Midterm Study Guide
Midterm Study Guide BADM 3401
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This 26 page Study Guide was uploaded by Annalea Soudry-Maurer on Sunday October 11, 2015. The Study Guide belongs to BADM 3401 at George Washington University taught by Marilyn Liebrenz-Himes in Fall 2015. Since its upload, it has received 51 views. For similar materials see Basic Marketing Management in Business Administration at George Washington University.
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Date Created: 10/11/15
Marketing Study Guide Chapter 1 Creating Customer Value and Engagement What is marketing 39 engaging customers and managing profitable customer relationships goals attract new customers by promising value and keep and grow current customers by delivering satisfaction The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return focus on satisfying customers needs 39 creating Value 39 designing products pricing the products appropriately placing products in stores or online in ways that are acquirable promoting the attributes which make those products desired by consumers Marketing Process companies work to understand consumers create customer value and build strong customer relationships Steps are Determine wants and needs Design a customerdriven marketing strategy Construct marketing program that delivers superior value Build relationships an delight the customer Capture value from customer to achieve profits companies reap the rewards of capturing value from customers in the form of sales profits and longterm customer equity W WNT 2 Market Offerings Wants and Needs fulfilled through market offerings combination of products services information or experiences offered to a market to satisfy a need or want marketing myopia occurs when the organization focuses only on existing wants of the company and loses sight of underlying consumer needs and wants need states of felt deprivation include physical social and individual needs that are part of the human makeup wants the forms that needs take as they are shaped by culture and individual personality ie you need food but want a burger when backed by buying power wants become demands the specific way a person satisfies a need depends on his or her unique history learning experiences and cultural environment 2 CustomerDriven marketing strategy focus on the consumer three elements marketing management the art and science of choosing target markets for exchanges and building profitable relationships with them selecting customers done through market segmentation dividing the markets into groups of customers that are different in some way target marketing choosing which segments to go after what customers will we serve how can we best serve these customers choose value proposition the set of benefits or values a company promises to deliver to customers to satisfy their needs customer value the customer s evaluation of the difference between all the benefits and costs of a market offering relative to those of competing offers successful organizations have to recognize these customer desires Marketing Management Orientations five alternative concepts under which orgs design and carry out marketing strategies Production Concept consumers will favor products that are available and affordable management should focus on improving production and distribution efficiency Henry Ford Model T cars highly available and affordable Product Concept consumers will favor products that offer the most in quality performance and innovative features marketing strategy focuses on making continuous product improvements Selling Concept consumers will not buy enough without a large scale selling and promotion effort practiced with unsought goods that buyers do not usually think of buying these industries must be good at tracking down prospects and selling them on benefits ex insurance or blood donations Marketing Concept goal is to find the right products for your customers 3 way perspective focus on satisfying needswants of customer research is often needed to confirm needs or wants customer focus and value is the best path to sales and profits understanding customer needs and creating products and services that meet existing and latent needs Societal Marketing Concept marketing strategy should deliver value to customers in a way that maintains or improves both the consumer s and the society s wellbeing questions whether pure marketing concept overlooks possible conflicts between consumer shortrun wants and longrun welfare Building Customer Relationships CRM 39 building and maintaining profitable customer relationships by delivering superior customer value and satisfaction depends on the product s perceived performance relative to buyer s expectations dissatisfaction performance falls short of expectations satisfaction performance exceeds expectations Capturing Value from Customers aim of CRM is to create customer delight customer lifetime value value of the entire stream of purchases that the customer would make over a lifetime of patronage companies realize that losing a customer means losing more than a single sale Stew Leonard owns a 4 store supermarket chain and says that he sees 50000 leave his store when he sees a sad customer Marketing Mix set of tools Product Place Price and Promotion used to implement marketing strategy Integrated marketing program comprehensive plan that communicates and delivers the intended value to chosen customers Changing Marketing Landscape uncertain economic times ethical and social responsibility digital age Internet mobile communication devices online marketing nonprofit marketing zoos museums churches and other organizations rapid globalization focus on sustainable marketing meets present needs of consumers and businesses while preserving or enhancing the ability of future generations to meet their needs Chapter 2 Marketing Strategy Strategic Planning process of developing and maintaining a fit between the organization s goals and capabilities and its changing marketing opportunities sets the stage for the rest of planning in the firm Steps 39 define the mission set objectives design business portfolio plan marketing strategies Define the Mission mission statement the organization s purpose what it wants to accomplish in the larger environment marketoriented mission statement the business in terms of satisfying basic customer needs Market Growth Rate armc tf nam EILEIIB39 lmFin39nmi must be realistic specific fit the market environment based on the company s distinctive competencies and motivating Disney We create fantasies a place where dreams come true and America still works the way it s supposedto Googie We help you organize the world s information and make it universally accessible and useful Set Objectives mission needs to be turned into detailed supporting objectives for each level of management marketing strategies and programs have to support these objectives objectives include investing in research improving profits improving CRM increasing market share creating local partnerships DesignAnalyze Business Portfolio management evaluates the products and businesses that make up the company best portfolio fits company s strengths and weaknesses to opportunities in the environment business