Marketing Midterm BA 390
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This 13 page Study Guide was uploaded by Samantha Tucker on Friday January 29, 2016. The Study Guide belongs to BA 390 at Oregon State University taught by Toombs in Winter 2016. Since its upload, it has received 293 views. For similar materials see Marketing in Business at Oregon State University.
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Date Created: 01/29/16
Marketing Midterm Study Guide Chapter 1 By the book: Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return. This is done by five steps 1. Understanding the marketplace 2. Designing a strategy 3. Marketing program 4. Building relationships 5. Capturing value 1. Understanding the marketplace: Needs, wants, demands. Needs => states of deprivation (physical, social, individual); Maslow’s Triangle Wants => shaped by culture and personality Demands => wants meet buying power Problems faced when trying to understand the marketplace and customer needs: o Marketing myopia: focusing only on existing wants, losing sight of real consumer needs. o Marketers need to set the right level of expectations; not too high or low 2. Designing a customer-driven marketing strategy Selecting customers o Market segmentation: dividing market into segments o Target marketing: picking certain segments to go after Choosing a Value proposition o Set of benefits or values a company promises to deliver customers Marketing management orientations o Production concept: consumers will favor products that are available and highly affordable o Product concept: consumers favor products that offer the most quality, performance, and features o Selling concept: consumers will not buy enough unless the company exercises large scale promotion effort o Marketing concept: Knowing the needs and wants of consumers and delivering products better than the competitors 3. Preparing an integrated marketing plan and program Marketing mix: product, price, promotion, and place; used to implement marketing strategy 4. Building customer relationships Customer Relationship Management (CRM) o Building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Customer-perceived value: difference between total customer value and total customer cost Customer satisfaction: the extent to which perceived performance of a product matches the buyer’s expectations o Changing nature of customer relationships Relating with a more carefully selected customers uses selective relationship management to target fewer, more profitable customers Relating deeply and interactively via two way relationships (blogs, social networks, etc) 5. Capturing Value from Customers Creating customer loyalty and retention o Customer lifetime value purchases/interaction for entire life Growing share of customer o That they go to you first for whatever need they have Building customer equity o Different customers require different types of interaction o Build relationships with the right customers Digital age o Online marketing; click-and-mortar companies on the rise (Uber, Prime, etc) Chapter 2 Companywide Strategic Planning Strategic planning: developing a strategy fitting organizational goals and capabilities Steps 1. Define the mission Organization’s purpose, what do you want to accomplish? Market-oriented mission statement defines a business in terms of satisfying basic customer needs 2. Set goals and objectives 3. Business portfolio 4. Plan marketing Partnering to build relationships Value chain: a series of departments that carry out value-creating activities to design, product, market, deliver, and support a firm’s products Value delivery network: is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system. Market Segmentation: dividing market into distinct groups of buyers who have different needs, characteristics, or behavior who require different products/approaches Market segment: group of consumers that respond to marketing efforts in a similar way Marketing Mix: controllable marketing tools Product: variety, quality, features & design, and packaging Price: list price, discounts, credit terms, etc. Promotion: advertisements, sales promotion, etc. Place: channels, locations, inventory, transportation Chapter Three Marketing environment Microenvironment: actors close to the company that affect its ability to serve its customers. o Company (Management, Finance, Purchasing, operations, accounting, etc.) o Suppliers (provide the resources to product goods and services) o Marketing intermediaries (help company promote, sell, distribute products to final buyers; resellers, physical distribution services, marketing agencies, financial intermediaries like banks) o Competitors (strategic advantage by positioning offerings against competitors’ products) o Customers (consumer markets, business markets, reseller markets, international and government markets) Macroenvironment: larger societal forces that affect the microenvironment; demographic, economic, natural, technological, political, and cultural forces. o Demographic The study of human populations: size, density, location, age, gender, race, occupation, and other statistics Baby Boomers 1946-1964 Rethinking the purpose and value of work Spending more carefully, working longer Wealthiest generation in US history Generation X 1965-1976 High parental divorce rates Cautious economic outlook Less materialistic Family comes first Millennials (Gen Y) 1977-2000 Most financially strapped generation Higher unemployment and saddled with debt Comfortable with technology Generational lifestyle ^^ segmenting people by lifestyle or life stage instead of age Changing American family ^ divorce, choosing not to marry/marrying later, not planning to have children after marriage, ^ working women, ^ stay at home dad Geographic shifts in population: Population shifting to West and South, telecommuting and home offices Changes in workforce: more educated, more white collar Increasing diversity: Ethnicity, LGBT, Disabled o Economic Affect consumer purchasing power and spending patterns Industrial economies are