MARK 20100- Principles of Marketing- All notes
MARK 20100- Principles of Marketing- All notes MARK 20100
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Chapter 1 marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large The first objective in marketing is discovering the needs of prospective customers. But these prospective customers may not always know or be able to describe what they need and want. When Apple built its first Apple II personal computer and started a new industry, consumers didn't really know what the benefits would be and had to be educated about how to use personal computers A principal activity of a firm's marketing department is to scrutinize its consumers to understand what they need and want and the forces that shape those needs and wants. market, which is people with both the desire and the ability to buy a specific offering marketing mix. These four elements are the controllable factors—product, price, promotion, and place—that can be used by the marketing manager to solve a marketing proble Product. A good, service, or idea to satisfy the consumer's needs. Price.What is exchanged for the product. Promotion. A means of communication between the seller and buyer. Place. A means of getting the product to the consumer. Environmental forces- forces beyond control social, economic, technological, competitive, and regulatory forces. Examples are what consumers themselves want and need, changing technology, the state of the economy in terms of whether it is expanding or contracting, actions that competitors take, and government restrictions best price, best product, or best service ® Best price: Target. It uses the Target brand promise of “Expect More, Pay Less ” to “make Target the preferred shopping destination for our guests by delivering outstanding value.” Best product: Starbucks. Starbucks seeks “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time,” stressing quality coffee and ethics in the process. ® Best service: U.S. Bank. The brandline in the U.S. Bank ad—“All of US serving you ”— reinforces its commitment to bestinclass customer service, while providing a complete array of financial products and services. relationship marketing, which links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit. Relationship marketing involves a personal, ongoing relationship between the organization and its individual customers that begins before and continues after the sale A recent focus in the customer relationship era has been the advent of social networking allowed organizations to understand and market to current and prospective customers in ways that are still evolving, such as in using social media customer experience, which is the internal response that customers have to all aspects of an organization and its offering social responsibi, the idea that organizations are accountable to a larger society. Ideas are most often marketed by nonprofit organizations or the government. So the Nature Conservancy markets the cause of protecting the environment. Charities market the idea that it's worthwhile for you to donate your time or money organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy products and services for their own use or for resale Chapter 2 Developing successful Marketing and Organizational Strategies Strategic planning Strategic planning- maintaining fit btw organizations goals and capabilities and its changing marketing opportunities o What market is demanding o Marketing's role Effective strategies Provide guiding philosophy Identify attractive opportunities Strong value chains Superior value delivery networks (how get products from factory to consumers) Marketing provides guiding philosophy as to what you are trying to be in the marketplace Marketing at 3 levels o Philosophy- how going into market? Leader (market driving) or follower (market driven)? Ex) apple was market driving with the iphone o Strategy- where and how you compete and where you do well How are you operationally? Customer intimacy ex) Starbucks knowing order and name, innovation ex) apple o Implementation- how do you deliver and sustain value- positioning Company objectives should tie to marketing objectives- company mission, business/marketing objectives 5c's analysis for pacsun- 39-40, pg 41 good diagram o Context- cant expand across country if just skate and surf bc cant do that everywhere o Customer- new phrase is golden state of mind o Competitors- other lifestyle brands like hollister o Collaborators- celebrities that endorse o Company- strength is that diverse, can attract other brands Weaknesses- not appeal to every age group Threats- other places that people can go to Opportunities to go beyond own brand like celebrities, do things that other stores don’t do. Pac sun has online brands that hollister doesn’t GIS- goal impediment solution o Business challenge- wanted to appeal to a broader audience bc they were so narrow with surfing that that would not be enough o Goals (measurable goals)- profit, sales, market share MUST BE SOMETHING QUANTIFIABLE o Impediment- consumer behavior needs to change. What do they need to do differently to achieve their goal? Whose behavior do they want to change Want look at older students who have more money and get them to shop ther Need them to switch from where were shopping to pacsun Ex) CKE- hardees and carls jr o Context- fast and ready, affordable high quality meal o Customer- o Competitors- all fast food restaurants- white castle, mcdonalds o Collaborators- food suppliers/technology, workforce o Company- focus on being premium product, add diff item to menu depending on where location, try have community service whereer are o Goal- sales goal or profitability o Impediment- not appeal to ppl who are health conscious People would have to be health conscious to want to eat their food o Solution- come up with new products to appeal to others It's all in the clouds reading with Apple Apple person is the cool person Most apple consumers have other products so tries to unify all those