portfolio collection of businesses and products that make up the company strategic business unit SBU unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses portfolio analysis calls for management to assess the attractiveness of its various SBUs and decide how much support each deserves most standard portfolioanalysis methods evaluate SBUs on 2 important dimensions attractiveness of SBU s market and strength of the SBU s position in that market SBU can be a company division a product line or even a Single IOrOdUCt Portfolio BCG Matrix 3 steps identify key businesses SBUs that make up the company assess the attractiveness of its various SBUs decide how much support each SBU deserves Boston Consulting Group approach stars are highgrowth highmarket share businesses or products requiring heavy investment to finance rapid growth eventually turn into cash cows Cash cows are lowgrowth high market share businesses or products that are established and successful SBUS requiring less investment to maintain market share 39 Question marks are lowmarket share units in highgrowth markets requiring a lot of cash to hold their share Dogs are lowgrowth lowmarket share businesses and products that may generate enough cash t0 maintain themselves but do not promise large sources of cash Portfolio BCG Matrix ProductMarket Growth Matrix MI 39E In a I E i I E 0501 Foam Elianne P LIxHiil too for identifying growth opportunities through market penetration product development market development or diversification market penetration making more sales to current customers without changing products market development identifying and developing new markets for current products Product development offering modified or new products to current markets Diversification starting up or buying businesses outside of current products and markets Downsizing reduction of the business portfolio by eliminating business units that are not profitable or no longer fit the strategy Market Penetration Product Development U E l E ii Market Devellopment Diversi cation EXIISTIN G Product Emphasis Create the Marketing Strategy a plan by which the company hopes to achieve profitable relationships needs to incorporate all activities and elements from the acquisition or manufacture of the goods to the final transaction and relationship with the customer value chain Value Chain series of departments that carry out valuecreating activities to design produce market deliver and support the firm s products value chain is only as strong as its weakest link marketers have to work closely with other departments to form an effective internal company value chain and with other companies to create an external value delivery network customer should be the starting point for the value chain Market Segmentation division of a market into distinct groups of buyers who have distinct needs characteristics or behavior and who might require separate products or marketing mixes market segment group of consumers who respond in a similar way to a given set of marketing efforts companies need to determine which segments would be most appropriate segments to target Market Targeting process of evaluating each market segment s attractiveness and selecting one or more segments to serve Market Positioning arrangement of a product to occupy a clear distinctive and desirable place relative to competing products in the mind of the target customer positioning message must persuade the target segments why the company s offerings are better than the competition Marketing Mix set of controllable tactical marketing V feminist Prisa armatu List whee that the firm blends to produce the 333 gigging response It wants In the target 33 gf ii d Product decnslons such as product 23353339 variation features packaging 5312 branding customer solution mans 39 39 39 U Punlftlianlng I Pricing determines how much the Pmmww V I v n PM charges for the product pncmg strategies establish prices the company will charge to wholesalers Liliax39i ii 35 retailers customer cost q 0 Promotion hOW marketers communicate a product s value to the target market communication Place outline how when and where the firm will make the product available to targeted customers convenience Managing marketing effort putting strategy into action 39 complete SWOT analysis strengths weaknesses opportunities threats Organize and develop strategic marketing plans implement the plans measure and evaluate the results Organization tools market design firm and Functional organization most common form of marketing organization with different marketing functions headed by a functional specialist Geographic organization useful for companies that sell across the country or internationally managers develop strategies for a specific region Product management useful for companies with varying productsbrands manager develop strategies for a specific product or brand Market or customer management organization useful for companies with one product line sold to many different markets and customers managers develop strategies and plans for their specific markets Large companies that produce many different products flowing intO different regions and markets employ a combination of these organizational forms Today s companies are finding that the marketing environment calls for less focus on products and territories and more focus on customers and customer relationships The Marketing Plan deciding on marketing strategies that will help the company attain its strategic objectives marketing plan is needed for each business product or brand start with a strong summary of the plan situation and SWOT assessment provides marketing objectives that are hoped to be achieved and the strategy that will be used incorporates ways to determine if the objectives are being achieved provides controls or ways to improve final performance budget is also provided for accomplishing goals Implementing and controlling the plan impiementation process that turns marketing plans into marketing actions to accomplish objectives marketing control involves evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are attained Operating control checking ongoing performance against the annual plan and taking corrective action when necessary Strategic control involves looking at whether the company s basic strategies are well matched to its opponunMes MeasuringManaging Return on Marketing Investment Marketing ROI the net return from a marketing investment divided by the costs of the marketing investment Marketing ROI provides a measurement of the profits generated by investments in marketing activities companies can asses MROI in terms of standard marketing performance measures brand awareness sales or market share marketing dashboards useful sets of marketing performance measures in a single display customercentered measures of impact customer acquisition customer retention and customer lifetime value Chapter 3 Marketing Environment marketing environment the actors and forces outside marketing that affect marketing management s ability to build and maintain successful relationships with target customers microenvironment actors close to the company that affect its ability to service customers company suppliers marketing intermediaries customer markets competitors and