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Exam 2 Study Guide

by: Pass

Exam 2 Study Guide MARK 3336

Introduction to Marketing
Michael Ahearne

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Introduction to Marketing
Michael Ahearne
Study Guide
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This 15 page Study Guide was uploaded by Pass on Monday October 12, 2015. The Study Guide belongs to MARK 3336 at University of Houston taught by Michael Ahearne in Fall 2015. Since its upload, it has received 40 views. For similar materials see Introduction to Marketing in Marketing at University of Houston.


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Date Created: 10/12/15
Business Markets and Business Buyer Behavior 0 Business buyer behavior 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 0 Business buying process the process where business buyers determine which products and services are needed to purchase and then find evaluate and choose among alternative brands 0 Business Markets 0 Market Structure and Demand I Fewer but larger buyers Derived demand Inelastic demand Fluctuating demand 0 Nature of Buying Unit Business buyers usually face more complex buying decisions than do consumer buyers Compared with consumer purchases a business purchase usually involves I More decision participants more professional purchasing effort more buyer and seller interaction 0 Decision Process I Supplier development the systematic development of networks of supplierpartners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others 0 Business Buyer Behavior 0 Major Types of Buying Situations I Straight rebuy a buying situation in which the buyer routinely reorders something without any modifications I Modified rebuy a buying situation in which the buyer wants to modify product specifications prices terms or suppliers I New task a buying situation in which the buyer purchases a product or service for the first time 0 Participants in the Business Buying Process I Buying center consists of all the individuals and units that play a role in the business purchase decisionmaking process 0 Users those that will use the product or service 0 In uencers help define specifications and provide information for evaluating alternatives 0 Buyers have formal authority to select the supplier and arrange terms of purchase I Gatekeepers control the ow of information 0 Major In uences on Business Buyers WET I 1r I mm Urgeiniizetienal F v 2 llnierpereenel g D l jECEWE E lnrdwrdluall mm 5quot Helleenee Strategies ge rmm mm g Expertise J g fgfn Streeiure I quotK a 4quot VI 1 r quota I 7 ileri Dynamic llyFINE style I H lnm Preeedu ree 0 The Business Buying Process eriiiiieri deeeriptieri epeeilieeiien S eSreh I P erfermeriee review Urdearreuiirre 393 epeeiiieerieri epeeel ieitetiieri Supplier ee eetien 0 Problem recognition occurs when someone in the company recognizes a problem or need I Internal stimuli need for new product or production equipment I External stimuli idea from a trade show or advertising 0 General need description describes the characteristics and quantity of the needed item Product specification describes the technical criteria 0 Value analysis an approach to cost reduction where components are studied to 0 determine if they can be redesigned standardized or made with less costly methods of production 0 Supplier search involves compiling a list of qualified suppliers to find the best vendors 0 Proposal solicitation the process of requesting proposals from qualified suppliers 0 Supplier selection when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions 0 Orderroutine specifications includes the final order with the chosen supplier and lists all of the specifications and terms of the purchase 0 Performance review involves a critique of supplier performance to the orderroutine specifications EProcurement and Online Purchasing 0 Advantages I Access to new suppliers Lower costs Speeds order processing and delivery Enhances information sharing Improves sales Facilitates service and support O Disadvantages I Erodes relationships as buyers search for new suppliers CustomerDriven Marketing Strategy Ell ll39llll f II were H tl l If a 39U lllll quot Ftr F E lll gmentetien e tetel merlltet imte Itet eeemente Uttferenttetiien Ditterentiete the market tterittg reete trellrue teeteete eupetiereeetemer eelee f ter targeted Fergeting the eegtment er e te te emtet Feeitientng PDEtli t ttte mletttet Et il tgt tn the minete et tetet eueterttete 0 Market segmentation requires dividing a market into smaller segments With distinct needs characteristics or behaviors that might require separate marketing strategies or mixes 0 Geographic segmentation divides the market into different geographical units such as nations regions states counties cities or even neighborhoods Demographic segmentation divides the market into segments based on variables such as age lifecycle stage gender income occupation education religion ethnicity and generation I Age and lifecycle stage segmentation divides a market into different age and life cycle groups I Gender