Final Exam Study Guide
Final Exam Study Guide BUSML 3250
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This 31 page Study Guide was uploaded by Abbey Deckop on Sunday March 29, 2015. The Study Guide belongs to BUSML 3250 at Ohio State University taught by Rebecca Naylor in Fall2014. Since its upload, it has received 116 views.
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Date Created: 03/29/15
BUSML 3250 Principles of Marketing Final Exam Study Guide Professor Rebecca Naylor Chapter 1 Marketing the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return 0 Goal to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction 0 Managing pro table customer relationships 0 The marketing process understand the marketplace and customer needs and wants design a customerdriven marketing strategy I construct an integrated marketing program that delivers superior value build pro table relationships and create customer delight Needs states of felt deprivation Wants the form human needs take as they are shaped by culture and individual personality Demands human wants that are backed by buying power Marketing Myopia the mistake of paying more attention to the speci c products a company offers than to the bene ts and experiences produced by these products Focuses only on existing wants and losing sight of underlying consumer needs Customer Value and Satisfaction Satis ed customers buy again and tell others about their good expe ence Dissatis ed customers often switch to competitors and disparage the product to others Moment of delight when something is better than what you expected companies strive to do this Customer equity combined customer lifetime values of all the company s customers Customer lifetime value lifetime revenue operating expenses cost of acquisition implementation and delivery costs Market Orientations Production concept the idea that consumers will favor products that are available and highly affordable therefore the organization should focus on improving production and distribution ef ciency 0 Product concept the idea that consumers will favor products that offer the most quality performance and features therefore the organization should devote its energy to making continuous product improvements Selling concept the idea that consumers will not buy enough of the rm s products unless the rm undertakes a largescale selling and promotion effort Marketing concept a philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do Societal marketing concept the idea that a company s marketing decisions should consider consumers wants the company s requirements consumers longrun interests and society s long run interests Customerdriven marketing strategy what customers can we serve what s our target market and how can we best serve these customers what s our value proposition Done by market segmentation diving the market into segments and target marketing selecting which segments to go after Value proposition set of bene ts of values it promises to deliver to consumers to satisfy their needs help to differentiate one brand from another Chapter 2 Mission a statement of the organization s purpose what it wants to accomplish in the larger environment What business are we in What customers should we serve How should we develop the rm s capabilities and focus its efforts The mission statement should not be focused on pro ts instead the mission should focus more on customers and the customer experience the company seeks to create BCG Matrix man u sines grew rate the EEG Matrix IE i39 mm mwg a m Feel Select Rem l tier 3 Few a Nesta l high law Fielatiyie pu itim Haititel Share Star high growth highshare business they often need heavy investments to nance their rapid growth eventually growth will slow down and they will turn into cash cows Cash cow low growth highshare business or product need less investment to hold their market share they produce a lot of the cash that the company uses to pay its bills and support other SBU s that need investment Question mark could fail or become a star lowshare business units in highgrowth markets they require a lot of cash to hold their share let alone increase it Dog low market share low growth may generate enough cash to maintain themselves but do not promise to be large sources of cash The BCG Boston Consulting Group matrix is used for company s to classify all its SBU s according to the growthshare matrix ProductMarket Growth Matrix Frudunls Existing New E d P uct 1 Mia rltlet Penetration m 39E hearelupment I Lu il 4 E E Market l DJIWEJFEIfI EtI n E leuelupment o Illustrates different growth strategies with two dimensions 1 Opportunities for growth in existing or new markets 2 Allocating resources into existing products of new products SWOT analysis SWOT Anal ysis Strengths internal capabilities that may help a sggg tnloslogical skills Tlg gg gzeo important skills C O m p a n y a C h O e V e S Leading Brands Weak brands Distribution channels I I Poor access to distribution 0 n a I Customer Loyaltleelatlonshlps Low customer retention I I I I 1522 3quot 1335223 Odmem39ce TEES limitations that may Interfe re Management Management with a company s ability to achieve its objectives 0 Opportunities external Opp l 39l39es meals factors that the compa ny Changing customer tastes a Changm customer page I I Techn0l09ica Ctos39r g geograp 3markets may be a ble to exploit to its Chan es In overnment olltlcs Tecnnolog39cal advances Lowe ersog alvtaxes p Chages in government politics Chan in o ulation a e 39 Tax increases E ema39 a g e New gistrib gn channgs Change in population age factors New distribution channels C U a n d emerging external factors that may challenge the Positive Negative com pa ny s pe rfo rma nce Market Segmentation dividing a market into distinct groups of buyers who have different needs characteristics or behaviors and who might require separate products of marketing programs 0 Market Segment a group of consumers who respond in a similar way to a given set of marketing efforts Market Targeting the process of evaluating each market segment s attractiveness and selecting one or more segments to enter Market Positioning arranging for a product to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers 4 P s of Marketing 0 Place product availability where and when customers want them all activities from raw materials to nished products ensure products arrive in usable condition at designated places when needed logistics aspect Product includes physical unit package warranty service brand image value products can be tangible goods idea or services 0 Promotion role is to bring about exchanges with target markets by informing educating persuading reminding pretty much any type of communication 0 Price what a buyer must give up to obtain a product the most exible of the 4 P s quickest to change competitive weapon but easily copied Chapter 3 Microenvironment the actor s close to the company that affect its ability to serve its customers the company suppliers marketing intermediaries customer