MKTG 300 - Study Guide for Exam #1
MKTG 300 - Study Guide for Exam #1 MKTG 300
Long Beach State
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This 11 page Study Guide was uploaded by a-tark on Monday February 15, 2016. The Study Guide belongs to MKTG 300 at California State University Long Beach taught by Mary Celsi in Spring 2016. Since its upload, it has received 77 views. For similar materials see Marketing in Marketing at California State University Long Beach.
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Date Created: 02/15/16
The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. Chapter 1 Overview Marketing; the activity for creating, communicating, delivering, and exchanging offerings that have value for consumers. o Communication = marketing o The goal = facilitate exchange Exchange; people giving up something in order to receive something they would rather have o "Giving up" money to "get" the products/services o It's an exchange if; 2+ parties, have unsatisfied needs/wants something of value to exchange one has what the other wants/needs 4 Philosophies of Marketing process: o Production Orientation; Focus = the internal capabilities of the firm, not the desires and needs of the consumers Assumption: consumers will buy if its cheap Cons - It doesn’t consider whether the goods services meet the needs of the marketplace o Sales Orientation; Based on the ideas that people will buy more goods and services if aggressive sales techniques are used High sales = high profits Selling things & collecting money = marketing Cons - Lack of understanding the needs and wants of the consumers o Market Orientation; Sale does not depend on aggressive sales force but it depends on consumers' decision "Customer is the king." Marketing concept: success = satisfaction of customer needs and wants while meeting organizational objectives Keys to implementing marketing concept: Research, departmental integration, and commitment to "consumer sovereignty" Market oriented: market information shared across the company. o Societal Marketing Orientation; More than consumer satisfaction and meeting the organizational objectives, a firm has to preserve/enhance society's long-term best interests Biggest social responsibility trend; sustainability (is innovation that minimizes negative impact and maintains balance between ecological resilience, economic prosperity, political justice, and cultural vibrancy to ensure a desirable planet for all species now and in the future.) Who’s in Charge? (pg. 6&7 on MKTG7) o The internet and social media shifted the power from manufacturers and retailers to consumers and business users. The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. o "Consumer is the boss" = "consumer is the king" o Companies must create strategy from the outside in by offering distinct and compelling customer value by studying consumers. Differences between sales and marketing orientation: o Five characteristics: 1. Organization's focus; sales oriented firms tend to focus on selling what the organization makes rather than making what the market wants. On the other hand, market oriented firms derive their competitive advantage from an external focus by putting consumer at the center of their business. a. Customer value; the relationship between the benefits and the sacrifice necessary to obtain them. i. The minimum requirement for the customer value is the offer products that perform. ii. Loyal customers can help the firm grow. iii. The firms must avoid unrealistic pricing. iv. The firms must give the buyer facts while advertising their products. v. The firms should offer organization-wide commitment in service and after-sales support. vi. It might be helpful to allow customers create their own experiences/products. b. Customer satisfaction; customer's evaluation of a good service/good in terms of whether or not it has met their expectations and needs. Coming back from customer dissatisfaction can be hard. c. Relationship marketing; strategy that focuses on keeping and improving relationships with current customers. This is important because it directly addresses to two of the ways that companies can expand market share. (which are increasing business with existing rd customers and retaining current customers - the 3 way is to attracting new customers) d. Customer oriented personnel; this helps to strengthen the firm's image. e. The role of training; is important in customer service and relationship building. f. Empowerment; many market oriented firms give their employees more authority to solve customer problems on the spot. Empowerment is the term that is used to describe this delegation of authority. This helps employees to develop an ownership attitudes. It also gives customers the feeling that their concerns are being addressed. The result = greater satisfaction for both customers and employees. g. Teamwork; collaborative efforts of people to accomplish common objectives. The organizations which teach their employees team- building skills are the ones that deliver the superior customer value and provide high levels of customer satisfaction. When people in the same department or work group emphasize cooperation instead of competition, job performance, company performance, product value, and customer satisfaction all improve. 2. The Firm's business; a sales oriented firm defines its mission in terms of goods and services while a market oriented firm defines it as in terms of benefits its customers seek. Thus, sales oriented firms misses opportunities The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. to serve customers whose wants can be met through a wide range of product offerings instead of through specific products. 