segmentation divides a market into different segments based on gender I 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 Behavioral segmentation divides a market into segments based on consumer knowledge attitudes uses of a product or responses to a product I Occasions benefits sought user status usage rate loyalty status Requirements for Effective Segmentation Measureable Accessible Substantial Differentiable Actionable 0 Market Targeting O 0 Evaluating Market Segments Segment size and growth Segment structural attractiveness Company objectives and resources Selecting Target Market Segments I Target market a set of buyers Who share common needs or characteristics that the company decides to serve 0 Differentiation and Positioning 0 Product position the way the product is defined by consumers on important attributes Ful ll LIE l lllll Ills I Eadrhilae Eieealade i unfzinri x I Lame LESTD i Limeain Navigm r g Terryma Land Cruiser an Lari Player Range Fi VEI mammam rienta an 1 lg maria Shaw cams mer pEFEE Fatima elf marketer g branidle imparting pr adwutts an Important buying drumensuring 0 Choosing a Differentiation and Positioning Strategy I Identifying a set of possible competitive advantages to build a position I Choosing the right competitive advantages 39 Selecting an overall positioning strategy 39 Communicating and delivering the chosen position to the market Products Services and Brands Building Customer Value 0 What is a Product 0 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 Products and services are becoming more commoditized Companies are now creating and managing customer experiences with their brands or company Levels of Product and Services I Hi 1 7 r 7 1 HE El r1 rill um alzlw quot quotwe In unimar i ller in gale i1 i EEFUIEE Fea EurEE Hillhusa I A n p k gll Warranty Product and Service Classi cations 39 Consumer products products and services bought by final consumers for personal consumption Convenience products consumer products and services that the customer usually buys frequently immediately and with a minimum comparison and buying effort 0 Newspaper candy fast food Shopping products less frequently purchased consumer products and services that the customer compares carefully on suitability quality price and style 0 Furniture cars and 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 0 Medical services designer clothes and highend electronics Unsought products consumer products that the consumer does not know about or knows about but does not normally think of buying 0 Life insurance funeral services and blood donations I Industrial products those products purchased for further processing or for use in conducting a business 0 Material and parts Capital items Supplies and services I Materials and parts include raw materials and manufactured materials and parts I Capital items are industrial products that aid in the buyer s production or operations I Supplies and services include operating supplies repair and maintenance items and business services I Organization marketing consists of activities undertaken to create maintain or change the attitudes and behavior of target consumers toward an organization I Person marketing consists of activities undertaken to create maintain or change the attitudes or behavior of target consumers toward particular people I Place marketing consists of activities undertaken to create maintain or change attitudes and behavior toward particular places I Social marketing uses commercial marketing concepts to in uence individuals behavior to improve their wellbeing and that of society Product and Service Decisions I Individual Product and Service Decisions Ul t SUPPIH Swims Facka nding Lbeling Communicate and deliver benefits by product and service attributes 0 Quality Features Style and Design Product quality refers to the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs 0 Total quality management Returnonquality Quality level Performance quality 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 I Product Line Decisions 0 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 0 Product line length is the number of items in the product line 0 Line stretching and Line filling I Product Mix Decisions consists of all the product lines and items that a particular seller offers for sale 0 Width length depth and consistency 0 Services Marketing 0 Types of Service Industries I Government Private notforprofit organizations Business organizations 0 Nature and Characteristics of a Service HEIDI ll f II III Seruleee eenrnet be eepereteel lrem their prerririere errrrer be eeerr elf heard er efere pureheee Serrrieee imhaillity l Periehahiility39 arvieee depende r Serrleee eermet be erred ridee them and fer Ie rer eele er uee were and hew 0 Marketing Strategies for Service Firm I Serviceprofit chain links service firm profits With employee and customer satisfaction 0 Internal service quality 0 Satisfied and productive service employees 0 Greater service value 0 Satisfied and loyal customers 0 Healthy service profits and growth I Internal marketing means that the service