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151 Cards in this Set
- Front
- Back
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Marketing |
Facilitating exchange between business and its customers. |
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Marketing Mix |
The set of tactical marketing tools—product, price, place, and promotion—that the firm blends to produce the response it wants in the target market.
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The 4 P's |
Product, Price, Place, Promotion |
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The 4 C's |
Customer Solution, Customer Cost, Convenience, Communication |
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Product |
A complex bundle of satisfactions.
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Segmentation |
The clustering of individuals with shared needs or characteristics. |
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Positioning |
Refers to the place the product occupies in the mind of the customer relative to competitors. |
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What are the four major steps in designing a customer-driven marketing strategy? |
1. Segmentation 2. Targeting 3. Differentiation 4. Positioning |
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Differentiation |
Differentiate the market offering to create superior customer value.
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Market Targeting |
Evaluating each market segment’s attractiveness and selecting on or more segments to enter. |
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Describe the four major sets of segmentation variables for consumer markets. |
1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation 4. Behavioral Segmentation |
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Geographic Segmentation |
Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods. |
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Demographic Segmentation |
Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. |
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Psychographic Segmentation |
Dividing a market into different segments based on social class, lifestyle, or personality characteristics.
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Behavioral Segmentation |
Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to the product.
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What are the requirements for effective segmentation? |
1. Measurable 2. Accessible 3. Substantial 4. Differentiable 5. Actionable |
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Measurable |
The size, purchasing power, and profiles of the segments can be measured. |
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Accessible |
The market segments can be effectively reached and served. |
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Substantial |
The market segments are large or profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program. I would not pay, for example, for an automobile manufacturer to develop cars especially for people whose height is greater than seven feet. |
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Differentiable |
The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments.
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Actionable |
Effective programs can be designed for attracting and serving the segments. For example, although one small airline identified seven market segments, its staff was too small to develop separate marketing programs for each segment.
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What three factors do marketers look at when evaluating market segments? |
1. Segment size and growth. 2. Segment structural attractiveness. 3. Company objectives and resources. |
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Segment size and growth |
A company wants to select segments that have the right size and growth characteristics. But right size and growth is a relative matter. |
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Segment structural attractiveness |
A company needs to examine major structural factors that affect long-run segment attractiveness. For example, a segment is less attractive if it already contains strong and aggressive competitors, or if it is easy for new products to come into the segment. |
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Company objectives and resources |
Some attractive segments can be dismissed quickly because they do not mesh with the company’s long-run objectives. Or the company may lack the skills and resources needed to succeed in an attractive segment. For example, the economy segment of the automobile market is large and growing. But given its objectives and resources, it would make little sense for luxury-performance carmaker BMW to enter this segment. |
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Describe the four primary market targeting strategies. |
1. Undifferentiated (mass) marketing. 2. Differentiated (segmented) marketing. 3. Concentrated (niche) marketing. 4. Micromarketing (local or individual marketing) |
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Undifferentiated (mass) Marketing |
A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
{{Grapefruit or Steel}} |
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Differentiated (segmented) Marketing |
A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
{{Different brands of laundry detergent}}
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Concentrated (niche) marketing |
A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches.
{{Whole Foods Market - upscale compared to Walmart}} |
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Micromarketing (local or individual marketing) |
Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing.
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Why are some marketing efforts criticized as being potentially harmful? |
Target marketing sometimes generates controversy or concern. The biggest issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products.
However, in target marketing, the issue is not really who is targeted, but rather how and for what. Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted.
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Which segments are considered the most vulnerable?
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Children Inner-City Minorities |
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How does the advertising industry’s self-regulatory agency address these issues? |
The Children’s Advertising Review Unit, the advertising industry’s self-regulatory agency, has published extensive children’s advertising guidelines that recognize the special needs of child audiences. |
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How do companies differentiate and position their products? |
Value position Product position |
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Value Position |
How the company will create differentiated value for targeted segments and what positions it wants to occupy in those segments. |
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Product Position |
The way a product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products. |
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What are the possible value propositions as described in your textbook? |
1. More for more 2. More for the same 3. The same for less 4. Less for much less 5. More for less |
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More for More |
This positioning involves providing the most upscale products or service and charging a higher price to cover the higher costs. It not only offers higher quality, it also gives prestige to the buyer. It symbolizes status and a loftier lifestyle.
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More for the Same |
Companies can attack a competitor’s more-for-more positioning by introducing a brand offering comparable quality at a lower price.