3. Those to whom the product is directed; a sales-oriented firm targets its products at the average customer whereas a market-oriented firm aims at specific group of people. Considering the diversity, an average users do not exist. A market oriented firm recognizes that different customer groups have different needs and wants. Market oriented organizations also analyzes the market and divides it into groups if people who are fairly similar in terms of selected characteristics. a. Customer relationship management; strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. It helps to communicate effectively with each customer rather than scattering messages far and wide across the spectrum of mass media. Firms that adopt CRM are almost always market oriented. 4. The firm's primary goal; a sales oriented firm seeks to achieve profitability through sales volume and tries to convince potential customers to buy. They place a higher premium on making a sale than on developing along-term relationship with the customer. However, a market oriented firm tries to make a profit by creating customer value, providing customer satisfaction, and building long-term relationships with customers. 5. The tools used to achieve the organization's goals; sales oriented firms seek to generate sales through intensive promotional activities, whereas market oriented firms recognize that promotion decisions are only one of four basic marketing mix decisions (4P's: product,place,pricing,promotion). A sales oriented firms tend to forget the importance of the other three components. On-Demand Marketing: always relative, responsive to the consumer's desire for direct marketing. Read the graphic on pp. 7-8: “Marketers Interested in Customer Value” Why Study Marketing? o Plays an important role in society. o Role in business; fundamental objectives of businesses are survival, profits, and growth. Marketing contributes to achieving these goals. o Offers career opportunities; in such areas as professional selling, marketing research, advertising, retail buying, distribution management, product management, product development, and wholesaling. o Affects everyday life; you participate in marketing process daily, as a consumer. By understanding marketing, you will become a better-informed consumer. The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. Chapter 4 External Environment Target market: a group of people for which an organization designs, implement, and maintains a marketing mix intended to meet the need of that group, resulting in mutually satisfying exchanges. Environmental management: when a firm implements strategies that attempt to shape the external environment External environment: all marketing takes place in a context o Elements in the external environment; 1. Channel; set of firms that cooperate to make the product available. EX: suppliers, retailers 2. Markets; people who buy products 3. Competitiors; EX: Apple vs. Android/Samsung 4. Publics; any group of people who might have an impact on your business 5. The macro environment; demographics, cultural forces, economic forces, technological forces, the regulatory/legal environment Social Factors: include attitudes, values, lifestyles. o American Values; (value: strongly held and enduring belief) 4 basic values: Self-sufficiency; individuality Upward mobility; success that comes from playing by the rules Work ethic; hard work Equal treatment; conformity; equality o Component lifestyles; practice of choosing goods and services that meet one's diverse needs and interest rather than conforming to a single, traditional lifestyle Demographic Factors: statistics of a group of people, such as age, gender, ethnicity, and location. o Population; the most basic statistic in marketing. Useful when broken into smaller increments. Tweens; (8-12yo) one of the fastest growing tween markets is home décor. Teens; more of a social sport. Generation Y; (born between 1979-1995) also called millennial generation. Tech-savy, expects brands to be on social media. Generation X; (born between 1965-1978) big spenders at discounters. Baby boomers; (born between 1946-1964) willing to change brands, and try new things -> ideal group, huge market with significant needs. Growing Ethnic Markets: minority populations embrace other cultures while continuing to patronize companies that understand their native cultural preferences. o Hispanic-Americans; imported goods, if not companies who reflect their native values and culture. o African-Americans o Asian-Americans; marketer's dream because they are a younger, more educated population who have a higher incomes than average. Economic Factors: o Consumers' income; education is the primary determinant of a person's earning potential. Along with "willingness to buy" and "ability to buy", income is a key determinant of target markets. o Purchasing power; better income doesn’t necessarily mean a higher standard of living. Increased standards of living are function of purchasing power. It's measured The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. by comparing income to the relative cost of living (a standard set of goods and services in different geographic areas). Discretionary income = when the income is high relative to the cost of living = more money to spend on nonessential items o Inflation; a measure of decrease in the value of money. In times of low inflation, businesses seeking to increase their profit margins by increasing their efficiency. No matter what happens to the seller's cost, the managers must realize that the buyer is not going to pay more than the subjective value he/she places on the product. o Recession; a period of economic activity characterized by negative growth which reduces demand. Occurring when the GDP falls for two consecutive quarters. During the recession, consumers stick to their shopping list, and visit fewer stores. Technological Factors: o Research; Basic research (pure research) - attempts to expand the frontiers of knowledge but not aimed at a specific problem. Aims to confirm an existing theory or to