Marketing Exam 2 Study Guide
Marketing Exam 2 Study Guide BUSMKT 1040
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This 17 page Study Guide was uploaded by Abigail Dobbertin on Thursday January 29, 2015. The Study Guide belongs to BUSMKT 1040 at University of Pittsburgh taught by Dr. Maryott in Fall. Since its upload, it has received 216 views.
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Date Created: 01/29/15
BUSMKT 1040 Study Guide Exam 2 Exam 2 will cover chapters 2 9 10 11 amp 12 as well as all class discussions and guest speakers You are allowed one 3 inch x 5 inch card with notes both sides typed or handwritten What is strategic planning 0 The managerial process of creating and maintaining a t between the organization s objectives and resources and the evolving market opportunities 0 Strategic planning is the basis for all marketing strategies and decisions These decisions affect the allocation of resources and ultimately the nancial success of the company 0 Strategic business units subgroup of a single business within the larger organization 0 Each SBU should have a distinct mission and a speci c target market control over resources its own competitors a single business and plans independent from other SBUs in the organization Each SBU has its own rate of return on investment growth potential associated risks and requires its own strategies and funding Elements and importance of a marketing plan including implementation and evaluation 0 A marketing plan should de ne the business mission perform a situation analysis de ne objectives delineate a target market and establish components of the marketing mix 0 other elements that may be included are budgets implementation of timetables required marketing research efforts or elements of advanced strategic planning 0 product lines distribution channels marketing communications pricing 0 The marketing plan serves as a reference point for the success of future activities 0 Elements of a marketing plan 0 a business mission answers the question quotwhat business are we inquot An analysis of bene ts sought by potential and present customers and existing and anticipated environmental conditions establishes boundaries for all subsequent decisions objectives and strategies should focus on the markets the organization is trying to serve rather than the goodservice provided marketing myopia results when missions statements are too narrow and de nes by product instead of customer bene ts 0 SWOT situational analysis marketers must understand the current and potential market environment in which the product or service will be marketed Strengths Weaknesses external Opportunities Threats when examining internal strengths and weaknesses the marketing manager should focus on organizational resources such as production costs marketing skills nancial resources company or brand image employee capabilities and available technology 0 environmental scanning collection and interpretation of information about forces events and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan 0 de ning objectives 0 identifying target market 0 establishing components of marketing mix product promotion price place 0 may also include budgets implementation timetables marketing research efforts 0 implementation the process that turns a marketing plan into action assignments and ensures that these assignments are executed in a way that accomplishes the plan s objective Involves gaining acceptance of new plan 0 evaluation gauging the extent to which the marketing objectives have been achieved during the speci ed time period 0 control mechanisms for evaluating marketing results in light of the plans objectives and for correcting actions that do not help the rms reach goals ex marketing audit Characteristics of good objectives 0 objectives set a basis for measuring the success of marketing plan activities 0 Objectives should be 0 realistic they have a chance of being met 0 measurable can quantitatively measure whether an objective has been met example increase sales vs increase sales to increase sales by 10 0 time speci c by what date should the objective be met 0 compared to a benchmark if the objective is to increase sales by 10 what is the baseline of comparison Example baseline last year s sales Example of good objective To increase sales of Purina brand cat food by 10 compared to 2012 sales of 300 million between january 1 2013 and December 312013 Ways to create a competitive advantage competitive advantage a set of unique features of a company and its products that are perceived by the target market as signi cant and superior to those of its competition 0 cost competitive advantage being the lowcost competitor in an industry while maintain satisfactory pro t margins Ways to reduce cost 0 Experience Curves curves that show costs declining at a predictable rate as experience with a product increases 0 Ef cient labor low labor costs ex outsourcing nofrills goodsservices ex Southwest Airlines offers low fares but no seat assignments or meals Low costs give them a higher load factor and greater economies of scale which mean lower prices 0 government subsidies grantsinterest free loans to target industries 0 product design ef cient design for easy manufacturing 0 reengineering rethinking and redesign of business processes to achieve dramatic improvements in critical measures of performance 0 product innovations new technology or simpli ed production techniques can lower average cost of production 0 new methods of service delivery ex online only magazines o productservice differentiation competitive advantage when a rm provides something that is unique and valuable to buyers beyond simply offering a lower price than its competition example brand names Lexus product reliability Maytag appliances image Neiman Marcus 0 niche competitive advantage when a rm seeks to target and effectively serve a small segment of the market 0 good for companies with limited resources that potential face giant competitors 0 many companies that use this strategy use only a limited geographic market 0 sustainable competitive advantage one that cannot be copied by the competition ex Net ix no one can compare to amount of moviestv shows Strategy options for marketing managers and how to