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What is the act of obtaining a desired object by offering something in return?

Notes Up to Class 12 & Hw 8

MIDTERM STUDY GUIDE/REVIEW 

Notes/Homework/Charts

Homework 1 Review 

1. “Customer-Centered” firms seek to deliver high customer satisfaction [relative to  

competitors], however it doesn’t attempt to maximize it.  

2. Mobile Marketing is the fastest growing digital marketing platforms.  3. The Final Step in the Marketing Process is to reap rewards of customer value 4. Customer Needs are the basics underlying marketing.

5. A brand’s value proposition involves the set of benefits or values it promises to  

The first step in strategic planning involves what?

deliver.  

6. Customer relationship building blocks: customer value & satisfaction 7. The production concept states consumers will favor what’s available & affordable. 8. Marketing is a process of creating customer value

9. The basic concept underlying marketing is customer needs

10. Exchange is the act of obtaining a desired object by offering  something in return

Homework 2 Review 

1. The first step in strategic planning involves: defining the company's mission 2. A company's mission statement should be focused on: customers 3. The major activity in strategic planning is the analyses of a business: portfolio 4. Within the growth-share matrix, "cash cows" are: low growth, high share  

What is the most dramatic force shaping the destiny of markets and marketing?

Don't forget about the age old question of Most mayan instruments are gendered musical performance is for what gender?

businesses or products

5. The most common form of marketing orientation is: functional organization 6. Each department can be thought of as a link in the company's: value chain 7. Marketing plays a key role in the company's strategic planning

8. Market Targeting involves evaluating each segments attractiveness and selecting  We also discuss several other topics like Define biological evolution and some mechanisms that drive it.

one or more to enter

9. Activities that communicate the merits of the product and persuade target  

customers to buy it refers to Promotions

10. In SWOT, the favorable factors in the external environment a company may be able to exploit to its advantage are Opportunities.

Homework 3 Review 

1. Resellers are distribution channel firms that help the company find customers or  

make sells for them

2. The microenvironment consists of all except: Demographics

3. Millennials is another name for Echo Boomers

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4. The Economic environment consists of economic factors that affect consumer  Don't forget about the age old question of How can you tell if a protein has been extruded into a microsome from an mrna encoding secretory protein?

purchasing power and spending patterns

5. Shortages of certain raw materials is a major trend related to natural  

environments  

6. The Technological Environment is the most dramatic force shaping the destiny of  If you want to learn more check out When the body is in anatomical position, the palms face towards the front of what?

markets and marketing

7. Business legislation has been enacted for numbers of reasons except: developing  We also discuss several other topics like Multidomestic company is what?

a code of ethics

8. Cultural Environments consists of institutions and other forces that affect a  

society’s basic values

9. Proactive Stance by companies towards the market environment is preferred  

over reactive stances

10. Many view the marketing environment as uncontrolled to which they  must react and adapt Don't forget about the age old question of Which sex is the homogametic sex in humans?

Homework 4 Review 

1. Marketers can access and easily sift through the data once it is available is NOT  

TRUE regarding Big Data

2. The first step in marketing research process is to define the problem 3. MIS interacts with information users in several ways except providing concise  

info

4. Competitive Marketing Intelligence is the systematic monitoring, collection, and  analysis of publicly available information about consumers, competitors, and  

developments in the marketplace.

5. MIS may provide information to external partners, such as suppliers, resellers, or  

marketing services agencies is NOT an advantage of MIS

6. The exploratory objective of research is to gather information that’ll help define  

the problem and suggest hypothesis

7. Small businesses and not-for-profit organizations can obtain good marketing  

insights through observation research  

8. Many companies manage detailed information about individual customers by all  

methods except collecting and storing huge amounts of data

9. Extranets - Companies can allow key customers and value-network members to  

access account, product, and other data

10. The marketing research industry is considering several options for  responding to intrusion and privacy issues, except sharing information widely  

Homework 5 Review

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1. Compared to the mainstream buying public, Hispanic consumers are deeply

family oriented,  

2. According to the stimulus-response model of buyer behavior, marketing and other

stimuli enter the consumer's black box and produce certain responses. 3. Consumer motivation, perception, and learning are related to Psychological

factors influencing consumer behavior.