markets competitors and pubics Macroenvironment the larger societal forces that affect the microenvironment demographic economic natural technological political and cultural forces 0 Demographic Environment dividing the market into segments based on variables such as age lifecycle gender income occupation education religion ethnicity and generation 0 Economic Environment economic factors that affect consumer purchasing power and spending patterns 0 Natural Environment the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities growing segment of green consumers and of companies that want to develop environmentally sustainable business practices beware of greenwashing Technological Environment forces that create new technologies creating new product and market opportunities external technology creates more ef cient operation or better products and may render existing products obsolete Political Environment laws government agencies and pressure groups that in uence and limit various organizations and individuals in a given society 0 Cultural Environment institutions and other forces that affect society s basic values perceptions preferences and behaviors Chapter 4 Primary Data data observed and recorded or collected directly from respondents new data Secondary Data date compiled both inside and outside the organization for some purpose other than the current investigation existing data 0 Advantages can be obtained at a lower cost than primary data also can sometimes provide data an individual company cannot collect on its own Disadvantages researchers can rarely obtain all the data they need from secondary sources even when data may be found it may not be usable must make sure the data is relevant accurate current and impartial Types of Primary Data 0 Observational research involves gathering primary data by observing relevant people actions and situations 0 Ethnographic research involves sending trained observers to watch and interact with consumers in their natural environment adds communication used to get a deeper richer understanding of the information 0 Survey research the most widely used method and is best for descriptive information knowledge attitudes preferences and buying behavior Survey research is exible however people may be unable or unwilling to answer or give misleading answers 0 Experimental research best for gathering causal information cause and effect relationships controlled in the lab 0 Quasiexperiments test markets not really controlled 0 Focus groups six to ten people trained moderator challenges expensive dif cult to generalize from small group consumers are not always open and honest Types of Samples 0 Probability sample everyone has a chance of selection Nonprobability sample people are chosen based on convenience Every rnerrber of the population has a known and Si mole Random Sanple equal chance of selection The population is divided into mutually excl usive groups such as age and random sarrples are drawn Strati ed RandomSanrple fromeach The population is divided into mutually excl usive groups such as blocks and the researcher draws a GusterSa le sa leoftheoustointerview Nonrobabili Sa le The researcher selects the easiest population Convenience Sanple menbers from which to obtain inforrmtion The researcher use his or herj udgTient to select population menrbers who are good prospects for J udcrnent Samole accurate infomation The researcher nds and i ntervi ews a prescribed Quota Sarrple nunber of people in each of several categories Ways to collect data 0 Mechanical instruments people meters checkout scanners eye cameras neuromarketing o Questionnaires can be used to collect large amounts of information at a low cost per respondent 1 Survey questions can be openended participants provide answers in their own words or closeended options are given Chapter 5 Consumer Behavior the buying behavior of nal consumers individuals and households who buy goods and services for personal consumption Culture learned set of meanings rituals norms and traditions that are shared among members of an organization or society Beliefs attitudes goals values behaviors customs Important because it can affect ALL aspects of consumer behavior expectations of product characteristics perception of product bene ts views of morality ethics Social Class society s relatively permanent and ordered divisions whose members share similar values interests and behaviors Measured by a combinations of occupation income education wealth and other variables 0 Consumers perceive different productsstores as appropriate for certain social classes 0 Working class sturdy comfortable and familiar products less likely to experiment with new productsstyles Af uent people appearancebody image diet foods more discretionary spending Reference groups groups that form a comparison or reference in forming attitudes or behavior we look to relevant social others to decide what we want to be like Roles that Household Members Play Gatekeeper household member who collects and controls info important to the decider 1 ln uencer household members who try to express their opinions and in uence the decision 0 Decider person who actually determines what will be chosen 0 Buyer person who physically acquires the product 0 User household member who consumes the product Lifestyle a pattern of living that determines how people choose to spend their time money and energy and re ects their values tastes and preferences 0 Activities interests and opinions AlOs o A lifestyle pro les a person s whoe pattern of acting and interacting in the world 0 Can help marketers understand changing consumer values and how they affect buying behavior Black Box contains buyer characteristics which in uence how he or she perceives and reacts to the stimuli and the buyer s decision process affects his or her behavior 0 The 4 P s as well as events in the buyers environment are all stimuli which effect the buyer s black box The Buyer Decision Process 1 Need Recognition the consumer recognizes a problem or a need 2 Information Search the consumer is motivated to search for more information 3 Evaluation of Alternatives the consumer uses information to evaluate alternative brands in the choice set 4 Purchase Decision the buyer s decision about which brand to purchase 5 Postpurchase Behavior consumers take further action after purchase based on their satisfaction or dissatisfaction Types of Consumer Decisions High involvement Low involvement Significant differences complex Varigty39 between brands buymg seemng behavior buying behavior Dissonance Habitual Few differences reducing buying between brands buying behavior behavior Chapter 6 Business Buyer Behavior the buying behavior of the organizations that buy goods and services for use in production of other products and services that are sold rented or supplied to others Main Differences between B2B and B2C Marketing 1 Number of customers BZC rms may have 100 to 1000 times as many customers for similar amount of revenue 2 Multiple levels within a BZB customer