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MKT 300 Exam #1

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MKT 300 Exam #1 MKT 300

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All the notes of both the book and class consolidated. In red are the topics he said wouldn't come. From the last chapter I ignored the information he said would not be addressed in the class
Managerial Marketing
Gilbert Harrell
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This 26 page Class Notes was uploaded by AlissaRabat on Tuesday October 4, 2016. The Class Notes belongs to MKT 300 at Michigan State University taught by Gilbert Harrell in Fall 2016. Since its upload, it has received 5 views.


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Date Created: 10/04/16
Marketing 300 Exam #1 Chapter 1: Marketing Framework and Perspective Marketing • Marketing: the activity, set of institutions and processes for creating, communicating, delivering and exchanging offering that have value for customers, client, partners and society at large o Marketing Activity : focuses on understanding the needs and wants of customers and engaging in competitive behavior o Customer Orientation: focuses on satisfying the needs and wants § Need: fundamental requirement § Want: specific form of consumption to satisfy a need o Society stimulates demand and promotes innovation and improves life Set of Institutions • Business-to-Consumer (B2C) Marketing: when organizations sell to individuals or household that buy, consume and dispose of products • Business-to-Business (B2B) M arketing: when a business purchases goods to support daily operations or to resell for profit o Either private or public sector • Nonprofit Marketing: when an organization doesn’t try to make a profit, but instead attempts to influence others t o support its cause by using its service or by making a contribution • Internal Marketing: when managers of one functional unit markets their capabilities to other units within their own organization o Addresses needs and wants of employees Marketing Performa nce • Efficiency + Effectiveness + Agility o Effectiveness: organizing activities to produce results that satisfy a customer § Organizational philosophy that focuses on satisfying customer needs and wants o Efficiency: operating with minimum waste of time and mone y o Agility: anticipation of market dynamics and speed of response to changing customer desires § Flexibility and speed with which organizations can identify or create new wants and take actions for them Exchanges Create Value • Exchanges: process in which two or more parties provide something of value to one another o Value: occurs for customers only when exchanges happen • Relationship Marketing: the development and maintenance of successful relational exchanges through interactive ongoing two way connections amo ng customers, organizations, suppliers and other parties for mutual benefit o Emotion is key o Builds customer loyalty o Ranges from informal to contractual or ownership • Form Utility: a want-satisfying value that is created when knowledge and materials are converted into finished goods and services o Guides decisions about what products to make • Place Utility: a want-satisfying value that is created by making goods and services conveniently available o Makes goods and services available o Accessibility makes the worth more • Time Utility: Makes goods and services available when they are wanted • Ownership Utility : makes it possible to transfer the title of goods and services from one party to another The Evolution of Marketing • Trading and Bartering • Early marketers o Make money by providing luxury items to the upper class and more practical goods to the rest • Mass marketing o 1700’s – 1800’s o mass production, mass distribution and mass promotion of a product th st • 20 & 21 century à 5 Eras o Production Era § Product Orientation • Historical marketing period that emphasized new products and the efficiency of production § Mass quantity § Low prices § Henry Ford § “a good product sells itself” o Sales Era § Sales Orientation • Historical marketing period that emphasized that consumers must be convinced to by § Great Depression § Ways to sell more effectively § After WWII moved from sellers market to buyers marker • Seller’s Market: scarcity of products lets seller control the market • Buyer’s Market: abundance of products lets buyers control the market o Customer Era § Customer satisfaction, value and loyalty • Customer Value: what consumers perceive they gain from owning or using products over and above the cost of acquisition • Customer Satisfaction: consumers overall rating of their experience with company or product • Customer Loyalty: measures of how often a customer purchases a particular brand o Value Era § Organization want lasting relationships so customers become assets of the organization not just one time buyers § Value Driven Organization: organizations that implement the marketing concept by ensuring that all parts of the organization make the maximum contribution towards creating value for the customer o Social Media Era § Social Media Marketing: focuses on efforts to draw attention to featured content and encourages users to share it with their social network • If successful message spreads fast and wide The Marketing Strategy Process • Situation Analysis o All marketing activities required to understand global marketing environment customers needs and wants and competition o Where to target or focus marketing efforts • Target Marketing o Dividing groups of customers into similar characteristics o Choose one group to target § Target Market • Positioning o