things for the consumer Apple had to overcome blackberry by being secure. Apple found a way to keep email and text all secure Apple introduces products over time o Ipod appealed to a certain customer base with ipod and created a market for music Simple and easy Gradually started adding features to ipod Touch screen with apps and more functionality Then added phone calls Ppl always want to upgrade (pg 38) o Will keep having customers stay loyal to the brand with same operating system to ppl will know how to use Differentiate from others bc can keep your icloud info even if lose phone Tracking Strategic Performance with Marketing Dashboards marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective o Has hyperlinks for detail marketing metric, which is a measure of the quantitative value or trend of a marketing action or result- each display The Business Portfolio What makes up the company How shape the company by adding new products Business portfolio- collection of products and businesses that make up the company o Decision making factors, figure 5-4 o Consumer decision process and 4 categories of influences o Sociocultural influences Who is engaged in your life, peer group, neighborhood Planning involves two steps o Analyzing the current business portfolio o Shaping future portfolio by developing strategies Investment strategies Cash cows are SBUs that generate large amounts of cash, far more than they can use. They have dominant shares of slowgrowth markets and provide cash to cover the organization's overhead and to invest in other SBUs. Stars are SBUs with a high share of highgrowth markets that may need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows. Question marks are SBUs with a low share of highgrowth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management's dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest. Dogs are SBUs with low shares of slowgrowth markets. Although they may generate enough cash to sustain themselves, they may not become real winners for the organization. Dropping SBUs that are dogs may be required if they consume more cash than they generate, except when relationships with other SBUs, competitive considerations, or potential strategic alliances exist Expansion options- ways can go to market Strategic marketing process: o Align strategy with vision and mission through 5c's and swot o Set goals: STP o Develop marketing plan: 4P's o Manage and measure: Tracking o Evaluation market segmentation, which involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. OVERALL Marketing strategies must align to business vision and mission General objective of marketing strategy is to create superior value Marketing strategy is grounded in analysis which provides: Insight into customers’/consumers’ problems/needs Insight into the firm’s goals and its core competencies relative to competitors Tracking is required (see Marketing Dashboard in homework and in text) Book Today's organizations are of three types: (1) for-profit organizations, (2) nonprofit organizations, and (3) government agencies. strategy is an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals. core values are the fundamental, passionate, and enduring principles that guide its conduct over time To be effective, an organization's core values must be communicated to and supported by its top management and employees; if not, they are just hollow words. By understanding its core values, an organization can take steps to define its mission, a statement of the organization's function in society that often identifies its customers, markets, products, and technologies CHAPTER 3 Context factors (environmental factors) Crest: competitive, regulatory, economic, social, technological Social o Demographics o Ex) eharmony having to make another website for gay people o Household composition o Population shifts o Changing attitudes Economic o Income- total vs disposable o GDP (gross domestic product) o Spend 68% of money Technological factors o Availability o Connectivity o New market offerings o Ex) for jamba juice can make smoothie at home o Eecommerce Competitive factors o New entrants o Advances o New market offerings o Pure competition: where everything is the same ex)apples o Monopolistic competition: kmart/walmart o Oligopoly- airline, verizon (hard to start) o Monopolies- energy o Marketing tactics: distribution, coupons/sales/ avertising, public relations Regulatory factors o Firm protection o Patents/trademarks o Consumer protection o Pricing and labeling ex) if say coke zero then must have zero calories o Legislation to ensure fairness in markets o Rules governing the competitive environment Competitive benchmarking o Segment analysis- ranking service time, convenience, and cost o Analysis of own company o Competitive analysis- comparing yourself to other companies and rating them Scanning the marketing environment (book)- environmental forces social forces of the environment include the demographic characteristics of the population and its culture o Have dramatic impact on marketing strategy o main social forces 1. Demographics Ex) baby boomers getting old now, generation y/x Population shifts Racial/ethnic diversity multicultural marketing programs, which are combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races 1. Culture- incorporates the set of values, ideas, and attitudes that are learned and shared among the members of a group Attitudes towards men and women in marketplace ex) if used to market to only women, will try to also market to men Changing values ex)environment destruction Value consciousness—or the concern for obtaining the best quality, features, and performance of a product or service for a given price —is driving consumption behavior for many products at all price levels Ppl will buy name brand products in order to afford phones etc Economic forces economy, pertains to the income, expenditures, and resources that affect the o cost of running a business and household o Economic forces include the strong