Exam 1 Review
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This 37 page Study Guide was uploaded by Kyla Brinkley on Thursday September 10, 2015. The Study Guide belongs to MARK 3001 at University of Georgia taught by Kimberly Grantham in Summer 2015. Since its upload, it has received 708 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.
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Date Created: 09/10/15
Kyla Brinkley MARK 3001 Notes Fall 2015 EXAM 1 REVIEW Chapter One Introduction to Marketing a Marketing an organizational function and a set of processes for creating capturing communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders i helps create value i satisfying customer needswants i i entails an exchange iv individuals and organizations v many settings b Marketing plan a written document composed of an analysis of the current marketing situation opportunities and threats for the firm marketing objectives and strategy specified in terms of the 4 Ps action programs and projected or proforma income and other financial statements c Exchange the trade of things of value between the buyer and the seller so that each is better off as a result d Marketing mix the 4Ps the controllable set of activities that a firm uses to respond to the wants of its target markets i Promotion communicating value i Product creating value i i Price capturing value iv Place delivering value 1 Marketing chain management aka supply chain management the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers manufacturers warehouses stores and other firms involved into a seamless value chain e Understanding consumer needs and wants is essential to marketing success f marketplace can refer to the world of trade or groups of people g Marketing costs money so you market to people who are likely to buy your product h Goods are items that you can physically touch i Services are intangible customer benefits that are produced by people or machine and can t be separated from the producer j Ideas include concepts opinions and philosophies and these intellectual concepts can be marketed k EVERYTHING HAS A PRICE i Price is what you give up time money energy ii Opportunity cost I Who can perform marketing i 820 business to consumer ii 828 business to business iii C2C consumer to consumer m History of marketing i Productionoriented era 1 Turn of the century 2 Believed good product would sell itself 3 Ford customers can have any color they want as long as it s black 4 Stores held merchandise until someone wanted it ii salesoriented era 1 192050 2 Better productiondistribution 3 Wartime Manufacturers produced more than consumers wantedcould buy so tried to sell it iii marketoriented era after ww2 consumer products suburbs consumers had choices so manufacturers had to focus on consumer wantsneeds 5 firms discover marketing iv value based marketing era 1 most successful firms today 2 try to discoversatisfy customer needswants 3 competition important try to give best value n value reflects the relationship of benefits to costs 0 value cocreation customers can act as collaborators to create the productservice i ex Nike letting ppl design shoes P9053 p relational orientation a method of building a relationship with customers based on the philosophy that buyers and sellers should develop a long term relationship q customer relationship management CRM a business philosophy and set of strategies programs and systems that focus on identifying and building loyalty among the firm s most valued customers r marketers are using social media to connect with customers more easilyeffectively s marketing advises production about how much of the product to make and then tells logistics when to ship it and fosters relationships with other firms as well as customers t supply chain the group of firms that make and deliver a given set of goodsservices u marketing channel the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption consists of all the institutions and marketing activities in the marketing process v entrepreneurs ppl who organize operate and assume the risk of a new business venture supply chain raw materiagtmanufacturergtretailergtconsumer Why is marketing important i Enriches society ii Can be entrepreneurial iii Expands global presence iv Strengthens national relationships y Advancing beyond the marketing concept i Societal marketing orientation ii Focus is on enhancing benefits to society iii How can I meet customer needs AND benefit society 5 IMPORTANT Market concept Make what you can sell rather than selling what you can make Make what there is demand forwhat customers want rather than just selling what you can produce ll Chapter Four Marketing Ethics a b C j k Solely focusing on profit leads to shortterm decisions that cause the firm to lose customers in the long run Primary ethical dilemma facing managers how to balance shareholder interests with needs of society Customers have to trust company and believe it to be responsible to support it Legal issues are black and white ethical issues are blurred lines i examples 1 Ethical but legal price collusion price fixing charging same price to be fair 2 Ethical and legal selfexplanatory 3 Unethical and illegal stealing an idea for a product 4 Unethical and legal commercializingtrying to influence kids Business ethics examines ethical rules and principles within a commercial context the various moral or ethical problems that might arise in a business setting and any special duties or obligations that apply to persons engaged in commerce Marketing ethics refers to those ethical problems that are specific to the domain of marketing Ethical climate the set of values within a marketing firm or in the marketing division of any firm that guide decision making and behavior Marketers in general aren t very trusted