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171 Cards in this Set
- Front
- Back
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what is the key concept for marketing?
Exchange |
-takes place when something is obtained for something else in return.
-which means that there is some transfer of value between a buyer and a seller. |
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why exchange?
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1. survival
2. raises our standard of living 3. forms needed relationships( brings buyer and seller together) |
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What are markets?
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- forums for carrying out exchanges.
-a merket exists if there are people who want to sell something and buyers who want to purchase something |
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7 characteristics of a market transaction ( free market)
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-division making autonomy(free to make own decision)
-participation is voluntary -both buyer and seller are able to veto any deal -both buyer and seller are separate entities -each party controls their own resources -each party is free to make decisions that reflect their own preferences. -there are rules that constrain every market and what is fair in that particular market |
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types of markets are based on the degree of competition
perfect competition 5 principles |
1. products of each firm are similar commodities ( almost identical)
2.prices must be known by all parties 3. easy entry and exist into the marketplace 4. prices are set exclusively by supply and demand 5. many small sellers |
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monopolistic competition
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1.many small sellers(different tomatoes)
2.easy entry and exit 3. product differentiation |
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oligopolistic competition
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- a few big sellers (coke vs pepsi)
-Key: interdependency between firms -difficult to enter market -constantly imitating each other |
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monopoly
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-no competition: one seller
-us mail or utilities -few close substitutes |
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consumers
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1. cognition (how they think)
2. behavior-action- movement 3. cultural context -ultimate user of good or service -marketing is the craft of linking the producers (or potential producers) of a product or service with customers ( both existing and potential) l -marketing research underpins all marketing activities |
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Robert Elberson
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CEO of hanes
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utility
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utility is the happiness or satisfaction gained from buying, owning, and or consuming a product
- goal of the consumer is to maximize utility |
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form utility
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raw materials are useful
-product is in a form that is useful to us ( raw materials--> finished good) -ex= a product is dissembled =low utility |
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place utility
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-make product available in place consumers want
-price difference in different stores |
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time utility
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-Wendy's or taco bell
-open for a longer period of time when consumer wants |
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possession utility
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-owning/ renting a product
- a product isnt useful until we are able to consume it |
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Exchange value
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willing to give up price
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use value
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direct literal meaning, something keeps us warm
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sign value
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quantitative product or brand- designer label
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exchange value formula
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exchange value= use value+ sign value
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need
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- the recognition of any difference between a consumers actual state and some ideal or desired state
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want
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-the desire of satisfy needs in specific ways that are culturally and socially influenced
-you must have a particular good to satisfy |
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environmental scanning
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-environmental scanning is the acquisition and use of information about events, trends, and relationships in an organizations external environment
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uncontrollable variables
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the environment- everything outside of the company
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controllable variables
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prices
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marketing concept
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-the company is trying to fulfill the needs of the consumer in their own interests.