Influencing customer perception and positioning of a brand or company • Marketing Mix Dec isions o Marketing Mix: four controllable variables that are combined to appeal to a company’s target market o Product: any physical object, service, idea, person, event, place or organization offered to satisfy consumers needs and wants § Decision on how to manage current products determine which need development and which need to phase out § Brand name usually reflects product or service o Place: providing products where and when they are needed in the proper quantities, with the greatest appeal and lowest possib le cost § Distribution Channel: a set of independent organizations that make a good or service available for purchase by consumers or businesses § Physical Distribution: the movement of products to the channels to consumers § Retailing and Direct Marketing: selling products directly to end users o Promotion: setting objectives to be attained creating messages and forms they will take § Communication or media must be selected o Price: setting prices to reflect the value received by customers and to achieve volume and profit required by the organization § How prices will influence the volume sold relative to the competition The Six Forces Shaping Marketing Practice • Sustainability: steps and processes organizations undertake to manage growth without detriment affecting resources or ecological systems o 3 Components § The Environment § The Economy § Society • Global o Increased customer reach o Cultural differences and barriers need to be fully understood • Relationships: interactive, ongoing, 2 way connections o Strategic alliances: a partnership formed by two or more organizations which commit resources to achieve a common set of goals o Pure Transactions: occur only once then both parties go their separate ways o Repeated Transactions: occur when customers have strong preferences often becoming loyal customers • Ethics: o Marketing Ethics : the application of moral standards to marketing de cisions, behaviors and institutions § Code of Conduct o Social Marketing Concept: extended to include satisfying the citizen as well as the consumer • Technology o Product Technology: technology that spawns new goods and services o Market-space: electronic space where business occurs, e-commerce • Diversity o Ethnicity: the amount of identification an individual feels with a particular ethnic group o Ethnic Background: subculture membership usually determined by birth and related to one or more of four elements § Country of origin § Race § Religion § Native language Chapter 2: Marketing Planning and Strategy Process Marketing Aspect • Marketing as Philosophy o Planning: Vision o Responsibility: top executive and top management team • Marketing as Strategy o Planning: Strategic Marketing Plan § Strategic Marketing Plan: the document describing the company’s objectives and how to achieve them in light of competitive activities • Outlines decisions exe cutives have to make about how to accomplish their vision o Responsibility: Marketing executive and members of strategic marketing team • Marketing as Tactics o Planning: Marketing Mix Plans o Responsibility: managers responsible for the following programs: § Sales § Price § Promotion § Place Vision • Vision: statement of an organizations operating philosophy • Developed by top executives • Helps maintain consistent direction • Compromised of: o Core Values § Ethics and Social Responsibility o Business Definition (mission) § Customer needs and wants o Strategic Direction § Desired leadership position § “way of knowing we are winners” o Strategic Infrastructure § SBU and Core Competencies • Visual, Not linear, Inclusive o World is getting less organized • JFK and the Moon o Lays out a vision o Works to achiev e it o However it is no longer inclusive § “man on the moon and return him home” • Women need to also be included Core Values • Core Values: a set of statements describing the type of behavior expected of the company and employees o Articulation of ethics o Company’s philosophy about societal well -being, good corporate citizenship and treatment of employees • Ethical guide useful in a crisis • Held Sacred • Authentic extension of your personal beliefs • About appropriate behavior • Ethical dimension of organizational cult ure • Examples: honesty, integrity, sustainable Business Definition • Business Definition : describes the contributions the business makes to customers and society o Stated in basic benefit rich terms and should focus on consumer benefits not product features • Mission: business we are in • Benefits to society and customer needs and wants • Broad, basic, fundamental, futuristic • Marketing Myopia : occurs when executives focus on their company’s current products and services rather than on benefits to consumers o Near sightedness o Focusing on current products instead of broad, basic, innovative, and futuristic needs o Ex. Train Business instead of Transportation Business § Train never got into planes or cars because they had business myopia o Ex. Edison § Was not an inventor § Lit half on wall street on August 4 § Light bulb idea rose after the Chicago fire • Started by a cow o Ex. Smart Cars § Self driven smart cars blends vision (headlights) with steering directions Strategic Direction • Strategic Direction: desired leadership position of an organization and the measures used to chart progress towards reaching that position o Also called strategic Intent • Competitiveness of organization and often sets goals relative to competition and marketing opportunities • May identify competitors by name or industry • May guide organizations toward becoming larges