4. Behavior that occurs when consumers are highly involved with an expensive,  infrequent, or risky purchase but see little difference among brands: Dissonance

reducing buying

5. Habitual buying behavior occurs: Under conditions of low-consumer involvement  

and little significant brand difference

6. There are five stages in the product adoption process

7. The first group marketers try to bring their new products to the attention to are  

potential: innovators

8. Consumer purchases are influenced strongly by certain characteristics except cognitive  

Homework 6 Review 

1. NOT a difference between business markets and consumer markets: very small &  

limited

2. Straight Rebuy: business buying situation which the buyer reorders something  

without modifications

3. Influencers are members of buying center who help define specs and provide  

information for evaluating alternatives

4. Business market demands are inelastic

5. Developing product specs follow general need descriptions in the business buyer  

decision process

6. The rapidly expanding use of e-procurement in business-to-business deals  provides several advantages; however, one of the disadvantages is it pits suppliers

against one another

7. Order-Routine Specification includes final order with chose suppliers and lists  

other required items

8. To do e-procurement, companies can conduct reverse auctions: put their  

purchasing requests online and invite suppliers to bid for the business. 9. Hospital purchasing agents should prefer food vendors with low prices & quality  

products

10. Institutional Markets characterized by low budget, captive patrons

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Homework 7 Review 

1. The winning value proposition by discount stores such as Walmart and Best Buy  

can be categorized as: the same for less

2. Behavioral Segmentation divides buyers into segments based on their knowledge,

attitudes, uses, or responses to a product.

3. Psychographic Segmentation divides buyers into different segments based on  

lifestyle or personality characteristics.

4. Amazon and GEICO set themselves apart with their smooth-functioning direct  

delivery strategy: channel differentiation

5. The step in designing a customer value driven marketing strategy in which a  

company divides a market into distinct groups of buyers – Segmentation  6. Concentrated Marketing is when a firm goes on a large share of smaller niche  

instead of a small share of large market  

7. Undifferentiated Market Strategy: firm might decide to ignore market segment  

differences.

8. Market Targeting evaluates each market segment's attractiveness and selects one or more segments to serve.

Homework 8 Review 

1. Airline Travel is considered a service product

2. Branding strategy launching a product/service as national or store brand is Brand

Sponsorship

3. Blood donations are Unsought Products

4. Freedom from defects and consistency in delivering a target level of performance  

is an attribute of Conformance Quality

5. Branding helps seller segment markets

6. Buyer-Seller Interactions is NOT one of the links in the service profit chain 7. The measure of brand ability to capture consumer preference and loyalty is Brand

Equity

8. Service Variability – quality of service depends on who, when, where and how  they are provided

LECTURE NOTES 

CLASS # 3 – MARKETING INTRODUCTION /MARKETING PROCESS 

∙ The Law of Leadership: 

Better to be 1st than to be better!

∙ Value Chain:

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Set of Primary & Support Activities performing together to create economic value for the enterprise.  

PRIMARY SUPPORT 

1. INBOUND & OUTBOUND  LOGISTICS

1. Procurement  

2. SERVICE 2. Tech Development 3. OPERATIONS 3. Human Resource  Management

4. MARKETING (INCLUDING  SALES)

4. Firm Infrastructure (finance,  accounting, legal-G&A)

Each Support can be the Primary Source of Value Creation for Enterprise

∙ Optimization of “Excellence Allocation” 

o More often not do resources allow for world class in all areas of the  enterprise.

o Assume limited resources, identify that activity where your firm’s value is  created & will be created.  

 Allocate/reassign resources to Best-In-Class Level

 Concept has LT planning, merger integration, change management,  etc.  

∙ Marketing: 

Process companies use to create value for customers & build strong  relationships to capture value from customers in return.  

THE PROCESS: 

1. Understand the market & customer wants and needs

2. Design customer driven market strategy [create value]

3. Consult integrated market program that delivers superior value [create value] 4. Build profitable relations & create customer delight

5. Capture value to create profits & customer equity  

Needs: 

∙   Physical (food, clothes, safety, warmth)

∙ Social (affection, belonging)

∙ Individual (self-expression, knowledge)

∙ State of deprivation  

Wants: 

∙ A form “NEEDS” take when shaped by culture & personality

Demands: Value from

customers in return!

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Notes Up to Class 12 & Hw 8

∙ “WANTS” backed by buying power

∙ Market Offerings:

Some combo of products, services, information, or experiences to satisfy a need or  want.

∙ Marketing Myopia:

Focus only on existing wants & losing sight of the underlying consumer needs.

