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UF / Marketing / MAR / What is the basic meaning of marketing?

What is the basic meaning of marketing?

What is the basic meaning of marketing?


School: University of Florida
Department: Marketing
Course: Principles of Marketing
Term: Spring 2019
Tags: mar3023, Marketing, exam1, 1- Creating Customer Relationships and Value through Marketing, 3- Scanning the Marketing Environment, 4- Ethical and Social Responsibility for Sustainable Marketing, 5- Understanding Consumer Behavior, 6- Understanding Organizations as Consumers, 9- Market Segmentation, targeting, and Positioning, and 8- Marketing Research: From Customer Insights to Actions
Cost: 50
Name: MAR3023 Exam 1 Study Guide
Description: This Study Guide for Exam 1 cover the lectures and textbook chapters 1- Creating Customer Relationships and Value through Marketing, 3- Scanning the Marketing Environment, 4- Ethical and Social Responsibility for Sustainable Marketing, 5- Understanding Consumer Behavior, 6- Understanding Organizations as Consumers, 9- Market Segmentation, Targeting, and Positioning, and 8- Marketing Research: From
Uploaded: 02/10/2019
26 Pages 160 Views 3 Unlocks

MAR3023 Exam 1 Study Guide 

What is the basic meaning of marketing?

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 Chapter 1: Creating Customer Relationships and Value through Marketing 

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* Marketing 

o MAIN DEFINITION: Marketing is the activity, set of institutions,  and processes for creating, communicating, delivering, and  exchanging offerings that have value

for customers, clients, partners, and society at large

 Set of institutions being manufacturers, wholesalers,  

and retailers

What is the best definition for customer value?

 Communicating being advertising or personal selling

o The purpose of a business is to create and retain customers o Marketing is the profitable creation of customer value Don't forget about the age old question of What is the limit of resolution of a microscope?

* Customer Value 

o The unique combination of benefits received by targeted buyers  that includes quality, price, convenience, on-time delivery, and  both before-sale and after-sale service

 Satisfaction- fulfillment of one’s desires, wants, or needs  Utility- useful, rather for function than attractiveness If you want to learn more check out What is the exponential function equation?

* Types of Utility

o Time

 (1) Being able to get a product when we want it

 (2) Being able to get a product quickly

∙ Example: McDonald’s offering All-Day Breakfast

What are the two types of utility?

∙ Example: Drone delivery for Amazon

o Place

 Being able to get a product where we want it  


∙ Example: McDonald’s is near one’s home

 Atmospherics- ambience or atmosphere inside

o Form

 The form the product is in

∙ Example: Pre-popped popcorn vs. popping it in the  We also discuss several other topics like What is the humanistic approach to psychology?

microwave yourself

∙ Example: Tide Liquid Detergent vs. Tide Powder vs.  

Tide Pods

o Possession  

 Getting the product into the consumer’s handsIf you want to learn more check out What is the difference between the nervous system and the endocrine system?

∙ Example: getting product without paying for it right  We also discuss several other topics like What are the core aspects of marketing?

then and there (mortgage)

* Marketing Creates Customer Value through the Process of Exchange  o An Exchange Relationship (Core of Marketing) 

 The Seller provides goods or services to the buyer (or  something else of value, e.g. ideas, images, concepts,  

places, and people), and the Buyer either gives money in  the form of cash or credit to the Seller or barters goods or  services to the Seller

* Marketing Management Facilitates the Exchange of Value (Value= Perceived Benefit


o Marketing Mix

 Controllable factors of Product, Price, Promotion, and Place  (the 4 P’s) used by marketing managers

∙ Product

o Variety  

o Quality

o Design We also discuss several other topics like What were w. smith contributions to the theory of evolution?

o Features

o Brand Name

o Packaging  

o Services

o Warranties  

∙ Price

o List Price

o Discounts

o Allowances

o Payment Period

o Credit Terms

∙ Promotion  

o Sales Promotion

o Advertising

o Salesforce

o Public Relations

o Direct Marketing

o E-Commerce

∙ Place  

o Channels  

o Locations

o Inventory

o Transportation

o Atmospherics  

* Marketing Program- a plan that integrates the marketing mix to provide a product, service, or idea to prospective customers

* Market Share

o Ratio of the firm’s sales revenues to total industry sales revenues (including the firm’s)

o Sometimes measured in unit sales rather than sales revenue o A key indicator of a successful marketing program