by the public esp compared to doctors etc but interactions build public trust Everyone in a firm should understand its ethical values and how they are put into action The roots of ethical conflict are usually competing values of different pe0ple Many companies use selfpolicing to uphold their values i Allows them to avoid painful public revelations Professions as a whole also have different ethical codes mAs we grow we gain an understanding of what is and isn t ethical i Many times managers make unethical decisions because they don t think they are unethical Corporate social responsibility refers to the voluntary actions taken by a company to address the ethical social and environmental impacts of its business operations and the concerns of its stakeholders i the short term goals of each employee must be aligned with the long term goals of the firm ii if decision goes against any of these 4 sets you should NOT move forward 1 employees 2 customers 3 marketplace 4 society firms should implement programs that are socially responsible AND its employees should act in an ethically responsible manner i consumer s bill of rights 1 to be heard 2 to be informed 3 to have options being socially responsible going above and beyond norms of corporate ethical behavior i ex philanthropy giving back to community programs etc ii however firms that are seen as socially responsible can still make unethical decisions at times iii some peOple are more inclined to pay more if they think a company is truly ethical ethical decision making framework i identify issues ii gather info and identify stakeholders iii brainstorm alternatives iv choose a course of action firm must identify all individuals and groups that have a stake in how the issue is resolved it is important to investigate any legal issues that might arise with alternatives i if the marketer isn t confident about the decisions they should revisit the other alternatives ethical decision making metric i publicity test 1 Would you want the action you re taking on the front of a magazine ii moral mentor test 1 Would person I admire most do this iii Admired observer test 1 Would I want the person I admire most to see me do this iv Transparency test 1 Could I explain this action well enough to satisfy a fair moral judge v Person in the mirror test 1 Would I respect myself after doing this vi golden rule test 1 Would I want someone to do this to me u Integrating ethics into marketing strategy i Planning phase 1 Including ethical statements in firm s mission statement ii Implementation phase 1 Ways to deliver 4Ps to potential markets 2 Firms consider ethical issues 3 Marketing through social media has many ethical concerns iii Control phase 1 Managers are evaluated on their actions from an ethical perspective v Corporate social responsibility CSR i 1906Upton Sinclair The Jungle 1 Horrific conditions US meatpacking districts 2 Pres RooseveltCongress made changes ii Today companies take initiative iii Goal isn tjust to make money 1 CSR appeals to shareholders and key stakeholders a Employees i Safe working environment ii Companies want reputation as good place to work iii Happy employees provide better service b Customers i Firms must consider effects on current and possible customers ii Healthy products iii CSR increases consumer awareness c Marketplace i When one firm in industry leads way to CSR its partnerscompetitors often have no choice but to follow ii Looks good to be on the cutting edge of CSR d Society i Improving community as a whole ii 95 of CEOs think society expects companies to take public responsibilities iii Can t ignore societal demands lll Chapter 5 Analyzing the Marketing Environment a Marketing environment uncontrollable elements outside of any organization that may affect its performance i Environmental scanning systematic analysis of those elements b Businesses try to stay on the cuttingedge and not be left behind i They have to pay attention to customer needs and monitor the business environment where they operate c Marketers operate in the interest of the firm d factors that affect the marketing environment i immediate environment 1 company 2 competition 3 corporate partners ii macro environment culture demographics social technology economic politicallegal iii at the center is consumers who are influenced by both anPP JNT 1 value based marketing aims to offer better value than competitors 2 so business process must be considered from consumers POV e firms use tools to track competitor activitiesconsumer trends ex sites like The Cool Hunters and Trend Hunters sometimes they anticipate trends f IMMEDIATE ENVIRONMENT company capabilities 1 in immediate environment 1St factor that affects consumer is firm itself 2 focus on satisfying consumer needs 3 ex Pepsi selling Aquafina after noticing demand for bottled water a did this by analyzing environment competitors 1 marketers must understand competitors strengths weaknesses and likely reactions to their own firms marketing activities 2 trying to get ahead 3 ex Gillette and Schick both adding more blades to their razors a often call each other out because they are aware of each other s practices corporate partners 1 few firms operate in isolation 2 ex car companies collab with suppliers 3 ex clothing companies using green suppliers g MACROEVIRONMENTAL FACTORS i macroenvironmental factors aspects of the external environment that affect a company s business such as the culture demographics social issues technological advances economic situation and politicalregulatory environment 1 CDSTEPquot culture the set of values guiding beliefs understandings and ways of doing things shared by members of a society exists on 2 levels visible artifacts ex behavior dress symbols physical settings ceremonies and underlying values thought processes beliefs