one consumer going to the store to buy coke vs 3 levels usually involved in BZB user s in uencers and decision makers 3 Domain Knowledge BZb buyer has expertise and experience that consumers do not have Supplier Development systematic development of networks of supplierpartners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products orreseH Buying Center all the individuals and units that participate in the business decisionmaking process 0 Not xed Formally identi ed unit within the buying organization 0 Set of buying roles assumed by different people for different purchases Participants in the buying center users in uencers buyers deciders gatekeepers Presents a challenge The business marketer must learn who participates in the decision each participant s relative in uence and what evaluation criteria each decision participant uses Business Buying Situations Straight Rebuy the buyer routinely reorders something without any type of modi cations Modi ed Rebuy the buyer wants to modify product speci cations prices terms or suppliers New Task the buyer purchases a product or service for the rst time Systems Selling buying a packaged solution to a problem from a single seller thus avoiding all the separate decisions involved in a complex buying situation Chapter 7 Types of Market Segmentation 0 Geographic dividing a market into different geographical units such as nations states regions counties cities or even neighborhoods 0 Demographic dividing the market into segments based on variables such as age lifecycle stage gender income occupation education religion ethnicity and generation 0 Psychographic dividing a market into different segments based on social class lifestyle or personality characteristics 0 Behavioral dividing a market into segments based on consumer knowledge attitudes uses or responses to a product Undifferentiated mass marketing a marketcoverage strategy in which a rm decides to ignore market segment differences and go after the whole market with one offer Differentiated segmented marketing a marketcoverage strategy in which a rm decides to target several market segments and designs separate offers for each Concentrated niche marketing a marketcoverage strategy in which a rm goes after a large share of one or a few segments or niches Differentiation and Positioning a company must decide on a value proposition how it will differentiate value for targeted segments and what position it wants to occupy in those segments Product position the way a product is de ned by consumers on important attributes Competitive advantage an advantage over competitors gained by offering greater customer value either by having lower prices of providing more bene ts that justify higher prices 0 Promoting points of difference not all brand differences are meaningful or worthwhile and each difference has the potential to create company costs as well as consumer bene ts Which differences to promote 0 Important the difference delivers a highly valued bene t to target buyers 1 Distinctive competitors do not offer the difference or the company can offer it in a more distinctive way 0 Superior the difference is superior to other ways that customers might obtain the same bene t 0 Communicable the difference is communicable and visible to buyers Preemptive competitors cannot easily copy the difference 0 Affordable buyers can afford to pay for the difference 0 Pro table the company can introduce the difference pro tably Chapter 8 Product anything that can be offered to a market for attention acquisition use or consumption that might satisfy a want or need Service an activity bene t or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything To differentiate their offers beyond simply making products and delivering services they are creating and managing customer experiences with their brands or company Layers of Product Concept The Product Au te me hi ie 0 Core Product Consists of all the bene ts Features 7 I Er Igir ie size Package Augmented Product I H Caller t h e p d U Brand interier design 39 39 WW Bad Will provnde for Appearance Bandy style Dptions available Medel name Must3mg Caugen eth 39 Werkmenship c u sto m e rs Warranty 4year Summitmile bumper tahumper warranty M a n 9 IS Hepeirr rneintenernce service after the sale Dealer parts and repair department Installation Dealer preparatien prier to dellitierjlli a b O Clustemer suppen services Owner instructier manual Deliveryquot 29 interest auto lean S U D p I y I n 9 Credit Tellfree customer complaint number Presdud use instrurtiion Customer preblem pel ic ies n n Free lubricatiein and oil changes p r0 d U C 0 Actual Product Consists of the physical good or delivered service that supplies the desired bene t Actual product also includes appearance styling packaging and the brand Augmented Product Consists of the actual product plus other supporting features such as warranty credit delivery installation and repair service after the sale Different Ways to Classify Products By how long they last Durable Nondurable By how they are used Consumer Industrial Materials and parts Capital Raw Materials By how consumers buy them Convenience Shopping Specialty Unsought Product Line a group of products that are closely related because they function in a similar manner are sold to the same customer groups are marketed through the same types of outlets or fall within given price ranges Product Mix the set of all product lines and items that a particular seller offers for sale Brand a name term sign or design or a combination of these that identi es the products of services of one seller or group of sellers and differentiates them from those of competitors Brand Equity the differential effect that knowing the brand name has on customer response to the product or its marketing Branding strategies brand equity brand positioning brand name selection brand sponsorship brand development managing brands Individual brands Each product has its own brand Family brands Market all or a group of products under an umbrella brand Private label Store brands Licensing One rms sells the right for another rm to use its brand name under speci c circumstances Example Ingredient branding Complementary branding Two brands marketed together to suggest use Packaging functions Protect the product Communicate brand personality Provide speci c information Make the package more userfriendly Labeling range from simple tags attached to products to complex graphics that are a part of the packaging perform several functions Identi es the product or brand Describes several things about the product Helps to promote the brand support its positioning and connect with customers Service Marketing based on relationship and value may be used to market a product or a service deals with internal marketing and interactive marketing Product Marketing deals with more outbound marketing tasks the 4 Ps deals with marketing products to prospects customers and others Chapter 9 New Product Development the development of original products product improvements