendship, status, esteem, and acceptance)

Safety Neeeds (Protection an physical well being)

Physiological needs (food, drink, rest, and sex)

Front 30

How does the family life-cycle affect purchase behavior?

Back 30

o Family members may share many attitudes and values, consider each others opinions and divide various buying tasks.
o Marital status, age, and the age of any children in the family have especially important effect on how people spend their income.
o Put together these dimensions tell us about the life cycle stage of a family.