* “S.T.P.” Marketing

o Segmentation  

 Not everyone wants the same thing (some like Country,  Rap, or Blues)

o Targeting

 Which of these segments are we going to try and serve  (sign artists to go after Blues, Soul, and Rap, or maybe go  after all genres)  

o Positioning  

 How do we go to market (what do we show consumers and  tell them)

* Four Business Orientations

o (1) Production Orientation [internal focus]

 Focuses on producing the product (demand exceeds  

supply, basically the only provider in the marketplace)

 Company produces and sells it and practically sells itself to consumers

o (2) Sales Orientation [internal focus]

 Be more aggressive in selling the product (demand and  supply are roughly equal)

 Company produces and sells it and aggressively sells it to  consumers

o (3) Marketing Orientation [external focus]

 Begins with consumers

 Consumers learn what they want about the company and  the company equally produces and market it back to the  

consumers and sell what they want

 Customers first

 Confined to the marketing department (Smaller portion of  the circle containing everyone)

o (4) Market Orientation [external focus]

 Begins with consumers

 Consumers learn what they want about the company and  the company equally produces and market it back to the  

consumers and sell what they want

 Open to the whole circle (everyone in the circle)

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 Chapter 3: Scanning the Marketing Environment

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* Marketing Environment

o Constraining (Constraint)

 Control

∙ Adapt (if the environment controls us) *Mostly what  

we do*

∙ Modify (if we have some control over the  


 Threat/Opportunity

o Multi-level

 Macro-Environment (Encompasses entire nation)

∙ Social

o Cultural  

 Core Set of Beliefs and Values

∙ Individualism- Contrast to  


∙ Time Orientation- “ Past, Present,  


∙ Materialism- “Stuff makes us  


∙ Youthfulness- Lots of products  

aimed at making us feel young  

(e.g. Botox)

 Micro-Cultures

∙ Football Participation (e.g. SEC)

∙ Racial/Ethnic Composition

o Hispanics are largest minority

(and language preferences)

 Diversity!

∙ Much more diverse in the U.S.

o Use of iPhone Emojis with  

different colored people

∙ LOTS of immigrants

o Demographic  

 Age Distribution

∙ Will be 22% of 65 years of age and  

older by 2050  

 Geographic

∙ Migration to the coasts (primarily  

to the West and South) (moving  

away from rural states, more to  

urban cities)

 Household Composition

∙ Married Couple- no children

∙ Married Couple- with children

∙ Separated Couple- no children

∙ Separated Couple- with children

∙ Divorced ^^ or Widowed  

∙ Consists of division of management

positions, housework, etc.

∙ “Boomerang kids:” college grads  

move back in with their parents to  

get on their feet

∙ Multigenerational Households: 2 or  

more adult generations living in the

same household

∙ Economic

o Trend in Gross Domestic Product (GDP) (def:  value of all goods and services produced within the United States)  

 Has been growing steadily

o Trend in Consumer Income

 Nominal Income (def: the actual income  you see on your check stub when you get

paid by your employer) (what we look at)

 “Real” Income (def: what is the  

purchasing power of that nominal  

income, a.k.a., what does it really  

amount to given we take into account  


o Trend in Income Inequality  

 83% of all the wealth in the United States is held by about 20% of the people)


∙ Gross (def: what you actually earn,

not what you get to keep)

∙ Disposable (def: what you get to  

actually spend) (“take home pay”)

∙ Discretionary (def: income after  

paying for necessities)

 Willingness:

∙ Consumer Expectations

∙ Index of Consumer Confidence  

(what measures consumer  


∙ Technological

o Television

 Smart TV

 TV watching is being weeded out by  

computers and smartphones

o Telephone/Smartphone

 Mobile Addiction

o Computer/Internet


 Rate of Change

∙ Technological environment is  

moving extremely fast

 Media Fragmentation

∙ Internet of Things (IoT) (e.g.  

connected devices to make use of  

data- FitBit, Apple Watch)

∙ Artificial Intelligence (AI) (machine  

learning about behavior) (e.g.  

Netflix giving recommendations on  

what to watch based on previous  

viewing habits)

∙ Regulatory

o Protecting Competition

 Sherman Anti-Trust Act: anti-monopoly  

law, prevents companies from getting too

large and having monopoly power, and  

thereby, being able to charge exorbitant  

prices, etc.

 Robinson- Patman Act: prevents a  

manufacturer from selling to different  

retailers or different wholesalers at  

radically different prices for no good  

reason (in regard to price discrimination)

o Protecting Consumers  

 Federal Trade Commission Act (FTC): in  

charge of regulating advertising, they  

monitor advertising to make sure it’s not  

false, misleading, etc.