product modi cations and new brands through the rms own product development efforts Process designs Etta s generatlon screenmg and development Business Product Test C I y t analysis development marketing ommercla 3923 390quot Idea generation the systematic search for newproduct ideas Sources of new product ideas Internal and External Internal sources refer to the company s own formal research and development management and staff and intrapreneurial programs External sources refer to sources outside the company such as customers competitors distributors suppliers and outside design rms Idea Screening screening newproduct ideas to spot good ideas and drop poor ones as soon as possible 0 Product Concept a detailed version of the newproduct idea stated in meaningful consumer terms 0 Concept Testing testing newproduct concepts with a group of target consumers to nd out if that concepts have strong consumer appeal 0 Marketing Strategy Development designing an initial marketing strategy for a new product based on the product concept 0 Business Analysis a review of the sales costs and pro t projections for a new product to nd out whether these factors satisfy the company s objective 0 Product Development developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering 0 Test Marketing the stage of newproduct development in which the product and its proposed marketing program are tested in realistic market settings Commercialization introducing a new product into the market Why do new products fail No discernible bene ts Poor match between features and customer desires Overestimation of market size Incorrect positioning Price too high or too low Inadequate distribution Poor promotion Inferior product The Product Life Cycle Explains how features change over the life of a product 0 Concept that seeks to describe a product s sales competitors customers and marketing emphasis from its beginning until it is removed from the market lllntlreduetieri Erewth IllaaterityF leeline Sales Stage Stage Stage Stage and Frefita Ne prefita P39re fits Sales peak Market ahrinka because the inlereaae Salea fall eempanly i5 and peak 39 reeevering RampD EDSTS Sales Prefit lPrefi ta fall margina ynarrew r a iP r39fita 39 Time Stages of the Product Life Cycle Introduction Fullscale launch of new product into marketplace Sales are low high failure rate Little competition Frequent product modi cation Limited distribution High marketing and product costs Promotion focused on product awareness and to stimulate primary demand Intensive personal selling to retailers and wholesalers Growth Sales grow at an increasing rate Many competitors enter market Large companies may acquire small pioneering rms Pro ts are healthy Promotion emphasizes brand advertising and comparative ads Wider distribution Toward end of growth stage prices fall Sales volume creates economies of scale Maturity Sales continue to increase but at a decreasing rate Marketplace is approaching saturation Product lines are widened or extended Marginal competitors drop out Increased promotion and RampD to support sales and pro ts Prices and pro ts fall DecHne Signaled by a longrun drop in sales Rate of decline is governed by how rapidly consumer tastes change or how rapidly substitute products are adopted Falling demand forces many out of market Few specialty rms left Decision Maintain the product Drop the product Harvest the product Product LifeCycle Strategies Style Fashion Fad Sales Sales Sales Time Time Time BUSML 3250 Principles of Marketing Final Exam Study Guide Professor Rebecca Naylor Chapter 10 Price the amount of money charged for a product or service or the sum of the values that customers exchange for the bene ts of having or using the product or service Valuebased pricing offering just the right combination of quality and good service at a fair price assess customer needs and value perceptions l set target price to match customer perceived value l determine costs that can be incurred design a product to deliver desired value at target price Costbased pricing setting prices based on the costs of producing distributing and selling the product plus a fair rate of return for effort and risk design a good product determine product costs set price based on costs convince buyers of product s value Competitionbased pricing setting prices based on competitors strategies prices costs and market offerings Demand curve a curve that shows the number of units the market will buy in a given time period at different prices that might be charged 0 In the normal case demand and price are inversely related meaning that the higher the price the lower the demand 0 Vertical axis represents the different prices a rm might charge 0 Horizontal axis shows the number of units Price Elasticity of Demand a measure in the sensitivity of demand to changes in price Price Price ElaStiC small 5 percentage Prlce chhange causes changes in great c lahge in Price Change P l demand Pal causes little prlce lead to change quotin SU bsta ntlal P2 39 P2 demand percentage changesinthe D number of D units bought I I 0 Q1 02 Quantity 0 01102 Quantity InelaStIC39 large Demanded Demanded pe FC 9 nta g e Ellasticnemand inelastic Demand price leads to small percentage changes in the number of units bought Chapter 11 Marketskimming pricing setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price the company makes fewer but more pro table sales 0 Product quality and image must support the price 0 Buyers must want the product at the price 0 Costs of producing the product in small volume should not cancel the advantage of higher prices Competitors should not be able to enter the market easily Marketpenetration pricing setting a low price for a new product in order to attract a large number of buyers and a large market share 0 Price sensitive market 0 Low prices must keep competition out of the market Product Mix Pricing Strategies 0 Product line pricing setting the price steps between various products in a product line based on cost differences between the products customer evaluations of different features and competitors prices Optionalproduct pricing the pricing of optional accessory products along with a main product Captiveproduct pricing setting a price for products that must be used along with a main product such as blades for a razor and games for a videogame console Byproduct pricing setting a price for byproducts in order to make the main product s price more competitive Product bundle pricing combining several products and offering the bundle at a reduced price Reference prices prices that buyers carry in their minds and refer to when they look at a given product 0 If the actual price is higher consumers will feel the product is overpnced If it is too low below the internal reference price consumers may assume its quality is inferior Price Image global impression of the overall price level of a store evaluated in context relative to other stores lmperfectly correlated with quality and price Everyday low pricing charging constant