-customer orientation vs product orientation -" consumer sovereignty" |
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Mr. E pushes for a SBU
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sbu- strategic business unit
-3 characteristics -a single business unit -own a set of competitors -own management and marketing teams |
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marketing research
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- a systematic process for gathering, analyzing, and interpreting data pertaining to the companys customers, competitors, and cultural environment with the goal of improving marketing effectiveness
- part of swot analysis |
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reliability
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- the extent to which research measurement techniques are free of errors
-the ability to perform a service dependably, accurately, and consistently |
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validity
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the extent to which research measures what it is supposed to measure
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Triangulation
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- triangulation is the application and combination of several research methodologies in the study of the same phenomenon
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methods and designs of market research
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Historical analysis
secondary qualitative |
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trade research
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-when entering a product into a new market
-secondary quantitative ( secondary = already collected) (primary= 1st to collect data) |
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survey research
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primary quantitative
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Focus group research
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primary qualitative
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how to divide the market
Mass Market |
all possible customers in a market
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Segmentation
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identify and describe market segments
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target
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evaluate segments and determine which one(s) to enter
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position
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-Use the "marketing mix" to create a competitive advantage in the selected target segments
-placing your product in consumers mind relative to the competition -ex volvo is associated with safe , :google it", kleenex |
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market fragmentation
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due to many diverse interests and backgrounds numerous different groups are created with distinct needs and wants
-broad based- large number of consumers niche market - one small part of the market |
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product positioning
1. Undifferentiated |
one strategy for each set of uses
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2. differentiated
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two different strategies
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concentrated
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one strategy and totally ignore the other
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semantic memory
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-ones memory for the meaning of words and concepts
- things people recall with out knowing when they learned them |
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3. package
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-unique has egg in name,going on peoples legs
-fits in the grocery store bc we have eggs in the store -has eggs in the name - |
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channels of distribution (Place)
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-intensive distribution
--make product avaliable through as many channels as possible -selective distribution --more discriminating use of channel members -exclusive distribution --single channel member has rights to sell the product |
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channels of distribution (place)
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-convenience goods( breads or asprin, non durable nature, needed by consumers in every day life)
-shopping goods( appliances/ furniture, purchased less higher priced, compare price/ quality ) -speciality goods( antique/original painting. Purchases infrequently. consumer will go to great effort to find one |
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L'eggs boutique
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-free standing unit
-grocer said no to this bc didnt want to stalk -grocer said no with route girls -said no bc they didnt want to buy inventory they thought would never sell. -grocer now says yes, leggs came up with consignment leggs owner inventory grocer got commission |
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Push
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-incentives to the retailer to carry the product because there is no wholesaler
(usually a coupon) -manufacturer provides retailer with incentive to carry the product +"push" through channel |
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pull
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provides an incentive to the consumer to buy the product
-manufacturer provides customers with incentive to buy product consumers demand product from retailer + pull through channel |
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Price
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price perceived quality relationship: the higher the price the higher the perceived quality
- women thought it would be low quality -they us high price to think its high quality -skimming= high price for new product |
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skimming price
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a firm charges high price for a new product
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penetration price
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a firm charges a very low price for a new product ( low price is maintained)
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historical analysis
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sec qualitative
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John Penberton
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Invented coke
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the woodruffs
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-1918 company sold to ernest woodruff. the son, robert ran the company for 60 years
-emphasized market world wide |
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caleb bradham
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created pepsi
also a medicine |
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pepsi ad campaign
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-pepsi generation emphasized the value of the baby bombers(ppl born 1946-65)
-a lot of discretionary income -pepsi challenge = tase test with coke in grocery stores 80% of the time pepsi won |
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quasi experimental design
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-pepsi challenge
-what taste tests are referred to in marketing research -easy to conduct -leave actual reason for the associations unclear ( disadvantage) -use non-randomized group meaning whoever happens to walk up -lack of control of variables |
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the strength of experiments
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-definition= the act of conducting a controlled test or investigation
-experiments are the only method that can scientifically argue a cause and effect relationship( if properly conducted) -disadvantage= difficult to design/conduct -behavior is observed outside of normal conditions -only show us a small part of the information, thats why we need triangulation |
