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(Planning Phase) Step 1: Define the Business Mission
Step 2 : Conduct a Situation Analysis Using SWOT
(Implementation Phase) Step 3: Identifying and Evaluating Opportunities Using STP (Segmentation, Targeting, and Positioning)
Step 4: Implement Marketing Mix and Allocate Resources
(Control Phase) Step 5: Evaluate Performance Using Marketing Metrics
is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value.
intangible activities or benefits that an organization provides to consumers in exchange for money or something else of value.
The overall sacrifice a consumer is willing to make-money, time, energy-to acquire a specific product or service; the sacrifice includes the money that must be paid to the seller to acquire the item, as well as other nonmonetary sacrifices
Marketers communicate the value of their offering, or the value proposition, to their customers through a variety of media including TV, radio, magazines, sales forces, and the Internet
selling merchandise or services from one business to another
(today) transcended a production or selling orientation and attempt to discover and satisfy their customers’ needs and wants; value- reflects the relationship of benefits to costs, or what you get for what you give; value co-creation- allow customers the opportunity to act as collaborators in creating the product or service
How do marketers create value for a product or service?
Why is marketing important both within and outside the firm?
Thanks to MTV and other global entertainment venues, cheap foreign travel, and the Internet, you share many of your consumption behaviors with college students in countries all over the globe, expanding firms’ global presence
-the marketing department works with other functional areas of the company to design, promote, price, and distribute products, thus responsible for coordinating all of these aspects of supply and demand
People who organize, operate, and assume the risk of a business venture
-key to success- they launch ventures that aim to satisfy unfilled needs
A firm’s target market, marketing mix, and method of obtaining a sustainable competitive advantage
Something the firm can persistently do better than its competitors
Something the firm can persistently do better than its competitors; another key goal or objective often embedded in a mission statement
A broad description of a firm’s objectives and the scope of activities it plans to undertake; attempts to answer two main questions
1.) What type of business is it? and
2.)What does it need to do to accomplish its goals and objectives?
The processes of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits
A group of consumers who respond similarly to a firm’s marketing efforts
Aggregates potential buyers into groups that have common needs and will respond similarly to a marketing action. A business does this when it expects that this will increase its sales, profits, and return on investment.
involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
-linking market needs to an organization’s marketing program
The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market
Involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products
A strategy that involves pricing below, at, or above competitors’ offerings
A pricing strategy that involves first determining the perceived value of the product from the consumer’s point of view and then pricing accordingly
Groups of associated items, such as those that consumers use together or think of as part of a group - similar products
A growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international
New-Product Strategy Development
New-Product Strategy development is the stage of the new product process that defines the role for a new product in terms of the firm’s overall corporate objectives
o Goals and objectives
The new business lacks any common elements with the present business; do not capitalize on either core strengths associated with markets or with products
The first to buy a product
venturesome, higher education , use multiple information sources
- skeptics who adopt new products when it is necessary
- adopt after majority of the market has purchased
-below average social status
Brief written descriptions of a product or service; its technology, working principle, and forms; and what customers needs it would satisfy
product idea (rather than the actual product)
An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm’s research and development (R&D) department; people, consumer groups, and governmental agencies are concerned when alpha testing involves tests on animals
After testing the prototypes, the firm must test the market for the new product with a trial batch of products by either
Market testing is the stage of the new-product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.
o Test marketing
o When test markets don’t work
Fees that firms pay to retailers simply to get new products into stores or to gain more or better shelf space for their products
when a product is first introduced to its target market
o Sales grow slowly
o Profit is minimized (b/c of development costs)
o Marketing Objective: create customer awareness and stimulate trial
o Often heavy expenditures on advertising and promotions to build awareness among consumers
(rapid increase in sales)
Sales growth comes from:
-More people trying/using the product
Advertising focus shifts to stimulate selective demand
Compare products with competitors to gain mkt share
Often see changes in product to differentiate from competitors (“New and improved”, new features)
slowing of product class sales
-Sales increase at decreasing rate as fewer new buyers enter the market
-Most consumers who would buy the product are either repeat purchasers or have tried and abandoned product
-Marketing attention directed at holding market share through further differentiation
sales and profits drop
-Often happens b/c of environmental changes
-2 strategies to handle declining product:
1. Company Objectives
5. Channel Members
a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers’ needs
Those that consumers purchase for status rather than functionality
*the higher the price, the greater the status associated with it and the greater the exclusivity, because fewer people can afford to purchase it
Tells us how sensitive consumer demand is to changes in a product’s price.