everyday low prices with few sales of discounts ex Walmart Costco and Family Dollar Highlow pricing charging higher prices on an everyday basis coupled with frequent sales and other price promotions to increase store traf c create a lowprice image or attract customers who will buy other goods at full prices Oddeven pricing a psychological pricing tactic in which numeric value is utilized to affect the customer s perception of product value 0 Odd pricing refers to a price ending in an odd number such as 247 0 Even pricing refers to a price ending in a whole number or in tenths such as 250 PriceQuality Relationship most inexperienced consumers use price as an indicator of quality however price becomes crucial when consumers have little knowledge about certain productsbrands Loss leader pricing setting prices near or below cost in order to attract customers to a store Legal and Ethical Aspects of Pricing Horizontal price xing illegal to agree on a price within a group of manufactures or retailers of wholesalers Vertical price xing retailers cannot be forced to adhere to minimum retail prices manufacturerswholesaIers can set maximum prices if it doesn t adversely impact competition 0 Price discrimination manufacturerswholesaIers cannot charge a different price to different retailers discounts must be equitable Price advertising guidelineslaws regarding advertising price reductions advertising prices in relation to competitor s prices and baitandswitch advertising Predatory pricing means that a company sets a very low price for the purpose of driving competitors out of business they will then raise prices when competitors are gone illegal Chapter 12 Distribution Channel a set of interdependent organizations involved in the process of making a product or service available to the nal consumer Between the producers and the consumers there are a variety of intermediaries wholesalers distributors which constitute the distribution channel 0 Channel members add value to the consumer s experience in 3 ways 1 Product Utility intermediaries bridge the discrepancy between the assortment of goods produced and demanded 2 Time Utility intermediaries can reduce search time increase delivery time 3 Place Utility intermediaries can reduce distance between consumer and product Direct marketing channel a marketing channel that has no intermediary levels 0 Useful because they allow for maximum control over presentation to the enduser and positioning efforts Indirect marketing channel a marketing channel containing one or more intermediary levels 0 Can greatly expand the reach to targeted endusers builds on the distribution expertise of channel partners relinquishes control of downstream activities Channel con ict disagreements among marketing channel members on goals roles and rewards who should do what and for what rewards Channel design decisions designing effective marketing channels by analyzing customer needs setting channel objectives identifying major channel alternatives and evaluating those alternatives Types of Distribution 0 Intensive distribution stocking the product in as many outlets as possible 0 Exclusive distribution giving a limited number of dealers the exclusive right to distribute the company s products in their territories o Selective distribution the use of more than one but fewer than all of the intermediaries who are willing to carry the products Logistics planning implementing and controlling the physical ow of materials nal goods and related information from points of origin to points of consumption to meet customer requirements at a pro t Supply chain management managing upstream and downstream valueadded ows of materials nal goods and related information among suppliers the company resellers and nal consumers Chapter 13 Retailing all the activities involved in selling goods or services directly to nal consumers for their personal nonbusiness use Retailers are businesses whose sales come primarily from retailing Categorized based on amount of service product line relative p ces Types of Retailers Selfservice retailers serve customers who are willing to perform their own locatecompareselect process to save time of money ex WalMart Kohl s Limitedservice retailers provide more sales assistance because they carry more shopping goods about which customers need information ex Sears JC Penny Fullservice retailers assist customers in every phase of the shopping process usually carry more specialty goods for which customers need or want assistance ex Neiman Marcus WilliamsSonoma Ways to Classify Retailers 0 Specialty store a retail store that carries a narrow product line with a deep assortment within that line ex Radio Shack Department store a retail store that carries a wide variety of product lines each operated as a separate department managed by specialist buyers of merchandisers ex Macy s Supermarket a relatively large lowcost lowmargin high volume selfservice operation designed to serve the consumer s total needs for grocery and household products ex Kroger Convenience store a relatively small store located near residential areas open long hours seven days a week and carrying a limited line of highturnover convenience products at slightly higher prices ex 7Eleven Discount store a store that carries standard merchandise sold at lower prices with lower margins and higher volumes ex Kohl s Offprice retailer a store that sells merchandise bought at less than regular wholesale prices and sold at less than retail ex TJ Maxx Superstore a very large store that meets consumers total needs for routinely purchased food and nonfood items ex Walmart Supercenter Segmentation targeting differentiation and positioning involves the de nition and pro le of the market so the other retail marketing decisions can be made Retail Atmospherics refers to how managers manipulate the design of the building interior space layout of aisles texture of carpets and walls scents colors shapes and sounds experienced by customers to achieve a certain effect Wholesaling all the activities involved in selling goods and services to those buying for resale or business use 1 2 3 4 Functions of wholesalers include selling and promoting buying assortment building bulk breaking warehousing transportation nancing risk bearing market information and management services amp advice Types of wholesalers Merchant wholesaler an independently owned wholesale business that takes title to merchandise it handles Broker a wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in nego a on Agent a wholesaler who represents buyers or sellers on a relatively permanent basis performs only a few functions and does not take title to goods Manufacturers sales branches and of ces wholesaling by sellers or buyers themselves rather than through independent wholesalers Chapter 14 Promotion any communication by marketers that informs persuades reminds and builds relationships with potential buyers of a product to in uence an opinion or elicit a response Elements of the Promotion Mix IMC Advertising reaches