select the optimal choice 0 Ansoff39s strategic opportunity matrix ProductMarket growth matrix matches product with markets 0 market penetration increase market share among existing consumers ex present productpresent market Starbucks sells more coffee to customers who register their reloadable Starbucks cards 0 market development attracting new customers to existing products ex present productnew market Starbucks opens stores in Brazil and Chile 0 product development creation of new products for present markets ex new productpresent market Starbucks develops powdered instant coffee called Via o diversi cation creation of new products for new markets ex Starbucks launches Hear Music and buys Ethos Water 0 The innovation matrix 0 enables a company to see exactly what types of assets need to be developed and what types of markets are possible to grow into or create based on the companies core capabilities Core innovation implement changes that use existing assets to provide added convenience to existing customers and potentially entice customers from other brands ex packaging changes Adjacent innovation take company strengths into new markets uses existing abilities in new ways adding related products going into new markets 0 ex Botox was originally created to treat intestinal problems now used for cosmetic surgery increases market Transformational innovation brand new products and brand new markets Where in Fl39legir 0 ex Apple s iTunes ii L g E E E 1 E5 5 E5 Trenefennetienaeil quot g Deeelee tireelithreughe e i V markele den i yet eelst ill Adjeee39nt 4 quot E e Expenefrm g E exietingi fblul fli i m 33 Eere VT Liptll iilEE g existing preduete ee m E Existing nererneniel Invent new gpredueiei eredueetei lprerueie enel eeeeie eeeete eeeete llew lie Win Boston Consulting Group Matrix balancing the organization s portfolio of SBUs for the best longterm performance 0 Portfolio matrix a tool for allocating resources among products or strategic business units on the basis on the basis of relative market share and market growth rate market share and pro tability are strongly linked o SBUs are broken into 4 categories 0 Star fast growing market leader Large pro ts but need lots of cash to nance rapid growth Best marketing tactic is to protect existing market share by reinvesting earnings in product improvement better distribution more promotion production ef ciency example iPad is Apple s current star 0 Cash cows generates more cash than it needs to maintain its market share it is a lowgrowth market but the product has a dominant market share maintain market dominance by being the price leader and making technological improvements in the product 0 Problem childrenquestion mark shows rapid growth but poor pro t margins has a low market share in a highgrowth industry strategy options invest heavily to gain better market share acquire competitors to get the necessary market share or drop SBU 0 Dog low growth potential and small market share 0 most dogs eventually leave the marketplace 0 After classifying the company s SBUs into the matrix the next step is to allocate future resources for each 0 Build if SBU has a potential to be a star building would be an appropriate goal 0 Hold if an SBU is a very successful cash cow holdingpreserving market share would be a good goal 0 Harvest good goal for all except stars increase short term cash return without too much concern for long term pro t 0 divest get rid of SBUs problem childrendogs What is the target market The marketing mix elements 0 Product physical unit package warranty aftersale service brand name company image value Placedistribution making products available when and where customers want them storing and transporting raw materials and nished products 0 Promotion advertising public relations sales promotion and personal selling 0 informing educating persuading and reminding them of the bene ts of an organization or product 0 Pricing what the buyer must give up in order to obtain a product the quickest element to change What is a marketing decision support system An interactive exible computerized information system that enable managers to obtain and manipulate information as they are making decisions A DSS gives managers access to useful data from their own desks interactive managers give simple instructions and see immediate results The process is under their direct control they don t have to wait for scheduled reports exible DSS can sort regroup total average and manipulate data in various ways It will shift gears as the user changes topics matching information to the problem at hand discovery oriented managers can probe for trends isolate problems and ask quotwhat ifquot questions accessible easy to use oz database marketing the creation of a large computerized le of customers and potential customers pro les and purchase patterns Importance and uses of marketing research 0 Marketing research the process of planning collecting and analyzing data relevant to a marketing decision It is the function that links the consumer customer and public to the marketer through information 0 provides decision makers with data on the effectiveness of the current marketing mix and insight for necessary changes 0 the ndings of marketing research become data in a D55 0 has 3 roles Descriptive role gathering and presenting factual statements 0 ex What are consumers attitudes toward a product and its advertising Diagnostic role explaining data 0 ex How a change in the packaging impacted sales Predictive role address quotwhat ifquot questions 0 How can the researcher use the descriptive and diagnostic research to predict the results of a planned marketing decison The marketing research process Identify and formulate the problemopportunity Plan the research design and gather secondary data Specify the sampling procedures Collect primary data Analyze the data Prepare and present the report Follow up Tools for conducting marketing research Secondary data data previously collected for any purpose other than the one at hand 0 includes documents such as annual reports reports to stockholders product testing results house periodicals o saves time and money if they help solve the researcher s problem IOWU39lbULJNl l primary data information that is collected for the