publics the company top management nance RampD purchasing operations accoun ng suppliers provide resources needed by the company to produce its goods and services supply shortages or delays labor strikes can cost sales in the short run and damage customer satisfaction in the long run managers must monitor price trends of key inputs intermediaries help the company promote sell and distribute its products to final buyers must work with intermediaries as partners rather than as channels oonduot consumer research and share with companies develop marketing programs and merchandising ex resellers physical distribution firms financial intermediaries marketing services agencies competitors position offerings strongly against competitors offerings in the minds of consumers no single competitive strategy is best for all companies onine purchasing has greatly increased competition publics any group that has a mutual or potential interest in or impact on an organization s ability to achieve its objectives financial publics influence company s ability to obtain funds media publics carry news features and editorial opinions government publics govt developments that may affect the company iooai publics neighborhood residents community organizations general public general public s image of the company affects its buying Internal publics workers managers volunteers and board of directors Responding to the marketing environment unoontroiiabie react and adapt to forces in the environment Proactive aggressive actions to affect forces in the environment Reactive watching and reacting to forces in the environment Customers company may target all five markets consumer markets individuals and households business markets business purchases for further processing in production reseiier markets buy goods and services to resell at a profit government markets made up of government agencies that buy goods and services to produce public services internationai markets buyers in other countries including consumers producers resellers and governments Macro Environment larger societal forces that affect the microenvironment demographic study of human populations in terms of size density location age gender race occupation etc invoves people and people make up markets trends age family structure geographic population shifts educational characteristics and population diversity baby boomers people born between 19461964 most affluent Americans 39 Generation X 19651976 high parental divorce rates cautious economic outlook less materialistic family comes first Miiienniais 19772000 comfortable with technology tweens teens and young adults generationai marketing important in segmenting people by lifestyle of life state instead of age changing family divorcing choosing not to marry marry without children stayathome dads geographic shifts about 14 of US residents each year move towards cities telecommuting and home offices occupation shifts US population is becoming better educated between 2006 and 2016 professional workers increase by 23 and manufacturing decline by 10 more diversity ethnicity LGBT disabled economic environment factors that affect consumer purchasing power and spending patterns industrial economies are richer markets subsistence economies consume most of their own agriculture and industrial output value marketing offering financially cautious buyers great value right combo of quality and service at a fair price natural environment natural resources that are needed as inputs by marketers or that are affected by marketing activities trends increased shortages of raw materials increased pollution and government intervention increased sustainable strategies technological environment most dramatic force in changing the marketplace new products opportunities concern for the safety of new products politicallegal environment laws government agencies and pressure groups that influence or limit organizations and individuals help develop public policy to guide commerce can have an impact on marketing performance due to discretion in enforcing laws social environment increased emphasis on ethics socially responsible behavior causerelated marketing TOMS shoes donates one pair of shoes to a needy child for every pair sold cultural environment consists of institutions and other forces that affect a society s basic values perceptions and behaviors core beliefs and values persistent and passed on through generations reinforced by schools churches businesses and governments secondary beliefs and values more open to change and include people s views of themselves others society nature and the universe serving themselves versus others decline of loyalty towards companies patriots defend society reformers change society malcontents leave it Chapter 4 Marketing Information Marketing Information and Customer Insights Marketing Information System MIS consists of people and procedures for assessing the information needs developing needed information helping decision makers use the information for customer a good MIS balances users information desires against what they need and what is feasible to offer the users of the information and the larger marketing environment serve as key inputs to an MIS MIS begins and ends with users assessing their information needs and delivering information that meet those needs MIS provides information to the company s marketing and other managers and external partners Customer Insights companies are forming customer insight teams collect information from a wide variety of sources Use insights to create more value for their customers the real value of marketing research and marketing information lies in how it is used and in the customer insights that it provides Developing Marketing Information finding the right information from inside and outside sources to turn it into customer insights 3 key sources of marketing information Internal databases usually found within the company marketing intelligence gathered outside of the organization and marketing research which is usually obtained through planned research activities strong competitive advantage marketing intelligence systematic collection and analysis of publicly available information about consumers competitors and developments in the marketplace intelligence information is often on annual reports business publications trade show exhibits and web pages collect market intelligence by monitoring media sources through industry network contacts actively scanning the general marketing environment marketing research systematic design collection analysis and reporting of data relevant to a specific marketing situation facing an organization more focused studies to gain customer insights relating to specific decisions Marketing research process Define problem research objectives gUideS the entire researCh process Develop research pan Implement Collectanalyze data Interpret and report findings two research options Primary observational ethnographic survey experimental collected for the specific purpose at hand tailored to the marketing problem costly and takes time observational gathering of primary data by observing relevant people actions and situations ethnographic borrows from anthropology and the researcher gains indepth information from a few