Marketing Final Exam Review - Old Material

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marketing

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entails processes that focus on delivering value and benefits to customers, not just selling goods and services.

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Marketing management philsophies evolution: Production

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focuses on the internal capabilities of the firm rather than on the desires and needs of the market place - efficient production + internal operations (Furniture industry)

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Marketing management philosophies evolution: Sales

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people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits - aggressive techniques for overcoming customer resistance (Intermediaries pushing manufactures products)

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Marketing management philosophies evolution: Market

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sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product. It is synonymous with the marketing concept. - focus on satisfying customer needs and wants

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Marketing management philosophies evolution: Societal

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an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals and society’s long-term best interests

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Market Penetration

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Present Product + present market

-increase market share among existing customers (holiday themed cans for coke)

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Market development

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Present product + New Market

-Attracting new customers to existing products

-Coke Zero

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Product development

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New Product + Present Market

-Creating new products for present markets

-Vanilla or cherry coke

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Diversification

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New Product + New market

-Strategy of increasing sales by introducing new products into new markets

-coke acquiring Glaceau to produce vitamin water

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BCG Portfolio Matrix

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Resource Allocation

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Star

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High Market Share + High Market Growth Rate

-Fast growing market leader but usually need cash to finance growth - reinvest earnings in product improvement ,distribution, promotion + product efficiency

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Cash Cow

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High Market Share + Low Market Growth Rate - High profits, low investment

-generates more cash than it needs to maintain market share but is in a low growth market

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Problem Child (question mark)

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Low Market Share + High Market Growth (poor profit margins)

-low market share in a high growth industry - shows rapid growth but poor profit margins

-needs lots of cash to prevent dog status - invest heavily

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Dog

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low market share + low Market Growth

- Low growth potential and small market share – most dogs leave the market - Divest or harvest

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Sustainability - enough for all - forever

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-Socially responsible companies will out perform their peers

-It is in business’s best interest to find ways to attack society’s ills

-We co-exist. We need healthy consumers,employees, stockholders, and a stable economic environment

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Green Marketing

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the development and marketing of products designed to minimize negative effects on the physical environment or to improve the environment

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Environmental Forces

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Social, Economic, Technological Competitive, Regulatory

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Social

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Demographic shifts, cultural changes

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Economic

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macroeconomic conditions

consumer income

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technological

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changing technology, technology's impact on customer value

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Competitive

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Alternative forms of competition, components of competition

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Regulatory

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laws protecting competition, laws affecting marketing mix actions, self-regulation

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Exporting

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Selling domestically produced products to buyers in other countries - Company can sell directly to foreign importers or buyers. - Lowest risk + lowest return

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Licensing

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Where by a licensor allows another firm to use its manufacturing process, trademarks,patents, trade secrets, or other proprietary knowledge - In turn the licensee pays the licensor a royalty fee or a fee agreed on by both parties - has sufficient control over licensee's activities

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Contract Manufacturing

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Private label manufacturing by a foreign company. - Foreign company produces a certain volume of products to specification, with the domestic firm’s brand name on the goods – domestic company usually handles the marketing

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Joint Venture

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Domestic firm buys part of a foreign company or joins with a foreign company to create anew entity

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Direct Foreign Investment

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Active ownership of a foreign company of overseas manufacturing or marketing facilities. Direct investors either have a controlling interest or a large minority interest in the firm - greatest potential for reward and risk

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Internal Search

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Recalls info stored in the memory - Info stems largely from previous experience with a product - compares

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External

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If a solution isn’t reached through internal search, then search process is focused on relevant external information

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Marketing Controlled Info

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Biased toward a specific product because it originates with marketers promoting that product - mass media advertising

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Non-marketing Controlled Info

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Product information source that is not associated with marketers promoting a product - personal experiences, personal sources

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Cognitive Dissonance (Buyers Remorse)

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Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions - try and reduce any lingering doubt

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Social Class

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A group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms (occupation, income, education, wealth

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Direct-face-to-face: Primary

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Small, informal group - Include all groups with which people interact regularly in an informal way

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Direct-face-to-face: Secondary

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Large, Formal Group - People associate with this more formally and less consistently - Clubs, professional groups, and religious groups

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Indirect non-membership: Aspirational

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Organizations that a person would like to join

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Indirect non-membership: Non-Aspirational

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a group someone wants to avoid being identified with

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Opinion Leaders

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First to try new products - Teenagers,because of their willingness to experiment, are key opinion leaders for the success of new technologies - Companies use prominent public figures, such as movie stars, sports figures, and celebrities to promote products

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Business Products

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Used to manufacture other products - become part of another product - aid the normal operations of an organization - are acquired for resale without change in form - Key is intended use

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Derived Demand

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Demand for business products results from demand for consumer products - Organizations buy products to be used in producing consumer products