rst time used for solving the particular problem under investigation 0 answers a speci c research question that the secondary data couldn t answer Understand the various research methodologies survey research most popular Researcher interacts with people to obtain facts opinions and attitudes o inhome personal interviews mall intercept interviews telephone interviews mail survey executive interviews focus group questionnaire design openended question closeended respondent answers by making selection from a limited list of responses scaledresponse a closeended question designed to measure the intensity of a respondent s answer observation research 0 systematic process of recording the behavioral patterns of people objects and occurrences without questioning them 0 beoble watchinq beoble observers stationed in supermarkets watch consumers select frozen dinners to see how much comparison shopping people do at point of purchase 0 people watching activity an observer stationed at an intersection counts traffic moving in various directions 0 machines watching people cameras record behavior as in the people watching people example 0 machines watching an activity traf ccounting machines monitor traffic ow ethnographic research the study of human behavior in its natural context involves observation of behavior and physical setting virtual shopping simulated retail store environment on a computer screen experiments a method of gathering primary data when the researcher alters one or more variables while observing the effects of those alterations on another variable Understand probability vs nonprobability samples probability sample a sample in which every element in the population has a known statistical likelihood of being selected 0 scienti c rules can be used to ensure that the sample represents the population 0 random sample every element of the population has an equal chance of being selected as a part of the sample nonprobability sample any sample in which little or no attempt is made to get a representative cross section of the population 0 convenience sample uses respondents who are readily accessible to the researcher employees friends relatives How has the internet changed marketing research gathering information used to be a tedious and boring job writing letters requesting info using library internet simpli ed the data search process internet surveys can be created rapidly and inexpensively rapid development realtime reporting customizable improved respondent participation contact with hard to reach Concepts of validity reliability and representativeness validity extent to which the research actually measures what it was intended to measure reliability extent to which the research measures are free from errors if the question is asked again under different conditions would we get the same answer representativenesssampling error error that occurs when the selected sample is drawn from a population different from the target population What is competitive intelligence and what are its sources competitive intelligence helps managers assess their competitors and their vendors in order to become more efficient and effective competitors 0 intelligence is analyzed information sources for gathering CI 0 internet company salespeople industry experts CI consultants government agencies Uniform Commercial Code lings suppliers periodicals the Yellow Pages industry trade shows What is a product Everything both favorable and unfavorable that a person receives in an exchange Tangible goods services and ideas The difference between consumer and business products businessindustrial product product is intended for a business purpose to manufacture other goods or services to facilitate an organization s operations or to resell to other customers consumer product bought to satisfy an individual person s wants o sometimes the same item can be classi ed as both a business and consumer product depending on its intended use ex light bulbs pencilpaper computers Convenience shopping specialty and unsought products convenience product a relatively inexpensive item that merits little shopping effort a consumer is unwilling to shop extensively for such an item 0 ex candy pop asprin car washes 0 buy products regularly without much planning 0 widely distributed specialty products consumers search extensively and are very reluctant to accept subsitutes 0 ex Omega watches RollsRoyce cars Bose speakers 0 selective statusconscious exclusive marketing 0 limited distribution 0 brand names amp quality of service unsought products a product unknown to the potential buyer or a known product that the buyer does not actively seek 0 new products fall into this category until advertising and distribution increase consumer awareness of them 0 require aggressive personal selling and highly persuasive advertising salesperson direct mail or direct response advertising 0 ex insurance burial plots The difference between a product item product line and the product mix product item a speci c version of a product that can be designated as a distinct offering among an organization s products 0 ex Campbell s Cream of Chicken soup product line a group of closely related product items 0 ex quotSoupsquot represents one of Campbell s product lines Different container sizes and shapes also distinguish items in a product line product mix all the products and organization sells 0 ex Campbell s soups sauces frozen entrees beverages biscuits 0 each product item in the product mix may require a separate marketing strategy product mix width number of product lines an organization offers product line depth number of product items in a product line Options marketing managers have to alter items lines and mix product modi cation changes one or more of a products characteristics 0 quality modi cation changing a products dependability or durability decreasing can lower price and increasing can help compete with rival rms 0 functional modi cation changes in a product s versatility effectiveness convenience or safety 0 style modi cation aesthetic product change clothing and auto manufacturers planned obsolescence the practice of modifying products so those that have already been sold become obsolete before they actually need replacement 0 ex cell phones