Unit 2 Book Notes  

Concentration of power in small number of hands and/or nations.

Chapter 7 Business to Business Marketing  

B2B 

• Eastman was the example used in class  

o Eastman material is used in camelback plastic, car paint (plastic)

B2C: Going to the store and buying lemonade to drink with friends

B2B: Buying lemons from Publix and opening a lemonade stand  

• The key is the intended use

Business products:

• Are used to manufacture other products

• Become apart of another product

• Aid the normal operations of an organization

• Are acquired for resale without change in form  

B2B MARKETS

1. Manufacturers or producers  

• Buy raw materials, components, or parts

• Manufacture their own goods  

2. Reseller

• Manufacturer ???? reseller ???? retailer

3. Institutions  

• Schools, museum, and religious organizations  

What is the fear of trade and globalization?

• NOT: Government  

4. Governments  

• U.S. Government $2.1 trillion producing goods  

• State and local government also make significant purchases  

• Firms specialize in selling to the government  

B2B BUYING PROCESS

• Need recognition ???? product specification ???? RFP process ???? proposal analysis & supplier  selection ???? order specification ???? vendor/performance assessment using metrics

STEP ONE: NEED RECOGNITION

• Can be generated internally or externally  

• Sources for recognizing new needs:

▪ Suppliers  

▪ Salespeople

▪ Competitors

STEP TWO: PRODUCT SPECIFICATIONS (Spelling what you need)

• Used by suppliers to develop proposals  

• Can be done collaboratively with suppliers  

STEP THREE: RFP Process (Request for proposal)

STEP FOUR: Proposal analysis, vendor negotiation & selection  

What is psychographic segmentation?

• Often several vendors are negotiating against each other  

• Considerations other than price play a role in final sector  If you want to learn more check out What is the principle of equifinality?

o (Time- can core campus be done by August)

o (Bus your workers in- don’t park on campus)

o Sometimes you have a better track record of your product lasting longer  STEP FIVE: Order specification (the buy)

• Firms place the order

• The exact details of the purchase are specified

• Just in Time conversation

• All terms are detailed including payment

STEP SIX: Vendor Analysis

• Evaluation of vendor’s performance

• Did they do what they said they would  

FACTORS AFFECTING THE BUYING PROCESS (These three are on the test as application  questions)

Buying center, organization culture, buying situation  

1. The buying center  

Influencer, decider, buyer, user, gatekeeper, initiator  

One person can do multiple or all roles

Or these jobs can be split between 55 or so people  

Initiator: McElveen calls department head and says we need new desks  

Influencer: Influences what gets bought (If im a graphic designer, I want/need a mac)

Decider: Deciding whether the product will be bought (Dean decides XYZ company will build Core  Campus)  We also discuss several other topics like what is the function of Kidney?
We also discuss several other topics like What does tolerance do to a dose response curve?

Buyer: Paperwork pusher. (Susy the assistant). Sometimes the buyer and the decider are the same User: May or may not have a say. (A student using desks, textbooks)  

Gatekeeper: LOTTERY TICKET QUESTION

2. Organizational Buying Culture (Examples of certain examples on test)

a. Democratic: Majority rules (Cops voting on driving Ford)

b. Autocratic: One guy decides and others input doesn’t matter (Small business with 8  employees)

c. Consultative: One guy will make decisions but will listen to the other opinions (Lottery  ticket)

d. Consensus: We all have to agree and we’ll sit here until we do  

3. Buying Situation  

1. New Buy (Lottery ticket gave a scenario of a new buy)

• Purchasing for the first time

• Likely to be quite involved  

• The buying center will probably use all 6 steps in the buying process

2. Modified re-buy  

• Purchasing a similar product but changing specifications

• Current vendors have an advantage

• (Cops realize they need four wheel truckers so they go back and get them)

3. Straight re-buys  

• Buying additional products that have been purchased already  

• Most B2B purchases  

• Not too much research  

• Buying more copy paper for the copy machine  

09/14/16

Chapter 8: Global Marketing  

• A lot of big businesses fail in China

o They don’t have patent laws- they rip off everything  

o Government is the single biggest reason

o Culture is different  

• Home Depot opened up 12 different stores in China…failed  

o China likes small local stores We also discuss several other topics like What is prosocial behaviors?

o China is not a fix it yourself type

o Launched in 2006, closed almost all stores in 2012  

• Mattel: A real life Barbie store (house of barbie)

o Barbie is an American store…China doesn’t care

• Ebay: Already one in China..tow bow

o But tow bow lets you establish a personal connect (IM)

• Google: Google gives out too much information  

o Government wants restrictions  

o Google, gmail, etc. is not in China

This week Starbucks is going to open up in China (what they announced)

• 500 stores a year will open there

• Keep in mind that China drinks tea not coffee

Rewards of Global Marketing

Having a global vision means….

• Recognizing and reacting to international marketing opportunities • Using effective global marketing strategies  

• Be aware of threats from foreign competitors  

Gerber took their products to South Africa  

• Very low literacy rate

• Has a picture of a baby

• People thought it was minced baby  

IBM: Translation problems in Japan

• Japanese thought it would make you smarter

Coors Light: Also translation problem  

What is globalization?

• Creation of a global economy

• Creation of global culture

• Concentration of power in small number of hands and/or nations • The erasure of the borders that divide us  

• Easiest it’s ever been to go abroad and sell goods

• Countries are now interdependent  

Examples of global marketing gone well  

Japan: Kit-Kat translates to “I hope you win”

Kit-Kat’s are good luck

A lot of flavors in Japan  

The fear of trade and globalization  We also discuss several other topics like How is gene expression regulated?