in the industry • Ex. Volkswagen o Overcame ethical dilemmas with open channels of communication § Dilemma: 2015 emissions scandal cost them a lot of money so the goal previously established is hard t o accomplish Strategic Marketing Plan • Strategy: a company’s long-term plan of how to use resources for pursuing goals and objectives in competitive arenas o Idea: win outright by serving customers better through relationships and technology • Strategic Window: The time during which market needs and the competencies of the firm fit together to create a significant opportunity o Open for short period of time • Cross-functional planning team: employees from several areas responsible for developing the company’s strat egic marketing plan o Work to understand market and organizations capabilities • 3 Common types of Marketing Plan Strategy o Low Cost: strategy based on efficiency with objective to be the low -cost leader, thereby allowing the company to have higher margins tha n competitors and pass savings on to customer through lower prices § Winning through efficiency § Way to gain favorable cost position • Process technology • Product design • Consolidation of value chain • Low cost suppliers • Locations • Economies of scale and scope o Differentiation: strategy based on delivering customer value ina way that clearly distinguishes the product from competitors § Winning through Effectiveness § Several ways to achieve it • New function capabilities • Improved performance • Lower cost • Product tailoring o Customer Intimacy Strategy : strategy based on delivering value through superior empathy for customers and solutions tailored to specific customer needs § Close relationships with customers § Achieved through • Add value • Mass customization • Information • Product bundling • Sustainable Competitive Advantage: a lasting ability to outperform all competition in a particular market or industry o Derived from competitors strong core competencies o Organization that creates sustainable advantage have less volatility and better long run performance o Achieved through § Strong research and innovation § Superior product or customer support § Corporate reputation § Brand popularity Strategic Infrastructure (Core Competencies) • Strategic Infrastructure: the corporate configuration that provides th e company’s distinctive or core competencies and provides the resources necessary to satisfy customer wants o Focus energy on specific goods, services and talents necessary to create customer value in specific market segments • Core Competencies: the unique resources a company develops and promotes as its specialty to create distinct customer value o The fundamental building blocks of competitive advantage o Lower cost develops new products o Can determine future of organization • Core Competencies: o Base Technology § Broad innovation that a given organization is especially effective at harnessing • Adaptable and can be applied to service product o Distinctive Competencies § So good you are the best o Process Technology § Allow the firm to produce quality product in the most effect ive and flexible manner o Product Technology § Helps to create new goods and services § Innovators and followers o People Systems § Procedures that provide the human connection between companies and consumers o Information Systems § Information processing technology that provide vas amount of data instantly o Supply Chain Integration Chapter 3: Global Marketing Environment Marketing Environment • Marketing Environment: sum of all factors that can affect a business o Micro and Macro Environment § Microenvironment : the forces close to a company that influence how it connects with customers • We can influence it o Made up of: § Stakeholders • Owners • Employees • Customers § Suppliers § Intermediaries § Action Groups § Competitors § Global Macro environment : the large external influences considered vital to long-term decisions but not directly affected by the company • Tend to shift slowly: long term implications • Cannot be influenced • Made up of the following environments: o Technology o Economic o Legal o Demographic o Ethical o Cultural • Environmental scanning: collects and analyzing information about the marketing environment in order to detect important changes or trends that can affect a company’s strategy o Internet is a great scan tool Microenvironment • Stakeholders: a group of people who can influence or be influenced by the firms actions o Form interactive, ongoing, 2 way communications to have a positive influence on the organization o Company acts in long term interest of stakeholders o Can be either, customer, owners or employees § Anyone who owns shares of the c ompany o Customers: most important part of micro environment § Real value to company is developing customer loyalty for repeat business and referrals o Owners: benefits are why organization operated § Benefit: increasing value of business or helping constituents § Have shares in the company § Action in line with expectation leads to higher market price and higher return on stock o Employees: key stakeholders • Suppliers: stakeholders who provide a company with necessary resources to produce its goods and services o Excellent source of new technologies o Major factor in customer satisfaction • Intermediaries: independently owned organizations that serve as links to move products between producers and end users o Increase ability to reach customers at home and abroad o Provide different channels of distribution • Action groups: stakeholders that support some cause in the interest of consumers or environmental safety o Watchdogs: make sure company thinks of people o Positive