repositioning changing consumers perceptions of a brand product line extensions adding products to an existing product line in order to compete more broadly in the industry 0 can lead to product line being overextended product line contraction strategic way to deal with overextension resources become concentrated on the most important products What is branding and why is it important brand a name term symbol design or combination thereof that identi es seller s products and differentiates them from competitors products brand name 7eleven YMCA Chevrolet brand mark logo 0 Brands are a signal or a promise to a consumer They should be memorable have a positive connotation and convey a certain image 0 Branding allows marketers to distinguish their products from all others 0 Brand names are familiar to consumers and indicate quality 0 Having a wellknown and respected company and brand name is extremely useful when introducing new products What are the elements of a brand 3 main purposes product identi cation repeat sales and new product sales brand equity the value of company and brand names 0 a brand that has high awareness perceived quality and brand loyalty among customers has high brand equity 0 ex Starbucks Apple global brand refers to a brand that obtains at least a third of its earnings from outside its home country is recognizable outside its home base of consumers and has publically available marketing and nancial data 0 ex Yum Brands Pizza Hut KFC Taco Bell brand loyalty a consistent preference for one brand over all others results in repeat sales 0 ex common for toothpaste mayo coffee headache remedies and ketchup What are the various branding strategies manufacturer s brand ex LaZBoy or Fruit of the Loom brand owner Private brandPrivate LabelStore Brand a brand name owned by a wholesaler or retailer 0 ex Target s Archer Farms 0 overhead is low and there are no marketing costs 10 higher pro t margin captive brands a brand manufactured by a third party for an exclusive retailer without evidence of that retailer s affiliation and sold exclusively at the chains 0 allows the retailer to ask a price similar or equal to manufacturers brands individual branding using different brand names for different products Companies use individual brands when their products vary greatly in use or performance 0 ex Procter amp Gamble has different segments of laundry detergent market with Bold Cheer Solo Tide etc family branding a company that markets several different products under the same brand cobranding placing two or more brand names on a product or its package 0 ingredient branding Mr Clean Disinfecting Wipes with Febreeze Freshness 0 cooperative branding 2 brands receiving equal treatment in the context of an advertisement borrow from each other s brand equity ex promotional contest sponsored by Ramada Inn American Express and United Airlines 0 complementary branding products are advertised or marketed together to suggest usage Packaging 0 Four most important functions to contain and protect products promote products facilitate the storage use and convenience of products facilitate recycling and reduce environmental damage Labeling persuasive or informational o persuasive focuses on a promotional theme or logo and consumer information is secondary o informational designed to help consumers make proper product selections and lower their cognitive dissonance after purchasing 0 greenwashing products that attempt to give the impression of environmental friendliness Global issues in branding and packaging 0 one brand name being used everywhere adaptions and modi cations name can t be pronounced it means something negative different brand names in different markets Warranties warranty a con rmation of the quality or performance of a good or service 0 express warranty a written guarantee ranging from simple statements 100 cotton to extensive documents written in technical language 0 implied warranty an unwritten guarantee that the good or service is t for the purpose of which it was sold All sales have an implied warranty under the Uniform Commercial Code Types of new products newtotheworld product create an entirely new market the smallest category of new products 0 new product lines the rm has not previously offered allow it to enter an established market additions to existing product lines new products that supplement a rm s established line 0 improvements or revisions of existing products quotnew and improvedquot repositioned products existing products targeted at new markets or market segments or products repositioned to change the current market s perception of the product or company lowerpriced products products that provide performance similar to competing brands at a lower price What is the new product development process and what happens at each stage 1 newproduct strategy links the newproduct development process with the objectives of the marketing department the business unit and the corporation 2 idea generation ideas come from customers employees distributors competitors vendors research and development and consultants 3 idea screening the rst lter eliminates ideas that are inconsistent with the organization s newproduct strategy or are obviously inappropriate for some other reason A concept test evaluates a newproduct idea before any prototype has been created 4 business analysis preliminary gures for demand cost sales and pro tability are calculated 5 development a prototype is developed and a marketing strategy outlines 4 p s works best with simultaneous product development a team oriented approach includes RampD marketing engineering production suppliers 6 test marketing the limited introduction of a product and marketing program to determine the reactions of potential customers in a market situation 7 commercialization the decision to make a product sets several tasks into motion ordering production materials starting production building inventories etc Diffusion of Innovation 0 innovation a product perceived as new by a potential adopter diffusion the process by which the adoption of an innovation spreads o innovators the rst to adopt the products eager to try new products 0 early adopters not the very rst to adopt rely more on group norms and values 0 early majority weighs