relationship between consumers' expectations about the economy and their spending. Gross income has remained stable for more than 40 years although the rate of saving has fluctuated, declining to zero before rising to 3.7 percent recently. o Macroeconomic conditions: Performance of econ based on GDP, unemployment, and inflation/deflation of prices o Consumer income Gross income- total amount of money made in one year Disposable income- money a consumer has left after paying taxes and necessities like food, housing, clothing and transportation Changes in gas prices will affect activities o Discretionary income- money that remains after taxes and necessities Technological forces o Technology- inventions or innovations from applied science or engineering research o First, the cost of technology is plummeting, causing the customer value assessment of technology-based products to focus on other dimensions such as quality, service, and relationships o Technological innovations can replace existing products and services. Changes in technology can also have an impact on customer value by reducing the cost of products, improving the quality of products, and providing new products that were not previously feasible. Electronic commerce is transforming how companies do business. o Allows for introduction of new products o Can change existing products and the way they are produced ex)recycling o Electronic business technologies Electronic commerce- Any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of products and services Network tech used for filing expense reports, monitoring daily sales, communicating, etc Competitive forces o Four basic forms: Pure competition- many sellers and each has similar product ex)wheat Distribution is important but other elements of marketing have little impact Monopolistic Many sellers compete with substitutable products within a price range Ex) if coffee prices are too high will switch to tea Coupons and sales are major marketing tactics Oligopoly A few companies control the majority of industry sales Pure monopoly When only one firm sells the product Ex) water, electricity Marketing plays a small role because regulated by federal state or government Govt control usually tries to manage prices o Components of competition: Factors that drive competition- entry, bargaining power of buyers and suppliers, existing rivalries, substitution possibilities Entry Assess likelihood of new entrants and barriers to entry for other firms Capital requirements, advertisement expenditures, product identity, distribution access, cost to customers of switching suppliers Power of buyers and suppliers Powerful buyers exist when few in number, low switching costs, or product represents a significant share of the buyer's total costs (this leads buyer to exert pressure for price competition) Supplier gains power when the product is critical to buyer and when has built up switching costs Existing competitors and substitutes Slow industry growth- competition more heated for any gains in market share High fixed costs create competitive pressures or firms to fill production capacity Ex) airlines offer discounts for early reservations and penalties for cancellations in order to fill all their seats o Small businesses= majority of competitive landscape for most businesses Regulatory forces o Regulation- restrictions state and federal laws place on business with regard to the conduct of activities o Protects companies as well as consumers bc ensures competition and fair business practices o Protecting competition- have legislation in order to allow consumer to determine which competitor will succeed and which will fail o Product related legislation Company can protect its competitive position under patent law/federal copyright Plenty of food safety laws and child protection, labeling A company can lose its trademark if it becomes generic, which means that it has primarily come to be merely a common descriptive word for the product Aspirin and escalator are former trademarks that are now generic terms in the United States and can be used by anyone. o Price related legislation Price fixing and price discounting Price fixing seen as illegal Price discounting- buyers can be charged diff prices for a product given differences in manufacturing or delivery costs Promotionals may be given to buyers on equal basis according to volume purchased o Distribution- related legislation Exclusive dealing- arrangement with reseller to handle only its products and not those of its competitors (illegal) Requirement contract- requires buyer to purchase all or part of its needs for a product from one seller for a time period (now always illegal) Exclusive territorial distributorships- manufacturer grants a distributor the sole rights to sell a product in a specific geographical area (few violations with these arrangements) Tying arrangement- seller requires the purchaser of one product to also buy another item in the line (sometimes illegal) o Corrective advertising- federal trade commission (FTC) requires company to spend money on advertising to correct previous misleading ads o Self regulation- Self-regulation through organizations such as the Better Business Bureau provides an alternative to federal and state regulation. Chapter 5 Monday, September 7, 2015 2:03 PM Decision making factors, figure 5-4 o 3 variations: Routine Limited extended o Consumer decision process and 4 categories of influences o Sociocultural influences Who is engaged in your life, peer group, neighborhood Groupon o Success attributed to understanding consumer behavior (understands how consumers buy) o Service provides value (draws more customers to business) o How did groupon grow? Consumer decision process- go through different process when buying gum vs car etc. Groupon puts it in front of you bc no need for problem solving or information search because it makes you want to go to a certain place rather than not even thinking of it Groupon consumers follow same purchase decision process common to