 Corrective Advertising: the company  

pays to run ads that attempt to correct  

the False claims they have made in  

previous ads (e.g. Tobacco and nicotine  


 Food & Drug Administration (FDA):

responsible for monitoring the safety of  

products, in particular, pharmaceuticals,

also regulates any pharmaceutical  

(medical) advertising; involved in  

approving new drugs; oversee labeling of


 Lanham Act: protects trademarks (brand  names, logos, etc.) (good for marketers)

 Trade Dress: you can infringe on  

someone’s packaging

 Consumer Product Safety Commission:

regulates the safety of products that are  

sold in the United States (pay special  

attention to imported products)

o Political Pressure

 Consumerism

∙ Def: a grassroots movement, that’s

anti-business; synonym for  

materialism; consumerism means  

people who fight against big  


 Media

∙ The use of social media and  

imaging to portray the effects of  

such (e.g. cartoon of skinny man w/

fat TV in 1990 but fat man w/  

skinny TV in 2011)

∙ Natural  

o Energy

 We use A LOT

 Trying to find cleaner forms of energy

o Global Warming/ Climate Change

 More frequent and violent storms  

because it was so hot

 Greenhouse gas emissions accelerating   Ocean warming is accelerating faster too  (kills off ecosystems that rely on cooler  


 Seas are rising at fastest rate

o Green Marketing/ Sustainability

 Green marketing is marketing designed  to make as little unfavorable impact on  

the environment as possible (worry about

packaging, materials used, etc.)  

 Cap and Trade: you have a certain  

budget of emissions that you would be  

permitted to make, and then if you go

above that, you would have to buy the  

right from somebody else, buy some  

permission (to make up for the extra  

energy you’re consuming)

 Greenwashing (BOO!): a company will  

overstate how environmentally friendly  

they are (similar to “whitewashing”), it  

makes it seem like you’re doing more for  

the environment than you really are  

(watchdog groups look for this)

 Micro-Environment (Encompasses specific region) ∙ Customers (where everything starts)

o How many do we have?

o Who they are?

o What are they like?

o What are their preferences?

∙ Competitors

o Need to monitor what is constantly going on  with the competition

o Find out through news reports, industry  

groups/conferences, annual reports, market  

share data, pricing data, analyst reports,  

speeches by competitors’ leaders, direct  

consumer feedback, insight from reverse

engineering products, insights from mystery  

shopping, etc.

∙ Stakeholders  

o Definition: any group or individual who is  

affected by the firm’s activities

o Customers would also be a stakeholder

∙ Suppliers

o People we need to supply us with raw  

materials, component parts, labor, electricity,  

etc. (all things to run a business)

o Important to have good relationships with  

supplies and become partners with our  

supplies (we keep track of what our suppliers  

are doing)

∙ Channels  

o Definition: how we get our products to the  


o E.g. Manufacturers sell though wholesalers and retailers to get to the consumer (the end user)

 Internal-Environment (Marketing Function)

∙ Top Management

o Starts here (CEO, and other members of the  


∙ Personnel

o Other marketing personnel who aren’t involved

in the management of marketing (e.g. Counter  

people at a fast food restaurant to upsell  


∙ Other Departments

o Areas like finance, accounting, production,  

research and development, etc.

o Current/Future


∙ Sectors

o Sectors of the macro-environment- economics,  

natural environment, etc.; Sectors of the micro

environment- customers, stakeholders, channel

members, etc.

∙ Actors

o Definition: key people or organizations within  

each sector

o Example: Regulatory sector- actors would be  

key legislators, key administrators, and various

regulatory bodies that could have an effect on  


∙ Sources

o Many and varied; articles, online journals, news

reports, web, social media, etc.

∙ Interpretation  

o Bring all of the information from the sources  

together, and somebody has to make sense of  

it (you give them time to think about all of this  

stuff..to ponder what it means for the future of  

the organization)

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 Chapter 4: Ethical and Social Responsibility for Sustainable Marketing 

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* “Marketing Ethics” is not an oxymoron!