and assumptions 1 transmitted by words literature institutions 2 marketers try to make productsservices identifiable byrelevant to particular group of people 3 ex UGA Louisiana Creoles 4 country culture a artifacts behavior dress symbols physical settings ceremonies language differences colors and tastes food prefs are easy to see b subtler aspects harder to see have to establish a universal appeal to identify with country culture 5 regional culture the influence of the area within a country where pe0ple live a affects how you refer to products soda vs pop vs Coke iii demographics information about the characteristics of human populations and segments esp those used to identify consumer markets such as by age gender income and education 1 firms do market research about what kind of customers they have 2 gives a snapshot of their typical customer in the target market 3 generational cohorts group of people of same generation typically have similar purchase behaviors because they ve shared experiences and are in same stage of life a marketing towards age is useful most media are characterized by the consumers who use it b baby boomers born after WW2 19461964 i want products that foster casual lifestyle because try to maintain youth ii big generation biggest group of old people iii individualistic iv leisure time important v selfsufficient vi vii viii ix careless spending money more focused on quality than price pushed casual lifestyles into workplace health conscious heavy internet users c generation Ymillennials born 19771995 iv V vi vii want products that foster casual lifestyle because of status big group Millennials 19772000 Children of baby boomers varies most in age entering workplace and have diff expectations want to balance work amp life consider marriage secondary to being good parents hard to tell diff between genY in US amp other countries d generation X 19651976 I ii iii iv V vi latchkey children both parents worked 50 have divorced parents Helicopter parents with their kids Big spending power get marriedbuy houses later Not interested in shopping cynical Demand conveniencedon t believe ads e generation 2 2001 2014 I ii iii iv v vi vii viii digital natives Born into internet social networks etc more globally connected better appreciation for diversity aware of terrorismenvironmental problems children of genX video games retailers like Gap developing special product lines to accommodate demands BUT this can cross line into exploitation 4 income a b C high income groups are growing middlelower income groups purchasing power is declining number of people earning below poverty line is growing increase in wealthy families increase of dual income households higher education level however broad range of incomes creates marketing opportunities at both highlow ends of the market consumers search for value because income growth has stagnated i healthcare costs property taxes tuition bills have risen faster than inflation 5educa on a b higher levels of edu lead to better jobs for some products marketers can combine edu level with data like occupationincome to make purchasing behavior predictions 6gender a today gender roles have been blurred i more firms concerned with gender neutrality 7 ethnicity a b C US getting more diverse Minorities are a quarter of the population and by 2050 will be half Immigrants live in metropolitan areas NY LA etc Hispanic buying power has huge influence Use credit cards ii Aren t very influenced by adsproduct placement iii Sensitive to instore promotions iv Shop onlinecatalogs v Marketers take separate approach ex Mexican vs Cuban For younger ppl firms gear marketing to whole US market regardless of ethnicity African Americans i Affluent suburban younger ii Home depot with Tom JoynerSteve Harvey g Asians i Fastest growing minority population ii Earn more more schooling iii More likely to be professionally employedown a business iv Marketers focus on Asian subgroups iv SOCIAL TRENDS 1 Thrift a American societyconsumer society b Saving money important c Spend less on luxuries d Don t use savings e Lipstick effect shoppers enjoy thrill of treating themselves to small luxuries Chanel lipstick but not big luxuries like a vacation f In uncertain economic setting hard to be frugal all the time g Extreme couponing i Subscribing to sale emails ii Consumers expectation of a good deal are changingwant things practically for free 2 Healthwellness concerns a Health geared towards children i Child obesity ii Diabetes b Other countries have health problems like obesity etc too i Western diets c New ad guidelines food in better portions i Nutrients i Low fat no artificial sweeteners i i Can t be shown during kids shows iv Cant link unhealthy foods with cartooncelebrity figures d New markets for healthy products i Yoga matsclothingclasses popular 3 Greener consumers a Green marketing involves a strategic effort by firms to supply customers with environmentally friendly merchandise Recycling more popular Watersaving dishwashers etc Solar powered businesses Greenwashing exploiting a consumer by disingenuously marketing products or services as environmentally friendly with the goal of gaining public approvalsales 4 Privacy concerns a Loss of privacy b Better securitycredit check services c Multinational corporation security breaches i Ex target ii Stealing personal info d Federal Trade Commission FTC made better Do Not Call Registry i Companies moving away from phone campaigns anyway 5 Timepoor society a Nobody has any time b People work a lot median hrsweek49 c Busy kids i Multitasking ii Divided attention can t focus on ads d Retailers try making products available 247 wherever customers want i Stores catalogues online shopping ii Extended hrs of operation iii Selfcheckout v TECHNOLOGICAL ADVANCES 1 Internet everywhere a