publicity and helps business make contribution if held a good relationship with them • Industry Competition: multiple components o Existing firms § Know how each competitor campaigns against their company and others in the industry § Identify key customers and suppliers, types of technology, current performance, strengths and wea knesses o Potential Entrants: any company that enters the market at any time § Aggressive marketing targets industry as a whole o Substitute Product: any good or service that performs the same function or benefit as an existing one § Not necessarily in the same in dustry o Buyer and Supplier Power § Inverse relationship § Many Suppliers = High Buyer Power • Ex. Walmart § Many Buyers = High Supplier Power • Ex. Apple • Has the most power when they have competitive advantage Technological Environment • Technological Environment : collective knowledge available for use in developing, manufacturing and making products • Most dynamic and fluid key force • Pros o New customers o Additional revenue o Increase market share • Cons o Older technology causes the contrary to occur • Government can help advance technology • Rapid rate of change causes companies to invest in research and development and promotes creative innovation • Marketers should be responsible for the technology used o 2009 àSoftware resides primarily on PC with some web support o 2010+à Cloud computing provides powerful software on web servers with access on all input/output devices Legal Environment • Legal regulatory Environment: international, federal, state, and local regulations and laws along with the agencies that interpret and administer the m and the court systems • Includes ethical standards and theories that guide marketing decisions • Laws Promoting Competition o US Laws: Sherman Anti -Trust Act § Laid foundation for related laws § Prohibits business practices designed to create monopolies or restric t trade across state lines or internationally • Laws Restricting Big Businesses o Restrict company size and power o Cartel: group of businesses or nations that work together to control the price and production of a particular product § OPEC: organization of the producing export countries • Tries to manage the supply of oil in an effort to set the price of oil in the world market • Laws Protecting Customers o US Laws: § Consumer Bill of Rights • Not up to consumer alone to asses the quality and safety of a product • Basic Rights Addressed o Right to choose freely from a variety of goods and services o Right to be heard when voicing opinions of goods and services o Right to be informed about specific goods and services so that responsible purchase decisions can be made o Right to be safe from defective or harmful product and services when used properly § Pure Food and Drug Act § Meat Inspection Act • Laws Protecting the Environment o US Law: National Environmental Policy Act § Enforced by the Environmental Protection Agency § Also responsible for protecting human health • Reacted to Flint, MI Economic Environment • Economic Environment: refers to financial and natural resources that are available to consumers, businesses and countries • The Executive Challenge o Winners find great markets and provide val ue in exchange for value o Find a market o Create open communication o Take off the American Challenge • Dispersion of Wealth o Consumer Income and Spending Behavior § Gross income: total amount of money earned in one year by an individual household or business § Disposable income: the income consumers have left after paying taxes § Discretionary income: the amount of money consumers have left after paying taxes and purchasing necessities § Spending Power: the ability of the population to purchase goods and services o Gross Domestic Product: the total market value of all goods and services produced by a country within a single year § Common measure of spending power § All GDP added together is GWP § GDP per capita assesses the standard of living § Ignores dispersion of wealth within a country • Superpower Trading Blocs o Trading Blocs: economic superpowers, have 80% of economy § 3 major trading blocs: • North America • Europe • Pacific Rim § North America • NAFTA: North American Free Trade Agreement o Largest market in the world o Removal of tariffs o Protection of intelligent property o Environmentally sound business practices o USA and Canada: skills and natural resources, capital and technology o Mexico: cheap labor § Europe • EU goal is to eliminate barriers that restrict the flow of people, service and money wit hin the union • Maastricht Treaty : 282 directives that eliminate barriers that restrict the flow of people, service and money within the union • Brexit Ramifications o Movement of labor and trade is more restricted o Prices of British goods rose in both UK and Eur opean Union § Tariffs § Competition and Trade goes down § Pacific Rim • Japan and the 4 dragons: o South Korea o Singapore o Taiwan o China • Largest manufacturing potential • Asian Pacific Economic Cooperation (APEC) o 40% of world population o GAAT: General Agreement on Tariffs and Trade § Absorbed by WTO § Responsible for many current trade agreements • Natural Resources o Provide income to areas inhabitants o Availability affects pricing o Fracking: process of drilling down into the Earth to release the gas inside the Earth’s rock with a high pressure mix of water, sand, and chemicals § Allows drilling firms to reach oil and gas § Potential carcinogenic chemical used can contaminate groundwater § Must consider environmental regulations that might threaten business practices and opportunitie s Demographic Environment • Demographic Environment: the statistical data that describes a population in terms of age, education…etc. • Population: look for trends within it o Population growth = birth + immigrants o Birthrate is increasing o Longer lifespan and births = larger world population o Migration redistributes world population o US annual growth rate is expected to decline • Population Density: the concentration of people within some standard measurement unit o More concentrated means its easier and more cost ef ficient o Technology has helped reduce population density constraint • Urbanization: refers to the population shift from rural areas to cities o Easier to reach concentrated populations o People in cities have more money for luxuries o Wider variety of products • Age Cohort: a group of people close in age who have been shaped by the generations experience with media, peers, events and society o Population average is 25 and getting smaller • Different Age Cohorts: o Matures or Silent Generation § Great depression § WWII § Sense of Purpose § Bettering themselves and family o Baby Boomers § Counter-culture § Distrust government § Value work and it’s the center of their lives § Tendency toward freedom and creative expression o Gen X § MTV generation § AIDS epidemic § End of cold war § Value own career over organization § Value autonomy and freedom in job § Less work centered § Self evolves o Gen Y § Grew up witnessing prosperity § Tend to be more global § Heavily connected through wireless technologies o Gen Z § Born post 9-11 § Never known a time when the US has not been at war § Grew up using and being condition by social media and gaming Cultural Environment • Cultural Environment: the learned values, beliefs, language, symbols and patters of behavior shared by people in society and passed on from generation to genera tion • Self reference Criterion: the unconscious reliance on ones own socialization values gained when trying o understand another culture • Perception of Time o Not all countries are punctual o Communicates subtle points, aka importance in some countries • Size and Space o Not all big products are good o Some countries have minimalistic tendencies • Negotiations and Agreements o In highly legalistic culture all documents must be written and signed prior to acceptance o Other cultures documents are views as inconveniences Ethical Environment • 4 different categories o Legal and Ethical o Legal and Unethical § Most difficult o Illegal and Ethical o Illegal and Unethical • Code of Ethics o Developed by companies to ensure everyone follows the same set of ethical standards • American Marketing Association o Committed to promoting highest level of professional ethics for tits members through statement of ethics § Statement of Ethics: convers basic responsibilities • What a consumer should expect from exchange surrounding Marketing Mix § Ethical Values Addressed: • Honesty • Responsibility • Respect • Fairness • Transparency • Citizenship Digital Marketing • Digital Marketing: promotion of products or brands in one or more forms of electronic media o E-marketing § Part of e-commerce o 2 sectors § Business to Consumer E-commerce: trade involving businesses selling to consumers over the internet • Ex. Google, yahoo, Ebay, Amazon • Dramatic consumer spending increase has direct impact on B2B market § Business to Business E -Commerce: trade involving internet sale in which businesses sell to other businesses including government and organization • Ex. ZDnet,, Bloomberg, Cisco, Dell • Cloud Computing o Enhances B2C and B2B e-commerce o General term used to incorporate a variety of information and services and apps remotely operated by users across the web Value of Internet • Value to Buyers o Better information = better decisions o Greater convenience § Reduces travel time and cost o Wider selection and customization o Better prices § Tends to be driven by price • Value to Sellers o Access to more customers § “Show rooming”: see an expensive product and try it on, but buy it online for less o Increased loyalty through customization § Boost sales § Millennials = social media and new trends o Reduced supply chain costs § Supply Chain Costs: costs associated with procuring goods and services from suppliers with distributing products from businesses to consumers o Two-Way Communication § Constant bridge between customer and company § Gather opinions and collect data Chapter 4: Marketing Information and Research The Concept of Marketing Information and Research • Marketing Information Systems (MkIS): a computerized system used to collect and analyze the data needed for marketing decisions o Data helps companies know market and adjust strategy o Too much data can lead managers to be unable to sort through it o Ongoing marketing data to aid decision making • Marketing Research: the formal assembly and analysis of data about specific issues surrounding the marketing of goods and services o Function that links the consumer, customer and public to the marketer through information o Specifies into required to address issues o Abolishes a specific issue with a clearly identified objective regarding marketing strategy o Situation specific marketing studies to understand aspects of marketing activities • Roles of Information o To aid in decision making o Reduce uncertainty in order to handle more risk o Provide competitive strength o Operate quicker and more definitively Marketing Information Systems and Data • Marketing Decisions Support System (MkDSS): a coordinated collection of data , systems and technologies by which an organization gathers and interprests relevant information from business and environment and turns it into a relevant marketing