o Ethics: moral principles and values that govern actions and  decisions

o Laws: societal standards and values that are enforceable in a  court of law

* Classifying Market Decisions

Not very many  


What we hope our  




Can get in big trouble


marketing falls into

High Cost of Epi-Pen  (went from $95 to  


* Reasons for Increased Attention to Ethics

o Diverse societal value systems

o Increased public scrutiny

o Expectations have risen

o Ethical conduct perceived dropping

* Framework for Ethical Behavior for PERSONAL MORAL PHILOSOPHY (top to bottom, looking at broader influences on our philosophy down to  more narrow and more specific influences)

o Societal Culture & Norms

 Refers to country, society, culture we live in

o Business Culture & Practices

 Difference between how we sort of expect business people  to operate vs. how, say, educators or scientists or the  

clergy would operate (we expect business to be a little bit  maybe harder around the edges than some of these other  disciplines, competitive sort of environment)

o Organizational Culture & Expectations

 Your specific company

* Personal Moral Philosophy and Ethical Behavior

 o Moral Idealism 

 Definition: individual rights and responsibilities are  

universal, regardless of outcome

 o Utilitarianism  

 Definition: emphasis on the “greatest good for the greatest number” (a cost/benefit tradeoff)

* Corporate Social Responsibility (have a broader sense as we move  from top to bottom)

 o Profit Responsibility 

 Very narrow focus (the only responsibility we have is to our  shareholders)

 o Stakeholder Responsibility 

 Have responsibility to groups other than just our  


o Societal Responsibility (think more broadly about our impact)

 Green Marketing (minimizes or causes no harm to the  


 Cause Marketing

∙ Marketing programs that are explicitly tied to some  

sort of a social cause (by pairing our  

products/services with support of a particular societal

cause) (tying to purchase- unlike pure philanthropy,  

which is a straight donation- not tied to any  

purchase) (“pinkwashing” is overstating or just flat  

out lying about their donations or their support of  

charitable organizations  

 Social Entrepreneurship  

∙ Company that is founded and is operated primarily to

support causes or a cause (they’re in business  

because they want to do social good)

* The Social Audit

o Recognition of responsibility *Starting point

 “We ought to be doing more, more for society in some  

way” (have a broader responsibility than just making  


o Identification of “mission”

 Trying to identify what it is you would like to contribute to  (e.g. ending world hunger)

o Determination of priorities

 Global statement of how they are going to proceed with  the mission

o Specification of resources

 What does that mean to accomplish the mission?

o Evaluation of results

 Tracked impact on customers and those affected by the  mission directly (how many lives were helped through the  building of homes from Habitat of Humanity)

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 Chapter 5: Understanding Consumer Behavior 

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* Consumer Decision Making (D-M)

o How do consumers decide what to buy?

* Influences on Consumer Decision-Making

o Psychological (our own perceptual and learning processes that  

we have as individuals)

o Marketing Mix (why marketers exist)


o Socio Cultural (social environment within which we make  decisions)

o Situational (“catch all” that we wouldn’t normally expect to have  an influence on our purchases)

* Basic Decision-Making Concepts

o Goal-Directed

 We, as consumers, have some goal in mind that we’re  trying to achieve when we buy a good/service

o Bounded Rationality

 People are rational and try to make good decisions, but we  just have limits on our decision-making prowess (things  impede our ability to be rational, e.g. in a hurry,  

overwhelmed with information, etc.)

o Low Involvement

 Low attentional processes or deliberation processes, that  we just don’t spend as much time or effort trying to make  sense of data to try to make the best possible decision

o Selective

 Focused only on certain ideas, not paying attention to  background information or “white noise;” tune in to certain  things, tunes out others

o Adaptive  

 Consumers will adapt their behavior based on what they  learn from their purchases (“trial and error”)

* Decision-Making Unit (DMU)  

o (Household) These are all roles that are played, not individuals;  they are versatile

 o Information Gatherer 

 Someone who is bringing information in about a particular  purchase decision

 o Influencer 

 Someone who tries to influence the decision that’s going to be made, but we don’t have the power to actually make  the decision

 o Decision Maker 

 Person who actually makes the choice about what we’re  going to buy; the person who has the ability, power, and  authority to make the decision

 o Purchaser 

 Individual who is actually making the transaction

 o User  

 Anyone who actually ends up using the product or service  that’s been purchased

* Decision-Making Process (Feedback Look causes a Decision Cascade) o Problem Recognition  

o Information Search (Internal [from memory] and  External [outside])

o Alternative Evaluation

o Purchase  

o Post-purchase Consumption

* Alternative Evaluation

o Multi-attribute Model

 Model of attitude formation; has 2 components listed below o (1) Considerate set of brands

o (2) Set of evaluative criteria (attributes)