informants outcome is qualitative data transcripts of interviews experimental research is best for gathering casual information cause and effect relationships survey the workhorse of marketing produces quantitative data requires a large sample and careful survey design questionnaires mechanical instruments checkout scanners people meters physiological measures questionnaires most common administered in person phone or online flexible research must be careful with wording and ordering of questions personai focus groups good moderator to keep the group on track and make sure it addresses the needed questions involve 615 people and usually reward participants often recorded onine research costs less than traditional research can gather both quantitative or qualitative data and to gather data from hard to reach groups higher response rates sampie a segment of the population selected to represent the population as a whole drawn by a probability or nonprobability sample Secondary collected for a different purpose already onhand easy cheap risk of being old outdated relevant ie trade association reports government data and grocery scanner data Steps to implement a research project Collect information process information analyze information interpret findings 39 draw conclusions report to management keep report relevant and concise information distribution involves entering information into databases and making it available in a time useable manner intranet provides information to employees and other stakeholders extranet provides information to key customers and suppliers Chapter 5 Consumer Behavior Model of Consumer Behavior consumer buyer behavior the buying behavior of final consumers individual and households who buy goods and services for personal consumption Consumer market all of the personal consumption of final consumers environment gt consumer s black box gt consumer s responses most of the buyer decisions are made in the black box environment inputs to the consumption process include marketing stimuli 4 P s as well as forces in the buyer s environment economic technological political and cultural marketer wants to understand how the stimuli from the environment are changed into responses inside the consumer s black box buyer characteristics influence how the buyer perceives and reacts to the stimuli the decision process itself affects the buyer s behavior oonsumer response purchasing and loyalty to the brand or outlet Characteristics Affecting Consumer Behavior 1 Cultural Influences broadest influence rarely aware of it until we travel to a foreign place culture reflects the learned values perceptions wants and behavior that stem from family and other important institutions lock for cultural shifts to discover new product opportunities subcultures groups of people within a culture that share value systems based on common life experiences African Americans Hispanics Tweens etc social class society s relatively permanent and ordered divisions members share values interests behaviors buying patterns based on an index of occupationincomeeducation 2 Social Influences impact of groups opinion leaders family and roles that we choose to assume Aspirational people are often influenced by reference groups to which they don t belong groups that a consumer aspires to join Reference serve as direct or indirect points of comparison or reference in forming a person s attitudes or behavior we refer to these groups when making a purchase online social networks online communities where people socialize or exchange information and opinions include blogs social networking sites virtual worlds opinion leadership people within a reference group who exert social influence on others how many individuals a leader may influence called influentials or leading adopters Family key reference group most important consumerbuying organization in society sccial roles expectations on us based on our position in a given situation such as an employee or uncle 3 Personal Influences demographic variables agelifecycle youth getting started builders accumulators preservers lifecycle refers to groups such as singles young marrieds single parents empty nesters etc incomeoccupation affect products desired and purchased Lifester Alos Activities interests opinions person s pattern of living as expressed in psychographics measures AlOs to capture information about a person s pattern of acting and interacting in the environment SelfPersonality people s possessions contribute to and reflect their identifies or sense of self we are what we buy unique psychological characteristics that lead to consistent and lasting responses to the consumer s environment 4 Psychological Influences Motives a need that is sufficiently pressing to direct the person to seek satisfaction physiological safety social esteem selfactualization motivation research qualitative research designed to probe consumers hidden subconscious motivations Perception process by which people select organize and interpret information selective attention tendency for people to screen out most of the information to which they are exposed selective distortion tendency of people to interpret information that will support what they already believe selective retention retaining information that supports existing attitudes and beliefs learning changes in an individual s behavior arising from experience beliefs and attitudes belief descriptive thought that a person has about something based on knowledge opinion and faith attitude person s relatively consistent evaluations feelings and tendencies toward an object or idea Types of Buying Decision Behavior Him 7 7 Low High biranld COMPLEX EQEILEIE Involvement based on perceived risks in d m iemc es the purchase high involvement leads to more active careful decision making Low bmd magnum HABITUAL complex buying behavior highly Involved dlil feremees REDUCING In a purchase and perceive significant differences among brands expensive or selfexpressive goods m quot quot339 dissonance reasoning occurs when consumers are highly involved but see little difference among brands post purchase regret Habitual occurs under low involvement with few significant brand difference varietyseeking characterized by low consumer involvement but significant perceived brand differences a lot of brand switching Decision Process Need Recognition need resulting from a perceived difference between a consumer s current state and the desired state when the buyer recognizes a problem or need triggered by internal or external stimuli Search occurs when the consumer does not have adequate information to make a purchase personal sources commercial sources public sources experiential sources Choice decision made using the information acquired previously time and effort is a function of involvement includes how the consumer processes information to arrive at brand choices Purchase act by the consumer to buy the most preferred brand usually pressures shopping companions out of stock or store layout may interfere with the purchase Post purchase satisfaction or dissatisfaction that the consumer feels about the purchase compare product performance against expectations Buyer Decision Process for New Products adoption process mental process an individual goes through from