• Millions of Americans have lost jobs

• Millions fear losing jobs

• Threat of outsourcing if workers do not accept pay cuts  • Vulnerability to operations moving offshore

• Hard to compete here because it’s costlier

Benefits of Globalization

• Expands economic freedom  

• Spurs competition

• Raises productivity and living standards

• Offers access to foreign capital, global export markets, and advanced technology  • Promotes higher labor and environmental standards (No child labor-Nike)

• Acts as a check on government power

• Works together- everyone’s looking for a cure for cancer

Big Mac Index and Burgernomics  

• “Burgernomics” is based on the theory of purchasing power parity  

• (PPP): A dollar should buy the same amount in all countries (Lottery ticket) • Exchange rates between 2 countries should equalize prices of an identical good in each country  • This “identical good” is a McDonald’s Big Mac produced in 120 countries  • The “Big Mac Index” is the exchange rate that would mean Big Mac’s cost the same everywhere • Switzerland has the highest Big Mac cost, Denmark is second

• India has the cheapest  

Cheer didn’t work out in Japan because it’s a hot water detergent and Japan washes their clothes in cold  water  

Organizations involved in World Trade (Know general information about these 4)

• GATT (General Agreement on Tariffs and Trade) Don't forget about the age old question of What is the homeostasis?

• IMF (International Monetary Fund)

• WTO (World Trade Organization)  

• World Bank Group

1. GATT – 1948 – 23 countries  

• Lower trade barriers

2. WTO – What GATT turned into

• Turned into an organization instead

3. IMF – Originally a branch of GATT  

4. World Bank Group – Lend money to power countries to build infrastructures so businesses can  come in  

Economic analysis General economic environment

Gross domestic product Gross national income

Purchasing power parity Human development index

9/17/16

Evaluating Real Income

• Firms make adjustments to an existing product to meet the unique needs of a particular  market  

• Make adjustments to a product to make it affordable for the country

• Adjust taste  

Analyzing infrastructure and technological capabilities

• Transportation

• Communication

• Distribution channel

• Commerce

Analyzing Government Actions

• Quote, boycott, exchange control, trade agreement, tariff  

Tariffs and Quotas 

Tariffs Quotas

Tax Maximum limit

Artificially raises prices Reduces availability of imported goods  

Lowers demand We use this a lot (agr products)

Both benefit domestically made products because they reduce foreign competition  

Exchange Control 

• Exchange rate

• Countertrade

• Affects our imports and exports

• When we have a strong dollar, it makes our goods harder to export  

• But when our dollar is strong, it’s easier to import because our dollar goes further (Lottery  ticket) /maybe test question

Trade Agreements (Page 166) Know NAFTA and CAFTA

• Know the European Union works together for trade  

• Know what NAFTA and CAFTA stand for…not countries

Analyzing Sociocultural Factors Hofestede’s Dimensions (On test)

1. Power distance: how comfortable people are with an uneven power distance  2. Uncertainty avoidance: Ability to function without structure  

3. Individualism: It’s all about me  

4. Masculinity: Degree of power that men have (USA is kind of in the middle)

5. Time Orientation (Long/Short term): Does your culture think about the now or the future? U.S.  think about now, China think about the future  

Choosing a global marketing strategy: Target Market (STP)

• Cultural nuances

• Subcultures

• View of product and consumer role

• Different positioning

• Adaptation  

• Single positioning strategy  

The Global Marketing Mix: Product of Service Strategies

• Some in U.S. and abroad (Crest toothpaste)

• Sell similar but minor adaptations abroad (Coca cola)

• Completely new abroad (Starbucks)

The Global Marketing Mix: Pricing Strategies

Tariffs, quotas, anti-dumping policies, economic conditions, competitive factors  

Anti-dumping policy: Set price that foreign markets to be set as. This is to ensure that home markets don’t  go out of business by being undercut  

Choosing a Global Entry Strategy  

• Export: Put your goods on a ship and wait (least amount of control and risk)

• Franchising: Allow an investor to come in and act as you  

o How KFC got to China

• Strategic Alliance: Partnership, agreement to work together

• Joint Venture: Work together, equal amount at stake (50-50)

• Direct Investment: Everything we’ll need is there (Ford in China)

9/19/16

Chapter 9: Segmentation, Targeting, and Positioning

• Step after SWOT analysis

o Amazon

• Segments of One: Micro-segmenting

o Personalization to increase conversion rates (email, website, etc.)

▪ Individual leverage, group leverage  

o They personalize a lot better  

▪ Individual leverage: seeing what you buy and tailoring accordingly  

▪ Group leverage: Gathering information about you and assuming  

• (recording that you bought a baseball bat and ball…and will show you  

other baseball stuff)

o Email is an extension of their store

▪ Keep email content and templates consistent

▪ Don’t just send out discounts and offers

o Take advantage of mobile platform and make it easy

o Urgency: One item left!!! (Christmas)

THE STP PROCESS  

Strategy or objectives ???? describe segments ???? evaluate segment attractiveness ???? select target market ???? identify and develop positioning strategy  

STEP ONE: Establish overall strategy or objective  

• Check yourself

• Derived from mission and current state

STEP TWO: Describe segments

1. Geographic segmentation  

• Region of the country or world  

• Market size

• Market density

• Climate  

• New ways to generate sales in sluggish and competitive markets

• Scanner data allow assessment of best selling brands in region

• Regional brands appeal to local preferences  

• Quicker reaction to competition  

2. Demographic segmentation (Most common and easiest way)

• Age, gender, income ethnic background, family life cycle  

3. Psychographic Segmentation (Lottery Ticket) (Hard to get your hands on but is preferred) • Social class (lower, middle, upper)