action o Develop = asses marketing information needs • Transaction Based Informations System (TBIS): a specialized type of MkIS that serves as a computerized link between a firm and its customers, distributers and suppliers • Data: facts or statistics obtained from inside or outside of the company o Primary Data: information gathered fro the first time § Second data gathered in an investigation o Secondary Data: information that has already been collected § First data gathered in an investigation o External Data: data obtained from outside the company usually not free databases o Internal Data: data obtained from within the company • Data Analysis: transforms material into a useable form, so analysts can develop insights o Involves: § Data sorting § Models § Statistics: help describe data in more detail • Information is for decision making o Key role in Marketing plan, marketing mix and performance monitoring o Marketing Plan: required input about customers, competition, technology, economical conditions, distribution channels and market trends § Priority on complete fact-based data o Marketing Mix Decisions: product, place, promotion, and price all need information to work appropriately § Product: monitor test markets § Place: distributors, distribution channels, inventory required § Promotion: target audience, advertising § Price: sends strong signals to market about value appropriate information is needed to set the price o Performance Monitoring: helps managers make sure plans and programs are progressing § Tells us how well an advertising plan meets specific marketing objectives Marketing Research • Situation Specific Decisions o Product Development: which products, functions, benefits o Personal Selling: targets, approaches, strategies o Pricing: amounts, promotions, policies o Promotion: media, messages, measures o Competition: what are competitors doing o Consumer Behavior: why and how people buy • Target market à Use à Competition • Customer à Competition à Environment • Turning Data Into Information o Being relevant is more important then being complex and complete o World Of Big Data à Data and Information à Information: Analyzed Data § World of Big Data • Types of Data § Data and Information • Data Analysis § Information: analyzed data • Information and Decision Making • Marketing à relevance > data Marketing Research Process • Problem Definition o Marketing researcher and key decision makers work together to specify the problem o Isolate the symptom from the problem • Research Design o Research Design: outline that identifies what data to collect and how to collect it and how it will be analyzed o 2 Types: Exploratory and Quantitative § Exploratory Research: research designed to clarify the problem and suggest ways to address it § Quantitative Research: research designed to provide the information needed to select the best course of action and estimate the probable results o Pilot Study: a small scale project that allows the researcher to define and test the approaches that eventually will be used • Interpret and Report Findings o Good research moves from data to information to insight o Presented in simple easy to understand o Don’t have to make recommendation of action § Depends on total data available and bosses and inclinations Exploratory Research (1 Step) • Helps investigators gain a better understanding of the issues specifically: o Determine nature of problem o Search for causes for the problem o Define the magnitude of problem o Create hypothesis about causes o Describe how causes affect situation o Understand competitors actions and reactions o Estimate how courses of action may affect market • Seeks information that will help marketers in decision process • Doesn’t reveal solution, helps define problem • Purpose: o Identify opportunity/problem o Give possible explanations/solutions o Formulate hypothesis • Focus Groups: a group usually composed of 8-10 people whose opinions are elicited by an interview to provide exploratory insights into problems o Should be homogeneous to insight conversation o Use several groups § # of groups = the # of sample o Moderator role: § Open ended § Problem solving § Snowball • Depth Interviews: a relatively unstructured conversation that allows the researcher to probe deeply into a consumers thoughts • Projective techniques: a technique that enables respondents to project their thoughts onto a third party or object or through some type of contrived situation o Word associations, sentence completion, role playing • Observation: a research technique in which researchers simply watch participants o Structured observation is made through mechanical means • Case Analysis: the in-depth study of a few samples o Complex buying and competitive situations o Also study competition Quantitative Research (2 Step) • Purpose: o Choose best option o Test hypothesis • Provides information that helps decision makers select the best course of action and estimate results • Use widely accepted methods • Duplicating study should give similar results • Scientific Method: a systematic way to gather, analyze and interpret data in order to confirm or reject a prior conception • Hypothesis: tentative assumption about a particular event or issue o State beforehand what they believe the results are so that appropriate data can be analyzed and gathered • Experiments: a test conducted under controlled conditions in order to prove or disprove a marketing hypothesis • Casual Research: research that attempts to show a cause-and-effect relationship between 2 phenomena o Test marketing • Surveys o Most popular way to collect data o Measurement device o Sample o Inferential statistic