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Inelastic Demand

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A change in price will not significantly affect the demand for product - Demand without regard to price

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Joint Demand

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Multiple items are used together in the final product. Demand for one item affects all - Occurs when multiple items are used together in a final product

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Fluctuating Demand

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Demand for business products is more volatile than for consumer products (few large players) The demand for business products tend to be more unstable than the demand for consumer products

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Multipier effect

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Small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and manufacturing equipment needed to make the consumer product

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Geography

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Segmentation based on region of a country or the world, market size, market density, and climate

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Demographics

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Segmentation based on age, gender, income, race/ethnicity, family life cycle

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Psycographcis

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Segmentation based on personality, motives, lifestyle, and geodemographics

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Benefits Sought

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Type of segmentation that identifies customers according to the benefits they seek in a product

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Usage Rates

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Divides a market by the amount of product purchased or consumed (Former, potential, 1st time, light or irregular, medium, and heavy) - Segmenting by usage rate enables marketers to focus their efforts on heavy users or to develop multiple marketing mixes aimed at different segments.

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Primary Research

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Information collected for the first time – used for solving the particular problem under investigation

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Observational Data

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watching people

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Questionnaire data

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asking people

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Primary Data Advantage

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Answers a specific research question, data is current, source of data is known, secrecy can be maintained

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Primary Data Disadvantage

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Primary data is expensive, disadvantage usually offset by the advantages of primary data

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Secondary Data

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Facts and figures already recorded prior to the project

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Internal Data

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inside the firm – financial statements, reports, files, customer letters, sales call reports, and customer lists

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External Data

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outside the firm – US census reports, trade association studies and magazines, business periodicals, and internet – based reports

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Tests/Experiments

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Used by marketer to gather primary data or Variables– products, price, package design, shelf space, advertising theme, advertising expenditures

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Surveys

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Most popular technique for gathering primary data, in which a researcher interacts with people to obtain facts, opinions, and attitudes

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Branding marks

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The elements of a brand that cannot be spoken

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Brand Names

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The part of a brand that can be spoken, including letters, words, and numbers

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Brand Line Extension

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occur when a company introduces additional items in the same product category under the same brandname such as new flavors, forms, colors, added ingredients, package sizes - many new products are line extensions

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Co-branding

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Placing two or more brands on a product or its package

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Private Label

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designating a product manufactured or packaged for sale under the name of the retailer rather than that of the manufacturer.

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Family Brand

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Marketing several different products under the same brand name

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Benefits of branding

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Helps speed consumer purchases by identifying specific preferred products - Provides a form of self-expression and status- Confidence,assurance - Evaluates product quality to reduce the risk of purchase

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where do brands live?

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in the hearts and minds of consumers

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brand equity

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Thevalue of company and brand names

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How Services differ from goods

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Intangible, inseperable, inconsistency, Inconsistency, perishable

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Intangible

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Services cannot be touched, seen, tasted, heard, or felt in the same way as goods.Tangible cues are often used to communicate a service’s quality and nature. Facilities are a critical tangible part of a service experience.

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Inseperable

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Production and consumption are simultaneous meaning the consumer takes part in production - Services are often sold, produced, and consumed at the same time

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Inconsistency

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Services depend on their employees for quality, which makes consistency difficulty to achieve - they're less standardized and uniform

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Perishable

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services cannot be saved, stored, warehoused, or inventoried. It is challenging to synchronize supply and demand

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Pricing

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Price allocates resources in a free market economy --> value = Benefits/price(costs)

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factors in setting price

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demand, cost, competition

-markup pricing, keystoning, profit max. pricing, break-even pricing

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consumer demand (value of benefits from customers POV

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Cost factors, competitive environment

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skimming

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where a firm charges a high introductory price often coupled with heavy promotion –over time price is lowered – use this for new products when the product is perceived as having unique advantages

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Penetration

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Charging a low price for a product, a larger share of the market is captured, resulting in lower production costs – lower profit per unit + higher volume of sales is required to meet break-even point

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ROI

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Net profit after taxes divided by total assets - most common profit objective - measures management's overall effectiveness in generating profits with the available assets - higher ROI the better

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Survival (Satisfactory profits)

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strive for profits that are satisfactory to the stockholders and management – a level of profits consistent with the level of risk and organization faces

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status quo

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Maintain Prices/margins – meet competition

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sales

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Marketshare – Sales maximization - Based on market share as reported in dollar or unit sales - Strive for either marketshare or to maximize sales

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profit

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Satisfactory profits – profit maximization – Targeted ROI - Setting prices so total revenue is as large as possible relative to total costs

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market share

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A company’s product sales as a percentage of total sales for the industry

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prestige

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How a company prices their product and how a customer values their product – the higher the price the more the customer will value their product