• Lifestyle (what is valued by the segment)

• Personality (adventure seekers)

4. Benefit Segmentation (Lottery Ticket)

• The process of grouping customers into market segments according to thr benefits they seek  from the product

5. Loyalty Segmentation  

• Much cheaper to an existing customer

• Lifestyle value  

6. Geodemographic Segmentation

• Segmenting potential customers into neighborhood lifestyle categories  

• Combines geodemographic, demographic, and lifestyle segmentation  

9/21/16

STEP THREE: Evaluate Segment Attractiveness  

Substantial, reachable, responsive, profitable, identifiable

1. Identifiable (Lottery Ticket)

a. Who is in their market

b. Are the segments unique

c. Does each segment require a unique marketing mix

2. Substantial

a. Too small and it is insignificant

b. Too big and it might need its own store

3. Reachable

a. Assessable  

b. Know the product exists  

c. Understand what it can do

d. Recognize how to buy

4. Responsive (Lottery ticket)

a. React positively to firm’ offering

b. Move toward the firm’s products/ services

c. Accept the firm’s value proposition  

5. Profitable

a. Segment needs to make money

b. Doesn’t matter if your segment is small (Rolex) as long as  

you make money

STEP FOUR: Selecting a Target Market

• Determining which segments they can serve best

• Should only enter segments where company can create superior customer value/gain  advantage over competitors  

• Undifferentiated segmentation strategy: Not targeting, everyone is the same

o Advantage: Potential savings on product and marketing costs

o Disadvantage: Unimaginative product offerings

▪ Company more susceptible to competitors  

▪ More affordable, but makes your product seem less exciting

▪ More likely to happen in small town with one sort

• Concentrated Segmentation Strategy: (Niche)

o Advantage: Concentration of resources

▪ Meets narrowly defined segment

▪ Small firms can compete

▪ Strong positioning  

o Disadvantage: Segments too small or changing  

▪ Large competitors may market to niche segments

• Differentiated Segmentation Strategy (Multisegment)

o Advantage: Greater financial success

▪ Economics of scale  

o Disadvantages: High costs (Lottery ticket)

▪ Cannibalization – company eats itself  

▪ (Lots of different toilet paper types)

• One-to-One Marketing (Micromarketing)

o Individualized- cost reduction

o Informative intensive- customer retention  

o Longterm- increased revenue

o Personalized- customer loyalty  

STEP FIVE: Identify and Develop Positioning Strategy  

• Positioning

o The place the product occupies in a consumers mind relative to competing products o Should be tied to competitive advantage

• Effective Positioning  

1. Determine consumers’ perceptions and evaluations in relation to competitors’ 2. Identify competitors’ positions

3. Determine consumer preferences  

4. Select the position

5. Monitor the positioning preferences  

• Perceptual Mapping

o A means of displaying or graphing, in two or more dimensions, the location of products,  brands, or groups of products in customers’ minds  

o “Dominoes pizza taste like cardboard, Papa John’s is delicious”  

• Repositioning  

o Trying to change consumer’s perspective

o Arby’s no longer wants to be considered fast food  

9/23/16

Chapter Ten: Marketing Research and Info Systems

• Acxiom is the largest date broker  

• Decision maker = collecting + recording + analyzing + interpreting  

The Role of Market Research 

• Descriptive: Gathering and presenting factual statements  

• Diagnostic: Explaining data (Lottery ticket)

• Predictive: “What if?”

The Importance of Market Research 

• Improve quality of decision making

• Trace problems

• Focus on keeping existing customers  

• Understand changes in marketplace  

Market Research Process 

• Defining the objectives and research needs

• Designing the research

• Data collection process

• Analyzing data & developing insights

• Action plan and implementation  

1. STEP ONE: Defining the objectives and research needs (what and how) (determine whether or  not you need to conduct research) (why should we do this) (Lottery ticket)

• How should that information be obtained  

2. STEP TWO: Designing the Research  

• Quantitative v. Qualitative

3. STEP THREE: Data Collection Process  

Secondary ???? Marketing Data ???? Primary Data  

Data was collected for another reason Data collected for the 1st time for the problem at hand But may be applicable for current situation  

4. STEP FOUR: Analyzing Data & Developing Insights  

• Converting data into information to explain, predict, and/or evaluate a particular situation  • No use if you don’t know how or what to use the data for  

9/26/16

5. STEP FIVE: Presenting the Data

• Executive Summary

• Body

• Conclusions

• Limitations

• Supplements including tables, figures, appendices  

External Data: Syndicated Data  

Scanner data

Panel research (lifestyle)

Internal ????

Data warehouse: storage facility for data (Lottery ticket)

Data mining: combing through data, trying to find trend  

Qualitative Research  

Observation focus groups  

In depth interviews social media  

Quantatative Research

Experiments scanner

Survey panel

1. Ethnographic: The study of human behavior in its natural context. Observation of behavior  and physical setting (Lottery ticket)

2. Survey Research  

Questionnaire design

Open-ended question: blank text box

Closed-ended question: Limited list or responses

Scaled-response: measures intensity (Lottery ticket)

Web Surveying

High response rates

May lie less

Inexpensive  

3. Experimental Research ???? Raise prices of Big Macs  

Advantages and disadvantages of secondary and primary data (Page 227)

Primary is most accurate but costly and time consuming

Coke was the top brand in 2012 (13 years in a row)

9/28/16

Chapter 11: Product, Branding, and Packaging Decisions

• History: Building the brand from the beginning

o Brand name, logo, trademark, bottle design

• Brand storytelling: brand communication  

What is a product?