∙ Exchange: 

Obtaining a desired object from someone by offering something in return  [Transaction]

MARKETS WANT AN EXCHANGE RELATIONSHIP!

∙ The Marketing Mix (THE FOUR P’s): 

1. PRODUCT: the total package of benefits a customer gets when making a  purchase

Products, Brand Names, Warranties, Financing, Etc.…

Planning the Product Line: A Key Element of The Strategy!

Some Specific Decisions:

∙ How broad or narrow should the product line be?

∙ Will it span a range of price points?

∙ What are the physical and performance characteristics [Sensory]? ∙ Will it have a brand name? A master brand name?

Product Decisions are Shaped by:

∙ Long-run Growth Potential

∙ Resource Commitments

∙ Competitive Positioning

∙ Company-Product/Market Fit

Most importantly, product decisions should be based on a clear understanding of

Existing & potential customer wants & desires! It requires constant monitoring & adjusting

- PROACTIVE - NOT REACTIVE - ACTION

First Mover Advantages & Me-too Product Challenges

2. PRICE: pricing of products  

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Notes Up to Class 12 & Hw 8

Price Determined by The Interplay Between:

∙ Supply/Demand Conditions: greater supply = lower price / affects supply &  demand

∙ Cost Factors: fixed costs & variable costs

∙ Competition: responses to competitive price pressure / different products & price  leadership

∙ Buyer Bargaining Power: account for significant % of sales & multiple options for  procurement

∙ Product Value to Potential Customers: the worth of a thing is the price it will  bring

3. PLACE: supplier’s distribution systems, and managing channels Elements of the Distribution System:

∙ Direct Sales Reps

∙ Brokers/Manufacturer’s Reps

∙ Distributors

∙ Retail Outlets

The “Glue” of the Distribution System is Technology and Information EDI – Electronic Data Interchange

Successfully Managing Distribution Channels:

∙ Products are stocked & available

∙ Resellers actively display, advertise, & promote

∙ Resale prices and margins do not deteriorate

Suppliers Gain Strength in Channel Management Under These Conditions:

∙ Selective rather than intensive distribution

∙ Superior product line breadth & quality

∙ High degree of supplier/reseller interdependency

∙ Supplier sales force presence at resale level

4. PROMOTION: marketing and advertising the product to sell  

Communication Channels:

∙ Print Media ∙ Television

∙ Direct Mail ∙ Telemarketing

∙ Personal Salesforces ∙ Third-party  

Influencers

∙ Trade Shows

∙ Internet

∙ Other Events

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Notes Up to Class 12 & Hw 8

∙ Point-of-Sale Displays

Understanding the Decision-Making Unit & Decision-Making Process:

∙ Awareness of Need

∙ Search for Information

∙ Identification of the Options

∙ Selection

∙ Post-Purchase Affirmation of the Buy Decision

CLASS # 4 - MARKETING STRATEGY 

∙ Law of Category: 

If you can’t be 1st in a category, set up a new one you can be 1st in. ∙ Strategic Planning: 

Process of develop & maintaining a strategy fit between goals & capabilities and  it’s changing marketing opportunities

The Process: 

1. Defining the mission

o Mission statement = organization’s purpose & what it wants to accomplish  

in the larger environment

o Defines the business in terms of satisfying basic customer needs 2. Setting objectives & goals [corporate level]

o Business objectives: build profitable customer relations, invest in  

research, improve profits

o Marketing objectives: increase market share, create local partners,  

increase promotion

3. Designing the portfolio

4. Planning marketing & other functional strategies [business unit, product, and  market level]

∙ Planning Tools: 

1. Porter (structural analysis of industries)

a. Threat of new entrants

b. Bargaining power of suppliers

c. Bargaining power of buyers

d. Threat of substitutes

ALL SURROUNDING RIVALRY AMONG COMPETITORS

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2. BCG Growth-Share Matrix [A LOT OF INFORMATION]

a. “Boston Consulting Group”  

b. The BCG business portfolio analysis analyzes a firm’s business unit  (SBUs) or products/brands as if they were a collection of separate  

investments. 