masses of geographically dispersed buyers at a low cost per exposure and it enables the seller to repeat a message many times Public relations very believable news stories features sponsorships and events seem more real and believable to readers than ads do PR can also reach many new prospects who avoid salespeople and advertisements the message gets buyers as quotnewsquot rather than a salesdirected communication Sales promotion includes a wide assortment of tools coupons contests discounts premiums and others all of which have many unique qualities They attract consumer attention offer strong incentives to purchase and can be used to dramatize product offers and boost sagging sales Personal selling the most effective tool at certain stages of the buying process particularly in building up buyers preferences convictions and actions it involves personal interaction between two or more people so each person can observe the other s needs and characteristics and make quick adjustments Direct marketing come in different forms direct mail and catalogs online marketing mobile marketing etc they all share four distinctive characteristics Direct marketing is less public it is immediate and customized and it is interactive it focuses on building onetoone customer relationships Integrated Marketing Communication the concept of designing marketing activities advertising public relations sales promotion personal selling direct marketing in combination to provide clarity consistency and maximum communication impact across all audiences Characteristics of a good IMC program Creates a single uni ed voice Begins with the customer focuses on the stakeholders Seeks to develop relationships Involves 2way communication Generates a continuous stream of communication Measures results based on actual feedback AIDA Model 1 AwarenessAttenti on senders rst must gain the attention of the consumers a multichannel approach increases the likelihood the message will be received 0 Interest after the customer is aware they must be persuaded the customer must want ttentiian Think Feel De to further investigate the productservice 1 Desire changing I like itquot to I want itquot 0 Action the purchase is just one type of action that an IMC can lead to it can also lead to gathering more information trying a free sample making a donation changing attitudes towards a brand and changing nonpurchase behavior The Communication Process 0 This process involves 9 elements two major parties sender receiver two communication Noise from the environment 39ll39Ira nsmitter Comm unite tie ns Receivr meades cha nnl Consumer to O I 5 message Media dcodes message m e S S a g e m e d i a f o u r Feedback V communication func ons encoding decoding response feedback and noise 0 To communicate effectively marketers must understand how these element combine to communicate value to target customers Hierarchy of Effects there is a sequence of events that is needed before a consumer buys a product 0 Be aware of the products existence 0 Be motivated to give some attention to the product and its bene ts Evaluates the bene ts of the product and whether or not it is worthy If they buy a good experience may lead to repurchase Integrated Marketing Communications Strategy 0 Advertising any paid form Carefulliy iblendied mix of promotion tools of nonpersonal presentation and promotion of ideas goods or services H Personal selling by an identi ed sponsor extremely effective at Advertising I creating awareness and generating interest and compelling I Consistent clear Sales promotion Public relations involves building good relations with the company s various company messages relations publics by obtaining favorable publicity building up a good corporate image and handling or heading off and brand Public Direct marketing unfavorable rumors stories and events Sales promotion the shortterm incentive to encourage the purchase or sale of a productservice Personal selling the personal presentation by the rm s sales force for the purpose of making sales and building customer relationships Direct marketing involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships through the use of direct mail telephone directresponse television email and the internet to communicate directly with speci c customers Chapter 15 Advertising any paid form of nonpersonal presentation and promotion of ideas goods or services by an identi ed sponsor Exposure when a stimulus comes within range of someone s sensory receptors we can however choose not to be exposed to some marketing messages Attention noticing information to attract attention advertisers can use novelty and contrast eyecatching pictures and headlines distinctive formats message size and position and color shape and movement Key Advertising Objectives Informative advertising used when introducing a new product category the objective is to build primary demand Persuasive advertising important with increased competition to build selective demand and brand preference o Reminder advertising important with mature products to help maintain customer relationships and keep customers thinking about the product Advertising Budget the dollars and other resources allocated to a product or a company advertising program Often depends on its stage in the product life cycle 0 Market share also impacts the amount of advertising needed Advertising Strategy the strategy by which the company accomplishes its advertising objectives consists of two major elements 1 Creating advertising messages 2 Selecting advertising media Types of Advertising Appeals 0 Rational appeal relates to the audience s selfinterest 0 Emotional appeal an attempt to stir up positive or negative emotions to motivate a purchase 0 Moral appeal directed at the audience s sense of right and proper Ethical Concerns of Advertising 0 Being truthful in advertising 0 Advertising to children 0 Advertising harmful products Public Relations building good relations with the company s various publics by obtaining favorable publicity building up a good corporate image and handling or heading off unfavorable rumors stories and events PR departments may perform any or all of the following func ons Press relations orpress agency creating and placing newsworthy information in the news media to attract attention to a person product or service 0 Product publicity publicizing speci c products 0 Public affairs building and maintaining national or local community relationships Lobbying building and maintaining relationships with legislators and government of cials to in uence legislation and regulation Investor relations maintaining relationships with shareholders and others in the nancial community 0 Development working with donors or members of nonpro t organizations to gain nancial or volunteer support 0 Tools of PR news speeches special events written materials corporate identity materials public service activities buzz marketing social networking internet Word of Mouth Communication product information transmitted by individuals to individuals