many consumer purchases Adapt for local communities o Groupon promise: customer can return a groupon if it let them down--> takes risk away from buying it Removes uncertainty o Which influence is most likely impacted by groupon promise? Not marketing bc not what firm doing, but all other 3 can apply Psychological because removes pressure of what purchase could be like Can justify that for what you paid it was a good deal even if you didn’t like it Situational- specific situations, figuring out what you might wanna do Sociocultural- social media through email subscription o GIS Business challenge- growth, global, competition (model is easy to copy), going to smaller markets because have to have daily deal, some customers may buy and not use, deep discounts are not profitable for merchants without repeat customers because giving away half a meal to ppl who wont come back Goal- sales goal because want people to come and buy again Impediment- consumer behavior that has to change- stop approaching groupon as discount shopping so become more regular consumers of businesses that use groupon. Need to get customers to use the groupon the first time o Types of consumers- people who want to save money in general, ppl looking for fun things to do, ppl new to an area or travelling Segmentation tree with 3 levels-->4 possible segments Local shopping- as habit bc all deals are for local merchants and not want online --> discount focus --> familiar offerings or --> lack of familiarity with options --> options focus (variety) --> seeking variety -->surprises are welcome (do whatever groupon you get) Variety seeking would be good bc ppl who are looking for random things to od will definitely find that through groupon Every little miracle- multi media outreach for latino moms in miami o Once have mom's trust they will be loyal and continue to purchase o Latinos are more loyal in family care once they choose brand o More likely to be internet users o Largest minority group o Campaign Celebrity endorsements Concerts focused on teaching lullabies in spanish to moms and children Resources to support mothering like contests Celebration of latino heritage Parenting website and allowed moms to connect with each other, shared where they could get information Giveaways and sweepstakes Lots of social media and music available to download o GIS Goal- market share bc wanted to be more involved with latino moms Impediment- brand loyalty could be at disadvantage so need to get their loyalty over to pampers since they are so loyal to brands Moms to look at- first time moms Segmentation tree: --> first time moms -->know pampers -->positive perception- easiest to target -->negative perception -->not know pampers -->loyal to others -->not loyal to others- looking for a brand, also easy Segmentation tree o Always start with path of least resistance Ex) people who are already using your brand and like it Because then you have income to invest in other areas o Hierarchy of segmentation: Personality traits- explain and predict values, attitudes, behaviors Social values- provide societal context like what's cool ex) when younger your opinion on breaking curfew is different from when you are an adult Attitudinal research- trends influencing behavior Behavior, activities, interests ex)sports equipment Geodemographics ex)snow shovels NOT means to segment Demographics- age, gender NOT means to segment Book: Understanding Consumer behavior Consumer purchase decision process and experience Purchase decision process: 1. Problem recognition: perceiving a need Diff between person's actual and ideal situations 2. Information search: seeking value Internal search- search memory for previous experiences with brands External search- needed when past experience not enough, when risk of making wrong decision is high, and cost of gathering info is low Personal sources: relatives and friends the consumer trusts Public sources: product rating sources, govt agencies, tv programs Marketer dominated sources- info from sellers including advertising, company websites, salespeople, point of purchase displays in stores 3. Alternative evaluation: assessing value to clarify the problem Suggest criteria to use for the purchase Yield brand names that might meet the criteria Develop consumer value perceptions Evaluative criteria- Factors that represent both the objective attributes of a brand and the subjective ones a consumer uses to compare different products and brands Firms try to develop the best criteria and put these in ads consideration set—the group of brands a consumer would consider acceptable from among all the brands in the product class of which he or she is aware 4. Purchase decision: buying value Now must decide from who to buy and when to buy Who to buy: depends on terms of sale, past experience, and return policy When to buy: sales or rebate Other important considerations: store atmosphere, pleasantness or ease of shopping experience, time pressure, financial circumstances Internet research and price comparison 5. Post-purchase behavior: realizing value Compare to your expectations If dissatisfied: determine whether product was deficient or consumer expectations were too high Affects repeat purchase behavior Satisfied buyers tend to buy from same seller and will share good news to others, dissatisfied customers will complain to way more Cognitive dissonance- postpurchase psychological tension or anxiety when faced with two or more highly attractive alternatives Ppl will try to seek others to assure them that made good purchase and look for negative features about brands you didn’t purchase Consumer involvement- personal, social, and economic significance of the purchase to the consumer 1 Extended: each of five stages has considerable effort spent for evaluation ex)cars 2 Limited- rely on a friend maybe ex(lunch 3 Routine- spend little time making decisions- low priced, frequently purchased products o Low involvement (toothpaste and soap) marketing: Attention placed on maintaining product quality, avoiding