Marketing Review
Marketing: The process of determining customer needs and wants and then developing goods and services that meet or exceed these expectations.
• Market: Is a group of potential customers with similar needs who are willing to exchange
something of value with sellers offering various goods and services.
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• Gross Domestic Product: Total value of all goods and services produced in a country for
one year.
• Gross National Income or GDP: same as GDP but excludes income earned by
foreigners.
• Gross National Income Per Capita: GNI divided by the population.
• Purchasing Power Parity (PPP): GNI per capita compared to the CPI gives you an idea
of the purchasing power of the individual.
• Consumer Price Index (CPI): Price of a basket of goods in a giving economy.
• Generic Market; is a market with broadly similar needs. The sellers offering various,
often diverse ways at satisfying those needs. (Entertainment)
Product market; is a market with very similar needs and sellers offering various close
substitute ways of satisfying those needs.
MICRO marketing: is the performance of activities that seek to accomplish an organization’
s objectives by anticipating customer or client needs and directing a flow of need
satisfying goods and services from producer to customer or client.
MACRO marketing: is a social process that directs an economy’s flow of goods and
services from producers to consumers in a way that effectively matches supply and
demand and accomplishes the objectives of society.
Marketing Concept: an organization which aims all it’s efforts toward its customers , for a
profit.
Marketing Ethics; the moral standards that guide marketing decisions and actions.
The Marketing Mix: The ingredients that go into a marketing program; price, product, place, promotion.
Product; concerned with developing the right product fit with the target market.
Components; Processed items that become part of a larger finished product are called: Goods; Physical things that are seen and touched, that are tangible and that you own once you buy them are called:
Place; concerned with getting the right product to the target market.
Distribution Channels; is any series of firms that participates in the flow of products from producer to final user or consumer.
Vendor Analysis; Formal rating of suppliers on all relevant areas of performance.
Promotion; is concerned with telling the target market or others in the channel of distribution
about the right product. Everything the customer sees, hears and feels about a marketing
mix is called
The three Basic Promotional Objectives are; Informing, persuading, and Reminding.
Advertising; Any paid form of non-personal presentation of ideas, goods or services by an identified sponsor is called:
Public relations; Managing peoples' perception of a company's image is called: Personal Selling; face to face selling between buyer and seller..
Pioneering; Advertising that tries to develop primary demand for a product category rather then demand for a specific brand.
Institutional advertising; Advertising that focuses on the name and/or prestige of an organization is called.
Reminder Advertising; Advertising to keep the product’s name before the public.
Bargaining Process; different suppliers offer different prices and buyers choose best price Direct Advertising; Aims at immediate buying action.
Communication process; Source – Encoding – Message Channel – Decoding – Receiver
Price; setting must consider the competition as well as all the marketing mix costs.
Skim Pricing; Setting price high and therefore targeting the high end customers. Penetration Pricing; Setting prices low and therefore trying to get a larger market share.
Marketing Plan: is a written statement of a marketing strategy and the time related details for carrying out the strategy
.
Segmenting; clustering people with similar needs into a market segment.
Segment; sub group within a broad target market.
Market Segment; A group of similar customers who will respond to a marketing mix in a similar way are called:
Positioning; refers to how customers think about proposed or present brands in the market.
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A Market Positioning Map
• Narrowing down to a superior marketing mix.
Differentiation; marketing mix that is distinct from and better than what is available from a competitor
• An effective marketing strategy matches a firm’s resources and it’s objectives with
market opportunities.
Attractive Opportunities; are those opportunities that a firm has a chance of pursuing given it’s resources and objectives.
Breakthrough Opportunities; opportunities that help innovators develop hard to copy marketing strategies that will be very profitable for a long time. ( best kind of opportunity )
Imitators; want to copy and thus share in the innovator's profits if they can. Competitive Advantage; is a marketing mix that the target market sees as better then the competition, and that is hard to imitate.
Marketing Strategy; Specifies a target market and a related marketing mix.
Market Penetration; trying to increase sales of a firm’s present products in its present
markets.
Market Development; trying to increase sales by selling present products in new markets. Product Development; Offering new or improved products for existing markets. Diversification; Moving into a totally new line of business.
Product Introduction; New product into new market.
Pushing; Using normal promotional effort, personal selling, advertising, and sales promotion to
help sell the whole marketing mix to possible channel members.
Pulling; Using promotion to get consumers to ask middlemen for the product.
Bargaining Process; different suppliers offer different prices and buyers choose best price. Reciprocating; Trading sales for sales, that is , “if you buy from me, I will buy from you”
Electronic Data Interchange (EDP); An approach that puts information in a standardized format easily shared between different computer systems.
Target Market; a fairly homogeneous group of customers to whom the company wishes to appeal.