WiFi 3G 4G b Tablets portable c Smartphones 2 Consumers dependent on technology for decision making too 0993 a Netflix suggesting movies Pandora suggesting music etc Payment online easier Mobile devices enhance customer s experience by making it easier to interact with manufacturer retailer amp other consumers Use internet more on the phone in general a Difficult small screen hard to give infoconvey brand image Vi ECONOMIC SITUATION 1 Marketers monitor general economic situation in home countryabroad affects way consumers buyspend Recession falling incomeemploymentproduction a Focus on value b Ex dollar tree does well in recessions Recovery rising incomeemploymentproduction a Focus on buy now for better times later Prosperity high incomeemploymentproduction a Focus on conveniencereward Depression low incomeemploymentproduction a Focus on basic needs Inflation the persistent increase in price of goodsservices a Dollar buys less than it used to b High inflation consumers will buy less expensive hamburger rather than steak important to marketers Foreign currency fluctuations changes in the value of a country s currency relative to the currency of another country Can influence customer spending a Ex euro was more expensive our products cost less for them but their products are more expensive for us Interest rates represent the cost of borrowing money a fee bank charges customers for borrowing money b interest rate goes up incentive for consumers to save more to earn interest c interest rate goes down incentive for consumers to borrow more vii POLITICALREGULATORY ENVIRONMENT 1 Comprises political parties gov orgs and legislationlaws 2 gov passing laws that promote fair tradecompetition a prohibiting formation of monopolies or alliances that would damage competitive marketplace 3 IMPORTANT a Sherman Antitrust Act 1890 i Prohibited monopolies ii Made free trade a national goal b Clayton Act 1914 i Prohibits combo of 2 or more competing corporations thru pooling ownership of stocldrestricting pricing policies 1 Price discrimination 2 Exclusive dealing 3 Tying clauses to diff buyers c Federal Trade Commission 1914 i Established to regulate unfair competitive practices practices that deceive or are unfair to consumers d RobinsonPatman Act 1936 i Specifically outlaws price discriminations toward wholesalers retailers or other producers ii Requires sellers to make ancillary services or allowances available to all buyers on proportionately equal terms e WheelerLea Act 1938 i Amended FTC Act ii Unfair actspractices unfair competition iii Penalties for violation f North American Free Trade Agreement NAFTA 1993 i Agreement between Canada Mexico US ii Rulesbased trade bloc in north America 4 Regulations require marketers to abstain from false or misleading ads 5 Manufacturers required not to use harmful materials a Ex lead in toys 6 Orgs must adhere to fairreasonable business practices when communicating with consumers viii RESPONDING TO THE ENVIRONMENT 1 Companies engage in tacticsmarketing strategies to try to respond to multiple developments in the wider environment 2 Marketers that succeed are the ones that respond quickly accurately and sensitively to consumers 3 Competition you are given money for a Disney vaca on a Direct competition brand i Similarsame product ii Disney World vs Universal b Indirect competition product i Substitutable items perform same func on ii Disney World vs the beach c Competition for discretionary spending i Other possible uses for the ii Disney World vs saving the for school lV Chapter Six Consumer Behavior a To understand customer behavior we must ask Why people buy goods or services b Marketing managers must be able to explain consumers behavior to give marketers as clear an understanding of their customers as possible c Marketers use theories from sociologypsychology to decipher consumer choices d Generally people buy one product or service over another because they perceive it to be the better value for them Ratio of benefits to costs is higher e Low Involvement Purchases I ii iii iv v vi f High I ii iii iv Low cost Standardized Not important Low risk Routine response behaviorhabitual Marketers influence thru in store promotion nvovement Purchases Important to consumer Risk is present Consumer spends effort and time purchasing Consumers see differences between alternatives 9 The Consumer Decision Process This modelA represents the steps that consumers go through before during and after making purchases Need Recognition the beginning of the consumer decision process occurs when consumers recognize they have an unsatisfied need and want to go from their actual needy state to a different desired state 1 Need is the difference between your actual state and your desired state Wants are goods or services that are not necessarily needed but are desired Functional needs pertain to the performance of a product or service Psychological needs pertain to the personal gratification consumers associate with a product or service 5 A key to successful marketing is determining the correct balance of functional and psychological needs that best appeals to the firms target markets 2 3 4 iii Search for Information 1 After a consumer recognizes a need they search for info about options that will satisfy that need 2 Internal search for information occurs when the buyer examines his or her own memory and knowledge about the product or service gathered through past experiences 3 External search for information occurs when the buyer seeks information outside his or her personal knowledge base to help make the buying decision a Consumers fill in knowledge gaps by talking with friends family or salesperson b Also look at media Consumer reports Magazinestvradio Blogsinternet growing resource 4 Factors affecting consumers search processes a