* Example

o Consideration Set

 The Social  

 The Swamp

 Beer Pit  

* Criteria (Rating Scale: 10 being Excellent…1 being Poor)

o Convenience

o Music

o Inexpensive

o Social Ambiance

The Social

The Swamp

Beer Pit













Social Ambiance




* Attribute (Importance Weight: 10 being Very Important… 1 being  Unimportant)

The Social

The Swamp

Beer Pit

















Social Ambiance





* Weighted Ratings

The Social

The Swamp

Beer Pit













Social Ambiance




* Total Weighted Ratings (Attitude)

o The Social 183

o The Swamp 128

o Beer Pit 156

* Involvement and Decision-Making

o Low: Routine Problem Solving 

 Super unimportant or Routine/Repetitive (don’t go through  alternative evaluation) [happens most often]

o Moderate: Limited Problem Solving 

 Maybe a new brand and consideration set expands

o High: Extended Problem Solving 

 Goes through all of the process (e.g. choosing a college)  [happens least frequently]

* Consumer Satisfaction

o Before Purchase and Use…

 Expectation Re: Product Performance

o After Purchase and Use…

 Perceptions of Actual Performance

* Consumers assess satisfaction by comparing Expectations (E) &  Perceived Performance (P)

o P < E Dissatisfaction

o P = E Satisfaction (most common)

o P > E Delight

* Managing Consumer Satisfaction

o Measurement  

 You have to measure something in order to know if you’re  making a difference

o Service After Sale

 Different outlets to get ahold of someone if you need them; ‘want to have customers for life, not just one-time  

customer’ (see below)

o 800 Number/ Website/ Social Media

o Chief Customer Officer (instilling importance of customer  satisfaction)

* Net Promoter Score (NPS Example)

o “On a scale of zero to 10, how likely is it that you would  

recommend us to your friends or colleagues?”

o Detractors = 0 through 6

o Promotors = 9 or 10

o NPS (%) = %P - %D

* NPS Example























o 0 – 6 = 1000, so D = 1000/5000 = 20%

o 9 – 10 = 3000, so P = 3000/5000 = 60%

o NPS = %P - %D = 60% - 20% = 40%

* “Symbolic Consumer Behavior”

o We are What We Wear

 “Basking in Reflected Glory”

o We are What We Drink  

 “Mountain Dew” Advertisements

o We are What We Drive

 “Pimping your Ride”

o Building, Maintaining, and Projecting a Self-Concept

 We build and project our own self-image (e.g. buying a  Prius)

o Hedonic Consumption (Experiences)

 Where we are pursuing what we enjoy doing and makes us  happy (entertainment)

o Product Enthusiasts: Hobbies, Collecting

 Deeply involved with a product/activity

* Example: Understanding the Active Recreation Consumer o Macro Lifestyle Trends

 Fantasy Adventure

∙ Designer/fantasy vacations

 Being Alive

∙ ‘Seize the day’ “Carpe diem”

 99 Lives

∙ We are so stressed out, multi-tasking

 Cashing Out

∙ Living a simpler life

o Leisure Trends (Micro)

 Aging Boomers

∙ As baby boomers retire, they have more time for  

recreational activities

 Hybrid Sports

∙ Combinations of games (e.g. snowboarding, kayak  

water polo, etc.); dissatisfaction of simpler games

 Cross-Participation

∙ E.g. motorboating, fishing, camping, biking, etc.

o Time Usage

 Contracted (Paid Work)

 Committed (Household Care)

∙ Chores, lawncare, etc.

 Personal (Self Maintenance)

∙ Caring for yourself, e.g. sleeping, eating, grooming,  


 Free (Discretionary)

∙ Expressionary, do with what you want

o Free Time vs. Recreation

 Top Free Time Uses (40 hrs./week)

∙ Television (15)

∙ Socializing (7)

∙ Reading (3)

∙ Hobbies (3)

∙ Outdoor Rec (2)

o Peak Experience and “Flow”

 Free time is not necessarily “re-creation”

 Peak experience- a high point in life, an exciting, rich, and  fulfilling experience (Maslow’s Hierarchy of Needs) (doesn’t require any skill)

 “Flow”- a sense of mastery, accomplishment, and novelty,  at one with the activity at hand (psychological state- some  sort of challenge to be met)

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 Chapter 6: Understanding Organizations as Customers ------------------------------------------------------------------------------------------------------------ -------------------

* Types of Organizational Buyers

o Industrial

 Will be used in the manufacturing of another product (a tire manufacturer would buy rubber for example)

o Resellers

 Purchase for the purpose of reselling (e.g. wholesalers and  retailers)

o Government  

 Federal, state, and local for the purpose of running the  government and providing services for its citizens