richer markets Subsistence economies consume most of their own outputs Changes in consumer spending Value marketing: offering financially conscious buyers greater value—right combination of quality and service at a fair price. o Natural Natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends Increased shortages of raw materials (-) Increased pollution (-) Increased government intervention Increased environmentally sustainable strategies (?) o Technological o Political Legislation regulating business; increased emphasis on ethics (socially responsible behavior and cause-related marketing) o Cultural Institutions and other forces that affect a society’s basic values Core beliefs and values: persistent, passed parents to children, reinforced by schools, churches, businesses, etc. Secondary beliefs and value: more open to change and include people’s views of themselves, others, organization, society, nature, etc. o Shifts in Secondary People’s view of others: more staying at home View of organizations: decline of loyalty towards companies View of society: patriots defend it, reformers want change View of nature: some feel ruled by it, some are in harmony, some want to master it View of universe: renewed interest in spirituality, more permanent values Responding to the Marketing environment o Views on responding: Uncontrollable: React and adapt to forces in the environment Proactive: aggressive actions to affect forces in the environment Reactive: watching and reacting to forces in the environment Chapter Four Customer insights: fresh and deep insights into customers’ needs and wants Difficult to obtain o Not obvious o Customers are unsure of their behavior Companies forming insight teams o Include all functioning areas of a company, collect info from a wide variety of sources Marking Information systems: Assessing information needs Developing needed information Helping decision makers use the info correctly Provides info to company’s marketing and other managers and external partners (suppliers, resellers) Developing marketing information Internal databased: electronic collections of consumer and market information obtained from data within company network Competitive marketing intelligence: collection and analysis of publicly available information about consumers, competitors and developments in the marketplace Marketing research: design, collection, analysis, and reporting of data relevant to a specific marketing situation facing and organization Marketing Research 1. Defining The problem and research objectives Outlines sources of existing data Spells out the specific research approaches, contact methods, sampling plans, and instruments to gather data 2. Developing the research plan Written research plan includes: management problem, research objective, information needed, how the results will help management decisions, budget Secondary data: info that already exists somewhere Primary data: gathered for a special research plan Marketing research: planning primary data collection, research approaches, contact methods, sampling plan, and research instruments Research approaches Observational research: gathering primary data by observing relevant people, actions, and situations Ethnographic research: sending trained observers to watch and interact with consumers in their natural environment Survey research: most widely used; best for descriptive information— knowledge, attitudes, preferences, and buying behavior Flexible Gives misleading or pleasing answers Privacy concerns Experimental research: best for gathering causal information—cause-and-effect relationship Contact methods Focus groups 6-10 people, trained moderator Challenges: expensive, difficult to generalize from small group, participants not always open and honest Online contact methods Internet surveys, online panels, online experiments, online focus groups Low cost, fast, higher response rates, good for hard to reach groups Sampling plan Sample = segment of the population selected for marketing research to represent the population as a whole Research instruments: questionnaires (close and open ended questions; closed =quantitative, open=qualitative) Chapter Five Model of Consumer behavior Consumer buyer behavior: the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption Consumer market: all of the personal consumption of final consumers Model o The environment: Marketing stimuli, economic, technological, social, etc. o Buyer’s black box: Buyers’ characteristics, buyers’ decision processes o Buyer response: buying attitudes and preferences, purchase behavior (what the buyer buys, when, where, how much) o Paradox? People tend to copy other people but they also want to be individuals Characteristics affecting consumer behavior Culture: learned values, perceptions, wants, and behavior from family and other important institutions and is the most basic cause of a person’s wants and behaviors o Subculture: groups of people within a culture with shared value systems based on common life experiences and situations o Social classes: relatively permanent and ordered divisions in society with members sharing similar values, interests, and behaviors Measured by a combination of occupation, income, education, wealth, etc Upper class (wealth), middle class (education), lower class (income, work) Social Factors o Groups and Social networks Membership groups: directly influence; person belongs Aspirational groups: individual wishes to belong to Reference groups: groups that form a comparison or reference in forming attitudes or behavior Word-of-mouth influence and buzz marketing Opinion leaders: people within a reference group who exert social influence on others o Marketers identify them to use as brand ambassadors Online social networks; communities online where people socialize o Family Most important consumer-buying organization in society Where most biases are learned Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status Biases are reinforced o Occupation: affects the goods and services bought by consumers Personal Factors o Lifestyle: person’s pattern of living as expressed in his or her psychographics Measures a consumer’s AIO (activities, Interests, opinions) to capture info about a person’s acting patterns of interaction o Personality: unique psychological characteristics that lead to consistent and lasting responses to the environment A collection of biases Psychological Factors o Motivation Motive: need that is sufficiently pressing to direct the person to seek satisfaction Motivation research: refers to qualitative research designed to probe consumers’ hidden, subconscious motivations Maslow’s Hierarchy of Needs (listed from bottom to top) Physiological needs (hunger, thirst) Safety needs (Security, protection) Social needs (sense of belonging, love) Esteem needs (self-esteem, recognition, status) Self-actualization needs (self-development and realization) o Perception Perception: The process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes Selective attention: tendency for people to screen out most of the info which they are exposed to Selective distortion: tendency for people to interpret information in a way that will support what they already believe (biases) Selective retention: tendency to remember good points of a brand you favor and forget good points of competing brands Beliefs and attitudes Belief: a descriptive thought that a person has about something based on: knowledge, opinion, faith Attitudes: describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Types of buying decision behavior Complex: Significant differences between brands & high involvement (ex: buying a house) Dissonance-reducing: Few differences between brands & High involvement ($10k fridge v. $1k) Variety seeking: Significant differences between brands & Low involvement (ex: buying cookies) Habitual: Few differences between brands & low involvement (ex: different salts) Buyer decision process Need recognition: Buyer recognizes a problem via internal or external stimulus Information search: personal sources (family, friends), commercial sources (advertising, internet), public sources (mass media, consumer orgs), experiential sources (handling product) Evaluation of alternatives: How the consumer processes information to arrive at brand choices Purchase Decision: buy most preferred brand, can be affected by attitudes of others and unexpected situational factors Post-purchase decisions: Satisfaction or dissatisfaction that the consumer feels after purchase o Relationship between consumer’s expectations and product’s perceived performance o Cognitive dissonance is the discomfort caused by a post-purchase conflict o Customer satisfaction: a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime value. Buyer decision process for new products Adoption process: the mental process an individual goes through from first learning about an innovation to final regular use. Stages = awareness, interest, evaluation, trial, and adoption o Innovators o Early adopters o Early mainstream o Late mainstream o Lagging adopters Chapter Six Business markets Business buyer behavior refers to the buying behavior of the organizations that buy goods and serviced for use in production of other products and services that are sold, rented, or supplied to others. Business buying process: the process where business buyers determine where business buyers determine which products and services are need to purchase, and then find, evaluate, and choose among alternative brands. Decision Process o Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that companies will use in making their own products or reselling to others. Major types of buying situations Straight Rebuy: routine purchase decision such as reorder without any modification Modified rebuy: is a purchase decision that requires some research where the buyer wants to modify product specification, price , terms ,or suppliers New task: purchase decision that requires thorough research such as a new product Systems selling: involves the purchase of a packaged solution from a single seller Participants in the business buying process Buying center is all of the individuals and units that participate in the business decision making process o Users: those that will use the product or service o Influencers: help define specifications and provide information for evaluating alternatives. o Buyers: have formal authority to select the supplier and arrange terms of purchase o Deciders: have formal or informal power to select and approve finals suppliers o Gatekeepers: control the flow of information Buying center = major challenge: who participates? o Their relative authority o What evaluation criteria each uses o Informal participants Model of business buyer behavior Environmental: economic developments, supply conditions, technological changes, political and regulatory development, competitive developments, culture and customers, competition, demand. Organizational: objectives, policies, procedure, organizational structure, systems Interpersonal: authority, status, empathy, persuasiveness Individual: age, income, education, job position, personality, risk attitudes, motivates, perceptions, prederences. Buying process: problem recognition General need description Product specification Supplier search proposal solicitation Supplier selection order-routine specification Performance review 1. Problem recognition: Internal (need) stimuli, external (idea from advertising/friend) 2. General need: describes the characteristics and quantity of the needed item 3. Product specifications: describes the technical criteria 4. Supplier search: involves compiling a list of qualified suppliers 5. Proposal solicitation: the process of requesting proposals from qualified suppliers. 