• Everything favorable/unfavorable a person receives in an exchange  

o Can be: tangible good, service, idea

• Product is the starting point of marketing mix (product, price, place, promotion)

Product Assortment and Product Line Decisions (at least 3 application questions on test)

• Breadth- number of product lines (kellog’s)

• Ready to eat cereal (cornflakes, raisonbran, special K)

• Toaster pastries/ portable snacks

• Cookies and crackers

• Depth- number of categories within a product line  

Change in product mix breadth 

• Increase breadth: true religion brand jeans now are a lifestyle brand with apparel, belts,  swimwear, and fragrances

• Decrease breadth: Due to competitive changes, TCBY is now focusing on yogurt  Change in product mix depth 

• Increase depth: Band-aid now has 40 products to heal cuts

o Every time a new Disney movie comes, a new band-aid comes out  

• Decrease depth: McCormick spices eliminates dozens of products a year  

Views on Brands (Not in the book but on the test)

“A name, logo, or symbol that evokes in customers a perception of added value for which they  will pay a premium price”

“A product with a personality”

Marketing communications in any form has an impact on customer’s perceptions  (Buying Cheerios instead of Toasted O’s, Buying coke instead of store brand cola)

Benefits of Branding 

For a customer a brand offers:

1. A desired level of quality. Consistently (Big Mac)  

2. Psychological rewards from ownership (using imessage group text instead of groupme) 3. A means of distinguishing one brand from another

The brand image helps create loyalty

For the company branding offers (Lottery ticket)

1. A means of of communicating features and benefits

2. An opportunity to create and sustain an image

3. Customer satisfaction and repeat purchase opportunity

Components of a Brand

• Brand name

• Logos & symbols

• URLs or Domain Names

• Characters

• Slogans

• Jingles and sounds

Brand Name 

• Spoken component of branding

• Can describe the product or service characteristics or can be derived from contemporary  language  

o Not apple pie, not amazon pie

Logos & Symbols  

• Visual branding elements that stand for corporate names or trademakes

URLs / Domain Names 

• The location of the pages on the internet, which often substitutes for the firms name (Google,  Yahoo, Amazon)

Characters 

• Brand symbols that can be human, animal, or animated (Ronald McDonald) Slogans 

• Short phrases used to describe the brand or persuade consumers about characteristics of the  brand  

• “Like a good neighbor, state farm is there”

Jingles/Sounds 

• Audio messages about a brand that are composed of words or distinct music  

How do we know how good a brand is?

• Brand awareness

• Brand equity

• Brand associations

• Brand personality

• Brand loyalty  

1. BRAND AWARENESS (Lottery ticket)

• How many consumers know about your brand  

• If they are not aware of it- the likelihood of it being bought is low  

o Goes bad when everything is referred to as your brand  

o Kleenex instead of tissues, Clorox instead of bleach (Test question)

Brand equity perceived value

Gluten free food, “all natural” type products (Toms deodorant)

2. BRAND EQUITY  

• The value of a brand in its holistic sense to its owners as a corporate asset. Brands have VALUE • Equity is derived from  

o Effective marketing strategies

o A brands status in the marketplace

o A brands position among customers  

3. BRAND ASSOCIATIONS  

• Concepts associated with your brand  

• Volvo: safety

• Fuel efficient, earth friendly: Prius

4. BRAND PERSONALITY  

• Your brand is not alive, but we give them human characteristics “Coca-Cola is so happy”

5. BRAND LOYALTY “The degree of consumer attachment to a brand” (Lottery ticket) • Makes consumers less price sensitive

• Marketing cost of reaching loyal customers is lower

• Loyal customers will praise the brand or service to others

• Insulates the firm from competition

o LOTTERY TICKET

o Recognition: awareness of name, benefit, and package

o Preference: Is useful, consumer will buy IF available..evoked set (peter pan) o Insistence: Will search for, must have (Cherry coke) (Google)

Roles of packaging  

1. Protect the product (toothpaste in a box) (safety piece-Tylenol)  

2. Market the product

3. Provide convenience to distributors and consumers  

Packaging (Lottery ticket)  

• Primary package: One consumer uses (toothpaste in tube)

• Secondary package: Wrapper of exterior carton (Box toothpaste comes in)

Labeling  

• Legal requirements  

o Ingredients  

o Fair Packaging & Labeling Act of 1967

o Nutritional Labeling & Education Act of 1990

o Food & Drug Administration

FDA Ensured: Only these four  

Low fat, light, high fiber, organic

ON TEST

• USDA Organic: 95% organic, Made with organic material: At least 70%

Greenwashing  

Unclear terms

• Antibiotic-free: FDA only validates “no antibiotics administered”

• Free Range/Free Roaming: Poultry must have access to outdoors for 5 minutes everyday  • Hormone Free: No definition. No meat can be called this but sometimes may use “no antibiotics  administered” but FDA doesn’t back up hormone free  

• Natural: Not strongly administered

• Fresh: Chicken can be sold as fresh if the temperate doesn’t dip below 26 degrees..but freezing is  32

REVIEW DAY

• What does B2B stand for  

• 4 kinds of B2B markets (page 146)

• Is government an institution? No

• Church/school that is buying? Institution

• What is the step after product spec? RIP

• Buying Center

o Who pushes paperwork? Buyer

o Starts the process? Initiator  

• Billy is going to buy trucks for his staff…staff votes…democrat

• All must agree…consensus

• Tell me what kind you want, give me your opinion, I’ll decide…consultative  • I don’t care what you want, I’ll buy what I think is best…autocrat

• Statefarm decides to buy ipads for the FIRST time- new buy  

• Statefarm hires new employees and they need new ipads …straight re-buy • New employees need a better camera on their ipad so they get new ones … modified re-buy • Why do we care about global marketing? Globalization  

• Adv. Of globalization

• Disadvantages? Cost jobs, more competition, more jobs overseas  

• Big Mac Index is based on what? PPP

• Tariff is what? What does it do to price and demand?