{{Toyota introducing its Lexus line of luxury car}} |
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The Same for Less |
Companies don’t claim to offer different or better products. Instead, they offer many of the same brands as department stores and specialty stores but at deep discounts based on superior purchasing power and lower-cost operations. |
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Less for Much Less |
Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price. |
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More for Less |
In the short-run, some companies can actually achieve such lofty positions. In the long-run, companies will find it very difficult to sustain such best-of-both positioning. Companies that try to offer both may lose out to more focused competitors. |
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Describe the three levels of products and services. |
1. Core customer value 2. Actual product 3. Augmented product |
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Core Customer Value |
When designing products, marketers must first define the core problem-solving benefits or services that consumers seek. Addresses the questions: What is the buyer really buying? |
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Actual Product |
Product planners need to develop product and service features, a design, a quality level, a brand name, and packaging.
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Augmented Product |
Product planners must build around the core benefit and actual product by offering additional consumer services and benefits. |
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Define the four types of consumer products. |
1. Convenience product 2. Shopping product 3. Specialty product 4. Unsought product |
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Convenience Product |
A consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort. Usually low priced, and marketers place them in many locations to make them readily available when customers need or want them.
Laundry detergent, candy, magazines, fast food |
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Shopping Product |
A consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style. When buying products and services, consumers spend much time and effort in gathering information and making comparisons. Marketers usually distribute their products through fewer outlets but provide deeper sales support to help customers in their comparison efforts.
Furniture, clothing, used cars, major appliances, and hotel and airline services. |
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Specialty Product |
A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchasing effort. Buyers do not normally compare these products. They invest only the time needed to reach dealers carrying the wanted products.
Specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, and the services of medical or legal specialists. |
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Unsought Product |
A consumer product that the consumer either does not know about or knows about but does not normally consider buying. By their very nature, these products require a lot of advertising, personal selling, and other marketing efforts.
Most major new innovations, life insurance, preplanned funeral services, blood donations.
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What decisions do marketers need to make about individual products/services? |
1. Product attributes 2. Product quality 3. Branding 4. Packaging |
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Product Attributes |
Quality, features, and style and design.
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Product Quality |
The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Closely linked to customer value and satisfaction.
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Branding |
A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. |
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Packaging |
The activities of designing and producing the container or wrapper of the product. |
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What is a product line? |
A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.
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What is a product mix? |
The set of all product lines and items that a particular seller offers for sale.
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What are the four characteristics that affect the marketing of services? |
1. Intangibility 2. Inseparability 3. Variability 4. Perishability |
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Service Intangibility |
Services cannot be seen, tasted, felt, heard, or smelled before they are brought.
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Service Inseparability |
Services are produced and consumed at the same time and cannot be separated from their providers. |
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Service Variability |
The quality of services may vary greatly depending on who provides them and when, where, and how they are provided.
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Service Perishability |
Services cannot be stored for later sale or use.
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How does service marketing differ from traditional product marketing? |
Because services differ from tangible products, they often require additional marketing approaches. Successful service companies focus their attention on both their customers and their employees.
They understand the service profit chain, which links service firm profits with employee and customer satisfaction.
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What is the service profit chain? |
The chain that links service firm profits with employee and customer satisfaction.
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Brand |
A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors.
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Brand Equity |
The differential effect that knowing the brand name has on customer response to the product or its marketing.
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How do companies find and develop new product ideas? |
1. Internal idea sources 2. External idea sources 3. Crowdsourcing 4. Idea screening |
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New-Product Development |
The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts.
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What are the steps in the new product development process? |
1. Idea generation 2. Idea screening 3. Concept development and testing 4. Business analysis 5. Product development 6. Test marketing 7. Commercialization |
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Idea Generation |
The systematic search for new-product ideas. |
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Idea Screening |
Screening new-product ideas to spot good ideas and drop poor ones as soon as possible.
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Product Concept |
A detailed version of the new-product idea stated in meaningful consumer terms. |
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Concept Testing |
Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.
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Marketing Strategy Development |
Designing an initial marketing strategy for a new product based on the product concept.
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Business Analysis |
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. |
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Product Development |
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering. |
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Test Marketing |
The stage of the new-product development in which the product and its proposed marketing program are tested in realistic market settings.
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Commercialization |
Introducing a new product into the market. |
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How do companies manage new product development? |
1. Customer-centered new-product development 2. Team-based new-product development |
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Customer-Centered New-Product Development |
New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences. |
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Team-Based New-Product Development |
New-product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness.