The percentage change in demand for product A that occurs in response to a percentage change in price of product B
Products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other
Products for which changes in demand are negatively related; that is, a percentage increase in the quantity demanded for product A results in a percentage decrease in the quantity demanded for product B
the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
EX: direct labor, direct materials, sales commissions, that are tied directly to quantity sold.
The costs that remain essentially at the same level , regardless of any changes in the volume of the production
Employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer
Takes tactic of leader pricing one step further by lowering the price below the store’s cost
promotional pricing to attract customers to the store
a firms’ practice of setting a very low price for one or more of its products with the intent to drive its competition out of business; illegal under both the Sherman Act and the Federal Trade Commission Act
The practice of colluding with other firms to control prices
Occurs when parties at different levels of the same marketing channel (ex: manufacturers and retailers) collude to control the prices passed on to consumers (Gray Area)
The grouping of consumers on the basis of the benefits they derive from products or services
is a means of displaying or graphing the location of products or brands in the minds of consumers
to identify problems and opportunities and to generate and improve marketing actions.
that something occurs with or extent of a relationship
between two factors
are facts and figures that have already been recorded before the project at hand.
-Internal data (inside the firm)
-External data (outside the firm)
are facts and figures that are newly collected for the project
-Observational data (watching people)
-Questionnaire data (asking people)
-Other sources of data
o Moderately expensive
o Ability to ask complex questions: some, since interviewer can probe and elaborate on questions
o Opportunity for interviewer bias results: some, because of voice inflection of interviewer
o Anonymity given respondent: some, because of telephone contact
-Please circle the number that represents how you feel about the computer software you have been using
a framework to relate the market segmentsof potential buyers to products offered or potential marketing actions by an organization.
company retains product but reduces marketing costs
purpose of harvesting: maintain ability to meet customer requests
a basic decision in marketing products in which an organization uses a name, phrase, design, or symbols, or combination of these to identify its products and distinguish them from those of competitors.
the added value a given brand name gives to a product beyond the functional benefits provided.
a flowchart of the points of interaction between consumer and service producer
are the approaches that can be used to collect data
Enables a firm to respond more effectively to the wants of these groups….to increase sales and profits
the total expense incurred by a firm in producing and marketing a product.
*= Fixed cost (FC) + Variable cost (VC)
consumer’s desire and willingness to pay a price for a specific good or service
1. the more substitutes a product or service has, the morel likely it is to be price elastic
2. products and services are considered to be necessities are price inelastic
allow them to see “what if” questions about the effect of changes in prices and costs on their profit
employ the Internet to make goods and services available for consumption or use by consumers or business buyers (combine electronic and traditional intermediaries to create time, place, form, and possession utility for buyers)
employ the Internet to make goods and services available for consumption or use by consumers or business buyers.
combine electronic and traditional intermediaries
Multichannel marketing can
Involves buying, selling, and risk taking because they stock merchandise in anticipation of sales
a contractual agreement between a parent company (a franchisor) and an individual or firm (a franchise) that allows the franchisee to operate a certain type of business under an established name and according to specific rules
refers to the variety of different items a store carries
(number of different product lines)
weigh factors underlying expected customer tastes and preferences more heavily than such factors as cost, profit, and competition when selecting price level
skimming pricing, penetration pricing, prestige pricing, price lining, odd-even pricing, target pricing, bundle pricing, yield management pricing
based on learning effect
use return on investment or profit/investment instead of total profit
stresses what the competitors or “market” is doing
customary, above at below market pricing, loss leader pricing
1) many segments of the market are price sensitive
2) a low initial price discourages competitors from entering the market
3) unit production and marketing costs fall dramatically as production volumes increase
1) enough prospective customers are willing to buy the product immediately at the high initial price to make these sales profitable
2) the high initial price will not attract competitors
3) lowering price has only a minor effect on increasing the sales volume and reducing the unit costs
4) customers interpret the high price as signifying quality
setting one price for all buyers of a product or service