• NAFTA is a trade agreement to lower trade barriers  

• World Bank does what

• WTO

• GAAT

• Exporting- least or most risk?

• Direct investment  

• H. cultural dimensions  

• What does STP stand for  

• What happens after segment attractiveness

• Demographic is what?

• Benefit segmentation

• Zip code- geographic  

• Lifestyle: psychographic  

• Geodemographic- everything  

• Segment attractiveness

o Identifiable- can divide

o Reachable- can access

o Responsive- will act  

• Targeting strategy  

o Niche market driven- concentrated  

o Everyone is the same- undifferentiated  

o 2 or more- differentiated  

o one to one/micromarketing- amazon..unique  

• Fundamental purpose of marketing: create value  

• Consumers perceptions are mapped  

• What comes after designing research? Data collection  

• Is primary or secondary data more expensive? Primary

• Which of the secondary do you pay for? Syndicated • Go through SD to look for patterns…data mining  

• All data stored…data warehouse

• Most common way to collect data…survey data

• Market research is important to know what the customers want  • On a scale of 1 to 10…scaled response

• Favorite part of football A. B. C. D. closed index  

• Describe your experience…open ended

• Only try something new at a few locations to test it out…experiment  • Know what a brand is…the extra incremental value  • Breadth and depth  

• Packaging: primary or secondary  

• Who controls labeling food in America? FDA

• Difference between specialty product and services..

Chapter 7: Business to Business Marketing

B2B (business to business) is majority of the market ???? bigger than B2C B2B instead of B2C comes from its intended use ???? if you sell what you make then it is B2B

Business Products

• Key is the intended use

• Are used to manufacture other products

• Become part of another product

• Aid normal operations of an organization

• Acquired for resale without change

B2B Markets

Resellers

Manufactures

• Manufactures or Producers

B2B  

Markets  Government

Institution

o Buy raw materials, components, or parts

o Manufacture their own goods

• Reseller

o The middle man (acquires already finished product) o Manufacture ???? Reseller ???? Retailer

• Institutions

o Schools

o Museums

o Religious Organizations

o **GOV’T ISNT AN INSTITUTION**

• Government

o US gov’t spends $2 million on goods

o State and local gov’t also make significant purchases o Firms specialize in selling to gov’t

B2B Buying Process

Proposal  

Need  

Recognition

Product  

Specifications

Request for  Proposal  Process

Analysis,  

Vendor  

Negotioation,  and Selection

Order  

Specification  

Vendor  Analysis

1) Need Recognition  

• Can be generated internally or externally

• Sources for recognizing new needs:

o Suppliers

o Sales people

o Competitors

2) Product Specification  

• Used by suppliers to develop proposals

• Can be done collaboratively with suppliers

Ex) Hospital needs new generator, comes up with specifications they have, and then put it  up for bid

3) **Request for Proposal Process (RFP)

• Business puts out specifications and puts it out for businesses to bid on it 4) Proposal Analysis, Vendor Negotiation, and Selection

• Often several vendors negotiate against each other

• Considerations other than price play a role in final selection

5) Order Specification

• Firms place the order

• Exact details of the purchase are specified

• All terms detailed including payment  

• **THIS IS THE PURCHASE

6) Vendor Analysis

• Evaluate vendor’s performance

• Good experience = buy again

Factors that Affect the Buying Process

1) Buying Situation

2) Buying Process

3) Buying Center

The Buying Center

Initiator Influencer Decider Buyer User Gatekeeper

1) Initiator

• The person that firsts suggest buying particular good

2) Influencer

• Person whose views influence other members of the buying center

3) Decider

• The person that decides whether to buy, what to buy, how to buy, and where to  buy

4) Buyer**

• The paper work pusher (signs purchasing order, ect)

5) User

• One who consumes/uses good or service

6) Gatekeeper**

• Person who controls info and access to decision makers

Organizational Buying Culture

1) Autocratic

• One person decides and doesn’t care what others think

2) Democratic

• Everyone has a vote, majority rules

3) Consultative**

• One person decides but they listen to others for feedback and opinions 4) Consensus

• Everyone has to agree before moving forward

Buying Situations

1) New Buy

• Purchase for the first time

• Very involved process

• Buying center will likely use all 6 steps in buying process

2) Modified Rebuy

• Purchasing similar product but changing specifications

• Current vendors have an advantage

• Not likely to go through whole buying process

3) Straight Rebuy

• Buying additional units or products that have been previously purchased • Most B2B purchases fall into this

Chapter 8: Global Marketing

Why Big American Businesses Fail in China? • The government  

• Don’t care about name brands

• They aren’t “do it yourselfers”  

• They hate big box American stores

Ex) Home Depot, Best Buy, Google

Rewards of Global Marketing

Having a global vision means…

• Recognizing and reacting to international marketing opportunities • Using effective global marketing strategies  

• Being aware of threats from foreign competitors

What is Globalization?**

• Creation of a global economy

• Creation of a global culture

• Concentration of power in a smaller number of hands and/or nations • Erase the borders that divide us  

