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the usefulness or benefit consumers receive from a product.
-Marketing processes create several different kinds of utility to provide value to consumers:
transforming raw materials into finished products
I don’t have to sew on the buttons to my new shirt because the manufacturer did it for me
involves obtaining a desired product from someone by offering something in return
A businessperson who only produces a product when it is ordered.
A business orientation that looks at financial profits, the community in which the organization operates, and creating sustainable business practices.
The Financial Bottom Line
The Social Bottom Line
The environmental Bottom Line
Acts, efforts, or performances exchanged from producer to user without ownership rights. Satisfies needs when it provides pleasure, information, or convenience.
-Services are acts, efforts, or performances exchanged from producer to user without ownership rights. Like other intangibles, a service satisfies needs when it provides pleasure, information, or convenience
-Something done to you (massage)-Something done to something you own (geek squad fixing your computer)
o Are acts efforts, or performances exchanged from producer to user without ownership rights
Intangible products exchanged directly from producer to constomer
o Example of services: insurance, tv, advertising, haircut, getting nails done, getting taxes done, etc.
Price is the unique value customers give up (exchange) to obtain product payment in forms of money, services, favors, or anything that you are giving up; anything that has value to the other party
-The assignment of value, or the amount the consumer must exchange to receive the offering or product.
-Payment may be in the form of money, goods, services, favors, votes or anything else that has value to the other party
-In some marketing practices, price can mane exchanges of nonmonetary value as well
Consumers use price as a signal of quality
Pricing decisions are very important for a firm
Example would be two cameras that look similar but one is priced higher so you assume it is better (higher quality)
The coordination of marketers communication efforts to influence attitudes or behaviors
(EX: marketing communication through Ads)
How a firm communicates with the consumers
Much can be communicated in your promotion
Includes much more than just advertising
Providing the product when and where the customer wants it
Example would be Walmart placing items in certain places for easier accessibility
The controllable elements inside an organization, including its people, its facilities and how it does things that influence the operations of the organization.
An analysis of organizations strengths and weaknesses and the opportunities and threats in its external environment.
: SBUs with products that have a dominant market share in high-growth markets.
-Maximize market share in the face of increasing competition
-Aims to get largest share of loyal customers so SBU will generate profits and reallocate them to other parts of the company.
High market share and high growth rate
Example: Mickey Mouse
SBUs with a dominant market share in a low-growth-potential market.
-enjoys a high market share that the firm can sustain with minimal funding.
Low market rate and high growth rate
Not going anywhere but still making money
SBUs with low market shares in fast growth markets.
-Suggests that a business has failed to compete successfully.
SBUs with small share of a slow-growth market. They are businesses that offer specialized products in limited markets that are not likely to grow quickly.
-Large firms sell dogs to small firms to take care of.
Existing sales to existing markets
Example: Cheerios advertise new uses for their products
Existing product to a new market
Example: Wii to older target audience
New product to an existing market
Example: New flavors of Pepsi
New product into a new market
Least Developed Countries
Offer wide range of opportunities for international marketers
(US and Europe etc.)
one firm with legal protection in that competition
Small number of sellers, each with large share of the market.
select number of firms that dominate the industry such as oil
Many different sellers, each offering a different benefit and each having small shares of market.
Smaller competitors don’t challenge them such as Coke and Pepsi
Many small firms all offering similar products, no influence. (Very Rare)
Ex. Steel or gas
Nobody has market power (Farmers)
-Statistics that measure observable aspects of a population
§ Population size
§ Ethnic Group
§ Family structure
Who is the buyer, who isn’t? Some go missing due to world events (Venus for women, Alternative for men)->Same thing different package target
o Deeply held beliefs about right and wrong ways to live, that it imparts to it’s members
o Talking about sex in public
Societies deeply held beliefs about right and wrong ways to live
Religious beliefs such as the acknowledgement of the Sabbath
Cultures in which people subordinate their personal goals to those of a stable community.
o Specific rules dictating what is right or wrong, acceptable or unacceptable
o What ways to dress, how to speak, what to eat and how to behave
Specific rules dictating what is right or wrong, acceptable or unacceptable
Middle finger is considered offensive in America, but is not in Europe
Tendency to prefer products of people of one’s own culture
“I only buy American cars”
Product strategy in which a firm offers the same product in both domestic and foreign markets.