C2C Perceived as more reliabletrustworthy than traditional marketing Backed by social pressure to conform with recommendations In uences approximately twothirds of all sales of goods WOM is especially powerful when we are unfamiliar with a product category More likely if the product is visibleobservable risky distinctive new selfimage related Chapter 16 Personal Selling personal presentation by the rm s sales force for the purpose of making sales and building customer relationships Presentation and demonstration Prospecting and qualifying gt Preapp roach Approach l L gt Building and maintaining profitable customer relationships Handling objections Followup Closing Steps in the Personal Selling Process Prospecting the sales step in which a salesperson or company identi es quali ed potential customers Preapproach the sales step in which a salesperson learns as much as possible about a prospective customer before making a sales call Approach the sales step in which a salesperson meets the customer for the rst time Presentation the sales step in which a salesperson tells the value storyquot to the buyer showing how the company s offer solves the customer s problems Handling objections the sales step in which a salesperson seeks out clari es and overcomes any customer objections to buying Closing the sales step in which a salesperson asks the customer for an order Followup the sales step in which a salesperson follows up after the sale to ensure customer satisfaction and repeat business Sales Management involves planning implementing and controlling the personal selling effort of the rm Sales Force Structure a company can divide sales responsibilities along any of several lines If the company sells only one product line they would use a territorial sales force structure However if the company sells many products to many types of customers it might need a products sale for structure a customer sales force structure or a combination of the two Territorial sales force structure a sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company s full line Product sales force structure a sales force organization in which salespeople specialize in selling only a portion of the company s products or lines Customer or market sales force structure a sales force organization in which salespeople specialize in selling only to certain customers or industries Key considerations in hiringtrainingand supervising salespeople Careful salesperson selection can greatly increase overall sales performance since the top 30 of salespeople bring in 60 of the sales A sales force with many new people is less productive and turnover disrupts important customer relationships The best salespeople possess four key talents intrinsic motivation a disciplined work style the ability to close a sale and the ability to build relationships with customers Super salespeople are motivated from within they have an unrelenting drive to excel and they understand customers wants and needs they are good listeners empathetic patient caring and responsive When recruiting a company should analyze the sales job itself and the characteristics of its most successful salespeople to identify the traits needed by a successful salesperson in their industry New salespeople may spend anywhere from a few weeks or months to a year or more in training after the initial training ends most companies provide continuing sales training via seminars sales meetings and internet elearning throughout the salesperson s career Training programs have several goals salespeople need to know about customers and how to build relationships with them it must teach the salespeople how to sell effectively and train them in the basics of the selling process salespeople also need to know and identify with the company its products and its competitors An effective training program teaches them about the company s objectives organization products and the strategies of major competitors 0 Companies vary in how closely they supervise their salespeople many help salespeople identify target customers and set objectives and some may also specify how much time the sales force should spend prospecting new accounts and set other time management priorities 0 A tool in supervising is setting up weekly monthly or annual call plans that show which customers and prospects to call on and which activities to carry out Sales Promotion shortterm incentives to encourage the purchase or sale of a product or service Push Strategy a promotion strategy that calls for using the sales force and trade promotion to push the product through channels The producer promotes the product to channel members which in turn promote it to nal consumers Pull Strategy a promotion strategy that calls for spending a lot on consumer advertising and promotion to induce nal consumers to buy the product creating a demand vacuum that pulls the product through the channel Chapter 17 Direct Marketing direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships Directmail marketing marketing that occurs by sending an offer announcement reminder or other item directly to a person at a particular address 0 Catalog marketing direct marketing through print video or digital catalogs that are mailed to select customers made available in stores or presented online Telemarketing using the telephone to sell directly to customers Directresponse television DRTV marketing direct marketing via television including directresponse television advertising or infomercials and interactive television iTV advertising Kiosk marketing many companies are placing information and ordering machines called kiosks in stores airports hotels college campuses etc 0 Online marketing efforts to market products and services and build customer relationships over the internet Facetoface selling selling situations in which the salesperson and buyer meet together to conduct their business Bene ts of Direct Marketing 0 For buyers direct marketing is convenient easy and private direct marketing gives buyers ready access to a wealth of products and it can offer an almost unlimited selection to customers almost anywhere in the world direct marketing gives buyers access to a wealth of comparative information about companies products and competitors direct marketing is immediate and interactive For sellers direct marketing is a powerful tool for building customer relationships it offers sellers a lowcost ef cient speedy alternative for reaching their markets direct marketing gives sellers access to buyers that they could not reach through other channels Primary ways companies connect with customers online Internet a vast public web of computer networks that connects users of all types around the world to each other and an amazingly larger information repository Clickonly companies the socalled dotcoms which operate online only and have no brickandmortar market presence Clickandmortar companies traditional brickandmortar companies that have added online marketing to their operations Paid media when an advertiser