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the three conditions of causation
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1. empirical relationship( two or more variables are related)
2. temporal sequence ( of or related to time. cause happens because of effect) 3. rule out alternative explanations ( blind folded people, random drink first, also gave bite of saltine cracker in-between tastes) |
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validity
internal validity |
-cause/effect
-We can scientifically argue that cause/effect have been found -formula/tase lead people to prefer pepsi |
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external validity
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we can generalize our finding to population of interests
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Robert goizueta
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-chairman of board of coke in early 80's
-called managers conference/ announced nothing is sacred in this company - 3 things influenced change in formula 1. history driven by charismatic leadership 2. emphasis on formula from very beginning 3. cokes incredible history |
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national brand
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owned by the manufacturer of the product ( coke)
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private label brand
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brands that are owned by a certain retailer (great value at walmart)
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Generic branding
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a strategy in which products are not branded and are sold at the lowest price position
( can labeled beer) |
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family brand
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several different products marketed under the same brand name
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project kansas
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-coke did this
-largest taste test in history -cost over 4 million -had 3 or 4 new tastes with over 200,000 people participating -new taste beats pepsi/old coke -with high internal validity coke established people preferred new coke |
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probability samples
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-samples the researchers use when they want to generalize their findings to the population of interest
-looking for external validity -coke will use these -objective= try to select a sample with same demographics as population |
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simple random sample
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each person in the population has a known and equal chance of being selected
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type of srs
systematic sampling |
-select the nth member of a population after a random start
-5,10,15 |
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stratified sample
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the population of interest is divided into strata of subpopulations, in other words you group alike groups (age) then a simple random sample is selected from each group
-main objective= increase or precession -project kansas uses this |
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cluster sample
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the entire population is divided into groups, or clusters, which should each be a small scale representation of the entire population. then a random sample of these clusters is selected
-objective=reduce costs increasing their sample inefficiency |
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non probability sample
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-used for generating ideas and insights
-more common -pepsi challenge - |
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convenience samples
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use whoever is available
-original pepsi challenge |
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judgement samples
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the sample elements are handpicked because it is expected that they can serve the research purpose
- skateboards/ go to skatepark |
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quota samples
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-an attempt to get a certain percentage of representation in the sample
-80% women use sample, needs to be 80% women |
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cokes mistakes
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1. generalization issue biggest mistake ( only one method of market research)
2. research participants were never told that new flavor would replace old coke 3. only 15% of people tried new formula 4. preference for sweeter tasting product diminishes with time 5. research completely ignored the sign value of coke |
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publicity
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-unpaid communication that gets media attention
-creates buzz -high involvement, less frequently purchased durables -product you think a lot before buying (CAR) |
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pros of publicity
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1. efficient ( efficient way to spread the news)
2. cheap 3. credible ( see something in the news much more likely to believe it) |
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cons of publicity
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1. no control over the message( control of the press is the most important con)
2. "nothing is sacred" 3. news emphasizes rational arguments |
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advertising effectiveness
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-usually measured in terms of how well the as is remembered, recognized, or recalled
-associations - two things appearing together often enough so that we begin to think of them as representing the same category |
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unconditioned stimulus
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thing that process an emotional response. this caries with the target segment
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unconditioned response
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the emotional response that is provoked by the unconditioned stimulus
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neutral stimulus
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-this isnt really a stimulus at al because its neutral
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pairing
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this is the word used to describe the association. The unconditioned stimulus is paired closely with the neutral stimulus
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conditioned stimulus
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suppose the pairing works. now the consumer is in the grocery store, they see diet coke, and they feel a little desire and excitement. Now an initially neutral stimulus elicits a response
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conditioned response
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the response to the conditioned stimulus
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three things must happen for respondent conditioning to work
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1. the stronger the unconditioned stimulus the better
2. the unconditioned stimulus must be paired with the neutral stimulus 3. there needs to be some repetition |
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adoption theory/ the diffusion of innovations
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-associated with the work of Everett M. Rogers
-studied the way new things(technology, fashion, etc. ) diffused (spread) through a population |
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1. Innovators
