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MKT 300 Study Guide for Test 2

by: Julie Knight

MKT 300 Study Guide for Test 2 MKT 300

Marketplace > University of Alabama - Tuscaloosa > Business > MKT 300 > MKT 300 Study Guide for Test 2
Julie Knight
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This study guide covers chapters 7, 8, 9, 10, and 12. I have all of the key terms in bold, the important charts and graphs, and other important facts from each chapter.
Susan Fant
Study Guide
MKT, MKT 300, Marketing
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This 14 page Study Guide was uploaded by Julie Knight on Friday March 4, 2016. The Study Guide belongs to MKT 300 at University of Alabama - Tuscaloosa taught by Susan Fant in Spring2015. Since its upload, it has received 102 views. For similar materials see Marketing in Business at University of Alabama - Tuscaloosa.


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Date Created: 03/04/16
Susan Fant Marketing Study Guide for Test 2 (Chapters 7,8,9,10, and 12) Chapter 7: Customer-Driven Marketing Strategy  Market segmentation- dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes  Market targeting (targeting)- evaluating each market segment’s attractiveness and selecting one or more segments to enter  Differentiation- differentiating the market offering to create superior customer value  Positioning- arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers   Geographic segmentation- dividing a market into different geographical units, such as nations, states, regions, counties, cities or even neighborhoods  Demographic segmentation- divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation  Age and life cycle stage segmentation- divides a market into different age and life-cycle groups  Gender segmentation-divides a market into different segments based on gender  Income segmentation- divides a market into different income segments  Psychographic segmentation- divides a market into different segments based on social class, lifestyle, or personality characteristics o Ex: Dunkin Donuts o Marketers also use personality variables to segment markets o Marketers sometimes refer to brand focused psychographic segments as brand “tribes”- communities of core customers with shared characteristics, brank experiences, and strong affinities for a particular brand  Behavioral segmentation- divides a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product  Occasion segmentation- dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase or use the purchased item  Benefit segmentation- dividing the market into segments according to the different benefits that consumers seek from the product  Using multiple segmentation bases: MKT 300 Susan Fant o Multiple segmentation- is used to identify smaller, better-defined target groups o Experian’s Mosaic USA- system classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence  Segment International Markets:  Geograph Political Economic Cultural ic factors and legal factors location factors  Intermarket (cross market) segmentation- forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries  Requirements for Effective Segmentation:  Measurable Accessible Substantial Differentiab Actionable le  Target market- a set of buyers who share common needs or characteristics that the company decides to serve   Undifferentiated (mass) marketing- a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer o Focuses on common needs rather than what’s different  Differentiated (segmented) marketing- a market coverage strategy in which a firm decides to target several market segments and designs separate offers for each o Goal is to achieve higher sales and stronger position o More expensive than undifferentiated marketing  Concentrated (niche) marketing- a market coverage strategy in which a firm goes after a large share of one or a few segments or niches o Limited company resources o Knowledge of the market o More effective and efficient  Micromarketing- is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations o Local marketing- involves tailoring brands and promotion to the needs and wants of local customer segments  Cites, neighborhoods, and stores o Individual marketing- involves tailoring products and marketing programs to the needs and preferences of individual customers  Also called: one to one marketing or mass customization Susan Fant  Product position- the way the product is defined by consumers on important attributes  Positioning maps- show consumer perceptions of marketer’s brands versus competing products on important buying dimensions o  Competitive advantage- is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices o Product o Services o Channels o People o Image o A difference to promote should be   Important Distinctive Superior Communica ble Preemptive Affordable Profitable  Value proposition- the full positioning of a brand; the full mix of benefits on which it is positioned o Susan Fant  Positioning statement- summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference) Chapter 8: Products, Services, and Brands  Product- anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want  Service- a product that consists of activities, benefits, or satisfactions and that is essentially intangible and does not result in the ownership of anything   Consumer products- products and services bought by final consumers for personal consumption o Convenience products o Shopping products o Specialty products o Unsought products  Convenience products- consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort o Ex: newspapers, candy, fast food  Shopping products- less frequently purchased consumer products and services that the customer compares carefully on suitability, quality, price, and style o Ex: furniture, cars, appliances  Specialty products- consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort o Ex: medical services, designer clothes, high-end electronics  Unsought products- consumer