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What are the five stages of a typical PLC (product life cycle)? |
1. Product development 2. Introduction 3. Growth 4. Maturity 5. Decline |
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Product Life Cycle (PLC) |
The course of a product’s sales and profits over its lifetime. |
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Product Development (PLC) |
Begins with the company finds and develops a new-product idea. During product development, sales are zero, and the company’s investment costs mount.
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Introduction (PLC) |
A period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expense of product introduction. |
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Growth (PLC) |
A period of rapid market acceptance and increasing profits.
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Maturity (PLC) |
A period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.
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Decline (PLC) |
A period when sales fall off and profits drop. |
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Introduction Stage |
The PLC stage in which a new product is first distributed and made available for purchase. |
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Growth Stage |
The PLC stage in which a product’s sales start climbing quickly.
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Maturity Stage |
The PLC stage in which a product’s sales growth slows or levels off.
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Decline Stage |
The PLC stage in which a product’s sales fade away.
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Do all products follow all stages of the PLC? |
No. Some products are introduced and die quickly; others stay in the mature stage for a long time; some enter the decline stage and then are cycled back into the growth stage through strong promotion or repositioning. It seems like a well-managed brand could live forever. A life-cycle can change quickly because of changing competitive attacks and responses.
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Style |
A basic and distinctive mode of expression.
Appears in homes (colonial, ranch, transitional), clothing (formal, casual), and art (realist, surrealist, abstract).
It may last for many generations, passing in and out of vogue—has a cycle showing several periods of renewed interest. |
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Fashion |
A currently accepted or popular style in a given field.
The more formal “business attire” look of corporate dress of the 1980s and 1990s gave way to the “business casual” look of the 2000s.
Grows slowly, remain popular for a while, then decline slowly.
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Fad |
A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.
Poker chips and accessories, Pet Rocks, Pogs.
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Social responsibility (in regard to new product development): |
Includes public policy issues and regulations involving or acquiring or dropping products, patent protection, product quality and safety, and product warranties. |
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Describe the three major pricing strategies: |
1. Customer value-based pricing 2. Cost-based pricing 3. Competition-based pricing |
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Price |
The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.
{{the value offered by a customer in a marketing exchange for products}}
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Customer Value-based Pricing |
Setting price based on buyers’ perceptions of value rather than on the seller’s cost. |
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Cost-based Pricing |
Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
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Competition-based Pricing |
Setting prices based on competitors’ strategies, prices, costs, and market offerings.
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Target Costing |
Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
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EDLP |
Every Day Low Pricing. Type of good-value pricing. Involves charging a constant, everyday low price with few or no temporary price discounts.
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High-low Pricing |
Involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.
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Name and describe the types of costs marketers must consider when setting prices?
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1. Fixed Costs 2. Variable Costs 3. Total Costs |
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Fixed Costs |
Costs that do not very with production or sales level.
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Variable Costs |
Costs that vary directly with the level of production. |
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Total Costs |
The sum of the fixed and variable costs for any given level of production.
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What is the experience curve and how does it relate to cost considerations? |
(Also known as learning curve): The drop in the average per-unit production cost that comes with accumulated production experience.
It relates to cost considerations because it takes economies of scale into consideration. As a result, the average cost tends to decrease with accumulated production experience.
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Cost-plus pricing (markup pricing) |
Adding a standard markup to the cost of the product.
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What are the pros and cons of cost-plus pricing? |
(Con) Any pricing method that ignores demand and competitor prices is not likely to lead to the best price.
(Pro) Sellers are more certain about costs than about demand. By tying price to cost, sellers simplify pricing; they do not need to make frequent adjustments as demand changes.
(Pro) When all firms in the industry use this pricing method, prices tend to be similar, so price competition is minimized.
(Pro) Many people feel that cost-plus pricing is fair to both buyers and sellers. Sellers earn a fair return on their investment but do not take advantage of buyers when buyers’ demand becomes great. |
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Price Elasticity of Demand |
A measure of the sensitivity of demand to changes in price.
Demand and price are inversely related.
Buyers are less price-sensitive when the product they are buying is unique or when it is high in quality, prestige, or exclusiveness; substitute products are hard to find or when they cannot easily compare the quality of substitutes; and the total expenditure for a product is low relative to their income or when the cost is shared by another party.
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Demand Curve |
A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged. |
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Elastic Demand |
A price increase leads to a large drop in demand. If demand changes greatly with a small change in price, demand is elastic.