o Covers part of the population o Sampling • Survey types o Likert Scales: a scale that measures the respondents intensity of agreement with a particular statement § Extent they like or dislike something o Bipolar Adjective scales: allows respondents to choose along a range of 2 extremes o Personal Interview: § Slowest speed § Highest response ate § Best response quality § Highest interview bias § Limited geographical reach § Expensive o Mall Intercepts: § Fast completion § Moderate response rate § Good quality § Moderate interview bias § Limited reach § Moderate cost § Actual behaviors as well as opinions and attitudes o Telephone Surveys: § Speed § Low cost § Large reach § Response rate good § Good quality responses § Moderate interview bias § Good with professions § Drawbacks • No visual elements • Unlisted numbers o Mail Surveys: § Low cost § Large reach § Low bias § Take your time § Low response rate § High response with organization backup o Internet Surveys: § Quick response § Low cost § Large reach § No bias § Moderate response rate § Types of online survey • Popup survey • Online groups • Email survey • Consumer-generated media § Also monitor comments online about brand to gather information • Census: covers total population o Sample does not exist o Descriptive statistics Sampling • Population (Universe): all the individuals or organizations relevant to the marketing research project • Sampling frame: a list of people in the universe who could potentially be contracted • Sample: a group of people who are asked to participate in a research o 2 categories § Probability Sample: a sample in which the chance of selecting a given individual from the sampling from or population can be calculated • Simple Random Sampling: a sampling technique in which each member of the study population has an equal and known chance of being chosen • Stratified Random Sampling: a sampling technique in which each member of a selected subgroup of the population has an equal chance of selection § Nonprobability Sample: a sample in which the likelihood of selecting a particular respondent from the sample cant be calculated • Judgment Samples: a sample selected by the researcher based on their belief that those chosen represent a majority of the study population • Convenience Sample: a sample composed of people who happen to come along o Inexpensive and may be unrepresentative Who does Marketing research? • In-company Research: o Headed by experienced personnel o Includes: director, analysts and specialists o Usually mix of inside and outside company • External Research: o Includes: § Consulting § Toll-service § Specialty Data • Certain aspects § Syndicated data • Information on company • Ethical Issues of Marketing Information and Research o Research used to sway consumers opinion § Arrives at wanted outcome without matter to facts o Consumers have little basis for questioning facts o Groups exist to protect and inform the customer o Children’s Online Privacy Act: use of information of children o Online Privacy and Disclosure Act: privacy online Technology Effect on Marketing Information and Research • Technology has made gathering data quicker, more convenient accurate and essential • Big Data: umbrella term for vast amount of data continually generated by society which can be analyzed to reveal trends, patterns, and predictions relating to human behavior and interactions o 3 types: § Descriptive Analytics: what has happened in the market, indicators linked to marketing strategy and consumer/business response • What patients have high blood pressure § Predictive Analytics: process of mining historical data to forecast future events and trends • Forecast • What patients will have a heart disease § Prescriptive Analytics: used to recommend one or more courses of action and shows outcome for each decision • Works along with AI to reach a conclusion • What treatment is there for patients Global Marketing Research • Most done online • Not easy to access second data that is complete and unbiased • Primary data acquisition hand because translation o Back translation: I translate then you translate it back • Cant be avoided • You expand = do research Chapter 5: Consumer Behavior Consumer Behavior • Consumer Behavior: the action and decision processes of individuals and organizations involved in discovery, evaluation, acquiring, consuming and disposing of p roducts and services o Looks at both actions and decisions o Then at households an d individuals o Finally it evaluates Consumer Involvement and Decision Making • Low-involvement purchase o Requires only simple decision making o Choose same brand every time o Purchase first then form evaluation o Passive learning: learning in which little energy is devoted to thinking about or elaborating on information o May skip first three steps of consumer decision making • High-Involvement purchases o Demand more extensive and complex decision making o Nontraditional products o Tied to self image o Form evaluation then p urchase o Active learning: learning in which substantial energy is devoted to thinking about and elaborating information o As involvement grows each step of decision making process becomes more important and so does active learning increase • Involvement influences relationship b/w product evaluation and purchasing behaviors • What is high involvement for one person can be low involvement for another Consumer Decision Making • Problem Recognition: occurs when a consumer becomes aware of an unfulfilled desire or need o Low Involvement: go immediately to source and select o High Involvement: recognition of need arises before it is acted upon • Information Search: consists of