learn more about a concept. Applied research - attempts to develop new/improved products. The U.S. has improved its track record on applied research. o Stimulating innovation; firms often limit their searches to areas they are already familiar with because by doing so leads to incremental progress and rarely leads to a dramatic breakthrough. Several approaches to keeping innovation strong; Build scenarios Enlist the website Talk to early adopters Use marketing research Create an innovative environment Cater to entrepreneurs Political and Legal Factors: o Consumer Privacy; CAN-SPAM Act - prohibits commercial e-mailers from using false addresses and presenting false or misleading information. Competitive Factors: o Competition for market share and profits; firms find themselves working harder t maintain their profits and market share since the competition has risen. o Global competition; marketing managers cannot focus only on domestic competition anymore. The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. Chapter 6 – Consumer Behavior Consumer behavior: a process of purchase decisions, use and dispose of purchased goods or services. The consumer decision-making process: five step process used by consumers (consumers do not always proceed in order). 1. Need recognition; result of an imbalance between actual and desired states. i. Want - recognition of an unfulfilled need and a product that will satisfy it ii. Stimulus - any unit of input affecting one or more of the five senses; sight, smell, taste, touch, hearing iii. Imbalance between actual and desired states = "want-got gap" iv. The gap doesn’t always trigger consumer action, it has to be large enough to drive consumer to do something. v. A marketing manager's objective is to get the customer to recognize that gap. Marketing managers can also create wants in the part of the consumer. 2. Information search; i. Internal information search - person recalls information stored in their memory. ii. External information search - person seeks information in the outside environment. Consumers knowledge of the product also affects the external information search. It's affected by the extent of one's decision making ability. Also affected by the personal product experience. a. Marketing controlled; product information source that originates with marketers promoting the product. Mass media advertising, salespeople, product labels, the internet. b. Nonmarketing controlled; product information source that is not associated with marketers promoting a product. Personal experiences, recommendations. c. Evoked (consideration) set; a group of brands from an information search from which a buyer can choose. 3. Evaluation of alternatives; considers the important and relative attributes as well as acceptable trade-off. i. Categorizing; a product's evaluation depends on the particular category to which it is perceived as belonging. How a product is categorized can influence consumer demand. ii. Brand extension - in which a well-known brand name from one product category is extended into other product categories, is one way firms employ categorization to their advantage. It's common business practice. 4. Purchase; best alternative is chosen. Place and method of purchase; online or in store? Sometimes prompt evaluation must be needed if the product is out-of-stock. i. Planned purchase - based upon a lot of information ii. Partially planned purchase - they know the product category but wait until they get into the store to choose a specific style or brand iii. Unplanned purchase - buying on impulse 5. Post purchase behavior; consumers expect certain outcomes from the purchase. i. Cognitive dissonance - inner tension that a consumer experiences after recognizing an inconsistent between behavior and values of opinions. The feeling that another choice would have been a better choice. Consumers try to educe dissonance by justifying their reinforces positive ideas about the purchase, avoid information that contradicts their decision, or revoke the The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. original decision by returning the product. Marketing managers can help reduce dissonance through effective communication with purchasers. Types of Consumer Buying Decisions and Consumer involvement: o Involvement: amount of time and effort a consumer invests in the consumer decision making process. o Showrooming: the practice of visiting a store or stores in order to examine a product before buying it online at a lower price. o Routine response behavior (routine decision making); type of decision making exhibited by consumers buying frequently purchased, low-cost goods and services (which also called low-involvement products). less involvement = less thinking It requires little search and decision time. Marketer’s task; for current customers: make sure that customers don’t change their mind about buying the product = maintain the quality, stock and value for non-customers: somehow have to break through normal buying habits, through promotion, USP (unique selling proposition) In general, the ads are not well thought because the purpose is only variety seeking not brand evaluation o Limited Decision Making (DM): type of decision making that requires a moderate amount of time. medium level of involvement = medium level thinking Marketer’s task; provide reasons for buying brand o Extensive Decision Making (DM): type of decision making which is complex, used for unfamiliar expensice products or an infrequently bought item. Requires use of several criteria for evaluating options and much time for seeking information. most involvement = most thinking If there are many different choices or if the consumer doesn’t know criteria to use. Factors Determining the Level of Consumer Involvement: o Previous experience; level of involvement decreases because they get familiar with the product o