c. It locates SBUs on a market growth-relative market share matrix. Then

SBUs are classified as question marks, stars, cash cows, or dogs. d. Enhance multidivisional firm’s efforts to formulate strategies

e. Autonomous division (or profit centers) constitute the business  

portfolio

f. Firm’s divisions may compete in different industries requiring  

separate strategy

g. Graphically portrays differences among divisions

h. Focuses on market share position and industry growth rate

i. Manage business portfolio through relative market share position and  

industry growth rate

j. Relative market share position defined: Ratio of a division’s own  market share in an industry to the market share held by the largest  rival firm in that industry

Stars

Question Marks

Cash Cows

Dogs

* Market Leaders * Fast Growing

* Require

Investment to Grow STRATEGY

* Protect Share

* Reinvest earnings

* Rapid Growth

* Poor Profit

Margins

* Enormous

Demand for Cash STRATEGY

* Invest to

* Profitable

Products

* Generate More Cash Than Needed For Share

Maintenance

* Slow Sales

* Majority of

Products fall in

this category

* Cost

disadvantage - few growth

opportunities

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Notes Up to Class 12 & Hw 8

through price cuts, Product

Improvement, More Efficiency

* Obtain Large

Share of New

Users

Aggressively build share

* Buy existing

shares by

acquiring

Growth

STRATEGY

* Maintain Market Dominance

* Invest in Process Technology

Improvement and Price Leadership, R&D in Other

Product Markets

at Reasonable Cost * Markets not

Growing

STRATEGY

* Harvest: Cut

back all support to maintenance

* Divest (sell);

Abandon (Delete from line)

3. GE  

a. “The G.E. Multifactor Portfolio Model” ** View Powerpoint For More Info ** 

H

H

M

H

M

L

M

L

BUS.

L

ATTRACTIVENE

SS

GREEN = GO =  

BUILD

YELLOW =  

CAUTIOUS = HOLD RED = STOP =

4. Product/Market Expansion Grid

∙ Managing the Marketing Effort 

∙ Review the Nash Equilibrium Model [slide 22]

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∙ Parts of a marketing plan: executive summary, marketing situation,  threats & opportunities, objective & issues, marketing strategy and action  

programs

∙ Implementation: turns plans into actions to accomplish strategies [who,  

where, when, how]

∙ Control: evaluate results, taking of corrective action to achieve objectives,  

operating control, strategic control

∙ Return on marketing investment: is net return from a marketing  investment divided by the costs of the marketing investment. It provides a  measurement of the profits generated by investments in marketing  activities.

WHAT GETS MEASURED, GETS MANAGED!

CLASS # 5 - ANALYZING MARKETING ENVIRONMENT 

 ∙    Law of Unpredictability: 

Unless you write your competitor’s plans, you can’t predict the future Marketing Environment: 

Includes actors and forces outside marketing that affect the management’s ability to  build & maintain successful relations with customers.  

Microenvironment: Actors close to the company that affect customer relations –

∙ Company (Top management, Finance, R&D, Purchasing, Operations, Accounting) ∙ Suppliers (provide the resources to produce goods & services, treat as partners  

to provide customer value),  

∙ Intermediaries (help promote, sell and distribute products to final buyers  

(physical, resellers, financial, or marketing services agencies)),  

∙ Customer Markets (Consumer, Business, Reseller, Gov’t, International Markets) ∙ Competitors (Firms must gain strategic advantage by positioning their offerings  

against competitors’ offerings)

∙ Publics (Any group that has an actual or potential interest in or impact on an  organization’s ability to achieve its objectives – Financial, Media, Gov’t, Citizen Action, Local, General, Internal Publics)

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Macroenvironment Includes: Actors of larger societal forces that affect  Microenvironment –  

∙ Demographic (shifts in age, family structure, geographic population, educational

characteristics, and population diversity)

∙ Economic (consists of factors that affect consumer purchasing power and  spending patterns – industrial economy = richer market / subsistence economies  

consume most of their own agriculture & industrial output)

∙ Natural (natural resources that are needed as inputs by marketers or that are  affected by marketing activities – increase shortage of raw materials, pollution,  

government intervention, and environmentally sustainable strategies) ∙ Technological (most dramatic force, new products, new opportunities, concerns  

for the safety of new products)

∙ Political & social (Legislation regulating business – increased legislation,  changing government agency enforcement, increased emphasis on ethics –  

socially responsible behavior and cause related marketing)

∙ Cultural (institutions and other forces that affect a society’s basic values,  

perceptions, and behaviors)

∙ Responding to the Marketing Environment.