firm must orient and motivate its customercontact employees and supporting service people to work as a team to provide customer satisfaction I Interactive marketing means that service quality depends heavily on the quality of the buyerseller interaction during the service encounter 0 Service differentiation 0 Service quality 0 Service productivity I Managing service differentiation creates a competitive advantage 0 Offer 0 Delivery 0 Image I Managing service quality enables a service firm to differentiate itself by delivering consistently higher quality than its competitors provide I Managing service productivity refers to the cost side of marketing strategies for service firms 0 Employee hiring and training 0 Service quantity and quality 0 Branding Strategy Building Strong Brands 0 Brand equity is the differential effect that knowing the brand name has on customer response to the product or its marketing 0 Brand value is the total financial value of a brand timing quot Eranl xnameslelertiam randrpnnsnr hip rarndiderelupmen l l l 39 95 a Selectimn Manufacturers bran 39 Lima marinara t5 H Prlerlinn Primate brand Errand EHIQE Ei S ualueg Licensing Mulltibrands En brandin New brands 0 Brand Positioning Marketers can position brands at any of three levels I Attributes 0 Benefits 0 Beliefs and values 0 Brand Name Selection I 1 Suggests benefits and qualities 2 Easy to pronounce recognize and remember 3 Distinctive 4 Extendable 5 Translatable for the global economy 6 Capable of registration and legal protection 0 Brand Sponsorship I Manufacturer s brand 0 Private brand 0 Licensed brand I Cobrand Existing New Lii me irarncl quot191 EKiE El EHtEHEIJD law Multtibrrands New brands New Product Development and Product LifeCycle Strategies 0 Ways to Obtain New Products 0 Acquisition refers to the buying of a Whole company a patent or a license to produce someone else s product 0 New product development refers to original products product improvements product modifications and new brands developed from the firm s own research and development New Product Development Process quotA Cencepi Marketing idea i I idea I deel m39rit etra tv39 v iteration eereer nirig B Up egy and testing development ueir rese 7 Preduei 39 x 39iieel C W quotI t 1quot r1alyeie development marketing quotDmm e m39a 3923 quotaquot O Idea Generation the systematic search for new product ideas I Internal sources refer to the company s own formal research and development management and staff and intrapreneurial programs I External sources refer to sources outside the company such as customers competitors distributors suppliers and outside design firms I 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 0 Idea Screening Identify good ideas and drop poor ideas I RWW screening framework 0 Is it real I Can we win 0 Is it worth doing 0 Concept Development and Testing I Product idea is an idea for a possible product that the company can see itself offering to the market I Product concept a detailed version of the idea stated in meaningful consumer terms I Product image is the way consumers perceive an actual or potential product I Concept testing refers to testing new product concepts with groups of target consumers 0 Marketing Strategy Development designing an initial marketing strategy for a new product based on the product concept I Target market description I Value proposition planned I Sales marketshare and marketing mix 0 Business Analysis a reView of the sales costs and profit projections for a new product to find out whether these factors satisfy the company s objectives 0 Product Development developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering 0 Test Marketing the stage of new product development in which the product and its proposed marketing program are tested in realistic market settings H LI I I E Hquot I 39LIluFlm l nlllll luct with 39 Simplo lino tment extension rltmir about I Clapquot of competitor Ir product a Pr Emm a Lowr oors I Ma nagomont rzn n 39dpn m 0 Commercialization involves introducing a new product into the market When to launch 0 Where to launch 0 Planned market rollout 0 Managing New Product Development 0 Successful new product development should be Customer centered Team based Systematic Customercentered new product development focuses on finding new ways to solve customer problems and creating more customersatisfying experiences Teambased new product development involves various company departments working closely together overlapping the steps in the product development process to save time and increase effectiveness Systematic new product development 0 Innovation management system 0 Creates an innovationoriented company culture 0 Yields a large number of new product ideas New product development in turbulent times 0 Tempted to reduce spending May become less competitive Product LifeCycle Strategies roduet 7 Prn ts a elelpmem Introduction Gurtjw t h Mair ri ty Emeline I 0 Product development Zero sales and increasing investment costs 0 Introduction Slow sales and nonexistent profits High distribution and promotion expenses 0 Growth