Same product in domestic/foreign markets
(Xbox One to Canada)
Similar, but modified product
(Ford cars to Europe)
Product strategy in which a firm develops a new product for foreign markets.
Less advanced product (simplified product)
(GE products to Africa)
Designated areas where foreign companies can warehouse goods without paying taxes or custom duties until they move the goods into the marketplace.
A company tries to get a toehold I a foreign market by pricing its products lower than it offers them at home.
Every individual has needs
Innate needs (physiological)
Primary needs: food, water, air, clothing, shelter, etc.
Acquired needs (psychological)
Secondary needs: self-esteem, prestige, affection, power, and learning
making products available when customers want them
Is the product available where I want it?
The benefit marketing provides by storing products until they are needed. Ex: Costumes for Halloween
benefit marketing provides by storing products until they are needed
Is the product available when I want it?
allowing the consumer to own, use, and enjoy the product
Do I have a variety of relevant products that I can buy?
· Anything tangible/intangible that, through exchange process, satisfies consumer/business customer needs
o Physical Goods (tangible)
Creation of a good to meet consumer needs.
Many levels of value can be added through type of product, packaging etc.
Example would be Crown Royal packaged prestigious and Jack Daniels packaged in a milk carton
A tangible good, service, or idea that satisfies needs; a bundle of attributes
Emphasis is on making the product better, production efficiencies. Best when demand > supply.
Apple’s iPhone compared to Blackberry
Get product out the door. Reduce inventory. Do not establish customer relationship. supply > demand.
Wal-Mart, Target, any huge superstore
A business approach that prioritizes the satisfaction of customer’s needs and wants. Followed TQM approach.
The overall ability of a product to satisfy customer’s expectations.
CRM (Customer Relationship Management)
A business strategy to optimize profitability, revenue, and customer satisfaction
A systematic tracking of consumers preferences and behaviors over time in order to tailor the value proposition as closely as possible to each individuals unique wants and needs. CRM allows firms to talk to individual customers and to adjust elements of their marketing programs in light of how each customer reacts
products used by companies to produce other products
Not for profit organizations
Operate like a business but do not pursue profit they seek to service their community through social educational and physical means examples American Diabetes Association
A superior ability of a firm in comparison to a competitor
Unique product properties that sets it apart
Product - Customer solution
Place - Convenience
Promotion - Communication
Price - Customer cost
Consists of all consumers who share a common need that can be satisfied by a specific product and who have the resources, willingness, and authority to make the purchase.
Substantiality, identifiability and measurability, accessible, responsive.
Consists of all consumers who share a common need that can be satisfied by a specific product who have the resources, willingness, and authority to make the purchase. (willing, able, authority)
Customers/potential customers who share a common need that can be satisfied by a specific product and who are willing, able and have the authority to make the exchange
Meet basic needs to move up the triangle.
People have different needs - it is not required to go in a certain order.
Value = Benefits - Costs
The financial value of a customer relationship throughout the lifetime of the relationship.
Focus is on competitor intelligence. Learning and reacting to what the competitor is doing.
Lowe’s building a store within 10 miles of every Home Depot
: suggests that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.
Competition for dollars with products in the same class, what product alternatives will consumers choose. 3 levels:
Understanding the impact of technology on all aspects of the business (distribution, inventory, control, communication, etc.)
Reader activated when a person passes it.
Ex. Grocery store commercial
Understanding the demographic or psychographics of your culture.
Ex-Individualistic vs. Collectivist cultures
Natural resources that are available for creating and marketing a product.