first learning about an innovation to final regular use awareness interest evaluation trial adop on model suggests that newproduct marketers should think about how to help consumers move through these stages 5 adopter groups innovators venturesome try new ideas at some risk early adopters guided by respect opinion leaders but adopt ideas carefully eary mainstream deliberate adopt ideas before the average person late mainstream skeptical adopt an innovation after a majority of people have tried it lagging adopters tradition bound suspicious of changes and adopt the innovation only when it has become something of a tradition itself 5 characteristics that are important in influencing an innovation S rate 01 adoption relative advantage degree to which the innovation appears superior to existing products compatibility degree to which the innovation fits the values and experiences of potential consumers complexity degree to which the innovation is difficult to understand or use divisibility degree to which the innovation may be tried on a limited basis communicability degree to which the results can be observed or described to others Chapter 6 BusinesstoBusiness Markets Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold rented or supplied to others includes behavior of retailing and wholesaling firms Business Markets differ from consumer markets business buying process process where business buyers determine which productsservices are needed to purchase and then find and choose among alternative brands Derived Demand the business demand for goods and services comes directly or indirectly from consumers demand ie textbooks Inelastic demand when price does not influence the demand for the product a large increase in a business product s price will have little effect on the final consumer product s price Fluctuating demand business demand is subject to more fluctuations because even modest changes in consumer demand can create large changes in business demand small shift in consumer demand for air travel may lead to a big drop in orders for airplanes Business buyers fewer and larger geographically concentrated more decision participants professional purchaserspurchasing agents Decision characteristics more complex high prices formal process buyer and seller dependency Buying situations 3 types of situations based on the degree of effort a firm needs to expend in order to collect info and make a decision straight rebuy routine purchase of items that a BZB customer regularly needs contribute to the bread and butter revenue a firm needs to maintain steady income modified rebuy firm decides to shop around for suppliers with better prices quality or delivery times can occur when the organization confronts new needs for products it already buys requires some research where the buyer wants to modify product specification price terms or suppliers requires more time and effort newtask buy firsttime purchase uncertainty and risk requires thorough research and effort no experience on which to base a decision Model of Business Buyer Behavior Environmental influences demand economic OU IlOOk cost Of money resources shortages in key materials companies are willing to buy and hold larger inventories to ensure adequate supply technology culture politics competition Organizational influences objectives policies procedures 39 structure 39 systems Interpersonal influences authority 39 status empathy persuasiveness Individual influences motives perceptions preferences 39 age income education professional identification personality attitudes towards risk KEY influences price service emotion Buying centers include all people in an organization who participate in a purchasing decision provide a challenge to marketers in determining who participates in the process their relative authority and what evaluation criteria each participant uses In uencer affects buying decision by dispensing advice expertise usually highly trained employees gatekeeper controls the flow of information to other members typically the purchasing agent who gathers information and materials from salespeople schedules sales presentations and controls suppliers access to other participants in the center decider member who makes the final decision and has greatest power authorize spending money Buyer person who executes the purchase and handles the details of the transaction obtains competing bids negotiates contracts arranges delivery dates and payment plans user member who actually needs and uses the product Buying process Problem recognition results from internal or external stimuli genera need description characteristics and quantity of the needed item product specification value analysis approach to cost reduction where components are studied to determine if they can be redesigned standardized or made with less costly methods of production supplier search compiling a list of suppliers scicit proposal process of requesting proposals from qualified suppliers select supplier buying center creates a list of desired supplier attributes and negotiated for favorable terms and conditions orderroutine specification final order with the chosen supplier that lists all specifications and terms of purchase performance review critique of supplier performance to the purchase items may lead the buyer to continue modify or drop the arrangement EProcurement online purchasing usually through companybuying sites or extranets good access to new suppliers low cost high speed share information sales service and support bed can erode relationships as buyers search for new suppliers security Institutional markets hospitals nursing homes and prisons that provide goods and services to people in their care US 2 million inmates and are the ultimate captive market 37 billion economy state prison systems spend more than 30billion annual vendors security medicine education food service maintenance technology low budget captive audience Government markets favor domestic suppliers and require suppliers to submit bids normally awarding to the lowest bidder carefully monitored and affected by similar environmental factors firms may have special teams to serve government buyers large and profitable noneconomic factors considered minority suppliers depressed suppliers small businesses Chapter 7 Segmentation and Target Marketing Market Segmentation dividing the market into smaller segments with distinct needs characteristics or behaviors that might require separate marketing strategies helps to reach markets more efficiently and effectively with products and services that match their unique needs 4 ways geographic dividing the market into geographical units such as nations regions states counties cities or neighborhoods demographic dividing the market into groups based on age gender family size family lifecycle income occupation education religion race generation and nationality income segmentation divides the market into affluent middleincome or lowincome consumers lifecycle offering different products or different marketing approaches for different age groups because family needs and expenditures change over time gender segmenting by sex occurs very early manufacturers often produce parallel products to appeal to each sex psychographic divides buyers into different groups