leverages an established media channel that it doesn t control or own directly The role of paid media is the foundation for most advertising campaigns However this is shifting toward paid as a catalyst to drive the effectiveness of owned or earned media Digital paid media drives predictable traf c and transactions The result is signi cant growth by marketers Challenges of paid media include clutter declining response rates and a credibility gap Owned media a channel for which a brand controls most of all of the messaging The role of owned media is to build for longerterm relationships with existing potential customers and earned media Variations of the traditional de nition of owned media have surfaced the rise of social platforms has created partially controlledquot owned media Owned media is a long term investment but yields a number of bene ts for brands and marketers such as control cost ef ciency longevity versatility and niche audiences Challenges of owned media include can never be sure your target audience will nd your content building traf c to your owned media takes time and building owned media requires longterm commitment from the brand Earned media when customers become the channel The role of earned media is to listen and respond earned media is often the result of well executed and well coordinated owned and paid media Harnessing the power of the consumer to advocate on behalf of your brand is of signi cant value A friend s recommendation for a brand or product typically trumps anything that paid media can do 0 The explosion of usergenerated content makes earned media more important than ever it is the most credible media it in uences sales and it has reach amp performance 0 Challenges of earned media include requires time and careful attention takes time to scale lack of control can frequently be negative and it is dif cult to measure the impact Chapter 19 Global Marketing focuses resources on global market opportunities and threats the main difference is the scope of activities because global marketing occurs in markets outside the organization s home country Internationalization of US Business 0 Increasing globalization of markets 0 Increasing number of US companies are foreign controlled 0 Increasing number of foreign companies building and buying manufacturing plants in the US 0 Increasing dif culty for domestic markets to sustain customary rates of growth need to look abroad for new sources of revenue Business is becoming more global due to 0 International free trade areas accomplished by international trade treaties Acceptance of free trade in Latin America Asia and Eastern Europe 0 International agreements on tariff reductions Technological improvements communications transportation internet 0 Globalization of culture mass media Culture learned set of meanings rituals norms and traditions that are shared among members of an organization or society 0 Content includes beliefs attitudes goals values behaviors and customs Culture can affect all aspects of consumer behavior expectations of product characteristics perception of product bene ts and views of moralityethics Primary ways of entering an international market o Exporting the simplest way to enter a foreign market entering foreign markets by selling goods produced in the company s home country often with little modi cation 0 Joint venturing entering foreign markets by joining with foreign companies to produce or market a product or service 0 Direct investment entering a foreign market by developing foreignbased assembly or manufacturing facilities Standardized global marketing an international marketing strategy that basically uses the same marketing strategy and mix in all of the company s international markets Adapted global marketing an international marketing approach that adjusts the marketing strategy and mix elements to each international target market which creates more costs but hopefully produces a larger market share and return Tariffs and quotas industrial raw materials exporting different types of economies Chapter 20 Sustainable Marketing socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet there needs Marketing s negative impact on consumers 1 High prices deceptive pricing many critics charge that the American marketing system causes prices to be higher than they would be under more sensible systems these high prices include high costs of distribution high advertising and promotion costs and excessive markups o Deceptive promotion practices such as misrepresenting the product s features or performance or luring customers to the store for a bargain that is out of stock 1 Deceptive packaging exaggerating package contents through subtle design using misleading labeling or describing size in misleading terms 0 Marketers manipulate consumer s needs and wants they tell people what they should want 0 Highpressure selling persuading people to buy goods that they had no thought of buying goods that are sold not bought 0 Shoddy harmful or unsafe products too often products and services are not made well or do not perform well 0 Planned obsolescence causing a company s products to become obsolete before they should actually need replacement Poor service to disadvantaged consumers the American marketing system has been accused of poorly serving disadvantaged consumers Marketing s negative impact of society False wants and too much materialism the marketing system urges too much interest in material possessions and that America s love affair with worldly possessions is not sustainable Too often people are judged by what they own rather than who they are Too few social goods businesses have been accused of overselling private goods at the expense of public goods As private goods increase they require more public services that are usually not forthcoming Cultural pollution critics feel our senses are being constantly assaulted by marketing and advertising believe that commercials ad pages billboards and spam are all disruptions of everyday life Marketing s impact on other businesses critics also charge that a company s marketing practices can harm other companies and reduce competition they identify three problems acquisitions of competitors marketing practices that create barriers to entry and unfair competitive marketing practices Ethics the moral principles and values that govern the actions and decisions of an individual or group Consumers think better of products made by rms they feel behave ethically Businesses often have to face tradeoff between their responsibilities to stakeholders with con icting desires Business ethics rules of conduct that guide actions in the marketplace What is right vs wrongquot differs among people organizations and cultures but there are some universal values Laws society s values and standards that are enforceable in the courts Consumerism an organized movement of citizens and government agencies designed to improve the rights and power of buyers in relation to sellers
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