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- first to adopt-2.5% of consumers
-adventurous, cutting edge consumers that are almost obsessed with the state of the art. -only an innovator for one product category -key: marketers do not influence innovators |
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introduction stage
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-sales and profits are low-in fact profits are often negative
-prices and costs are high -product just being introduced to the population of interest -little competition in this stage |
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2. early adopters
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-aka opinion leaders
-second to adopt 13.5% of consumers -larger group that represents the very beginning of the mainstream -"translates" the actions of the innovators into something that is more understandable to the mainstream -help marketers find tune strategies and opportunities -marketers put themselves in role of being an early adopter -early part of growth |
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growth stage
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-earlier adopters correspond with the beginning of the growth stage
-prices and costs are beginning to decline -rapidly rising sales -moderate cost per customer -rising profits -growing competition |
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3. early majority
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-represents approximately 34% of consumers
-these consumers have opportunity to communicate with the opinion leaders -last part of growth stage |
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growth stage continued
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-sales and profits are increasing
-prices and costs are decreasing due to the experience effect- "learning how to do things better" leads to a more affordable product ( ex flat screen tv) -also economics of scale= more you produce the less in costs per unit |
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4. late majority
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-remainder of the mainstream
-34% of consumers -have the opportunity to communicate with the early majority -tend to try things only after they have proven to be valuable |
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maturity stage
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-prices and costs are the lowest ( due to experience effect)
-sales peak -high profits -competition begins to decline |
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laggards
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-16% of consumers
-believe new is not always better -hold on to traditional values -resistance to innovation -last to adopt an innovation -almost isolated in the social networks of local systems -suspicious of innovations and change agents |
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decline stage
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-if the innovation ever becomes obsolete it corresponds to the decline stage
-declining sales, profits, and competition -low cost per customer |
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chart of revenue and profit
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-revenue and profit are lowest in introduction stage
-profits are highest in growth stage -revenue is highest in maturity |
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diffusion of innovations
trickle down |
-a theory that tracks how fast and in what way something new diffuses through a culture
-trickle down vs trickle up -trickle up= come from the street to top fashion -trickle down=top fashion to the street |
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implementing the strategy (AW)
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-mak shoes edgy/cool
-social integration makes them no longer cool |
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classic model of communication
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-process where meaning is transferred from source to receiver
-source.encoding, message/media, decoding. receiver. response feedback. back to source |
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sender
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-source... the sender --who is trying to get the consumers attention?
-encoding..put thoughts and ideas into symbolic form ( that well convey meaning) -task completed by the source -goal-receiver understand message -airwalk wants to add style and entertainment to their shoe, not just sport anymore |
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message
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-controlled by the source
-definition= communication in physical form that does from sender to receiver |
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artistic values
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-only have airwalk on printout
-whole campaign is entirely visual -17 year old kids are exactly the same in what shoe they like all over the world |
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medium
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-choosing media type
-factors to consider -media habits of target consumers -nature of the product -type of message -cost definition= communication vehicle through which a message is transmitted to a target audience |
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word of mouth marketing
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-giving people a reason to talk about your products and making it easier for that conversation to take place
-ex give free item, then have them write on a blog about it |
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buzz marketing
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-using high profile entertainment or news to get people to talk about your brand
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viral marketing
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-creating informative or entertaining messages that are designed to be passed along by email ( now youtube)
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guerilla marketing
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a firm ambushes customers with promotional content in places they are not expecting to encounter this kind of activity
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Receiver
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-receiver ( consumer/us) the person who "intercepts" and "interprets" the message
-decoding= receiver transforms message back into thought provides a frame of reference( assigning meaning to the message) |
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airwalk core consumer
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no longer thought about core consumer so trend was over
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Rudolf and Adolf Dassler
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-adidas is the oldest of these brands
-rudolf has a mind for business -adolf was an innovator, he enjoyed crafting/designing shoes. was an athlete himself -jesse owens wore their shoes winning gold medals -become popular in 1936 olmpics -first shoes were dasslers |
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adidas and puma
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-rudolf/ adolf got in big fight and split up
-rudolf formed puma -adolf formed adidas -prior to 1972 they where shoe market |
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1952 olympic games and miracle at bern
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-olympics: adidas shoe were worn
-bern german soccer team won the world cup -rained and the field was muddy -during the game the players used interchangeable spikes and put in longer spikes to increase traction - gave 100% credit for win to adidas shoes |
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adidas marketing strategy
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every company follows this strategy
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1. kinesiology
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-means the science dealing with the interrelationship of the physiological process and anatomy of the human body with respect to movement