Perceived benefits vs perceived costs of search Is it worth the time and effort to search for info about a product or service Ex more likely to research housing market than toys b The locus of control iv Internal locus of control when consumers believe they have some control over the outcomes of their actions in which case they generally engage in more search activities External locus of control refers to when consumers believe that fate or other external factors control all outcomes Important because people with internal locus of control will work harder to achieve goals because they control their goals than if they feel the goals are imposed on them external locus Ex consumers gaining greater internal locus over health with smartphone apps c Actual or perceived risk Risks associated with purchase decisions that will delaydiscourage purchases 1 Performance 2 Financial 3 Social vi vii 4 Physiological 5 Psychological Higher riskmore likely to engage in extended search 39 39 Performance risk involves the perceived danger inherent in a poorly performing product or service 1 Will I have to get it fixed Financial risk associated with a monetary outlay includes the initial cost of the purchase as well as the costs of using the item or service 1 Will owning this item require additional costs than the original pnce Social risk the fears that consumers suffer when they worry other might not regard their purchases positively 1 Will my friends like it Physiological Safety Risk the fear of an actual harm should a product not perform properly 1 Ex the safety of a car or health risks Psychological risks associated with the way people will feel if the product or service does not convey the right image 1 Will I feel good with my choice iv Evaluation of Alternatives 1 Occurs while the consumer is engaged in the process of information search a Attribute sets Universal sets include all possible choices for a productcategory Retrieval sets include those brands or stores that the consumer can readily bring forth from memory Evoked set comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision 1 if a firm can get its brandstore into evoked set increases likelihood of purchase reducing search time because consumer has product in their mind b evaluative criteria consist of a set of talent or important attributes about a particular product sometimes hard to evaluate brandsstores too many choices determinant attributes product or service features that are important to the buyer and on which competing brands or stores are perceived to differ 1 something special 2 Can appear rational or more sub e c Consumer Decision Rules the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives Compensatory decision rule at work when the consumer is evaluating alternatives and trades off one characteristic against another such that good characteristics compensate for bad ones 1 Good overall rating compensates for a higher price 39 Multiattribute model a compensatory model of customer decision making based on the notion that customers see a product as a collection of attributes or characteristics The model uses a weighted avg score based on importance of various attributesperformance on those issues 1 Allows tradeoffs to be directly involved in consumer s purchase decision iii Noncompensatory decision rule at work when consumers choose a product or service on the basis of a subset of its characteristics regardless of the values of its other attributes v Purchase and Consumption 1 Conversion rate percentage of consumers who buy a product after viewing it a Try making it easier to buy things b Stock on hand c Reduce wait time more checkout lanes d Letting people renttest merchandise e Conversion rates lower online people don t finish checking out vi Post purchase 1 customer satisfaction a unrealistically high customer expectations of the product lead to higher initial sales but result in dissatisfied customers i negative reviews b setting low expectations dangerous too i not putting best foot forward ii dirtyunappealing store won t get customers even if the products are good c to ensure post purchase satisfaction i build realistic expectations ii demonstrate correct product use iii stand behind product money back guaranteeswarranties iv encourage customer feedback v contact customers thank them for suppon 2 Post purchase Cognitive Dissonance the psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance Buyer s remorse a Was my purchase appropriate b Likely for expensive products infrequently purchased don t work right have high risk levels c Reducing dissonance i Return item ii Listen to positive feedback iii Pay attention to positive info in media iv Seek negative info about other dresses v Results in satisfaction with purchase 3 Customer Loyalty a Marketers try to solidify a loyal relationship with their customers b Loyal customers will buy only certain brandsshop at certain stores and include no other firms c Valuable to firms 4 Undesirable Customer Behavior a Passive customers don t repeat purchase or recommend the product b Negative word of mouth occurs when consumers spread negative info about a product service or store to others i When customers expectations are met or exceeded they usually don t tell anyone ii But will be fast to complain to many if they feel they have been treated unfairly iii Internet helps spread negative word of mouth iv Companies offer forums for customers to leave reviews 1 If customer believes positive action will be taken when they complain less likely to complain h Factors Influencing the Consumer Decision Process i Psychological factors 1 motives needs or wants that are strong enough to cause the person to seek satisfaction a Maslow s hierarchy of needs classifies people s motives Argues that when lower level more basic needs psychologicalsafety