based on social class lifestyle or personality traits behavior divides buyers into groups based on knowledge attitude uses or responses to a product occasion grouping buyers according to occasions when they get the idea to buy actually make their purchase or use the item benefit grouping buyers according to different benefits that they seek from the product user status grouping buyers into nonusers exusers potential users firsttime users and regular users usage rate grouping buyers into light medium and heavy product users loyalty grouping buyers according to degree of loyalty Differentiation differentiate the firm s market offering to create superior customer value Positioning a market offering occupying a clear distinctive and desirable place relative to competing products in the minds of target consumers Multiple Segmentation used to identify smaller betterdefined target groups Prizm NE company that classifies every American household into 66 unique segments organized into 14 social groups segmenting people and locations into marketable groups of likeminded consumers that exhibit unique characteristics and buying behavior based on demographic factors Segmenting Business customer operating characteristics purchasing approaches situational factors 39 personal factors Segmenting international divides consumers into groups with similar needs and buying behaviors even though they are located in different countries geographic factors nations close to one another will have many common traits and behaviors economic factors population income levels and overall level of economic development political and legal factors type and stability of government receptivity to foreign firms monetary regulations and amount of bureaucracy cultural factors common languages religions values and attitudes customs and behavioral patterns Evaluating Segments segment size and growth segment structural attractiveness 39 company objectives and resources largestfastest growing segments are nota always the most attractive ones a segment is less attractive if it already contains many aggressive competitors existence of many substitute products may limit prices and profits a segment may be less attractive if it contains powerful suppliers who can control prices Useful Market Segments measurable size purchasing power and profiles of the segments can be measured accessible segments can be effectively reached and served is the segment accessible with media substantial market segments are large or profitable enough to serve be careful of competition differentiable segments are conceptually distinguishable and respond differently to different marketing mix elements and programs Actionable effective programs can be designed for attracting and serving the segments Undifferentiated strategy essentially avoids segmentation appealing to a widespectrum of people ie antifreeze or candy bars target the whole market with 1 offer mass marketing that focuses on common needs Differentiated strategy targets different market segments and designs separate offers for each goal is to achieve higher sales and a stronger position develop separate marketing programs for different segments of the market costly approach that is usually used by larger firms Nike Toyota GE Concentrated Strategy firm focuses efforts on offering one or more products to 1 single segment often useful for smaller firms that do not have the resources to be all things to all people targets a small share of a large market organization can utilize knowledge of the market and succeed by being effective and efficient Individual Segment Marketing involves tailoring products and marketing programs to the needs and preferences of the individual customers onetoone marketing mass customization marketsofone marketing design products and services tailormade to meet individual needs this has made relationships with customers important distinguishes the company against competitors Micromarketing tailoring products and marketing programs to suit the tastes of specific individuals and location includes local marketing and individual marketing ooa marketing tailoring brands and promotions to needs and wants of local customer groups cities neighborhoods or specific stores advances in communications technology has allowed for new hightech locationbased marketing by using GPS devices marketers are now targeting customers wherever they are with whatever they want Target marketing dividing the total market into different segments based on customer characteristics selecting one or more segments and developing products to meet those segments needs target market set of buyers who share common needs or characteristics that the company decides to serve Choosing a target company resources 0 product variability 0 product lifecycle 0 market variability competitors marketing Socially responsible target marketing benefits customers with specific needs such as concern for vulnerable segments such as children or alcoholics and drug addicts Product positioning the way the product is defined by consumers on important attributes the place that the product occupies in consumers minds relative to competing products positioning map shows consumer perceptions of their brands versus competing products on important buying decisions Competitive advantage a company gains competitive advantage when it can differentiate and position itself as providing superior customer value an advantage over competitors gained by offering consumers greater value Choosing a positioning strategy Identify competitive advantages upon which to build a IOOSition differentiation based on product place distribution services people who work at the organization or the image of the organization Choose the right competitive advantage select a positioning strategy Communicate the position strategy to the designated target market The difference to promote should be What point of distinction would be the most persuasive difference or positioning message Important difference delivers a highly valued benefit to target buyers distinctive competitors do not offer the difference superior difference is superior to other ways communicabie difference is communicable and visible to buyers preemptive competitors cannot easily copy the difference affordabie buyers can afford to pay for the difference profitable company can introduce the difference profitably Value proposition Price More The same Liaise Once the company has chosen a position it must take M strong steps to deliver and communicate the desired are More More Mme fur fur the fur posmon to target consumers gamer liege marketing mix efforts must support positioning strategy The same Bene ts Chapter 8 Product fleas L E What is a product 39 39 anything that can be offered to a market for attention acquisition use or consumption that might satisfy a want or need service a product that consists of activities benefits or satisfaction that is essentially intangible experiences represent what buying the productservice will do for the customer market offering includes tangible goods and intangible services layers of a product core product all the benefits the product will provide for consumers or business customers actual product physical good or delivered service that supplies the desired benefit