The Fear of Trade and Globalization**

• Millions of Americans have lost jobs

• Millions fear losing jobs

• Threat of outsourcing if workers don’t accept pay cuts

• Vulnerability to operations moving offshore

Benefits of Globalization

• Expands economic freedom

• Spurs competition (lower prices)

• Raises productivity and living standards

• Offers access to foreign capital, global export markets, and advanced technology • Promotes higher labor and environmental standards

• Acts as a check on government power

Big Mac Index and Burgernomics**

• “burgernomics” is based on the theory of purchasing power parity (PPP) – a dollar should  buy the same amount in all countries

• Exchange rates between two countries should equalize prices on identical good in each  country

• The “identical good” is a Mcdonald’s Big Mac produced in about 120 countries  • “The Big Mac” Index is the exchange rate that would mean Big Macs cost the same  everywhere

Organizations Involved in World Trade**

(know the general knowledge)

• General Agreement on Tariffs and Trade (GATT)

• International Monetary Fund (IMF)

• World Trade Organization (WTO)

• World Bank Group

**lower trade barriers

Assessing Global Markets

1) Economic Analysis

• General Economic Environment

o GDP

o Gross National Income

o Purchasing Power Parity (PPP)

o Human Development Index – how developed is the nation

• Evaluating Market Size and Population Growth Rate

• Evaluating Real Income

o Firms make adjustments to an existing product to meet the unique needs of a  particular country market

2) Analyzing Infrastructure and Technology Capabilities

• Transportation

• Communication

• Distribution Channel

• Commerce

3) Analyzing Government Actions  

• Tariffs

o Tax

o Artificially raises prices

o Lower demand

• Quotas

o Maximum limit that you can bring in

o Reduces availability of imported goods

**both benefit domestically made products because they reduce foreign competition • Exchange Controls

o Exchange rate: regulation of the country’s currency

o Counter trade ???

• **THE DOLLAR

o Strong dollar right now ???? hurts to export goods but is easier to import

o Weak dollar = opposite • Trade Agreements

o European Union

Lower trade  barriers

o **North America Free Trade Agreement (NAFTA) – US, Canada,  

Mexico

o **Central America Free Trade Agreement (CAFTA) – US, Costa Rica,  

Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua

o Mercosur

o ASEAN

**Analyzing Sociocultural Factors (Hofestede’s Dimensions) 1) Power Distance: culture’s ability to accept an uneven distribution of power

2) Uncertainty Avoidance: ability to deal with uncertainty/unknown

3) Individualism: Individualism VS collectivism (group)

4) Masculinity: measure how gender roles are accepted in culture

5) Time Orientation: short time = all about now; long term = all about the future

Choosing a Global Marketing Strategy: Target Market (STP) 1) Culture nuances

2) Subcultures

3) View of the product and consumer role

4) Different positioning

5) Adaptation

6) Single Positioning Strategy

The Global Market Mix: Product or Services Strategy

• Sell the same

• Sell an adaption

• Sell a totally new product

The Global Marketing Mix: Price Strategy

• Tariffs

• Quotas

• Antidumping policies

• Economic conditions

• Competitive Factors

Choosing a Global Entry Strategy**Direct Investments: you go  into a county and make a direct  

investment

Joint Venture: both  

parties put money in

L

Strategic Analysis: two  

O

firms that agree to work  

R

together but no equity changes  

T

hands

N

Franchising: contract  

O

agreement, they do business  

C

as you

Export: send product to  

another country

RISK

Chapter 9: Segmentation, Targeting, and Positioning

Amazon

• Segments of One: micro segmenting

• Personalization is to increase conversion rate (email, websites, etc) ???? getting people to  buy

o Individual leverage

o Group leverage

• How do they do this?

o Track everything you do

• Email is an extension of the store

o Keep email templates and content consistent

o Don’t just send discounts and offers

• Take advantage of mobile platform and make it easy

• Use psychology but keep it subtle

o Urgency

The Segmentation, Targeting, and Positioning (STP) Process 1) Strategy or Objectives

• Check yourself

• Derived from mission and current state

• Inline with core strategy of business

2) Describe segments

• Geographic Segmentation

o Region of country or world

o Market size

o Market density

o Climate

o Benefits:

▪ New ways to generate sales in sluggish and competitive markets

▪ Scanner data allows assessment of bestselling brands

▪ Regional brands appeal to local preferences

▪ Quicker reaction to competition

• Demographic Segmentation

o **MOST COMMON WAY TO SEGMENT

o Age  

o Gender

o Income

o Ethnic background

o Family life style

• Psychographic Segmentation

o More useful than demographic

o Social class (Lower, middle, upper)

o Lifestyle (what is valued)

o Personality (adventure seekers)

• **Benefit Segmentation

o Grouping customers into market segments according to benefits they seek from  the product

• Loyalty Segmentation

o Much cheaper to keep an existing customer

o Lifetime value

• **Geodemographic Segmentation

o Segmenting potential customers into neighborhood lifestyle categories o Use geographic, demographic, and psychographic segmentation  

Ex) Looking up zip codes in class

3) Evaluate Segment Attractiveness

Substantial

Identifiable

Segment  

Attractiveness

Reachable

Profitbale Responsiveness

• Identifiable

o Who is in their market?

o Are the segments unique?

o Does each segment require a unique marketing mix? • Substantial

o Too small and its insignificant

o Too big and it might need its own store

• Reachable

o Know product exists

o Understand what it can do

o Recognize how to buy

• Responsive

o React positively to firm’s offering

o Move toward the firm’s product/services

o Accept the firm’s value proposition

• Profitable

o Need to make money

4) Selecting a Target Market

• Determine what segments you can serve best

• Should only enter where company can create superior customer value and gain  advantages over competitors  