stockout situations so buyers don't switch brands, repetitive advertising messages to assure buyers of their right choice Must break buying habits via free samples, coupons to encourage trial of their brand Focus on getting their brand into a consumers consideration set o High involvement: item to be purchased is expensive, can have serious personal consequences, could reflect on ones social image Extensive information searches, consider many product attributes and brands, form attitudes, participate in word of mouth communication MARKETING strategies: Consumers constantly seek and process info about brand attributes, form evaluative criteria, Ply customers with info through ads and personal selling and use social media to create online experiences for brand Focus on existing product attributes and introduce novel evaluative criteria for judging competing brands Decision making influences Situational influences 1. the purchase task- reason for engaging in the decision 2. social surroundings- other people present when a purchase decision is made 3. Physical surroundings- décor, music, and crowds 4. Temporal effects- time of day or amount of time available ex) could influence where consumers have breakfast or lunch 5. Antecedent states- consumers mood or amount of cash on hand Psychological influences 1. Consumer motivation and personality Research shows that certain key traits within a person and their relationships with others will show products that people prefer a person's self-concept, which is the way people see themselves and the way they believe others see them Actual self: how people actually see themselves Ideal self: how people want to see themselves Consumer needs are the focus of marketing, so try to arouse those needs Order of needs: 1. Physiological needs- water food shelter. 2. Safety needs- freedom from harm, financial security 3. Social needs- friendship, belonging, love 4. Personal- status, respect, prestige 5. Self actualization- self fulfillment 2 Consumer perception (selective)- the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world. Selective exposure- people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent with them. Often occurs in postpurchase stage when read advertisements for brand they just bought. Also occurs when a need exists (more likely to "see" food ad when hungry) Selective comprehension- interpreting info so that it is consistent with your attitudes and beliefs ex) brand name should reflect what product offers Selective retention- consumers not remember all info they see read or hear Can have brochures to take home Subliminal perception means that you see or hear messages without being aware of them 3 Perceived risk- anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences Ex) risk of physical harm, financing to buy a product, performance of product The greater the perceived risk, the more extensive the external search stage will be Strategies: Obtaining seals of approval Endorsements from influential people Free trials Extensive usage instructions Warranties and guarantees 4 Consumer learning- behaviors resulting from repeated experience and reasoning Behavioral learning- developing automatic responses to a situation built up through repeated exposure to it. Main ways consumers learn from repeated experience: Drive- need that moves individual to action ex) hunger Cue- stimulus or symbol perceived by customers Response- action taken by consumer to satisfy drive Reinforcement- reward- the product is satisfying Ex) being hungry (drive) we see a cue (billboard) and take action (buy sandwich) and receive a reward (it tasted good) Stimulus generalization- response elicited by a cue is generalized to another stimulus ex) two diff tylenol products Stimulus discrimination- consumers ability to perceive differences in stimuli 1 Cognitive learning- thinking, reasoning, and mental problem solving without direct experience Making connections between 2+ ideas or simply observing outcomes of others' behaviors and adjusting own accordingly Repetition in advertising or messages 2 Brand loyalty- results from positive reinforcement of previous actions Consumer reduces risk and saves time by consistently purchasing same thing and still getting positive results o Consumer values, beliefs, and attitudes Attitude formation- responding to object in a consistently favorable or unfavorable way Shaped by our values or beliefs Marketers mostly focused on personal values bc influence attitudes (importance assigned to specific product attributes) Beliefs- subjective perception of how a product or brand performs on different attributes Based on personal experience, advertising, and discussions with other people create the favorable or unfavorable attitude the consumer has toward certain products, services, and brands. Attitude change Changing beliefs about the extent to which a brand has certain attributes Changing the perceived importance of attributes Adding new attributes to the product o Consumer lifestyle- mode of living identified by how ppl spend time and resources, what they consider important in their environment, and what they think of themselves and the world around them Psychographics- combine psychology, lifestyle, and demographics to uncover motivations for buying/using products VALS system- identifies eight consumer segments based on primary motivation for buying and the consumer's resources Idealsmotivated groups . Consumers motivated by ideals are guided by knowledge and principles.Thinkers are mature, reflective, and welleducated people who value order, knowledge, and responsibility. They are practical consumers and deliberate informationseekers who value durability and functionality in products over styling and newness. Believers, with fewer resources, are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. They choose familiar products and brands, favor Americanmade products, and are generally brand loyal. Achievementmotivated groups . Consumers motivated by achievement look for products and