Interest; directly related. Interests may vary from one to another. o Perceived risk of negative consequences; as the risk increases, consumers' level of involvement increases also. Financial risk - loss of wealth or purchasing power Social risk - affecting social opinions Psychological risk - occurs if consumer feel that making the wrong decision might cause some concern or anxiety o Social visibility; involvement increases as the social visibility of a product increases. The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. Not all involvement is the same; high involvement means that the consumer cares about the product. High involvement can take a number of different forms. o Product involvement; product category has high personal relevance. o Situational involvement; the circumstances may temporarily transforms a low- involvement decision to a high-involvement one. High involvement comes into play when the consumer perceives risk in a specific situation. o Shopping involvement; personal relevance of the process of shopping. o Enduring involvement; ongoing interest in some product or activity. The consumer is always searching for opportunities to consume the product. Usually gives personal gratification to consumers as they continue to consume these goods. o Emotional involvement; how emotional a consumer gets during some specific consumption. Marketing Implications of Involvement: for high involvement products, marketers have several responsibilities (target market should be extensive and informative). For low involvement products, in store promotions and package designs are important since many consumers don’t recognize their wants/needs until they arrive in the store. For low involvement products, marketers also should link the product to higher involvement issue. Cultural Influences on consumer buying decisions: exert the broadest and deepest influence amongst all factors that affect consumer decision making. o Culture and values Culture: set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products of that behavior as they are transmitted from one generation to the next. It is pervasive, functional, learned and dynamic. Value: the enduring belief that a specific mode of conduct is personally/socially preferable to another mode of conduct. It also corresponds to consumption patterns. o Understanding cultural differences: a firm has a little chance of selling its product if it doesn’t understand the culture of the consumers. Language is another aspect of culture that the global marketers must consider. o Subculture; a homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. A culture can be divided into subcultures on the basis of demographic characteristics, location, religious beliefs, political beliefs, and ethnicity. Within a subculture consumers have similar purchase decisions. Identifying subcultures is important to marketers so that they can design special marketing to serve their needs. o Social class; a group of people who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms. Techniques to measure social class; Upper classes - capitalist class (people whose investment decisions shape the national economy) & upper middle class (family income well about national average) Middle classes - middle class (income somewhat above national average) & working class (income below national average) Lower classes - working poor (below mainstream in living standard) & underclass (people who are not regularly employed and who depend on the welfare system for sustenance, living standard below poverty line) Social influences on consumer buying decisions: many consumers seek out the opinions of others to reduce their search and evaluation effort. o Reference Groups: all of the formal and informal groups in society that influence an individual's purchasing behavior. For marketers reference groups serve as The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. information sources, affect an individual's aspiration level and their norms either constrain or stimulate consumer behavior. Primary membership group; a reference group with which people interact regularly in an informal manner. EX: friends, family, co-workers Secondary membership group; a reference group with which people associate less consistently and more formally. EX: club, professional group, religious group Aspirational reference group; a group that someone would like to join Norm; a value or attitude deemed acceptable by a group Nonaspirational reference group; a group which an individual doesn’t want to associate with o Opinion leaders: an individual who influences the opinions of others. It's important for marketers to get opinion leaders to purchase their products. Usually they're phenomenon or inconspicuous, thus marketers create one. o Family: the most important social institution for many consumers. Socialization process; how cultural values and norms are passed down to children. Psychological influences on consumer buying decisions o Motivation Motive; a driving force that causes a person to take action to satisfy specific needs Maslow's hierarchy of needs; Physiological - the most basic human needs; water, food, and shelter. Safety needs - security and freedom from pain and discomfort. Marketers appeal to consumers' fears and anxieties about safety. Social needs - love and sense of belonging. The most appealed need by marketers. Esteem needs - acceptance based on one's contribution to the group. Self esteem = self-respect and a sense of accomplishment. Self actualizing - finding self-fulfilment and self-expression, reaching the point in life at which people are what they feel they should be. o Learning; process that creates changes in behavior through experience and practice. Repetition can lead to increased learning, thus it's the key strategy in promotions. Stimulus generalization; form of learning that occurs when one response is extended to