includes features of the product augmented product actual product plus supporting features such as warranty credit delivery installation repair Product ine group of products that are closely related as they function in a similar manner are sold to the same customer groups marketed through same outlets or fall within given price ranges Product line length number of items in a product line Product line filling adding more items within the present range of the line Product line stretching when a company lengthens product line beyond current range companies can stretch lines downward or upward based on market positioning Product mix companies can increase their business by expanding these 4 things Width number of different product lines the company carries Length total number of items the company carries Depth number of versions of each product in the line Consistency how closely related the various product lines are in end use production requirements distribution channels or some other way 2 types of products consumer products and industrial products Marketers classify products based on how customers shop for them convenience consumer products and services that customers usually buy frequently immediately and with a minimum comparison and buying effort newspapers candy shopping less frequently purchased that customers compare carefully on quality price and style furniture cars clothes appliances speciaity consumer products and services with unique characteristics or brand identification for which significant group of buyers is willing to make a special effort unsought consumer products that the consumer does not know about or knows about but does not normally think of buying Industrial products purchased for further processing or for use in conducting a business materials and parts manufactured parts and raw materials capital items industrial products that aid in the buyer s production or operations supplies and services operating supplies repair and maintenance items and business services Person marketing activities undertaken to create maintain or change attitudes and behavior of target consumers toward particular people ie Rachel Ray Place marketing activities undertaken to create maintain or change attitudes and behavior of target consumers toward particular places ie Las Vegas Organization marketing activities undertaken to create maintain or change attitudes and behavior of target consumers toward an organization both profit and nonprofit entities business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their image IBM s Smarter Planet campaign Social marketing use of commercial marketing concepts and tools in programs designed to influence individuals behavior to improve wellbeing for themselves and society Services acts efforts or performances exchanged from producer to user without ownership rights intangibiiity consumers can t see touch or smell a service cannot be inspected or handled before purchase inseparability impossible to separate the production and consumption of a service Variabiiity same service even if performed by the same individual or customer can vary Perishabiiity impossible to store a service for later sale or consumption Service Marketing Business services private nonprofit organizations 39 government Service companies face 3 major marketing tasks Service differentiation have more able and reliable customercontact people develop a superior physical environment in which the service is delivered or designing a superior delivery process offer distinctive features delivery more able and reliable customer contact people image symbols and branding service quality quality is harder to define and judge and depends on interaction between employees and customers good service recovery is important Service productivity under pressure to increase service productivity train current employees better or hire new ones who will work more skillfully additional strategies internal marketing service firm must orient and motivate its customercontact employees and support service people to work as a team Interactive marketing service quality depends heavily on the quality of the buyerseller interaction Serviceprofit chain 1 Internal service quality employee selection and training quality work environment strong support for dealing with customers which results in 2 Satisfied and productive service employees results in 3 Greater service value more effective and efficient customer value creation and service delivery results in 4 Satisfied and loyal customers remain loyal repeat purchase and refer other customers results in 5 Healthy service profits and growth superior service firm performance Product and Service Decisions product attributes communicate and deliver the benefits quality features style design level and consistency quality conformance freedom from defects consistency in delivering a targeted level of performance product quality is one of the marketer s major positioning tools has direct impact on performance style describes the appearance of the product design contributes to a product s usefulness as well as to its looks branding name term sign symbol or design that identifies the maker or seller or a product or service help consumers identify products that might benefit them attributes benefits beliefs perceptions and feelings about a product and its performance brand equity differential effect that knowing the brand name has on customer response to the product or its marketing brand positioning product attributes product benefits product beliefs and values a good brand name should suggest something about the benefits and qualities easy to pronounce extendable translate easily into foreign languages be legally protected brand sponsorship product launched as manufacturer s brand manufacturer sells to resellers who give it a private brand manufacturer markets licensed brands two companies can join and cobrand allows a company to expand existing brand into a category it might otherwise have difficulty entering alone brand development line extensions extend existing brand names to new forms colors sizes ingredients or flavors of an existing product category brand extension extend a current brand name to new or modified products in a new category multi brands introduces additional brands in the same category new brands packaging covering or container for a product protects the product makes it easy to handle the product involves designing and producing the container or wrapper labeling identify the product or brand describe attributes and provide promotion support services companies must continually assess the value of current services to obtain ideas for new ones assess the costs of providing these services develop a package of services to satisfy customers and provide profit to the company Chapter 9 New Product Development Competition in global marketplace makes it essential for firms to continuously offer new products to attract consumers New Products and their development original products product improvements product modifications and even new brands developed from the firm s own research and development or acquired through purchase of another company patent or license New Product Development refers to original products improvements modifications and new brands