services that demonstrate success to their peers or to a peer group they aspire to.Achievers have a busy, goaldirected lifestyle and a deep commitment to career and family. Image is important to them. They favor established, prestige products and services and are interested in timesaving devices given their hectic schedules. Strivers are trendy, funloving, and less selfconfident than Achievers. They also have lower levels of education and household income. Money defines success for them. They favor stylish products and are as impulsive as their financial circumstances permit. Selfexpressionmotivated groups . Consumers motivated by selfexpression desire social or physical activity, variety, and riExperiencers are young, enthusiastic, and impulsive consumers who become excited about new possibilities but are equally quick to cool. They savor the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Much of their income is spent on fashion items, entertainment, and socializing and particularly on looking good and having the latest things.Makers , with fewer resources, express themselves and experience the world by working on it—raising children or fixing a car. They are practical people who have constructive skills, value selfsufficiency, and are unimpressed by material possessions except those with a practical or functional purpose. High and lowresource groups Two segments stand aparInnovators are successful, sophisticated, takecharge people with high selfesteem and abundant resources of all kinds. Image is important to them, not as evidence of power or status, but as an expression of cultivated tastes, independence, and character. They are receptive to new ideas and technologies. Their lives are characterized by Survivors, with the least resources of any segment, focus on meeting basic needs (safety and security) rather than fulfilling desires. They represent a modest market for most products and services and are loyal to favorite brands, especially if they can be purchased at a discount. Sociocultural influences o Personal influence- purchases influenced by views, opinions, behaviors of others 1. Opinion leadership- individual who exert direct or indirect social influence over others Knowledgeable about users of particular products and services so influence other ppls choices Cars, trucks, entertainment, clothing 2. Word of mouth Most powerful source of info for ppl bc comes from trusted friends Sometimes run teaser campaigns before actual product introductions to stimulate word of mouth conversations Magnified by internet: forums, blogs, social media Can spread negative info too o Reference groups- ppl an individual looks to as a basis for self-appraisal or as source of personal standards 1. Influence things that set a consumer's standards ex) for party, ppl ask what will wear 2. Associative group- person actually belongs to group ex)fraternity Easily identifiable and targeted Brand community- specialized group of consumers with structured set of relationships involving particular brand, customers of brand, and product Can form around a brand ex) harley owners group (harley davidson plans) 3. Aspiration group- one that person wishes to be member of or identify with Ex) sports team Firms rely on spokespeople or settings associated with their target market's aspiration group in advertising 4. Dissociative group- person wishes to maintain distance from bc differences in values or behaviors o Family influence 1. Consumer socialization- acquiring skills, knowledge, and attitudes necessary to function as consumers (children interacting with adults and own experiences) 2. Family life cycle- we act and purchase differently through life Family progresses through diff phases with diff purchasing behaviors, from formation to retirement Young singles- market for recreational travel, entertainment Young married- furniture, housewares Young married with children- insurance, things for kids Single with kids- convenience foods, child care, personal services Middle aged with kids- home improvement, leisure products Middle aged w/o kids- better home furnishings, nice cars Older- drugs, medical services, vacation trips 3. Family decision making Spouse dominant Wives have more say with groceries, kids toys, clothing, medicines Men- home and car maintenance Joint decision making- cars, vacations, houses, home appliances, electronics, family finances, medical care o Social class influence 1. Person's occupation, source of income, education 2. Exhibit common values, attitudes, beliefs, lifestyles, and buying behaviors 3. Lower class- shorter term time orientation, see fewer personal opportunities 4. Upper class- achievements and the future Targeted by companies for financial investments, expensive cars, formal clothing 5. Middle class- target for home improvement, car parts, personal hygiene o Culture/subculture influences 1. Largest in US are hispanics, african americans, asian americans 2. Hispanics Quality and brand conscious- will pay for premium product if good quality and are brand loyal American made products that cater to hispanic needs Influenced by fam and peers Consider advertising a credible product information source Convenience not important or health qualities of foods Translation problems in messages So many different kinds of hispanics from different countries with different cultures 3. African american Spend more on boys clothing, rental goods, and audio equipment Women spend way more on health/beauty products Younger families Motivated by quality and choice 4. Asian american From many diff countries so hard to make generalizations Assimilated- buying patterns more like american consumer vs nonassimilated Sensitive to diff nationalities Hard work, strong family ties, appreciation for education, median family income Chapter 9 Tuesday, September 8, 2015 10:20 AM Market Segmentation, Targeting, and Positioning A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action o A firm will segment when the effort will increase sales, profit, and return on