6. Supplier selection: the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions. 7. Order-routine specifications: the final order with the chosen supplier and list all of the specifications and terms of the purchase Chapter Seven Market segmentation Select customers to serve o Segment and select target segment (Select the segment of segments to enter) Decide on a value proposition o Differentiation: Differentiate the market offering to create superior customer value o Positioning: Position the market offering in the minds of target customers Market Segmentation: requires dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes o Segmenting consumer markets Geographic: divides that market into different geographical means such as nations, states, cities, etc. Demographic: divides the market on the basis of age, gender, family, income, occupation, race, generation, education, etc. Age and life-cycle stage segmentations: is the process of offering different products or using different marketing approaches for different age and life-cycle groups Psychographic segmentation: divides based on social class, lifestyle choices, or personality traits. Behavioral segmentation: buyers into groups based on their knowledge, attitudes, uses, or responses to a product Using multiple segmentation bases: used to identify smaller, better-defined target groups o Segmenting business markets: Additional variables: customer operating characteristics, purchasing approaches, situational factors, personal characteristics o Requirements for effective segmentation: To be useful, market segments should be: measurable, accessible, substantial, differentiable, actionable Target marketing strategies Undifferentiated marketing targets the whole market with one offer (mass marketing; focus on common needs) Differentiated marketing: targets several different market segments and designs separate offers for each (goal is to achieve higher sales, stronger position) Concentrated marketing: targets a small share of a large market (limited company resources; more effective and efficient) Micromarketing: the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations (local marketing) Local marketing: involves tailoring brands and promotion to the needs and wants of local customer groups (cities, neighborhoods) Individual marketing: involves tailoring products and marketing programs to the needs and preferences of individual customers (one-to-one) Strategy depends on company resources, product variability, product life-cycle stage, market variability, competitors’ strategies Differentiation and Positioning Product position: the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products (perceptions, impressions, feelings) Choosing a differentiation and positioning strategies o Identifying a set of possible competitive advantages to build a position Provide superior value from: product, service, channel, people, or image differentiation o Choosing the right competitive advantages Differences to promote should be: important, distinct, superior, communicable, affordable, profitable Identifying possible value differences and competitive advantages o Competitive advantage: advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Chapter 8 Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need Market offerings include both tangible goods and services. Companies create and manage customer experiences with their brands or companies Three Levels of Product 1. Core customer value 2. Actual product (brand name, quality level, packaging, design, features) 3. Augmented product (delivery and credit, product support, warranty, after-sale service) Product and Service classifications Consumer products: Bought by final consumers for personal consumption Industrial products: Bought by individuals and organizations for further processing or for use in conducting a business o Materials and parts, capital items, and supplies and services. Other marketable entities Organizational Marketing (Oregon State University) Person marketing (peyton manning) Place Marketing (sports authority field at mile high, Denver broncos stadium) Social marketing (Green Peace) Individual Product Decisions Product attributes, branding, packaging, labeling, product support services Product line decisions Product line: Closely related products that: o Have similar functions and customer groups; Are sold through similar outlets or fall within given price ranges Product line length: Number of items in the product line o Filling and stretching Product mix (or Product portfolio) Set of all product lines and items that a particular seller offers for sale Product mix decisions o Width: Number of different product lines the company carries o Length: Total number of items a company carries within its product lines o Depth: Number of versions offered for each product in the line o Consistency: Relativity of the various product lines in end use, production requirements, distribution channels, or some other aspect. Brand Equity With positive brand equity, consumer react more favorably to the brand than to an unbranded version of the same product (the opposite is true of negative brand equity) Consumer perception dimensions: differentiation, relevance, knowledge, esteem Brand valuation is the estimation of the total financial value of a brand Customer equity is the value of customer relationships that the brand creates. Major brand strategy decisions: Brand positioning strategy decisions o Brand positioning: attributes, benefits, beliefs and value o Brand name selection: selection and protection Be based on the product’s benefits and qualities Be easy to pronounce, recognize, and remember Be distinctive and extendable Translate easily into foreign languages Be capable of registration and legal protection o Brand sponsorship: manufacturer’s brand, private brand, licensing, co-branding Store brand: created and owned by a reseller of a product or service Licensing: use names and symbols created by other companies/well-known movie characters or celebrities for a fee Co-branding: use the established brand names of two different companies on the same product o Brand development: line extensions, brand extensions, multibrands, new brands Managing brands Communicate the brand’s positioning Manage all brand touch points Train employees to be customer centered Audit the brands’ strength and weaknesses
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