MKT 300 Study Guide for Test 2
MKT 300 Study Guide for Test 2 MKT 300
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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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