thinking through a situation, recalling previous experiences stored in memory and probably seeking information from friends • Alternative evaluation: use of decision rules that attempt to determine which product would be most likely to satisfy goals • Purchase Decision: the decision of whether or not to buy and which competing product to buy, which is made after carefully weighing alternatives. o Purchase: the actual financial commitment and transaction made to acquire the product • Purchase Evaluation: process of determining satisfaction or dissatisfaction with a buying choice Psychological Factors that Influence Consumer Decisions • Motivation o Motivation: internal force that directs behavior toward the fulfillment of needs § Needs can be either: • Biological (primary or innate needs) • Psychological (secondary or learned needs) o Maslow’s Hierarchy of Needs § Five basic needs § Lower level needs have to be fulfilled before higher level needs emerge o Motivational Conflict § Approach-approach conflict • Occurs when a consumer desires two objectives but cannot have both • Marketing Response: em phasis both benefits § Avoidance-avoidance conflict • Results when a choice must be made between two undesirable alternative • Marketing Response: stress unpleasantness of one alternative to get desired action § Approach-avoidance conflict • Occurs when a consumer d esires and alternative that has a positive and negative quality • All can be considered approach avoidance because you get something in exchange for money • Marketing Response: emphasize positive benefits of desired action • Perception o Perception: the process of recognizing, selecting, organizing and interpreting stimuli in order to make sense of the world around us o 4 Stages § Selective Exposure: consumer’s ability to seek out or avoid information § Selective Attention: people pay attention to messages that are co nsistent with their attitudes and beliefs and ignore messages that are not • Products they have already purchased or intend to purchase • Ex. Smoking ads, Democrats hear democrats § Selective Comprehension: tendency to interpret products and messages according to current beliefs • If it runs counter you are less likely to even attempt to hear the complete message • Assimilate: neutral statement sand Pro statements • Contrast highly pro statements § Selective Retention: tendency to remember messages that are consistent with ones attitudes and beliefs and forget those that are not • Once information is retained it is held until replaced or altered § Subliminal Perception: see or hear messages without being aware of them • Debate over effectiveness • Learning o Learning: any change in consumer behavior caused by experience o 2 basic types § Cognitive • Often used in high -involvement purchases • Emphasized perception reason and problem solving § Behavioral • Occurs through ei ther classical or operant conditioning o Classical Conditioning: after two stimuli are presented together repeatedly, people learn to respond to one in the same way as the other § Dog, meat and bell § Generalization: making the same response to different stimuli • Associating healthy with all brands of oatmeal § Discrimination: making different responses to different stimuli • Visual consistency across products to emphasis brand o Operant Conditioning : the use of reinforcement or punishment to shape behavior § Called operant because the learning occurs as the subject respond to or operates on the environment § Positive reinforcement can take place in different ways: • Product satisfying a need or want • Knowledge about the product • Seeing results • Frequent customer card promot ion § Stimulus à Want à Drive à Action à Acquisition à Repetition • Attitudes o Attitudes: a combination for a consumer’s thoughts, feelings and intentions toward some object § Described as consumer preferences § Theory: leads to great practice § Measurement: attitudes and behaviors § Statistics § Strategy: Attitude change to gain loyalty o Sum of three dimensions: § Cognitive: Knowledge about a products a ttributes not influences by emotion § Affective: Emotional feeling of like or dislike § Behavioral: tendency to act positively or negatively o Not the same as beliefs § Belief: a conviction that something is true or that descriptive statements are factual § We are all belief seeking individuals o What comes first Attit udes or behavior § Depends on situation • High Involvement: attitude then behavior • Low Involvement: neutral feeling • Information Processing o Information Processing: refers to ways in which consumers acquire, store and evaluate the data they use to make decisions o Key: encoding and use in memory § Encoding: process of converting information to knowledge • 2 ways to encode information o Episodes: mental images encodes as thoughts held in a picture form § Feelings § Early stages o Verbal encoding: words or symbols are stored in semantic memory § Memory: the brain function that stores and recalls encoded information • 3 types o Sensory Memory § Takes in an almost unlimited amount of encoded information § Most is forgotten within a fraction of a second o Short-term memory § Interprets what is sent from sensory memory § Smaller capacity § Holds information for longer than sensory memory o Long-term memory § Vast amount of information can be held for years § Remains there until replaced by contradictory information • Interference o Left Brain vs Right Brain § Left Brain • Slow • Analytical/rules • Gets tired • Reasons • Memory § Right Brain • Fast • Visual • Music • Creative • Encoding • Recall vs Recognition o Recall is harder


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