are fulfilled people turn to satisfying their higherlevel human needs socialpersonal i 5 groups of needs 1 Physiological needs relate to basic necessities of life food drink rest shelter a Basic needs b Ex Campbell s Soup is goodfoodquot 2 Safety needs pertain to protectionphysical wellbeing Ex secure employment health 3 Love needs expressed through interactions with others friendship family 4 Esteem needs enable pe0ple to quminnerdeskescon dence respecD 5 Selfactualization when a person is completely satisfied with their life met intellectual creative aesthetic needs Don t care what people think Attitude a person s enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea consists of cognitive affective behavioral a We have attitudes about almost everything b Learned amp long lasting Cognitive component component of attitude that reflects what a person believes to be true Affective component component of attitude that reflects what a person feels about the issue at hand like or dislike of something Behavioral component component of attitude that comprises the actions a person takes with regard to the issue at hand a When the 3 components don t agree cognitive dissonance occurs b People don t like this feeling and try to convince themselves that they made the right decision c Attitudes are usually slow to change but can be influencedchanged through persuasive communications amp personal experience 6 Perception the process by which people select organize and interpret information to form a meaningful picture of the world a Influences our acquisitionconsumption of goodsservices through our tendency to give meaning to color symbols taste packaging b Selective exposure we choose our exposure Opt in c Selective attention happens after exposure i Looking at the actual single ad after deciding to look at billboards in general cueing in ii We catch attention for ads we are in the market for stereo ads seem boring until you need one d Selective comprehension tend to interpret info that is consistent w prior beliefsattitudes 7 Learning refers to a change in a person s behavior that arises from experience and takes place throughout the consumer decision process a as we learn info becomes part of our memory to affect our decisions as a whole for the future b cognitive vs experience i letting people test product 8 lifestyle component of psychographics refers to the way a person lives their life to achieve goals a usually people want products that fit their perceived lifestyle not their actual lifestyle b ads that don t scream BUY THIS PRODUCT but have a story about the brand i ex Pepsi max basketball commercial ii Social Factors 1 family a many purchase decisions made based on whether whole family will use product b children play increasingly important role in family buying decisions i indirect influence on family spending ii retailers try to influence them 2 reference groups one or more persons whom an individual uses as a basis for comparison regarding beliefs feelings and behaviors a can be family friends coworkers celebrities b affect buying decisions by i offering information ii providing rewards for specific purchasing behaviors iii enhancing a consumer s selfimage c consumers can identify and affiliate with reference groups to create enhance maintain selfimage d Oprah s favorite things skyrocketing sales of products 3 Culture the set of values guiding beliefs understandings and ways of doing things shared by members of a society exists on 2 levels visible artifacts behavior dress symbols physical settings ceremonies and underlying values thought processes beliefs assumptions a Influences consumer behavior b Ex shopping family affair for Hispanics but blacks tend to shop solo iii Situational Factors factors affecting the consumer decision process those that are specific to the situation that may override or influence psychological and social issues 1 Purchase situation a Psychological and social factors can change in different purchase situations b Why are you buying it Ex cheesecake factory promotes products as good gifts for others 2 Shopping situation a Store atmosphere I ii iii iv v vi vii Images Environment Music Scent Lighting Color Try to create interactive atmospheres to appeal to customers b Salespeople iv c Crow i ii iii iv Well trained Influence the sale Educate customers about products point out advantages encourage multiple purchases Training programs for employees ding Too many people Too much merchandise Long lines Distracts customers d lnstore demonstrations Attract people to try something new e Promotions iv v f Pack i ii Unadvertised price promotion can alter someone s preconceived buying plan Multi item discounts like BOGO Get people to buy more than normally would Coupons more available Free gifts with purchases aging Make product stand out Appealing 3 Temporal state a Our state of mind at any particular time can alter preconceived notions of what we re going to purchase b Time of day Mood swings Can t affect what happens outside of store so retailers try to ensure a good experience once customer walks in up i Involvement and Consumer Buying Decisions Involvement consumer s interest in a product or service 1 2 Very involved consumers pay attention in detail to the info provided Less involved customers don t process ads as thoroughly a May pay attention to brand names or celebrity endorsers b More superficial impressions Extended problem solving a purchase decision process where the consumer devotes considerable time and effort to analyzing alternatives often occurs when consumer perceives that the purchase decision entails a lotofnsk Limited problem solving occurs during a purchase decision that calls for at most a moderate amount of effort amp time 1 2 3 Customer had some prior experience and perceived risk is moderate