CLASS #6 – MARKETING INFORMATION & INSIGHTS  

 ∙    Law of the Division 

Over time, a product category will divide & become 2+ categories Customer Insights 

∙ Fresh & deep insights into customer needs and wants

∙ Difficult to 0btain (not obvious - customers are unsure of their behavior) ∙ Better information & more effective use of existing information

∙ Companies are forming insight teams – including all company functional areas,  collect information from a wide variety of sources, use insights to create more  value for customers

Marketing Information Systems (MIS)

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Notes Up to Class 12 & Hw 8

∙ People & procedures for assessing information needs, developing needed  

information, helping decision makers use the information for customers ∙ See powerpoint for graph [slide 8]

∙ Provide information to company’s marketing, managers, and external partners  

such as suppliers, resellers, and marketing service agencies.

∙ A GOOD MIS: balance what users would like to have against what they  

need & want is feasible to offer  

∙ Marketers obtain information from:

o Internal Data: electronic collections of consumer & market information  

obtained from data sources within company network

 o Marketing Intelligence: systematic collection & analysis of publicly  available information about consumers, competitors & developments in the  

marketplace

 o Marketing Research: systematic design, collection, analysis & reporting  

of data relevant to specific marketing situation facing an organization.   Steps in Research Process:

1. Defining the problem & research objectives [Exploratory,  

Descriptive, Casual Research]

2. Develop the research plan for collecting information

[Outline source of existing data, spells out specific - research  

approach, contact methods, sampling plans and instruments to  

gather data] [manage problem – research objectives – info  

needed – how the results will help – budget]

3. Implement the plan – collect and analyze data

4. Interpreting & reporting the findings

Primary data: collected for the specific purpose at hand.

∙ See table in powerpoint [slide 21]

∙ Observational research: observing relevant people, actions, situations ∙ Ethnographic research: sending trained observers to watch & interact with  

consumers in their “natural environments”

∙ Survey research: asking people questions about knowledge, attitude, buying  

behavior, preference  

∙ Experimental research: selecting matched groups of subjects, giving different  treatments with a controlled related factor, and checking for differences in  responses.

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∙ Focus groups: 6-10 people, expensive, trained moderator, difficult to generate,  

consumer dishonesty

∙ Online Contact: low cost, speed, higher response, good for hard to reach groups. ∙ Sampling plan: segment of the population to represent the entire population. ∙ Instruments: questionnaires (most common), in person, phone, online, flexible,  

careful wording and ordering (close or open ending), and useful in exploratory  research.  

Secondary data: already exist somewhere, collected for another purpose.

∙ Advantages – lower cost, obtained quickly, cannot collect otherwise ∙ Disadvantages (data may not be) – relevant, accurate, current, impartial

CLASS # 8 – CONSUMER MARKETING 

∙ Law of Perception: 

Marketing is NOT a battle of products, it’s a battle of perceptions.

Model of Consumer Behavior: 

∙ Consumer Buyer Behavior: buying behavior of final consumers, individuals and  

households, who buy goods and services for personal consumption. ∙ Consumer Market: all personal consumption of final consumers ∙ The Model: The Environment (Marketing Stimuli or The Four Ps and Economic,

Technological, Social, and Cultural)  Buyer’s Black Box (characteristics &  decision process)  Buyer Response (buying attitude & preferences, purchase  behavior; what, when, where, and how much and the brand/company relationship  

behavior)

∙ Factors Influencing Consumer Behavior:

o Cultural

 Culture – learned values, perceptions, wants, & behavior from family  

(most basic)

 Subculture – group within culture with shared values based on  

common lifestyles

 Social Class – permanent & ordered divisions measured by wealth and  

education

o Social

 Reference Groups – form comparison/reference in forming attitudes or behavior

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 Family – membership group; have direct influence

 Roles & Status – groups, clubs, orgs. a person belongs to that define  

role & status  

o Personal

 Age & Life Cycle Stage

 Occupation – affects goods and services bought by consumers

 Economic Situation – personal income, savings, interest rates

 Lifestyle – pattern of living measured by AIOs (activity, interest,  

opinions)

 Personality & Self-Concept – unique characteristics lead to consistent  

responses

o Psychological  

 Motivation – a need sufficiently pressed directly to seek satisfaction  Perception – interpret information (selective attention, distortion,  

retention)

 Learning

 Beliefs & Attitudes

Psychological Factors: 

 ∙    Selective Attention: 

Tendency to scream out most of the information they are exposed

 ∙    Selective Distortion: 

Interpret information in a way that will support what they already believe  ∙    Selective Retention: 

Remember good points made about something favored and forget good points  about competing brands.