* North American Industry Classification System (NAICS)

o System for classifying organizations in Canada, Mexico, and the  U.S. on the basis of the major activity, good, or service provided * Key Features of Organizational Buyers

o “Derived Demand”

 Demand that a business customer has for our product is  going to be derived from the demand for their product

o More Formal Decision Process

o Larger Decision-Making Unit

 More people involved

o More Specific Criteria

o “Relationship Marketing”

* The “Buying Center” (Decision-Making Unit)

o Users

 People in the organization who are actually going to be  using the product or service that is going to be purchased o Influencers

 People within the organization who have some sort of  influence or try to exert some influence on the decision  (they care about it, but don’t have the power to make the  decision)

o Purchasing Agent

 Someone who is charged the responsibility to actually  make the transaction

o Deciders

 Individuals who actually make decisions

o Gatekeepers

 A person who keeps information out (parallel to  

‘information gatherer’)

* The Decision Process: “Buyclasses”

o Straight Re-Buy

 When a company buys the same item repeatedly (e.g.  even if you buy a new quantity, but you still buy the same  item)

o Modified Re-Buy

 When something intervenes the cause of difference,  maybe there’s a new supplier (still highly familiar with the  product you’re purchasing)

o New Buy

 When your company is buying something for the very first  time

* Value Analysis

o Understand how customer uses product

o Cost savings

* Types of Costs

 o Initial Purchase 

 The cost of buying the new item

 o Switching 

 The cost we incur as an organization when we move from  one product to another or one system to another, etc. (e.g. when consumer switches from Android to Apple, has to  

learn how to use the item, as well as physical costs)  

 o Operating 

 Labor, energy, all the things that will go into actually using  the product

 o Life-cycle 

 All of costs listed above (initial purchase, switching, and  operating) over the lifetime of the product in use

* Computational Example from Incandescent to CFL Bulbs

Purchase Price



Annual Electric Cost




1 year (have to buy new bulb each year)

5 years (one bulb lasts 5 years)

Lifecycle Cost (Five  Years)



Computation for Lifecycle Cost:

$0.50 (5 yrs) = $2.50 and $12.00 (5 yrs) = $60.00, which means $2.50 + $60.00 = $62.50 

$3.00 (1 yr) = $3.00 and $4.00 (5 yrs) = $20.00, which means $3.00 + $20.00 = $23.00 

Cost Savings: $39.50 ($62.50 - $23.00)

∙ Vendor Analysis

o Often a “Formal” Multiattribute Model Approach (looking at  multiple possible suppliers of a specific product, while value  analysis looks at product and costs)

 Avoid sole source (putting your eggs in one basket in case  of a bad vendor relationship or if a problem arises on the  

vendor’s side)

Vendor 1

Vendor 2

Vendor 3

Product Quality  (40%)

Delivery (25%)

Reliability (20%)

Price (15%)

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 Chapter 9: Market Segmentation, Targeting, and Positioning ------------------------------------------------------------------------------------------------------------ -------------------

* Market segmentation is the search for relatively homogeneous clusters in a heterogeneous market.  

o A segment is a group of customers, existing and potential, with  common needs, values, and responsiveness to marketing  


* Segmentation Criteria

o Measurability (Assignment) 

  Ability to assign customers/consumers to segments  

(Segmentation Bases- Measurability) 

 Four Categories of Measures

Objectiv e



Product Class  





Demographic, SES  

(Social Economic Status)

Past Purchase

Activities, Interests,  Opinions

Brand Ratings & Import  Weights

* Demographic/SES

o Age, Sex, (former 2 most used) Ethnicity,  

Income, Region  

o Reachability (being able to get to the consumer w/ both product  & promotional message) 

 Selective Targeting (“modern approach”)

* Deliberately try to select groups or individuals to  

target with our message (emergent approach)

 Self-Selection (“old school approach”)

* Put ads into a general medium and count on the  

people in our segment to notice those ads (Standard,

traditional media)

o A lot of potential wastage (mom Capri sun  

example in Sports Illustrated)

 Solution: buy placement in certain  


o Profitability (think about how profitable a given segment will be)  Will this segment be profitable? Apply analytical thinking to decide

o Differential Response (the people in this segment will respond  differentially to certain controllable marketing variables [e.g.  price, promotion, product features, etc.) 