developed from the firm s RampD efforts Acquisition buying of a whole company patent or a license to produce someone else s product New Product Failure new products face tough odds 90 of all products in America fail each year companies lose 2030 billion on failed food products alone meager competitive advantages overestimation of market size poor product positioning poor marketing mix or bad timing changes in legal environment or lack of monetary resources New Product Development Process Idea generation systematic search for new product ideas search starts internally and then externally internai own RampD management and staff intrapreneurially programs externai sources outside the company such as customers competitors distributors suppliers and outside design firms crowdsourcing inviting broad communities of people into the new product innovation process asking consumers to send in ideas for new products ideas must provide strong customer benefits that are compatible with company mission Idea screening reviewing ideas to help spot good ideas and drop poor ones ASAP ideas are expanded into complete product concepts examining the chances that the product might achieve success is it real can we win is it worth doing Concept development and testing several descriptions are generated to find out how attractive each concept is to customers a product idea idea for a possible product a product concept detailed version of the idea stated in meaningful terms a product image the way consumers perceive a product concept testing testing newproduct concepts with groups of target customers Marketing strategy development designing an initial market strategy for introducing a product to the market 1 description of the target market planned value proposition sales market share and profit goals for the first few years 2 outline of the planned price distribution and marketing budget for the fst year 3 description of the planned longrun sales profit goals and marketing mix strategy Business analysis involves a review of the sales costs and profit projections for a new product to find out whether they satisfy the company s objectives conducted to find out if the product can be profitable issues include potential demand and required firm resources Product development creation and testing of one or more physical versions by the RampD or engineering department calls for a large jump in investment to show whether the product idea translates into a workable product testing use employees for testing Test marketing the product and marketing program are introduced into realistic market settings provides the marketer with experience in testing the product and entire marketing program before full introduction standard test markets small representative markets where the firm conducts full marketing campaign and store audits consumer surveys and other measures results are used to forecast national sales and profits discover problems and finetune marketing program controlled test markets panels of stores that have agreed to carry new products for a fee let expensive and faster than standard test markets but competitors gain access to the new product track individual consumer behavior for new products from TV sets to the checkout counter simulated test markets simulated shopping environments company shows ads and promotions for a variety of products including the one being tested to a sample of consumers gives consumers a small amount of money and invite them to a store where they may keep the money or use it to buy items see how many consumers by the new product and competing product provides measure of trial and effectiveness of promotion researchers can interview consumers to understand their reactions less expensive faster restricted access by competitors not considered as reliable due to controlled setting top 10 test markets Albany Schenectady Troy NY Rochester NY Greensboro Winston Salem High Point NC BirminghamAL Syracuse NY Charlotte gastonia Rock Hill NCSC Nashville TN Eugene Springfield OR Wichita KS Richmond Petersburg VA Commerciaiization introducing the new product to the market decisions made about timing location of launch and how to implement market rollout Managing New Product Development 3 Mandates customercentered focuses on finding new ways to solve customer problems and create more customer satisfying experiences Team based departments work closely together in crossfunctional teams overlapping the steps in the product development process to save time and increase effectiveness stay with the product from start to finish instead of passing it along to different departments systematic collects reviews evaluates and manages newproduct ideas creates an innovationoriented culture and yields a large number of newproduct ideas innovation management systems entire company commitment to new product development efforts Eelee and 0 high expense pro fite S A Product Life Cycle the way products go through stages from development to death Sales lPrnfils a n Product development find and develop a new Tlm e product idea Prioritiot 39 oeeeloornent Introouotion Growth Maturity Deotine Introduction period of slow sales growth as product is introduced in the market profit is nonexistent due to costs of RampD and promotion 40 of products fail at this stage Growth period of rapid market acceptance and Lo eeoef ineeetrnent Si ning 1221 11 WJIEIi v39 quote E39J rt ggaol39m uo Hot increasing profits marketing s goal is to encourage brand loyalty and exhibiting superior qualities versus competitors introduction of product variations to attract market segments price CU IS sales increase new competitors price stability consumer education profit increase promotion and manufacturing costs gain economies of scale Maturity period of slowdown in sales growth because product has achieved acceptance by most potential buyers profits level off or decline because of increased marketing outlays to defend product against competition usually the longest period competition grows intense price reductions and reminder advertising maintain market share company tries to increase consumption of product might try modifying the product changing characteristics to inspire more usage decline period when sales fall off and profits drop decrease in product category sales market as a whole shrinks profit curve peaks before the sales curve modify the marketing mix improving sales by changing marketing mix elements out prices launch a better campaign or use aggressive sales promotions move into new marketing channels to help serve new users sell the product through as many outlets as possible because availability is crucial suppliers pull out no competitors have a distinct advantage 3 options Maintain the brand repositioning or reinvigorating it in hopes of moving it back to growth stage Harvest the product reducing costs hoping that sales hold up Drop the product can sell to another firm or liquidate it Life Cycle Strategies ster basic and distinctive mode of expression fashion a given field fad sales driven immediate Style Sale539 first Sales Fashinn Time Sales currently accepted or popular style in M temporary periods of unusually high by consumer enthusiasm and product or brand popularity Time
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