products that the consumer does not know about or knows about but does not normally think of buying o Ex: life insurance, funeral services, blood donations  Industrial products- those products purchased for further processing or for use in conducting a business o Material and parts- raw materials and manufactured materials and parts o Capital items- industrial products that aid in the buyer’s production or operations Susan Fant o Suppliers and services- operating supplies repair and maintenance items, and business services  Organization marketing- consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization  Person marketing- consists of activities undertaken to create, maintain, or change the attitudes or behavior of target consumers toward particular people  Place marketing- consists of activities undertaken to create, maintain, or change attitudes and behavior toward particular places  Social marketing- uses commercial marketing concepts to influence individuals’ behavior to improve their well-being and that of society   Product quality- refers to the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs o Total quality management o Return-on-quality o Quality level o Performance quality o Conformance quality  Product features- Competitive tool for differentiating a product from competitors’ products; assessed based on the value to the customer versus its cost to the company  Style- describes the appearance of the product  Design- contributes to a product’s usefulness as well as to its looks  Brand- is the name, term, sign, or design or a combination of these, that identifies the maker or seller of a product or service  Packaging- involves designing and producing the container or wrapper for a product  Labels- identify the product or brand, describe attributes, and provide promotion  Product line- is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges  Product mix- consists of all the product lines and items that a particular seller offers for sale. o Width o Length o Depth o Consistency Susan Fant   Brand equity is the differential effect that knowing the brand name has on customer response to the product or its marketing  Brand value is the total financial value of a brand Chapter 9: New Product Development  Acquisition- refers to the buying of a whole company, a patent, or a license to produce someone else’s product  New product development- refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development o “New pie” o Major stages in new product development o  Idea generation- is the systematic search for new product ideas o Company owns ideas o Internal sources- refer to the company’s own formal research and development, management and staff, and intrapreneurial programs o External sources- refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms o Crowdsourcing- involves inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process  Idea screening: o R-W-W screening framework:  Is it real?  Can we win?  Is it worth doing? MKT 300 Susan Fant  Product idea- is an idea for a possible product that the company can see itself offering to the market o Understand  Product concept- is a detailed version of the idea stated in meaningful consumer terms o Perceive  Product image- is the way consumers perceive an actual or potential product  Concept testing- refers to testing new product concepts with groups of target consumers o Ex: concept cars  Marketing strategy development- is designing an initial marketing strategy for a new product based on the product concept  Ethnographic research- how and why people use certain brands  Marketing strategy statement consists of: o Target market description o Value proposition planned o Sales, market-share, and marketing mix  Business analysis- is a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives  Product development- is developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering  Test marketing- is the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings o When test marketing is likely When test marketing is unlikely • New product with large investment • Simple line extension • Uncertainty about product or •Copy of competitor product marketing program • Low costs • Management confidence  Product Life-Cycle Strategies o Product development  Zero sales and increasing investment costs o Introduction  Slow sales growth  Little or no profit  High distribution and promotion expenses o Growth  Sales increase  New competitors enter the market  Profits increase  Economies of scale  Consumer education  Lowering prices to attract more buyers o Maturity  Slowdown in sales  Many suppliers  Substitute products Susan Fant  Overcapacity leads to competition  Increased promotion and R&D to support sales and profits o Decline  Sales fall off and profits drop  Maintain the product  Harvest the product  Drop the product  Chapter 10: Pricing  Price- is the amount of money charged for a product or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service   Value-based pricing- uses the buyers’ perceptions of value rather than the seller’s cost o “Freemium vs. premium” o Value-based pricing is customer driven o Cost-based pricing is product driven o Price is set to match perceived value  Susan Fant  Good-value pricing- is offering just the right combination of quality and good service at a fair price o Ex: grocery store examination  Everyday low pricing (EDLP)- involves charging a constant everyday low price with few or no temporary price discounts o Ex: Walmart o Opposite- luxury goods  High-low pricing- involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items o Ex: Bed Bath & Beyond Hobby Lobby, etc.  Value-added pricing- attaches value-added features and services to differentiate the companies offers and thus their higher prices o Alabama shirt plus a name on the back  Cost-based pricing- sets prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk o Trying to cover cost and harder to sell  Fixed costs- are the costs that do not vary with production or sales level (rent, heat, interest, executive salaries, etc.)  