Motivation Research: Qualitative research designed to probe consumers’ hidden,  subconscious motivations

Characteristics Affecting Consumer Behavior:

∙ Self-Actualization Needs (Top of Pyramid): 

Self-development and realization

∙ Esteem Needs: 

Self-esteem, recognition, status

∙ Social Needs: 

Sense of belonging, love

∙ Safety Needs: 

Security, protection

∙ Physiological Needs (Bottom of Pyramid): 

Hunger, thirst

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Types of Buying Decision Behavior:

∙ Complex Buying  

∙ Dissonance-Reducing Buying

∙ Habitual Buying

∙ Variety-Seeking Buying

5 Stages of Buyer Decision Making Process:

1. Need Recognition

2. Information Search

3. Evaluation of Alternative

4. Purchase Decision

5. Post-Purchase Behavior

Different Innovative Adopter Categories:

∙ Innovators

∙ Early Adopters

∙ Early Mainstream

∙ Late Mainstream

∙ Lagging Adopters

CLASS #9 – BUSINESS MARKETING  

 ∙    Law of Success: 

Success often leads to arrogance, and arrogance to failure.  

∙ Business Buyer Behavior: 

The organization’s behavior that buys goods and services often use in production  of other products & service that are sold, rented, or supplied to others.  

The Environment  The Buyer Organization (organizational influences)  The  Buying Center (interpersonal & individual influence – users [use the product],

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Notes Up to Class 12 & Hw 8

influencers [help define info for evaluation], deciders [formal or informal authority to  select supplier & terms], purchasers [formal authority to select supplier], gatekeepers [control info flow])  Buying Decision Process  Buyer Response (product and supplier choices, quantities, delivery and service terms, payment)

∙ Business Buyer Process: 

Business buyers determine which products & services are needed to purchase,  and then find, evaluate, and choose among alternative brands.  

Business Markets Decision Process:

∙ More complex, decision participants, professional purchasing efforts, and  buyer/seller more dependent.

∙ Supplier development: systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that  companies will use in making their own products or reselling to others

Types of Buying Situations:

1. Straight Rebuy: routine purchases; reorders without modifications 2. Modified Rebuy: requires some research where specification, price, terms, or  supplier modification is needed

3. New Task: requires thorough research; new products

The Model of Business Buyer Behavior:

1. Environmental

a. Economic Developments

b. Supply Conditions

c. Technological Change

d. Political & Regulatory Developments

e. Competitive Developments

f. Culture & Customs

2. Organizational

a. Objectives

b. Policies

c. Procedures

d. Organizational Structure

e. Systems

3. Interpersonal

a. Authority

b. Status

c. Empathy

d. Persuasiveness

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Notes Up to Class 12 & Hw 8

4. Individual

a. Age

b. Income

c. Education

d. Job position

e. Personality

f. Risk Attitudes  

5. Buyers

Value analysis: an approach to cost reduction where components are studied to  determine if they can be redesigned, standardized, or made with less costly methods of  production

The Buying Process:

1. Problem Recognition  

o Internal Stimuli (need new product or equipment)

o External Stimuli (idea from trade show or advertising)

2. General Need Description  

o Describe characteristics & quantity of the needed item

3. Product Specs.

o Describes technical criteria

4. Supplier Search  

o Compiling a list of qualified suppliers

5. Proposal Solicitation  

o Process of requesting proposals from qualified suppliers

6. Supplier Selection

o Buying center creates list of desired suppliers attributes & negotiates with  preferred suppliers for favorable terms & conditions

7. Order-Routine Specs.  

o The final order with chosen supplier and lists all specifications 7 terms of  the purchase

8. Performance Review

o A critique of supplier performance to the purchase terms

E-Procurement:

∙ Online purchasing & Company-buying sites

∙ Extranets

Advantages

∙ Access to new suppliers

∙ Lowers costs

∙ Speeds order processing and delivery

∙ Shares information

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Notes Up to Class 12 & Hw 8

∙ Sales, Service & Support

Disadvantages

∙ Can erode relationships as buyers search for new suppliers

∙ Security

Institutional Markets: schools, hospitals, nursing homes, and prisons that provide  goods/services to people in their care – low budgets & “captive” audience.