• Target Marketing; The marketing mix is tailored to fit some specific target customers.
• Mass Marketing; Typical production oriented approach, aims at everyone. However
Mass Marketers may aim at a target market, through mass distribution.
Market Segmentation: The process of dividing the total market into groups whose members have similar characteristics.
Patent: A form of intellectual property that gives investors exclusive rights to their inventions for 20 years.
Copyright: A form of intellectual property that protects a creator’s right to materials such as
books, articles, photos and cartoons.
Trademark: A brand that has been given exclusive legal protection for both the brand name and the pictorial design.
Licensor:; When your business allows another business to produce and distribute your products in exchange for a fee, your business is called:
Product; means a need satisfying offering of a firm.
Good; tangible items
Service; is a deed performed by one party for another.
Quality; a product’s ability to satisfy a customer need.
• Product Assortment; is a set of all the product lines and individual products that are
closely related.
• Product line; is a set of individual products that are closely related.
• Individual product; is a particular product within a product line.
Each individual product needs a separate marketing mix strategy.
Each individual product within the product line supports the others in the line and
pushes the overall brand.
Shopping Products; are products the customer feels are worth the time and effort to
compare with competing products.
Homogeneous shopping products; are shopping products the customer sees as basically
the same and wants at the lowest price.
Heterogeneous shopping products; are shopping products the customer sees as different
and wants to inspect for quality and suitability.
Branding are less important for heterogeneous products.
Unsought products; are products that potential customers don’t yet want or know they
can buy.
New Unsought products; are product offerings for really new ideas that potential
customers don’t know about yet.
Regularly Unsought products; are products like gravestones and life insurance, that stay
unsought but not unbought!
Business product classes are based on how buyers see products and how the products will
be used.
1. Installations; important capital items; buildings
2. accessories; are short lived capital items
3. raw materials; unprocessed items
4. components; are processed items that become part of the finished goods.
5. supplies; are expense items that do not become part of the finished product.
- maintenance
- repair
- operating supplies
6. professional services; are specialized services that support a firm’s operations.
Five levels of Brand Familiarity:
1. Rejection
2. Non recognition
3. Recognition
4. Preference
5. Insistence
Branding; means the use of a name, term, symbol, or design to identify a product.
Brand Name; is a word, letter, or a group of words or letters.
Trademark; includes only those words, symbols, or marks that are legally registered for
use by a single company.
Service mark; is the same as a trademark except it refers to a service offering.
Ethics: Standards of moral behavior; that is, behavior that is accepted by society as right versus wrong.
Ethical dilemma: situation when we must decide whether or not something is ethical or not; ask yourself three questions;
1. Is it legal?
2. Is it balanced?
3. How will it make me feel?
Corporate Social Responsibility (CSR): A businesses concern for the welfare of society as a whole.
Corporate Responsibility: Dimensions of corporate responsibility that include everything from hiring minority workers to making safe products.
Customer Value; The difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits. ( Benefits-Costs=Value )
Social Class; Social class is determined by education and occupation.
The psychological variables that influence whether a customer will buy a product include:
1. motivation
2. perception
The basic necessary things that humans must satisfy are called:
a) wants
b) needs
c) drives
Maslow’s hierarchy of needs: Theory of motivation that places different types of human needs in order of importance, from basic physiological needs to safety, social, esteem needs to self-actualization.
• 1. Physiological
• 2. Safety
• 3. Social
• 4. Esteem
• 5. Self Actualization
Managing Products Over Their Life Cycles
• The Product Life Cycle has four major stages.
• 1. Market introduction; sales are low as a product is introduced to a market.
• 2. Market growth; industry sales grow fast, but industry profits rise then start
falling.
• 3. Market maturity; industry sales level off and competition gets tougher.
• 4. Sales decline; old product sales decline and start to be replaced.
• Some products move fast; some products move through the early stages quicker then
others.
- Comparative advantage; the greater the comparative advantage the more rapidly sales will grow.
- easy to use and easy to communicate use; product growth will be more rapid.
- compatible; with the values and experiences of the target customers.
• Length of cycle affects strategy planning
- Marketing managers must understand the life cycle of their products and must make realistic plans.
• Introducing New Products;
- Requires a lot of promotion
- Promotion must be focused on the whole product idea in the beginning and not just the brand.
- Since new product development is expensive, and the innovator is leading the charge, a skim pricing strategy may be used
• Pioneer may need help from competitors;
- With really new ideas introducing and building new product market awareness may be to big a job for one company.
- Two or more companies promoting a new product idea may serve to build demand and help both.
- Must be compatible with existing products or you will have problems!
• New product sales may not take off
- Some ideas just don’t sell as projected!
- People just don’t understand or accept the marketing mix!
Adoption Processes Can Guide Product Planning
• Promotion efforts must vary over time for different adopter groups.