investment. When expenses are greater than sales, firm shouldn’t attempt to segment their market o --> product differentiation: firm using different marketing mix actions, such as product features and advertising, to help consumers perceive the product as being different and better than competing products ex) color, price Market product grid- relates market segments of potential buyers to products offered or potential marketing actions Segmentation strategies: o One product, multiple market segments Avoids extra costs of developing and producing additional versions of the product Diff segments will be diff promotional campaigns Ex) magazines and books o Multiple product, multiple market segments Car company with diff models of cars Even tho producing more cars is expensive, it's still effective bc better at meeting customers' needs, doesn’t reduce quality or increase prices, more profits But can reduce quality and raise prices ex) foreign imports o Segments of mass customization Economies of scale in manufacturing and marketing has made mass produced products so affordable that most customers were willing to compromise their individual tastes and settle for standardized products Internet ordering and flexible manufacturing/marketing has made mass customization possible Segmentation trade-off- synergies vs cannibalization o Increased customer value- more products, improved quality, lower prices, easier access to products through improved distribution, etc (synergies) o Cannibalization- when the addition of new products/stores steals customers and sales from older existing ones Steps for segmenting a market 1 Group potential buyers into segments Would segmentation be worth doing/is it possible 5 criteria: Simplicity and cost effectiveness of assigning potential buyers to segments Potential for increased profit Similarity of needs of potential buyers within a segment Difference of needs of buyers among segments- if needs arent very different, then combine into fewer segments Potential of a marketing action to reach a segment Ways to segment: geographic, demographic, psychographic (personality, values, lifestyle, needs), behavioral (product features, usage rate) Segmenting business markets: geographic, demographic (size of firm), behavioral (usage rate) Usage rates/80/20 rule, a concept that suggests 80 percent of a firm's sales are obtained from 20 percent of its customers Ex) at fast food restaurants, want to focus marketing on heavy users bc they consume highest percentage 2 Group products to be sold into categories Ex) for wendy's, groupings of food items as meals Each product not equally marketed to males and females, or to their needs 3 Develop a market-product grid and estimate the size of markets Market product grid- each cell can show estimated market size of a given product sold to a specific market segment Estimating market size to determine which target market segments to select and which product groupings to offer 4 Select target markets Not too narrow a set bc would fail to reach volume of sales and profits it needs, not too broad bc may spread marketing efforts so thin that the extra expense will exceed profits 5 Criteria (how to select): Market size- determines if it's worth going after Expected growth Competitive position- the less competition, the more attractive ex) if meal plan no longer does weekends, college student segment could become promising Cost of reaching the segment- if inaccessible, do not try to pursue Compatibility with the organization's objectives and resources- if not have resources to reach another segment, don’t try to do it ex) if no breakfast making equipment, don't try to reach breakfast market 2 Take marketing actions to reach target markets Use market product grid to trigger marketing actions Identify which groups will be targeted and what ad campaigns will be used ex) flyers on cars, coupons for certain time periods (diff segments will want to go to fast food at diff times) Keep an eye on competition to react and keep up if market demands change Future strategies bc competition and customers change taste Look at what headquarters is doing, what competitors are doing, what might be changing in area Marketing synergies- opportunity for efficiency in terms of market segment Product synergies- opportunity for efficiency in research and development and production Could simplify product line and manufacture only one type of product Marketing synergies often come at expense of product synergies bc a single customer segment will likely require a variety of products Conversely, if product synergies are emphasized, marketing will have to address the concerns of a wide variety of consumers, which costs more time and money Must balance the two for maximum profit Positioning the product- where product occupies consumer's mind based on important attributes relative to competitive products Product repositioning- changing the place a product occupies in consumers mind 2 types: 1. Head to head positioning- competing directly with competitors on similar product attributes in the same target market 2. Differentiation positioning- seeking a less-competitive, smaller market niche in which to locate a brand ex) mcdonalds offering healthy option Writing a positioning statement that focuses on the marketing strategy Key to positioning a brand: discovering the perceptions in the minds of potential customers in 4 steps: 1. Identify the important attributes for a product or brand class. 2. Discover how target customers rate competing products or brands with respect to these attributes. 3. Discover where the company's product or brand is on these attributes in the minds of potential customers. 4. Reposition the company's product or brand in the minds of potential customers. 