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Inelastic Demand |
A price increase leads to a relatively small drop in demand. If demand hardly changes with a small change in price, demand is inelastic.
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What are the major strategies for pricing new products? |
1. Market-skimming pricing (price skimming) 2. Market-penetration pricing |
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Market-Skimming Pricing
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Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high prices; the company makes fewer but more profitable sales.
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Market-Penetration Pricing |
Setting a low price for a new product in order to attract a large number of buyers and a large market share.
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What are the major price adjustment strategies? |
(1) Discount and Allowance. (2) Segmented Pricing. (3) Psychological pricing. (4) Promotional pricing. (5) Geographical pricing. (6) Dynamic pricing. (7) International pricing.
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Discount and Allowance |
Reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product.
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Segmented Pricing |
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
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Psychological pricing |
Pricing that considers the psychology of prices and not simply the economics; the prices is used to say something about the product. |
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Promotional pricing |
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.
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Geographical pricing |
Setting prices for customers located in different parts of the country or world.
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Dynamic pricing
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Adjusting prices continually to meet the characteristics and needs of individual customers and situation.
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International pricing
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In some cases, a company can set a uniform worldwide price. However, most companies adjust their prices to reflect local market conditions and cost considerations.
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Discount |
A straight reduction in price on purchases during a stated period of time or in larger quantities. |
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Allowance |
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way. |
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What consumer and competitor issues must marketers consider before initiating a price change?
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(Buyer Reactions to Price Changes) - A brand’s price and image are often closely linked. A price change, especially a drop in price, can adversely affect how consumers view the brand.
(Competitor Reactions to Price Changes) – A firm considering a price change must worry about the reactions of its competitors as well as those of its customers. The competitor can interpret a company price cut in many ways.
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What social and legal issues must marketers consider when making pricing decisions? |
(Price fixing & Predatory Pricing) - Potentially damaging pricing practices within a given level of the channel.
(Retail Price Discrimination, Discriminatory Pricing, & Deceptive Pricing) – Potentially damaging pricing practices across levels of the channel.
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Price Fixing |
Sellers must set prices without talking to competitors (or price collusion is suspected).
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Predatory Pricing |
Selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.
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Price Discrimination |
Sellers that don’t offer the same price terms from a given manufacturer, whether the retailer is REI or your local bicycle shop.
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Deceptive Pricing |
Occurs when a seller states prices or price savings that mislead consumers or are not actually available to customers. |
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Marketing Channels |
(Also called Distribution Channels)
A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
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Why do companies use marketing channels? |
Having distribution networks can reduce the number of channel transactions. Channel members add to the overall value of customer satisfaction.
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Customer-Value Delivery Network |
The network made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.
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Describe how channels are organized: |
Conventional Distribution Channel
Vertical Marketing System (VMS)
Multichannel Distribution System
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Conventional Distribution Channel |
A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits for the system as a whole. |
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Vertical Marketing System (VMS) |
A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate. |
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Multichannel Distribution System |
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. |
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How is disintermediation affecting today’s marketplace? |
Channel innovators who find new ways to add value to the channel can displace traditional resellers and reap the rewards.
Like resellers, to remain competitive, product and service producers must develop new channel opportunities, such as the internet and other direct channels.
Developing these new channels often brings them into direct competition with their established channels, resulting in conflict.
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Disintermediation |
The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.
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Intensive Distribution |
Stocking the product in as many outlets as possible.
{{Toothpaste, candy, and other similar items}}.
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Selective Distribution |
The use of more than one but fewer than all of the intermediaries who are willing to carry the company’s product.
{{Televisions, furniture, home appliances}}.
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Exclusive Distribution |
Giving a limited number of dealers the exclusive right to distribute the company's products in their territory.
{{Luxury automobiles and STIHL}} |
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Functional Needs |
The satiation of functional needs involves solving largely utilitarian problems. For example, we need food, shelter, and transportation. |
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Symbolic Needs |
Symbolic needs refer such things as our need to express and communicate identity to ourselves and others. After the Beaver baseball team won a second consecutive College World Series, the campus was seemingly polluted with students and supporters wearing t-shirts commemorating that extraordinary event. In some ways, the shirts are functional in that they protect the wearer from the sun or cold. More importantly, the t-shirts are expressive in that they convey a sense of shared celebration or community. |
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Experiential Needs |
Experiential needs reflect our desire for fun, excitement, fantasy, and stimulation. A Beaver Bowl game provides these kinds of benefits to the fans, especially when we win! |