• Adoption Curve; shows when different groups accept product ideas.
Customer Group in The Adoption Curve
• Innovators 3%-5%; are the first to adopt. Eager for new ideas and like taking risks.
• Early Adopters 10%-15%; are well respected by their peers and often are opinion
leaders.
• Early majority 34%; avoid risk and wait to consider a new idea after many early
adopters have tried it.
• Late majority 34%; are cautious about new ideas. Often older and more
conservative.
• Laggards and Nonadopters 5%-16%; prefer to do things the way they done them in
the past and are very suspicious of new ideas.
The New Product Development Process
• Step 1; Idea Generation
• Step 2; Screening
• Step 3; Idea Evaluation
• Step 4; Development
• Step 5; Commercialization
Why are product life cycles getting shorter?
1. technology is changing quickly
2. patent and trademark laws are weak in most countries
3. ideas and products are often copied and stolen
Modified rebuy; Buying something that has been purchased before, but with a few changes to the
conditions and suppliers is called:
Social influences; Family, culture, social class and reference groups are all.:
Levels of problem solving in the consumer buying process;
- Awareness
- Interest
- Evaluation
- Decision
- Confirmation
The 4 Parts of The AIDA Model are;
- Attention
- Interest
- Desire
- Action
The Five Levels of Brand familiarity are;
- Rejection
- Non recognition
- Recognition
- Preference
- Insistence
Organizational customers; Producers of goods and services, intermediaries, governments and non-profit corporations
• Family Brand; same brand for several products.
• Licensed Brand; a well known brand that sellers pay a fee to use.
• Individual brands; separate brand names for each product.
• Generic products; products that have no brand at all other then the identification of
their contents and the manufacturer.
• Economic buyers; People who know all the facts and logically compare choices to get the
greatest satisfaction from spending their time and money.
• Economic Needs; Are concerned with making the best use of a consumer’s time and
money, as the consumer sees it.
• Needs Motivate Consumers!
Needs; Are the basic focus that motivate a person to do something.
Wants; Are needs that are learned during a person’s life.
Drives; Is a strong stimulus that encourages action to reduce a need.
PSSP Hierarchy of Needs
• Physiological Needs; Are concerned with biological needs- food, drink, rest, etc.
• Safety Needs; Are concerned with protection and physical well-being- health, etc.
• Social Needs; Are concerned with love , friendship, esteem, etc.
• Personal needs; Are concerned with an individual’s need for personal satisfaction.
Perception Determine What Consumers See And Feel
• Perception; How we gather and interpret information from the world around us.
• We apply the following selective process-
• 1. Selective exposure; Our eyes and minds seek out and notice information that interests
us.
• 2. Selective Perception; We screen out or modify ideas, messages, and information that
conflict with previously learned attitudes and beliefs.
• 3. We remember only what we want to remember.
• Marketers are interested in these selective processes because they effect how target
customers get and retain information.
• Psychographics; Are any attributes relating to personality, values, interests or lifestyles.
• Psychographic or Lifestyle Analysis; is the analysis of a person’s day to day pattern of
living as expressed in that person’s activities , interests, and opinions.
Social Influences On Buying Behaviour
• Family; Who is the real decision maker in the family?
• Social Class; is a group of people who have approximately equal social position as
viewed by others in the society.
• Reference Groups; is the people to whom an individual looks when forming attitudes
about a particular topic.
• Culture; is the whole set of beliefs, attitudes, and ways of doing things of a reasonably
homogeneous set of people.
• Opinion Leader; is a person who influences others.
Every group has one, and the opinion leader on one subject is not necessarily one on any other subject!
Retailing; involves all of the activities in the sale of products to final consumers. Mass-merchandising concept; which says that retailers should offer low prices to get faster turnover and greater sales volumes by appealing to larger markets.
• Wheel of Retailing Theory; says that new types of retailers enter the market as low status,
low margin, low price operators and then, if successful, evolve into more conventional
retailers offering more service with higher operating costs and higher prices.
• Scramble merchandising; carrying any product line they think they can sell. More modern
approach.
Demographic Dimensions
• Provide marketing managers with critical information about the size, location, and
characteristics of target markets.
• Demographic Trends; are these fact over time.
• Reason they are important;
• 1. Is there enough of the right kind of customer?
• 2. Demographic data can be correlated with psychographic variables that help define
market segments.
• Gross Domestic Product: Total value of all goods and services produced in a country for
one year.
• Gross National Income or GDP: same as GDP but excludes income earned by foreigners.
• Gross National Income Per Capita: GNI divided by the population.
• Purchasing Power Parity (PPP): GNI per capita compared to the CPI gives you an idea of
the purchasing power of the individual.
• Consumer Price Index (CPI): Price of a basket of goods in a giving economy.