the pros and cons before adopting a new product Collect and evaluate more informationbrands than early adopters 0 late majority adopts a new product because most of their friends already have it pressure to conform o laggards do not rely on group norms independence rooted in tradition By the time they adopt something a newer version is already out Characteristics that in uence the rate of adoption 0 complexity degree of dif culty involved in understanding and using a new product More complexslower diffusion o compatibility how consistent product is with existing values and product knowledge past experiences and current needs 0 relative advantage how superior to existing substitutes a product is perceived as iPod vs CD player 0 observability how well the bene ts of using the product can be observed by others and communicated to target customers ex fashion items and cars are highly visible in comparison to personal care items 0 trialability how much the product can be tried on a limited basis ex easier to try new tooth paste than a new car Product life cycle know the stages and what marketing strategies are best at each stage 0 PLC provides a way to trace the stages of a product s acceptance from its introduction to its decline 0 introductorv stage the fullscale launch of a new product into the marketplace high failure rate little competition frequent product modi cation limited distribution Marketing costs high promotion developing product awareness and informing consumers about bene ts 0 growth stage sales grow at an increasing rate competitors enter the market large companies start to acquire small pioneering rms pro ts are healthy promotion aggressive brand advertising and communication of the difference between brands ex Kindle vs Nook distribution manufacturers scramble to build long term relationships with distributors without adequate distribution it is impossible to establish a strong market position 0 maturity sales decrease market approaches saturation longest stage competitors drop out of market service and repair assume more important roles product design changes are only stylistic heavy promotion to consumers and dealers to maintain market share 0 decline longrun drop in sales ex landline telephone service eliminate all nonessential marketing expenses as sales decline and eventually remove product from the marketplace What is a service and what is their importance in our economy 0 service the result of applying human or mechanical efforts to people or objects 0 service industry is 55 of US GDP How are services different from goods 0 Services have 4 unique characteristics 0 intangibilitv cannot be touched seen tasted heard or felt in the way goods can lack search quality cannot be easily assessed before purchase experience quality can only be assessed after use credence quality consumers may have dif culty assessing even after purchase because they don t have the knowledge or experience 0 inseparability the inability of the production and consumption service to be separated consumers must be present during the production 0 heterogeneity the variability of the inputs and outputs of services which causes services to tend to be less standardized and uniform than goods 0 perishability the inability of services to be stored warehoused or inventories How to measure service quality Service Quality Scale reliability ability to perform a service dependably accurately and consistently responsiveness ability to provide prompt service assurance the knowledge and courtesy of employees and their ability to convey trust empathy caring individualized attention to customers tangibles the physical evidence of a service including the physical facilities tools and equipment used to provide the service The Gap Model of service quality the 5 gaps that can cause problems in service delivery and in uence customer evaluations of service quality When gaps are large service quality is low Gap 1 between what customers want and what management thinks customers want Gap 2 between management s perception of what the customer wants and the quality speci cations management develops to provide the service Gap 3 between service quality speci cations and service that is actually provided Gap 4 between what the company provides and what the customer is told it provides Gap 5 gap between the service the customers receive and service they want What does the marketing mix look like for a service productservice strategy decisions on the type of process involved core and supplementary services standardizationcustomization of the service service mix placedistribution strategy focus on convenience number of outlets direct vs indirect distribution location scheduling promotion strategy stressing tangible cues using personal information sources real customers in ads or celebrity endorsed creating a strong organizational image engaging in postpurchase communication price strategy de ne unit of service based on speci c task performed or amount of time bundled pricing or separate pricmg The importance of customer relationships in marketing services involves attracting developing and retaining customer relationships 0 Level 1 pricing incentives frequent yer program 0 Level 2 pricing incentives and social bonds stays in touch with them 0 Level 3 pricing social bonds and structural bonds to build longterm relationships Nonpro t marketing and its unique challenges apathetic or strongly opposed target markets such as vaccinations or psychological counseling pressure to adopt undifferentiated segmentation strategies pressured to serve the max number of people by targeting the average person complementary positioning nonpro ts help each other rather than compete bene t complexity if a person quits smoking bene ts are complex long term and intangible bene t strenqth can be weak or indirect involvement low involvement prevent forest res or very high stop smoking dif cult undifferentiated marginal target market complex product with indirect bene ts and elicit very low involvement distribution may require special facilities depending on service provided lack of resources for promotion prices only indirectly related to the exchange between the producer and consumer of services
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