Relies on past experience more than external info Impulse buying buying decision made by customers on the spot when they see the merchandise a Stores provide easily accessible cues prominent display great location reasonable price Habitual decision making a purchase decision process in which consumers engage with little conscious effort a Attracted amp maintained by creating strong brands amp store loyalty because these consumers don t even consider other brandsstores FOR REVIEW 0 Consumer Decision Process 0 Psychological factors Motives Attitudes Perceptions Learning Lifestyle 0 Situational factors Purchase situation Shopping situation Temporal state 0 Social factors Family Reference groups Culture 0 Marketing mix Product Price Place Promotion 0 Elaboration likelihood model 0 Low involvement Less attention Peripheral processing 0 Generates weak attitudes and increased use of cues 0 High involvement Greater attention Deeper processing 0 Develops strong attitudes and purchase intentions V Chapter Nine Segmenting Targeting amp Posntioning a AKA STP analysis b Uniqueness about a group that changes something about the 4Ps c POSITIONING IS KEY d Step 1 Establish Overall Strategy or Objectives i Articulate vision or objectives of company s marketing strategy clearly ii Consistent with firm s missionobjectives amp current situation e Step 2 segmentation methods i Develops descriptions of different segments 1 Helps firms better understand customer profiles ii Geographic segmentation groups consumers based on where they live Country Region State City etc Good marketers make adjustments to meet the needs of small geographic groups iii Demographic segmentation groups consumers based on easily measured objective characteristics like age gender income education 1 Ex tv viewing habits diff for men amp women 2 Special K ads are mostly for women 3 Not useful for defining target segments of all companies a Poor predictors of users of active wear b Rethink stereotypes about who is buying what iv Psychographic segmentation 1 Psychographics used in segmentation delves into how consumers describe themselves allows people to describe themselves using those characteristics that help them choose how they occupy their time behavior and what underlying psychological reasons determine those choices P PWNT Selfvalues goals for life not just the goals one wants to accomplish in a day a component of psychographics that refers to overriding desires that drive how a person lives his or her life a Causes people to develop selfimages to help them arrive at goals of selfrespect self fulfillment or belonging Selfconcept the image people ideally have of themselves Lifestyles the way a person lives their life to achieve goals Value and Lifestyle Survey VALS a psychographic tool developed by SRI Consulting Business Intelligence classifies consumers into 8 segments innovators thinkers believers achievers strivers experiencers makers survivors VALS is owned and operated by Strategic Business Insights SBI Vertical dimension indicates level of resources like i lncome ii Education iii Health iv Energy level v Degree of innovativeness vi The upper segments have more resources and are more innovative k Horizontal dimension shows psychological motivation for buying i ldeals ii Achievement iii Selfexpression T1390 quot 519 62 h I l VALS enables firms to identify target segments and their underlying motivations showing correlation between psychology amp lifestyle choices m Predicts consumer behavior better than demographics v Benefit Segmentation groups consumers on the basic of the benefits they derive from products or services 1 Divides market into segments whose needs amp wants are best satisfied by the product benefits 2 Hollywood practices this a lot different movies marketed differently vi Behavioral Segmentation divides customers into groups based on how they use the product or service Ex occasion loyalty 1 occasion segmentation type of behavioral segmentation based on when a productservice is purchased or consumed a Ex why did you need a suit Work Prom Etc 2 loyalty segmentation strategy of investing in loyalty initiatives to retain the firm s most profitable customers a loyal customers feel so strongly that they buy almost exclusively from the firm b more profitable in long term c firms try to maintain by providing special services for returning customers vii Using Multiple Segmentation Methods 1 Each method has advantagesdisadvantages a Ex segmenting based on demographics is easy but not as effective 2 Geodemographic segmentation the grouping of consumers on the basis of a combination of geographic demographic and lifestyle characteristics a Tools PRIZM Potential Rating Index by Zip Market amp Tapestry by ESRI Claritascom b Useful for retailers to identify customers and find new locations f Step 3 Evaluate Segment Attractiveness i Marketers determine whether segment is worth pursuing using descriptive criteria 1 Identifiable a Identify who is in their market b Segments must be distinct can t overlap 2 Substantial a How big is the market b Too smalllow buying power won t make enough 3 Reachable a The best productservice has no impact if the market for it can t be reached accessed through persuasive communications amp product distribution b Consumer must know product exists understand what it can do for them amp recognize how to buy it 4 Responsive a Customers in the segment must react similarly amp positively b Firm shouldn t target a segment it can t provide productsservices to 5 Profitable a Market growth current and expected b Market competitiveness of competitors entry barriers product substitutes c Market access ease of developing or accessing distribution channels amp brand familiarity d To determine if firm will make a profit e Long term i How long will customer be