-scientist where working with the body, designing these shoes. shoes can give better performance |
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2. product line
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-the first company to develop an extensive product line
-different shoe type for every sport |
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3. endorsement contracts
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-the company pays the athlete to use or wear their product
-the brand is identified with a logo which needs to be simple yet distinctive -tends to be more effective than an ad because seeing the "real thing" increases credibility - consumer needs to be able to see this logo on T.V. |
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4. licensing agreements
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-adidas negotitated contracts with small foreign firms to produce their shoes
-economic advantages -may be paying fewer taxes -labor is cheaper -since adidas doesnt own factories, it keeps fixed costs low |
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break even point
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-point at which sales=expenses
-profits=0 - allows marketers to identify how many units of a product they will have to sell at a given price to be profitable -licensing agreements lower break even point, making the company more competitive |
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criticisms of licensing agreements
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-if a competitor doesnt use licensing agreements than their break even point will be higher and they will not be able to compete
- mostly focused on working conditions in overseas factories, including low wages and long hours, child labor, and unsafe working conditions |
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social responsibility
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- a management practice in which organizations seek to engage in activities that have a positive effect on society and promote public good
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environmental stewardship
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- a position taken by an organization to protect or enhance the natural environment as it conducts its business activities
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americas running culture
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steve prefortaine- one of the best runners in the world.
-ran for Bill Bowerman -first person to wear athletic shoes as street or casual wear -running became popular -frank shorter= won the marathon in the 1972 olympics |
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Bill Bowerman and Phil Knight
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-Bill=track coach at UO
-Phil Knight= on track team -Oregon track and field powerhouse -bowerman is innovator, knight is business mind -knight found tiger tennis shoe -made business on the spot called blue ribbon sports -started to import shoes to the USA |
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Linear city model
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-where a firm will place its products along a ling of attributes
- we look at a shoe and try and figure out what is missing from shoes. -none of the companies were focused on running shoes so thats what he thought would sell |
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location model
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-where a firm would locate its "presence" given the distribution of potential customers
-located in oregon bc tack and field powerhouse |
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nike marketing strategy
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-imitated adidas
-expanded their product line especially with running -emphasized research and development more than any other company -good use of endorsement contracts with MJ -contracted with asian factories for production -put together research committees/advisory boards made up of athletes coaches trainers and doctors who evaluated shoes by actual running in them -*** distribution channels where more extensive. they where able to reach rural america *** |
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the mean end chain
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-understanding the ways product or a brand links to a culture
-how does it represent our every day lives -ultimately want to end up with values |
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tmec attributes
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- are one type of knowledge consumers have about products or brands
-physical, measure intangible characteristics of the product -color of shoe -weight of the shoe |
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tmec benefits
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-benefits-positive consequence of product use
-1. Functional= benefits provide immediate physiological outcomes -padding support system in that shoe can lead to injury free runs therefore greater fitness |
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tmec psychological
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-benefits make one feel a certain way (emotionally)
^exercising makes you feel better psychologically -social- benefits are socially integrating( make friends with other runners) |
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tmec values
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-values are the end state that consumers are trying to achieve in their lives such as health and self-fulfillment
-ultimate value=health/self fulfillment -values can be defined as enduring beliefs about desirable outcomes that transcends specific situations and shape a persons behavior |
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tmec values define cultures
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so by linking product attributes and benefits to values--- that marketer is associating the product or brand with a subculture
-greater fitness leads to people feeling better/ stronger and lead to better self esteem |
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tmec two parts of value
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1. instrumental value- refers to a pattern of behavior in how consumers use products which leads to a different demand for products
-serious runner looks for shoe for different reasons than someone just going to class |
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#2^
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terminal value- the end of the means end chain. this is ultimately what the consumer wants to achieve
-people felt they needed to be fit, thats what lead to the running boom -value-a symbol or icon of the subculture -just another way of understanding sign value |
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reebok
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-named after african gazelle
- had been around since 1895 and originally called foster and sons -made in GB -1958 Grandsons started Reebok. Wanted to make trendy shoes grand father said they couldnt use foster name -1979 paul F bough north american distribution rights -where shoe market until dasslers came along -no licensing agreement. cost to high, couldnt compete with adidas -most expensive running shoe at 60$ |
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reebok continued
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-imitated nike and adidas except aerobic exercise movement
-created shoe called freestyle only shoe designed for aerobics -increasing involvement of women in exercise -increasing extension of athletic footwear to street/casual wear -started putting a lot of color in their shoes -most expensive shoes but sold all of them |
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the pump
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-there was a problem with pricing strategy- 130$ for the pump
-most expensive shoe on the market |
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elasticity
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-changing price-how much more inventory do i need?