• Market: people or organizations with needs and wants, and with the ability and  willingness to buy; if it lacks one of these it isn’t a market

• **Segmentation Strategy: how you are going to market

Differentiated  

Undifferentiated

Segmentation  Target

Micromarketing

Concentrated

o Undifferentiated (Mass Marketing)

▪ Market to everyone the same way

▪ Saves money

▪ Makes company more susceptible to competitors ▪ Unimaginative product offerings

o Concentrated (Niche – little, special)

▪ Concentration of sources

▪ Small, narrowly defined segment

▪ Small firms can compete

▪ Strong positioning

▪ Segments too small or change and youre screwed ▪ Large competitors may to niche segment

Ex) William Sonoma – high end cooking; dog magazines o Differentiated (multisegment)

▪ At least 2 segments

▪ Greater financial success

▪ Economics of scale

▪ High costs but overall risk goes down

▪ Cannibalizing your own business (icecream) Ex) types of toilet paper

o Micromarketing (one-to-one)

▪ Individualized

▪ Information intensive

▪ Long-term

▪ Personalized

▪ Goals:

⮚ Reduce cost

⮚ Customer retention

⮚ Increased revenue

⮚ Customer loyalty

Ex) Target, Amazon

5) Identify and Develop Positioning Strategy

• What do customers think about you

• The place the product occupies in your mind relative to competition • Should be tied to competitive advantage

Effective Positioning

1) Determine customer’s perceptions and evaluations in relation to competitors 2) Identify competitor’s positions

3) Determine consumer preferences

4) Select the position

5) Monitor the positioning strategy

• Perceptual Mapping: means of displaying or graphing, in two or more dimensions, the  location of the product, brands, or groups of products in customers minds o **Customer’s perception is being mapped – closely tied to positioning** • Position bases

1) Attribute

2) Price and quality

3) Use or application

4) Product use

5) Product class

6) Competitor

7) Emotion

Usually mapped against competitor

• Repositioning: trying to change what the customer thinks about them Ex) Arby’s, Buick

Chapter 10: Marketing Research and Information System

**Who is the largest data broker? Axciom

**How do they get this data? Web browsing history ???? click stream

Market Research

Data collecting, recording, analyszing, and interpreting = decision making

The Role of Marketing Research

• Descriptive = gives facts

• Diagnostic = explains data

• Predictive = “what if…”

The Importance of Market Research

• Improve quality of decision making  

• Trace problems

• Focus on keeping existing customers

• Understand changes in the market place

The Marketing Research Process

1) Defining objectives and research needs

• What info is needed to answer specific research questions?

• How should that info be obtained?

2) Designing the research

• Type of data

• Type of research

3) Data Collection Process

• **Primary: data collected specifically for the problem at hand for the first time • **Secondary: data gotten from another source or not collected specifically for the  problem at hand

4) Analyzing the data

• Converting data into info to explain, predict, and/or evaluate a particular situation 5) Presenting the data

• Executive summary

• Body

• Conclusion

• Limitations

• Supplements (tables, charts, figures, appendix)

Types of Data and Research

• External Secondary Data

1) **Syndicated Data: bought data that wasn’t collected specifically for the problem at  hand; available faster

2) Scanner Research: from barcodes, determine what you buy, not collected for specific  data

3) Panel Research: group of customers that they look into, ask questions, get information • Internal Secondary Data

1) **Data Warehouse: storage system for data

2) **Data Mining: digging through data to find something you can use (looking for  patterns and trends)

• **Qualitative and Quantitative Data

**Qualitative:  

- Observation

- Focus Groups

- In-depth Interview

- Social Media (motion)

- Used for exploratory; don’t  

know what the problem is

• **Ethnographic Research

**Quantitative:  

- Experiments

- Scanner

- Survey

- Panel

- Used when you know what the  problem is

o Studying human behavior in its natural context; includes observation of behavior  and physical setting

• Survey Research

o Most common way data is collected

Questionnaire Design

• Open-ended Question: require person to put it in their own words

• Closed-ended: limited response (multiple choice)

• Scale-Response Question: closed-ended questions to measure intensity of respondent’s  answer (rate things on how you feel)

• Web Surveying

o Response rates are relatively high

o Respondents may lie less

o Cheap

o Results are processed and received easy

o Most common survey type

• Experimented Research

o You run an experiment and see what happens

Advantages and Disadvantages of Primary and Secondary  Data**

Type Examples Advantages Disadvantages

Secondary

• Census data

• Sales invoices

• Internet information • Books

• Journal articles

• Syndicated data

• Saves time in collecting  data because they are  

readily available

• Free or inexpensive  (except for syndicated  

data)

• May not be precisely  

relevant to info needs

• Info may not be timely • Sources may not be original  and therefor usefulness is an  issue

• Methodologies for  

collecting data may not be  appropriate  

• Data sources may be biased

Primary

• Observed consumer  behavior

• Focus group  

interviews

• Surveys

• Experiments

• Specific to the  

immediate data needs  

and topic at hand

• Offers behavioral  

insights generally not  

available from  

secondary research

• Costly

• Time consuming

• Requires more sophisticated  training and experience to  design, study, and collect  

data

Chapter 11: Product, Branding, and Packing Decision

Ex) Coca-Cola

• Secret formula

• The bottle

• Red

• Brand feeling: fun and bringing people together

• Share a coke campaign

• Happiness project campaign (college students)

What is a product?