1. Perceptual map from these data enables us to see how consumers see competing products or brands: Class notes: Product positioning Opportunities for brands: if have no competitors in section that they are in, could mean that there is no market for the product ex) low moisturizing and non deodorant Game changer (new attributes): Lush- looks good, smells good, natural, specialty premium Positioning map example in class NEVER DO PRICE OR QUALITY BECAUSE PRICE CAN CHANGE AND QUALITY IS MATTER OF OPINION DO NOT DO AGES Look for opportunities in blank spaces on the maps Understand what positions are taken and what are available and free of compatition How can change rules of the game Chapter 10 Wednesday, September 16, 2015 1:36 AM Developing New Products and Services NOT TESTED ON SERVICES Under marketing mix: product and service good A has tangible attributes that a consumer's five senses can perceive. For example, Apple's iPad can be touched and its features can be seen and heard. A good also may have intangible attributes consisting of its delivery or warranties and embody more abstract concepts, such as becoming healthier or wealthier. o nondurablegood is an item consumed in one or a few uses ex) food products and fuel Rely heavily on consumer advertising o durablegood is one that usually lasts over many uses, such as appliances, cars, and smartphones. Rely heavily on personal advertising Consumer products are products purchased by the ultimate consumer o Convenience product- consumers purchase frequently, conveniently, and with minimum of shopping effort o Shopping products- consumer compares several alternatives on price quality and style o Specialty- make special effort to search out and buy o Unsought- customer not know about or knows about but not initially want o Consumers may view each type of product differently: one may fall into a category that it wouldn’t fall in for someone else business/industrial products are products organizations buy that assist in providing other products for resale o Their sales result in derived demand- result from the sale of consumer products o Ex) as consumer demand for Ford cars increases, company may increase demand for spraypaint (business product) o Components (items that are parts on final product) or support products (assist in producing products/services) Installationsuch as buildings and fixed equipment. Accessory equipment such as tools and office equipment. Supplies such as stationery, paper clips, and brooms. Industrial servicesch as maintenance, repair, and legal services. Product class- industry a product belongs to product item is a specific product that has a unique brand, size, or price o Each product item has a different SKU number (stock keeping unit) product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range o Each has own marketing strategy o If have a more extensive product line, higher chance of supplying to supermarkets or store bc they want to increase efficiencies by dealing with fewer suppliers product mix- consists of all of the product lines offered by an organization o Ex) P&G has large product mix- beauty and grooming: crest and gilette razors, household: downy, tide, pampers New products and why they succeed or fail Newness compared to existing products- product functionally different from an existing product o Could still be Apple bc created new industry o Sometimes adding new features to appeal to more customers Newness as result of effects on consumption- classifies new products according to degree of learning required by consumer o Continuous innovation- consumers not need learn new behaviors ex)toothpaste can add teeth whitener, but customers will not need to learn new tooth brushing behaviors Marketing strategy- only need to generate awareness o Dynamically continuous innovation- minor behavioral changes ex) colored ketchup for kids to make cool designs. Need to educate on benefits of product and proper use o Discontinuous innovation- consumer must learn entirely new consumption patterns to use product ex)wireless router for computer. Teaching the customer proper usage can be really expensive Newness in legal terms- federal trade commission says product is new for up to 6 months Newness from organization's perspective- 3 levels: o Product line extension- involves least risk. Improvement of existing product line the company already sells. Can add new customers but also increase expenses or cannibalize products in the existing line o Brand extension (or a significant jump in innovation/tech like offering new phone)- putting established brand name on new product in an unfamiliar market Using existing brand name on a new product in an unfamiliar market o Radical invention/innovation- a truly revolutionary new product Ideally, a new product should meet a precise protocol, a statement that, before product development begins, identifies (1) a well-defined target market; (2) specific customers' needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers Marketing reasons for product failure: o Insignificant point of difference Most important factor is a distinctive point of difference Superior characteristics that deliver unique benefits to user o Incomplete market and product protocol before product development starts Must have protocol that clearly defines how will satisfy consumer wants and needs o Not satisfying customer needs on critical factors Even if product is high quality, problems with just 1 or 2 critical factors can kill the product o Bad timing When product introduced too soon/late or when consumer tastes are shifting dramatically ex) after another company had already released a similar product o No economical access to buyers Very costly to attain shelf space in stores Shelf space is determined by sales per square foot, so must displace an existing product by making enough sales in order to meet requirements o Poor product quality Can happen when product not thoroughly tested Will include labor, materials, and other expenses to fix the problem o Poor execution of the marketing mix (brand name, package, price, promotion, distribution) Not telling customers what a product is supposed to be used for and why someone would want it o Too little market attractiveness
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