Ex-Pollution, scarce natural resources
-Occurs when the retailer that wants to carry the product has to charge the “suggested” retail price
- The Consumer Goods Pricing Act of 1976 limited this practice, leaving retail stores free to set whatever price they choose without interference by the manufacturer or wholesaler
Clayton Act 1914
-Advocates of standardization argue that the world has become so small that basic needs and wants are the same everywhere
-A focus on the similarities among cultures is certainly appealing
-Realize large economies of scale because it could spread the costs of product development and promotional materials over many markets
-Consistent exposure also helps create a global brand because it forges a strong, unified image all over the world
Standardization - apply the same marketing strategies to all markets, basic needs and wants are same everywhere. creates strong, universal brand recognition and could lower costs
Apple only has one iPhone that doesn’t change no matter of location
Localization - need to tailor products and marketing strategies to local environments. More expensive, but more effective because each culture is unique and has a different set of behavioral and personality characteristics
McDonalds doesn’t serve meat in their India stores because it goes against their culture to eat meat
Can you identify the true causal relationship (most important).
Threaten ability to identify internal validity - people are asked to try each chocolate from Switzerland but they refused because they had a bad experience with someone from Switzerland --> the two are not related at all.
Break people into groups and then randomly sample within those groups.
Adv: Respondents feel anonymous, low cost, good for ongoing research.
Disadv: May take a long time to be returned, low rate of response, may not be returned, length limited by interest, unclear level of understanding questions, honesty aspect.
Adv: Fast, high flexibility in questioning, low cost, limited interviewer follow up.
Disadv: decreasing levels of cooperation, limited length, high likelihood of misunderstanding, no materials to view, impossible to survey households without phones, consumers can screen calls.
Adv: Flexibility of questions, can be long, can determine understanding, can take as much time as necessary, can use visuals.
Disadv: high cost, interviewer bias can be a problem.
Adv: Instantaneous data collection and analysis, questioning very flexible, low cost, no bias, no geographic restrictions, can use visuals.
Disadv: Unclear who is responding, no honest assurance, limited length, unable to determine understanding.
A process in which analysis sift through data to identify unique patterns of behavior among different customer groups.
Applications for a marketer: customer acquisition, customer retention, customer abandonment, market basket analysis.
o Process in which analysts sift through data to identify unique patterns of behavior among different customer groups
When you don't realize that you're being marketed to.
Ex-Camera phone story
any practice designed to deceive people about the involvement of marketers in a communication.
(hiring someone to pretend to read a new novel on the subway)
· When you’re being marketed to, and you don’t realize you’re being marketed to
o i.e. Camera phones – Nokia, having employees ask people to take pictures with their camera phones (w/o launching a campaign)
Marketing where/when you don't expect to be marketed to
Ex-Side of a building
When a firm 'ambushes' consumers with promotional content in places they are not expecting to encounter this kind of activity.
EX: putting an ad on the back of a movie ticket, or a crowd of people doing a dance routine in a subway.
· doing something in a non-conventional, unique way
o i.e. Shooting someone from behind a tree…
o first time using QR codes
Word of mouth communication that customers view as authentic.
Ex: your friend tells you that the food at a restaurant is really good, so you believe it and go.
Marketing message that exaggerates its description of the facts and embellishes the truth.
Buzz is work of mouth hype is from the company (buzz is more valued).
You have to be able to see the source of it for it to be hype.
**See diagram in notes**
As marketers we must determine which part of the market we are going to focus on.
To do this, marketers divide up the entire market into groups based on some shared characteristics.
-The process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics.
-Can’t please all people all the time, but you have to try your best
Segment Profile: the "typical" person for the segment.
Once a segment is created, a marketer must determine which segment they intend to target.
1. Homogeneous within,
2. Heterogeneous between (Differentiable)
4. Meaningfully defined (measurable)
One strategy for everyone (mass marketing).
Adv: low costs for one market strategy as opposed to multiple (economies of scale)
Disadv: you can miss out on individuals by not individually targeting them
Different product offerings for each segment.
Adv: most time this is the best strategy.
Only focusing on one segment (do what you do best).
Most companies start with this
Positioning is the place a product or brand occupies in the consumer's mind on important attributes, relative to competitive offerings.