Rapid market acceptance and increasing profits New competitors enter the market economies of scale consumer education lowering prices to attract more buyers 0 Maturity Slow sales growth and profits level off or decline Many supplies substitute products overcapacity leads to competition increased promotion and RampD to support sales and profits I Modification Strategies Modify the market product or marketing mix 0 Decline Sales fall off and profits drop Maintain the product Harvest the product Drop the product Fashion kyle Sales Sales T i I I I I n 3 Ina I z 1 z intmdluetiinini Growth Immunity Beeline tics Lew sales Raididllgi rising salee lRealt salee Declining sales High cast her custcmer ee rage ccst ber iLcuw ccst ber custcrner Lew cast her custcirner custerrier Negative Risng DrillEl llligh bret39its Declining brdfits lnnetraters Earlyr adcbteis Mainstream adebtecs tagging adapters Feer Brewing number Stable number beginning Declining number in decline Create brcduct Maximise market share Maxih iize bretit white Reduce eabei39iditure and o engagement and trial defending market share rniilllet the brand Fi I llIlllllllllllilr U ll l39llu ull lil lliilI39lEr39E Iiil39j Elllzrm quotHIIIlI 39lE39IE39IlI III39liEa39 HHII E EIIF EEI IIIIIInIl ii lull lla E Hl E a lintreduetiun Einth Maturity Deeline Offer a basic brdduct Otter brcdiuct extensicns iiiliiiersiiiir brand and Phase but weak items service and quottartaricantif medele Lise castblue Price in ibenetrate Price tc rnatch er beat Gut brice rnaritet ccrnbetiters Build selective Build intensive Etuin mere intensive Ge selective phase but distributbn distributiin distributibn un brciitable cutlets Build birdduct awareness Build engagement and Stress brand differences Reduce tn ieael needed amcng eerie adapters interest in the rnass and benefits tc retain hardccre Icyals and dealers marltat icn Lise heavy sales Reduce tc talte increase in encburage Reduce ta minimal level br crrictien tc entice triail advantage ct heave brand switchingquot 0 l li T I lquot r39b marvel 0 Additional Product and Service Considerations 0 Product Decisions and Social Responsibility Public policy and regulations regarding developing and dropping products patents quality safety and product warranties should be considered carefully 0 International Product and Service Marketing Determining What products and services to introduce in which countries Pricing Standardization versus customization Packaging and labeling Customs values laws 0 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 0 Major Pricing Strategies external faetere Cempetiitere etrategtea tel artieea Marketing atrategy ebyeetiiuea Mature at the market and elema rte 2 and rriia eenaamer pereepttena at vatue Pri ee eeiling Ne demarr abeae th ia rtee 55 Priee 0 Customer ValueBased Pricing uses the buyers perceptions of value rather than the seller s cost I Valuebased pricing is customer driven I Costbased pricing is product driven 0 Price is set to match perceived value let I priieiinrgr rmer alue ta Determine preduet eaata Bet target price tea mateh eaatemer perceived aarue Set price based an east lEteterrrrirte eeeta that team the teen tree Cenainee tbuyera at ereduet39a value Desing aredaet ta deliver desired value at target priee I Everyday lovv pricing EDLP involves charging a constant everyday low price With few or no temporary price discounts I Highlow pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items I Valueadded pricing attaches valueadded features and services to differentiate the companies offers and thus their higher prices 0 CostBased Pricing sets prices based on the costs for producing distributing and selling the product plus a fair rate of return for effort and risk hen quotIi ill Hllhlh rlh Eh il I IHH HHLIHII m Cost per unlflz Tl ElPEI E 31D ig LiJI il ni i IJ39FILU39FIIl MildEH F Ei39lEi39lu JJ irh lj Iiihunk AugIIIJ meteor guanine memo acumeno Accumulated Broduetiion O Competitionbased pricing is setting prices based on competitors strategies costs prices and market offerings 0 Other Internal and External Considerations Affecting Price Decisions 0 Organizational Considerations Who should set prices Who can in uence prices 0 The Market and Demand Pricing in Different Types of Markets Pure competition Monopolistic competition Oligopolistic competition Pure monopoly 39 Price Elasticity of Demand I I 1 I1 DE gr 3y salamander per pEFii CI Quantity demanded per per 39 Price elasticity is a measure of the sensitivity of demand to changes in price 39 Inelastic demand is when demand hardly changes with a small change in price 39 Elastic demand is when demand changes greatly with a small change in price are LUSIOWEFS bee valuxe ETWDDUCIS 5 PIE 5 U r f n j Firm d U r quotJr m E J EJIJ m 1 g1 3911 E P5 9 LI U I 52 New Product Launches A recent study showed that more than 65 of new products launched by established companies failed in 2010 Huge financial implications 260 billion in 2010 was spent on failed launches 96 of all innovations fail to return their cost of capital


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