loyal ii Defection rate of customers who switch on yrly basis iii Costs of replacing lost customers ads promotion iv Whether customers will buy more or more expensive items in future g Step 4 Select Target Market Undifferentiated Targeting Strategy a marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone with no need to develop separate strategies for different groups 1 AKA Mass Marketing 2 Ex super bowl 3 focuses on similarities in customer needs rather than differences 4 if firm provides similar benefits to everyone little need for separate strategies 5 used for basic commodities a ex salt sugar 6 cheaper Differentiated Targeting Strategy strategy through which a firm targets several market segments with a different offering for each 1 Helps firms obtain bigger share of the market and increase the market for their products 2 Helps diversify business lowering company risk a If one segmented product doesn t sell others probably will 3 More expensive Concentrated Targeting Strategy a marketing strategy of selecting a single primary target market and focusing all energies on providing a product to fit that market s needs 1 Mostly used by entrepreneurial startup ventures a Allows them to use limited resources more efficiently Micromarketing an extreme form of segmentation that tailors a productservice to suit an individual customer s wants or needs AKA OnetoOne Marketing 1 Usually small producers do this 2 Harder for big companies 3 Facilitated by Internet a Makes micromarketing more efficientcheap b Ex insurance sites giving personalized quotes 4 Cookies computer program installed on hard drives that provides identifying information a Small text files stored by websites on visitor s browser b Tell how customer reached site Online registration for recommendations Customers can create items for themselves i Ex MY MampMs e Customers like goods especially made for them meets their needs exactly i Usually more expensive though 19 h Step 5 Develop Positioning Strategy Defining marketing mix variables so target customers have clear distinctive desirable understanding of what product does or represents in comparison with competitors Value proposition the unique value that a productservice provides to its customers amp how it s betterdifferent from the competition 1 How do I want my product positioned in customer s mind relative to the competition Maintaining a unique value proposition can only be sustained longterm in monopoly or monopolistic competition situations 1 Usually the competition will copy the success of your product so the value of the two products ovenaps 2 Firms constantly monitor competition iv Value Proposition Statement Key Elements 1 Target market 2 Offering name or brand 3 Productservice category or concept 4 Unique point of differencebenefits i Positioning Methods Firms position productsservices based on methods like 1 Value proposition 2 Salient attributes 3 Symbols 4 Competition Value reflects the relationship of benefits to costs or what the consumer gets for what they give Value doesn t necessarily mean low price vi 1 Longterm investment can make a product valuable Focus on product attributes most important to target market Well known symbols used as positioning tools to distinguish from competition Can also position against competitors 1 Be careful not to position too closely 2 Same packaging can cause lawsuit 3 Confuses customers j Positioning Using Perceptual Mapping FOR REVIEW Steps firms take to establish their position Perceptual map displays in 2 or more dimensions the position of products or brands in the consumer s mind Ideal points the position where a particular market segment s ideal product would lie on a perceptual map 1 Larger the circle larger the market size To derive a perceptual map 1 Determine consumer s perceptions and evaluations of the productservice in relation to competitors Identify market s ideal points amp size Identify competitors positions Determine consumer preferences Select the position Monitor the positioning strategy Note it is hard for consumers to change prior beliefs mweww Segmentation Targeting and Positioning Process 0 Segmentation 0 Step 1 strategy or objectives 0 Step 2 segmentation methods 0 Targeting 0 Step 3 evaluate segment attractiveness 0 Step 4 Select target market 0 Positioning 0 Step 5 identify and develop positioning strategy Segment profitability segment size X segment adoption percentage X purchase behavior X profit margin percentage Fixed costs Where Segment size of people in segment Segment adoption of customers in segment likely to adopt the productservice Purchase behavior purchase price x of times customer would buy productservice in a yr Profit margin selling price variable costs selling price Fixed costs advertising expenditure rent utilities insurance administrative salaries for managers Guest Speakers from 9215 Marathon Petroleum Company 0 Tiffany Fetterly Brand Territory Manager 0 Anthony Gattuso Brand Sales Manager 0 Josh Brown Program Territory Manager 0 Petroleum refining companies in top 40 2011 fortune 500 5 Exxon chevron Philips 66 Valero marathon 0 None are in fortune 500 most profitable 0 Avg profit per dollar 35 cents 0 Last refinery built in US 1976 Garyville LA 0 Marathon over 125 years in business 1887 o Fortune 25 4th largest Largest in Midwest 46000 employees HQ in OH East coastsoutheast OOOOO 0 Marketing divisions wholesale amp commercial accounts Marathon customer distributorgtretailer gas stationgtend user consumer Differentiate product sell company people logisticssupply image programs quality 0 Campaigns BP invigorate Chevron Techron etc Marketing based on price should ALWAYS be last resort Main contributor to gas prices is price of crude oil Marathon targets customers and consumers
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