These attributes help a consumer position a product relative to the attributes
Uses a consumer's important attributes to place companies on a map. Used to determine the best marketing mix strategy. Broken into:
Translators (Cars manual with mess up)
Local, state, national, and global laws and regulations affect businesses
Creating customer relationships through a consistent relevant dialogue across multiple channels in order to maximize customer satisfaction and business results
mental rules of thumb used for a speedy decision.
A mental rule of thumb used for a speedy decision:
--Price equals quality, Brand loyalty, Country of origins
Availability: mental shortcut where we make judgments about the probability of an event occurring by the ease with which examples come to mind
Representative: Judging a situation based on how similar the prospects are in the person’s mind
Anchor and Adjustment:
The anxiety or regret that a consumer may feel after choosing from among several similar attractive choices.
Example: Second guessing a purchase.
Anxiety or regret a consumer may feel after choosing from among several similar attractive choices
To remove dissonance, marketers reinforce purchases through personalized contacts after the sale, include information inside the package praising consumers and reinforcing they made the right choice, or by Offering comprehensive warranties and guarantees
Hidden messages in marketers’ communication
Behavioral Learning Theories
Focus on how consumer behavior is changed by external events or stimuli
Describes learning as OUTCOME NOT THE PROCESS
2 Forms of Behavioral Learning
Classical & Operant
Organisms can be taught certain behaviors through repetition.
Example: Dogs salivating when hearing a bell or something similar
Learning occurs that associates a response to a stimulis, once paired with a second stimulis, over time the second stimulis will create a similar response as the first
· Increases the strength of the association between a conditioned stimulus and an unconditioned stimulus
· Stimulus Generalization
· Pavlov found that the dogs salivated at sounds similar to bells (e.g., jangling keys)
· Product line, form, and category extensions
· Family branding
· Marketing the whole line of company products under the same brand name (e.g., Apple)
Learning that occurs as the result of rewards or punishments
Strategic Applications of Instrumental Conditioning
Marketers use instrumental learning when they provide positive reinforcement to the customer
Importance of internal mental processes; people are problem solvers who actively use information from the world around them to master their environment
Individuals observe how others behave in response to certain situations (stimuli) and the ensuing results (reinforcement)
Example: Turning in Elevator
Learning from watching other’s actions and noting what happens to them as a result
· Last evaluations of a person, object, or issue
· 3 components: affect, cognition, behavior
· Affect: Feeling Component
· Cognition: Knowing Component
· Behavior: Doing Component
Personality is the set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment.
Example: Senses make people react differently
o Person who influences others’ attitudes or behaviors
o Trusting someone to tell you the positive and the negative
o Knowledgeable about product category
o Among first to buy new products
o Likely to tell both positive and negative info about product performance
o Online reviews are better because people can identify the reviewers
Person who influences others’ attitudes or behaviors.
Example: Views change when your friend thinks something is cool.
A person who is able to influence others’ attitudes or behaviors by virtue of his or her active interest and expertise in one or more product category
Influences others’ attitudes or behaviors.
Valuable information sources because:
knowledgeable about product category
among first to buy new products
likely to tell both positive & negative info about product performance
Business’s demand for goods and services comes either directly or indirectly from consumers demand for what it produces
Ex/ Some of the demand for forestry products is derived indirectly from the demand for education
As a result, the success of one company may depend on another company in a different industry
Ex/ Fewer college students means fewer books sold, the forestry industry has to find other sources of demand for its products
Means that it usually doesn’t matter if the price of a B2B product goes up or down- business customers still buy the same quantity
Often one of the many parts/materials that go into producing the consumer product
In the short term
Demand for 2 or more gods that are used together to create a product
If supply for one of these parts decreases, demand for other part decreases as well
Taking raw goods and making it into a finished product
Moving the good and storing it in large quantities
Routine purchase that requires minimal decision making
Reordering when supplies run low from same suppliers
When a firm decides to shop around for suppliers with better price, quality and delivery times
Requires limited decision-making
Can occur with organization confronts new needs for products it already buys
First time complex purchase; inexperienced buyer
Uncertainty and high risk
Extensive decision making
People in organization that participate in purchasing decision
Cross-functional team of decision makers
Refers to the reps of org divisions