Variable costs- vary directly with the level of production (raw materials, packaging, etc.)  Total costs- are the sum of the fixed and variable costs for any given level of production  Cost-plus pricing- adds a standard markup to the cost of the product o Benefits  Sellers are certain about costs.  Price competition is minimized.  Buyers feel it is fair. o Disadvantages  Ignores demand and competitor prices  Break-even pricing (target return pricing)- is setting price to break even on costs or to make a target return o “Have to spend money to make money” o  Competition-based pricing- is setting prices based on competitors’ strategies, costs, prices, and market offerings o Very little to do with actual costs o Ex: Walmart vs. Target Susan Fant  Target costing- starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met  Invisible hand  Adam Smith  prices move with the market  Pricing in different types of markets: o  involves a large number of sellers, no Pure competition one of which influences price or supply Monopolistic  when an organization with many competitors  competition develops a marketing strategy to differentiate its  Oligopolistic product  competition  when multiple competitors develop marketing strategies Pure monopoly  involves one single seller who makes  Demand curve- shows the number of units the market will buy in a given period at different prices o Demand and price are inversely related. o Higher price = lower demand o Downward sloping  Price elasticity of demand: o Price elasticity- is a measure of the sensitivity of demand to changes in price o Inelastic demand- is when demand hardly changes with a small change in price o Elastic demand- is when demand changes greatly with a small change in price o  The economy and other external factors: o Economic conditions o Reseller’s response to price o Government o Social concerns Chapter 12: Marketing Channels Delivering Customer Value  Value delivery network- composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system o “Stakeholders” Susan Fant  Upstream partners- firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service  Downstream partners- include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers  Supply chain “make and sell” view includes the firm’s raw materials, productive inputs, and factory capacity  Demand chain- “sense and respond” view suggests that planning starts with the needs of the target customer  Marketing channel (distribution channel)- a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user   How channel members add value: o Information o Promotion o Contact o Matching o Negotiation o Physical distribution o Financing o Risk taking  Susan Fant  Connected by several types of flows: o Physical flow of products o Flow of ownership o Payment flow o Information flow o Promotion flow  Marketing channels- consist of firms that have partnered for their common good with each member playing a specialized role  Channel conflict- refers to disagreement among channel members over goals, roles, and rewards o Ex: suppliers o Horizontal conflict o Vertical conflict  Conventional distribution systems- consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole  Vertical marketing systems (VMSs)- provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system. o Corporate marketing systems o Contractual marketing systems o Administered marketing systems MKT 300 Susan Fant o  Corporate vertical marketing systems- combine successive stages of production and distribution under single ownership.  Contractual vertical marketing systems- consist of independent firms at different levels of production and distribution who join together through contracts.  Administered vertical marketing system- a VMS that coordinates successive stages of production and distribution through the size and power of one of the parties  Franchise organization- a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production- distribution process  Horizontal marketing system- a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity o Companies joining together  Multichannel distribution systems- systems in which a single firm sets up two or more marketing channels to reach one or more customer segments o  Disintermediation- the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries o Internet  Types of intermediaries- refers to channel members available to carry out channel work. Most companies face many channel member choices o Intensive Low price distribution o Exclusive to distribution o Selective High price distribution  A producer and the intermediaries need to agree on the following: Susan Fant o Price policies o Conditions of sale o Territory rights o Specific services  Channel systems can vary from country to country  Marketers must be able to adapt channel strategies to structures within each country  Selecting Managing Motivating Evaluating channel channel channel channel members members members members  Exclusive distribution- when the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories  Exclusive dealing- when the seller requires that the exclusive distribution sellers not handle competitor’s products  Exclusive territorial agreements- where producer or seller limit territory  Tying agreements- agreements where the dealer must take most or all of the line  Marketing logistics (physical distribution)- involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit   Supply chain management- involves managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers  Goal of marketing logistics- should be to provide a targeted level of customer service at the least cost; they include: o Warehousing o Inventory management o Transportation o Logistics information management  Integrated logistics management- the recognition that providing customer service and trimming distribution costs requires teamwork internally and externally


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