-determinants of elasticity -number of substitutes available -how much time do you have to respond -share of budget involved in the purchase decision -necessity or luxury -the more necessary a good is the lower the elasticity -degree to which a demand curve reacts to a change in price -more substitues, the higher the elasticity -longer price change holds, the higher the elasticity -the higher the% of income that the products price is of the consumers income the higher the elasticity |
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price elasticity of demand
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percentage change in quantity demanded over percentage change in price
-over 1 elastic demand under 1 inelastic demand |
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inelastic deman
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-when consumers arent sensitive to prices
-not sensitive to prices -magnitude of less than 1 -change in quantity demanded is less than the change in price |
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elastic demand
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-the higher the price the lower the demand is
-%change in quantity demanded is greater than that of price |
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prestige products
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-products that have high price and that appeal to status conscious customers
-demand increases as price increases -demand decreases as price decreases |
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mistake #1
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-retailers knew price to high on shoe and they cut price
-rebook said they would shut off supply if not sold for $130 which lead to price fixing charges by the federal gov |
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cross elasticity of demand
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-measures the rate of response of quantity demanded of one good, due to a price change of another good
-substitutes. consumers purchase more of a good when the price of its substitute increases ( reeboks coast a lot so people bought nike) -complements: a price rises in one good causes the demand for both goods to fall ( something you use in addition to product goes with the product somehow. price of shoe rises, demand for socks declines |
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income elasticity
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-measures the responsiveness of the quantity demanded of a good to the change in income of the people demanding the good
-inferior goods: as income increases quantity demanded decreases -normal goods: as income increases quantity demanded increases -full time job can afford more expensive shoe |
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mistake 2
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-operating cost to high
-1. endorsement spent to much 2.increase sporting event sponsorship 3. shoes not selling |
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mistake 3
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-an exclusive shoe that was only at footlocker
-reebok would not give an exclusive line, they sold to anybody |
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awareness
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information that the innovation exist
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interest
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Consumers look for and are open to information about the innovations
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evaluation
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weigh the cost and benefits of the product
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trial
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potential buyers will actually experience or use the product for the first time
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adoption
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consumer actually buys the product
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confirmation
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after adoption, the consumers weighs expected VS. actual belief
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adoption and diffusion of new products
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innovator---->introduction stage
early adapters---->early growth early majority ----> later growth stage late majority---->maturity stage laggords-----> decline stage |
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contribution margin
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price-variable costs
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cost volume profit
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revenues-fixed cost-vairable costs
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break even point formula
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total fixed costs divided by contribution margin
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advertising
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least personal part of promotional mix
-non-personal communication from a sponsor using mass media. -most familiar |
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sales promotion
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contests or coupons. Build interest in a product during a specified time period. stimulate immediate purchases
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public relations
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seek to create and maintain a positive image of any organization
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personal selling
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one on one selling
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direct marketing
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the most personal part of promotional mix
-direct mail, telemarketing |
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diversification
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-a new product in a new market
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market penetration
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-present product into a present market
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market development
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present product into a new market
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product development
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new product into a present market
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