• Everything favorable/unfavorable a person receives in an exchange

• Can be:

o Tangible good

o Service

o Idea

• The starting point of the marketing mix

Product Assortments and Product Line Decisions • **Breadth: Number of product lines (wide)

• **Depth: number of categories within product (deep)

Ex) Kellogg’s Product Lines:

1) Ready to eat cereal – frosted flakes, special k

2) Toaster Pastries  

3) Cookies and Crackers – Keebler, Cheeze-itz, Famous Amos

4) Natural Fresh and Organic

Change in Product Mix Breadth

• Increase: True Religion jeans are now a lifestyle brand with apparel, belts, swimwear,  and fragrances

• Decrease: Due to competitive changes, TCBY is now focusing on yogurt (deleted coffee  line)

Change in Product Mix Depth

• Increase: Band-Aid now has over 40 product to heal cuts

• Decrease: McCormick spices eliminates dozens of products each year

Views on Brands

• Brand: name, logo, or symbol that evokes in customers a perception of added value for  which they will pay premium price

• Marketing communications in any form has an impact on customer’s perceptions

Benefits of Branding

• **For customers a brand offers:

1) A desired level of quality (consistent)

2) Psychological rewards for ownership (status)

3) A means of distributing one brand from another

- Brand image creates loyalty

• **For a company a brand offers:

1) A means of communication features and benefits

2) An opportunity to create and sustain an image

3) Customer satisfaction and repeat purchase opportunity

Components of a Brand

1) Brands name

- Spoken component of branding

- Can describe the product or service characteristics or can be derived from  contemporary language

2) Logos/Symbols

- Visual branding elements that stand for corporate names and trademarks 3) URLs/Domain names

- The location of the pages on the internet which can often substitute for firm’s names 4) Characters

- Brand symbols that can be human, animal, or animated

Ex) red and green m&ms, Pillsbury dough boy,  

5) Slogans

- Short phrase used to describe the brand or persuade consumers about characteristics  of the brand

Ex) Just do it, America runs on Dunkin

6) Jingles or sounds

- Audio messages about a brand that are composed of words or distinct music

How Do You Know How Good a Brand Is?** 1) Brand awareness

- What it stands for and what it is used for; customers are familiar with the brand and  what it stands for; created from repeated exposure to various brand elements in the  firms communication to customers

- Can become over aware and start using the name for the generic brand Ex) Kleenex

2) Brand equity

- Value of the product

- Perceived Value: relationship between a product’s or service’s benefits and its cost o Value of a brand in its holistic sense to its owners as a corporate asset o Customers determine offerings value in relationship to that of its close  competitors

o If they believe the less expensive brand is about the same quality as the  premium brand, the perceived value of the cheaper choice is high

3) Brand associations

- Link between your brand and products attributes

Ex) Volvos and safety

4) Brand personality

- Human qualities you assign a brand

5) Brand loyalty

- Degree of attachment to product

- Loyalty points

- Marketing costs to reach these customers is much cheaper

- Loyal customers praise the products to others

- Recognition: awareness of name, benefit, and package

- Reference: customer will buy it available, evoked set

- Insistence: will search for product; must have it

- **When you are brand loyal, you are less price sensitive (pay more attention to brand  than price)

- Help insulate firm from competitors

Role of Packaging

1) Protect the product

2) Market the product

3) Provide convenience to distributers and customers

• **Product downsized: keep prices the same but less product ???? price increase for  customer; packaging looks almost the same

Packaging

• Primary Package: one the customer uses

Ex) toothpaste tube

• Secondary Package: wrapper or exterior carton

Ex) box toothpaste comes in (UPIC code)

• Innovative packaging could be a competitive advantage

Labeling

• Information

o Legal requirements

o Ingredients

o Fair Packaging and Labeling Act of 1967: requires the label to state, the identity of  the product, the name and place of business of the manufacturer, packer, or  distributor; and the net quantity of contents

o National Labeling and Education Act of 1990: gives the FDA authority to require  nutrition labeling of most foods regulated by the Agency; and to require that all  nutrient content claims (for example, 'high fiber', 'low fat', etc.) and health claims  meet FDA regulations; doesn’t require restaurants to comply with the same standards. o Food and Drug Administration (FDA)

▪ FDA stands behind: low fat, organic, high fiber, light

▪ Does nothing with cosmetics

▪ Natural cosmetics have no claim for FDA to validate

▪ FDA has no definition for “natural” as long as it has no artificial colors, etc…

Greenwashing ???? unclear terms

• “All Natural” for food – FDA doesn’t stand behind it

• Organics – USDA validates

USDA

Organic

100%

Organic = only 95%                                                                          = is 100% organic

o Shouldn’t contains GMOs and have little pesticides

• Free Range – access to outside for atleast 5 minutes a day

• Non GMO certified – not validated by USDA or FDA

• Grass fed – leaner meat ???? doesn’t taste as good; different standards so they may not  be solely grass fed

• No added sugar – no sugar was added during processing (is no healthier) • Cage Free Eggs – they just aren’t in a cage, not really any healthier, generally no  outside access

**Private label: Brand owned not by a manufacturer or producer but by a retailer or supplier who  gets its goods made by a contract manufacturer under its own label; also called private brand

**Manufacturers Brand: also called producer brand or national brand; merchandises carrying  manufacturer’s brand name rather than private label i.e. brand is owned by the producer; is under  its own name; attract existing loyal and satisfied customers by transferring their loyalty to  manufacturer’s other products; brand identity is linked with manufacturer’s image.