Government Markets: domestic suppliers, require suppliers to submit bids & normally award to the lowest bidder – affected by environmental factors and a few “Non Economic” factors considered: minority suppliers, depressed suppliers, and small  businesses  

CLASS # 10 AND #11 – CUSTOMER DRIVEN STRATEGY & SEGMENTATION,  TARGETING, AND POSITIONING  

 ∙    Law of Focus 

The most powerful concept in marketing is owning a word in the prospect’s mind. Creating Value for Target Customers: Segmentation, Targeting, Positioning Market Segmentation: 

∙   Divide a market into smaller segments with distinct needs, characteristics, or  behavior that might require separate marketing strategies or mixes ∙   Segmenting consumer markets, business markets, and international markets ∙   Requirements for effective segmentation

Segmenting Consumer Markets 

∙   Geographic – nations, regions, states, countries, or cities. Good starting point  because data is easy to obtain, less expensive, quick snapshot of a market,  populations can be sampled & accurately projected.

∙   Demographic – age, gender, family size, family life cycle, income, occupation,  education, religion, race, generation, and nationality. Demographics: human  population & vital stats/socioeconomic: economics and social-class  variables.

o Major Demographic Approaches: Market size factors, age & stage, men  & female, race, nationality & religion

o Major Socioeconomic Approaches: monetary & homeownership factors,  social class & geodemographic clustering

o Sources of Data (Low Cost Library/Online Database):

 US Statistical Abstract  

 State & Metropolitan Area Handbooks  

 County & City Datebooks

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Notes Up to Class 12 & Hw 8

 Statistical Reference Index, Statistical Handbook Series  

 CACI’s Sourcebooks  

 Donnelley’s Market Profile Analysis  

 Census Bureau (www.census.gov); AMERICAN FACTFINDER

 State and Local Agencies; HOUSTON-GALVESTON AREA COUNCIL  Universities; UT POPULATION CENTER, TEXAS A&M TEXAS STATE  DATA CENTER  

 Other Sources

∙   Psychographic – class, lifestyle, or personality traits. 3 main types of  segmentation: Lifestyle, Social/Value, and Personality.

 o Advantages: 

 Target Market Identification

 Understanding Consumer Behavior

 Strategic Marketing

 Product, Price, Place, Promotion

 Minimizing Risk

 o Limitations:  

 Data Collection & Analysis

 Cost Factors

∙ Behavioral – knowledge, attitudes, uses, or responses to a product. Occasions,  Benefits sought, User status, Usage rate, Loyalty status

 o 2 Components of Product Usage: 

 Usage Frequency

 Usage Variety

 o Advantages: 

 Useful Dimension for Understanding Consumer or Industrial Markets  Can Increase Consumption among Heavy Users in Moderately  Competitive Markets

 Increase Consumption among Light and Medium Users in Highly  Competitive Markets

 Possible to Attract Non-Users or Neglected Segments

 o Limitations: 

 Product Usage Segments are Often Difficult to Explain through  Traditional Demographics

 Problems with Targeting Heavy Users

∙ Competition for this segment can be great

∙ All heavy users are not purchasers for same reasons

∙ Often are not brand loyal

 Definitional Problems

Multiple Segmentation: identify smaller, better-defined target groups

Mark 3336

Notes Up to Class 12 & Hw 8

PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups.

Segmenting Business Markets: consumers and marketers use many of the same  variable to segment markets.  

∙ Customer operating characteristics

∙ Purchasing approaches

∙ Situational factors

∙ Personal characteristics

Segmenting International Markets: Geographic Location, Economic Factors,  Political Legal Factors, Cultural Factors

∙ Intermarket Segmentation: divide consumers in groups with similar needs &  buying behaviors even though they’re located in different countries

∙ Requirements for Effective Segmentation

o Measurable

o Accessible

o Substantial

o Differentiable

o Actionable

∙ Evaluating Market Segments

o Segment size and growth

o Segment structural attractiveness

o Company objectives and resources

Target Marketing Strategies

∙ Selecting Target Market: consists of a set of buyers who share common needs  or characteristics that the company decides to serve