 Differential Response to Marketing Variables (Price on top  of each graph)

 Quantity “Inelastic” Quantity “Elastic”

 The Concept of Differential Response applies to all  

Controllable Marketing Variables

o Price

o Product

 E.g. Gatorade for doing groups of people  

(organic, athletes, etc.)

o Promotion

 E.g. Ads in a magazine as the old approach,  

digital media as selective targeting modern  


o Place  

 E.g. Selling at higher end stores vs. discount


* Region: Example

o “A Tale of Three Cities”

 Tampa/ St. Pete/ Sarasota

 Miami/ Ft. Lauderdale

 Orlando/ Daytona/ Melbourne

o A.C. Nielsen designated market areas (DesignatedMarketArea)  lifestyle market analyst 2004

 Indexing  

* % in DMA / % in USA * 100

o Example: Tampa DMA Households (HH)S with Infant

 Tampa 2.9% / USA 3.8%

* = .76

o .76*100= 76

* Typical AIO Study

o AIOs (Activities, Interests, and Opinions)

o Product Usage

o Media Usage

o Demo/SES

Product Use

AIO Demo  

(who the  



Media Use  

(where to find  


* Product Usage [Objective Product Specific]

o Past Purchase

 Product Class (Heavy Half- industry characterizes the  tendency for purchases to be concentrated on a relatively  small percentage of the total marketplace)

 Brand Loyalty (reflect repeat purchase, also some sort of  psychological commitment)

* Benefit Segmentation [Subjective Product Specific]

o Segment on the basis of what benefits are important (closest to  the behavior in question)

 To date, benefit segmentation is the best available  

surrogate for true differential response measurement.

* Usage Situation (Occasional-Based) Segmentation

o Examples:

 Athletic Shoes

 Computers  

∙ E.g. Alienware for video games

* Targeting: Four Strategies [top to bottom, get more refined] o Mass Marketing

 Treat the entire market uniformly (not segmenting); doesn’t recognize segments (“one size fits all”)

o Concentration

 Focus on a “niche” segment; usually preferred by start-up  firms (small, new businesses)

o Multisegment

 Identify a bunch of different segments and market to  multiple segments (more segments = more costs) (usually  larger firms pursue)

o “Mass Customization”

 Level of the individual; efficiently serving customers  

uniquely; personalized (not cheap, but more value)

* Other Considerations in Targeting Segments

o Expected Size, Growth

 We want to make sure that the segments we choose are  substantial in size and are heading in the right direction  (long-term)

o Competition

 Majority Fallacy

∙ Blindly pursuing the largest segment

∙ Problem: all of our competition is going after the  

same large segment (be aware to compete  

vigorously if you’re going to go after large segments)

o Cost

 Every segment is going to cost us something (segment  only when it makes since and the return you are going to  get on it)

o Compatibility  

 Reality check; just because it looks like an attractive  segment, it doesn’t mean it is going to be attractive for us  *     Product Positioning 

o The location a brand occupies in a consumer’s mind (i.e. on a  perceptual map- generated through research from  

questionnaires) relative to competitors (not a physical location,  but rather in our head)

 Points of Parity: Features or benefits that are similar or  identical to other competitors in the product category.  

(“like the others”) (e.g. almost every car has tires and  

steering wheels)

 Points of Difference: Unique (desirable) brand features  or benefits that differentiate it from other competitors in  the product category. (“how they stand out”- how they are  better than everyone else)

* Approaches to Positioning

o Product Feature

 Characteristic/ingredient of the product

o Product Benefit

 What does the product do for us, as consumers  

(differentiation in this)

o User Category

 Who is the type of person that uses this product (e.g.  Wheaties is the breakfast of ‘champions’)

o Against Other Brand

 Perform comparative advertising, direct comparison of  ourselves, showing our superiority

o Against Product Category

 Hidden Valley advertising against Heinz ketchup,  

promoting that the sauce isn’t just for salad, but for wings,  burgers, and fries too! (a lot less common)

o Specific Use

 Identify some occasion out there that people use this  

product and try to position specifically for that (e.g.  