a second stimulus similar to the first one. Marketers usually use one well known brand to create brand awareness. Retailers also design their packages to resemble well-known brands to confuse the consumers. Stimulus discrimination; a learned ability to differentiate among similar products. EX: Coca cola & Pepsi o Beliefs and attitudes Belief; an organized pattern of knowledge that an individual holds as true about his or her world. Consumers tend to develop a set of beliefs about a product and form a brand image. Attitude; a learned tendency to respond consistently toward a given object The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. Chapter 8 Segmentation Market: People/organizations with needs/wants and with the ability and willingness to buy. A group of people or an organization that lacks one of these characteristics is not a market. o Market segment: Subgroup of people/organizations sharing one/more characteristics that cause them to have a similar product needs. o Market segmentation: Process of dividing market into meaningful, relatively similar, and identifiable segments/groups. It's the key role in the marketing strategy of almost all successful organizations. Helps marketers define customer needs and wants more precisely. Helps decision makers to define marketing objectives more accurately and locate the resources better. Bases for Segmenting Consumer Markets: characteristics of individuals groups or organizations o Demographics; The statistical characteristics of the population like age, gender, income, ethnic background, family life cycle Family life cycle is a series of stages determined by a combination of marital status, age, and presence/absence of children. Used to explain why consumer buying behavior varies when the other demographic factors (age, gender, and income) are not sufficient enough to do so. Some segments are left out of the family life cycle (FLC). o Geographic segmentation; Region of a country or the world, market size, market density, or climate. Because consumer behavior may vary depending on their geographic location. By geograhic segmentation, marketers can adjust marketing and products for regional taste. Scanner data: electronic records of transactions that businesses collect usually by scanning barcodes at the retail stores. EX: membership cards at grocery stores o Psychographic segmentation; On the basis of personality, motives, lifestyles, and geodemographics. o Benefit Segmentation; Grouping consumers into market segments according to the benefits they seek from the product Unique selling proposition (USP); the factor presented by a seller as the reason that one product/service is different from and better that its' competition o Usage Rate; Divides a market by the amount of product bought/consumed 80/20 principle; 20% of all consumers generate 80% of the demand Heavy half/Light half; heavy half has intense needs for products/services and has emotional attachment to the product category. Steps in Segmenting a Market: 1. Select a market/product category for study 2. Choose a basis/bases for segmenting the market 3. Select segmentation description 4. Profile and analyze segments The definitions are from the book, MKTG 7 Edition. Notes are also from Dr. Celsi's lectures. You should read the book and study the lectures to get the most from this study guide. 5. Select target markets 6. Design, implement, and maintain appropriate marketing mixes Strategies for Selecting Target Markets o Target market; a group of people for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group resulting in mutually satisfying exchange. o Undifferentiated targeting strategy; a marketing approach that views the market as one big market with no individual segments = uses single marketing mix. Advantage - potential for saving on production and marketing Disadvantages - unimaginative product offerings and being more susceptible to competition o Concentrated targeting strategy; a strategy used to select one segment of a market for targeting marketing efforts Advantages - concentration of resources, meeting the needs of a narrowly defined segment better, strong positioning, allows small firms to compete with big ones. Disadvantages - segments too small or changing, large competitors may more effectively market to niche segment Niche; one segment of a market o Multisegment targeting strategy; a strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each Advantages - greater financial success, economies of scale in producing/marketing Disadvantages - high costs, cannibalization Cannibalization; a situation that occurs then sales of a new product cut into sales of a firm's existing products Positioning: developing a specific marketing mix to influence potential consumers' overall perception of a brand, product line, or organization in general o Position; the place a product/brand occupies in consumers' minds relative to competing offerings o Product differentiation; a positioning strategy that some firms use to distinguish their products from those of competitors o Perceptual mapping; a means of displaying in two or more dimension, the location of products/brands in customers' minds o Positioning bases Attribute - a product is associated with an attribute, product feature, or consumer benefit Price and quality - may stress high price as a signal of quality or emphasize low price as an indication of value Use or application - stressing uses or applications can be effective means of positioning a product with buyers Product user - focuses on a personality or type of user Product class - position the product as being associated with a particular category of products Competitor - positioning against competitors Emotion - positioning using emotion focuses on how the product makes customers feel Dan Ariely Video - best answers posted in Beachboard
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