∙ Undifferentiated: marketing targets the whole market with one offer o Mass marketing

o Focuses on common needs rather than what’s different

∙ Differentiated: target several different markets segments & designs separate  offers for each

o Goal is to achieve higher sales and stronger position

o More expensive than undifferentiated marketing

∙ Concentrated: targets a small share of a large market

o Limited company resources

o Knowledge of the market

o More effective and efficient

Mark 3336

Notes Up to Class 12 & Hw 8

∙ Micromarketing: practice of tailoring products & marketing programs to suit  tastes of specific individuals and locations

o Local

o Individual  

∙ Local Marketing: tailoring brands & promotion to the needs and wants of local  customer groups

o Cities

o Neighborhoods

o Stores

∙ Individual Marketing: tailoring products & marketing programs to the needs  and preferences of individual customers

o One-to-one marketing

o Mass customization

Choosing A Target Market: 

Depends On:

∙ Company resources

∙ Product variability

∙ Product life-cycle stage

∙ Market variability

∙ Competitor’s marketing strategies

Differentiation & Positioning:  

∙ Product Position - the way the product is defined by consumers on important  attributes, the place the product occupies in consumers’ minds relative to competing  products

o Perceptions

o Impressions

o Feelings

∙ Choosing A Differentiation & Positioning Strategy:

o Identifying a set of possible competitive advantages to build a position o Choosing the right competitive advantages

o Selecting an overall positioning strategy

o Communicating and delivering the chosen position to the market  ∙ Identifying Possible Value Differences & Competitive Advantages:

Mark 3336

Notes Up to Class 12 & Hw 8

o Competitive – gained by offering consumers greater value, either though  lower prices or by providing more benefits that justify higher prices o Choosing the Right Competitive Advantage: Identifying a set of possible  competitive advantages to build a position by providing superior value from:  product, service, and channel differentiations.

  Difference to promote should be: important, distinctive, superior,  communicate, preemptive, affordable, and profitable

Product Positioning

∙ Creating a Positioning Statement:

o For (target), (product, brand, service, company) is the (competitive  qualifier) that (single or short list of truly distinctive benefits).

o For competitive skiers who love to run moguls, the new XYZ variable  stiffness ski is the first and only model of competitive ski that can be  switched from flexible for control on mogul terrain, too stiff for speed on  flat terrain, at the push of a button.

∙ Choosing the Position Is Often Easier Than Implementing the Position.  

CLASS #12 PRODUCTS AND SERVICES 

Consumer products: products and services for personal consumption

∙ Classified by how consumers buy them

o Convenience products – brought frequently, immediately with minimum  comparison and buying efforts; newspapers, candy, or fast food

o Shopping products – compared carefully on suitability, quality, price, and  style; furniture, cars, or appliances

o Industrial products – purchased for further processing or use in  conducting a business; raw/manufactured materials, parts, capital items, or  supplies and services

o Specialty products – unique characteristics or brand identification a  specific group of buyers is willing to make a special purchase effort;  medical, designer, or high-end

o Unsought products – products the consumer doesn’t know about or  normally thinks of buying; life insurance, funeral services, or blood  donations

Individual Product and Service Decisions:

∙ Brand – name, term, sign, or design (or combination) that identifies the maker or  seller

Mark 3336

Notes Up to Class 12 & Hw 8

∙ Packaging – designing and producing the container or wrapper for products ∙ Labels – identify the product or brand, describes attributes, and provide  promotions

Product Line Decisions:

∙ Product Line – group of products closely related, function in a similar manner,  sold in the same customer groups, marketed through same type of outlets, or fall  within same price range

∙ Product Line Length – number of items in the product line; line stretching &  line filling

Product Mix Decisions:

∙ Product Mix – all products and items that a seller offers for sale; width, length,  depth, and consistency

Types of Service Industries: 

1. Government

2. Private Not-For-Profit Organizations

3. Business Services

Brand Equity: the differential effect that knowing the brand name has no customer  response to the product or its marketing.

Building Strong Brands:

Brand Positioning  Brand Name Selection  Brand Sponsorship  Brand Development

∙ Brand Positioning: 

o Product attributes, benefits, beliefs and values

∙ Brand Name Selection: 

o Desirable qualities: suggest benefits & qualities, easy to pronounce,  recognize, and remember, distinctive, extendable, translatable for global  economy, capable of registration and legal protection

∙ Brand Sponsorship: 

o Manufacturer’s brand, private brand, licensed brand, co-brand ∙ Brand Development Strategy:

Mark 3336

Notes Up to Class 12 & Hw 8