Alienware for gaming)

------------------------------------------------------------------------------------------------------------ -------------------

 Chapter 8: Marketing Research: From Customer Insights to Actions ------------------------------------------------------------------------------------------------------------ -------------------

* Marketing Research

o Definition: Activities providing information for marketing  decision-making

o Uses of Marketing Research

 Demand Forecasting (important for launching new  

products- need to know how much inventory we need) (e.g. Tide pods)

 Segmentation (identifying new segments in the market)  (e.g. Lays wavy [women] vs. Lays ruffles [men] packaging)  Market Tracking (input on existing products in the market;  continuously see how our product is performing, very  


 New Product Testing (want consumer’s opinions on possible new products {how positively/negatively a person feels}; a stage in the new product development process)

 Ad Pretesting (to make sure ads are reacted to favorably;  fMRI {neurological} is used to see how our brains react to  the advertisement when viewed)

* Marketing Information System (MIS)

o Definition: An integrated, ongoing decision support system o MIS Data Classification



Billing Records


Sources of Data outside of the org. can be accessed for their purposes (syndicated [anyone

can purchase]- J.D. Quality Rating System and census data) (BIG DATA)

When developing new product ideas (e.g. menu suggestions from those dealing w/ the

customers, not the actual customers; Foodi)

- Exploratory (just  


- Descriptive (take a  

snapshot of the  


- Causal (attempt to  

conduct research that  

gets at the causes of  

marketplace behavior)



* Types of Marketing Research (External, Primary)

o Exploratory [basically to form a hypothesis]

 Observation (we observe consumers to gain insights that  might help us do a better job; bring into a realistic setting)  (Consumer Ethnography is when we study the consumer in  their own environment “in situ” in the situation- more  

extended observation over time)

 Focus Group (most widely used exploratory technique;  entails bringing a group of consumers into a room where  we’re going to have a conversation about some product or  ad or anything that we might want to be trying to do  

research on)

 Depth Interviews (same thing as a focus group, except we  do them just one on one, one consumer at a time; more  expensive to conduct)

o Descriptive [accurate snapshot of the marketplace to test the  hypothesis]

 Observation (larger numbers of people than exploratory) ∙ Personal  

o E.g. Retailers use a lot…most people spend 21  

mins in a grocery store and only cover 23% of  

the store (used a stopwatch)

∙ Electronic  

o E.g. Big Data to capture data (observing your  

market behavior)

 Surveys (ask people questions on some sort of  


∙ Mail (the original type of survey…very low response  

rate…so they have slowly eroded)

∙ Phone (huge change in market research..as  

telephone interviews have diminished over the  


∙ Personal

o Door-to-door

o Mall Intercept (someone in the mall w/ a  

clipboard intercepts you)

∙ Web (most common now; offers convenience; large  

number of people with low costs) (mobile surveys to  



∙ Population  

o E.g. University of Florida students (55,000  


∙ Sample

o E.g. Subset of overall population (500 students)

∙ Response Rate

o E.g. How many of the sample responds (this is  


∙ Representativeness

o E.g. Sampling 1000 students would be  


∙ Error (Bias)

o Types of Survey Error

 Sampling

∙ Not enough people  

 Interviewer

∙ Authority figure vs. an equal  


 Questionnaire Design

o E.g. Measures of Consumer Memory

 Free Recall

∙ “What brands did you see  

advertised during the Super Bowl?”

 Cued Recall

∙ “Which brands of pickup truck did  

you see advertised during the  

Super Bowl?”

 Recognition  

∙ “Did you see an advertisement for  

the Chevy Silverado during the  

Super Bowl?”

o Causal (aimed at uncovering the causes of marketplace  behavior)

 Experiments

∙ Laboratory

o E.g. Extra credit opportunities

∙ Field (Test Marketing)

o E.g. Out in the actual marketplace

 THE KEYS TO CAUSAL RESEARCH: Manipulation and Control ∙ Manipulate the Experimental Independent Variable(s) ∙ Control All Extraneous Independent Variables  

(manipulate color)

∙ Measure Response on Dependent Variable

 Example: Hand Lotion

∙ Experimental Independent Variable: Amount of Oil o 6cc-------8cc-------10cc

∙ Dependent Variable Measures: Creaminess,  

Greasiness Ratings

o Rate the Lotion you just tried on each scale.

 (1) Not at all Creamy-------------Very  


 (2) Not at all Greasy--------------Very  


* Test Marketing

o Cost

 Very expensive, as we’re distributing products/services,  observing consumers, and advertising

o Competition

 The competition finds out what your plans are (the  

drawback; e.g. Coke and Pepsi testing)

o Timing

 It slows us down to test it, as we’re foregoing the success  and profit

o Re-Purchase Rate

 Indication of whether a product/service is delivering value  to consumers (we have to wait the length of the re

purchase rate, e.g. toothpaste is long wait, beer may not  be)

o Fine Tuning

 Tweak our advertising campaign, price points, and maybe  even packaging

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