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AEM 2200
Test 2
| Term | Definition |
|---|---|
| Global Marketing | A targets market throughout the world- has become an imperative for business |
| Global Vision | recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets |
| Developing a Global Vision | External and internal environment change. |
| Coke VS Pepsi Global Vision | Difference: more people in coke, coke same logo everywhere- but Pepsi has different variations, bottles, flavors. 2 companies selling the same product but different positions all around the world |
| Gross Domestic Product (GDP) | the total market value of all final goods and services produced in a country for a given time period. |
| Why go global? (5) | Earn additional profits Leverage a unique product or technological advantage- in another country Possess exclusive market information Saturated domestic markets Excess capacity Utilize “economies of scale” |
| Importance of Global Marketing (4) | • US export 1/5 of production. • Derives 13% of GDP from world trade More than 10 million Americans hold jobs that are supported by exports.7% of employment is supported by exports US businesses export over 1.7 trillion in goods and services each year. |
| National Export Initiative | goal to double US exports over the next 5 years and support 2 million US jobs- Obama |
| 4 Benefits of Globalization | Spurs competition Raises productivity and living standards Offers access to foreign capital, global export markets and advanced technology. Promotes higher labor and environmental standards |
| Negatives of global trade (6) | Millions of Americans lost jobs Millions fear losing jobs. Employers threat outsourcing if employees won't accept pay cuts. Service and white-collar jobs moving offshore. Work on tech moving to developing nations. Firms take more wealth out than in. |
| Job Outsourcing | sending U.S jobs abroad- Ex. Detroit, or Ford manufacturing moved to Mexico |
| Globalization acts as a check on governmental power by | making it more difficult for governments to abuse the freedom and property of their citizens. |
| Multinational Corporation | a company that is heavily engaged in international trade beyond exporting and importing. |
| 4 Stages of development | 1.Company operate in one country, sell to others. 2.Set up foreign subsidiaries to handle sales: when sales get big, need someone in the country. 3.Operate an entire business in another country. P&G expanding to another country 4.Virtual operation:easy |
| Revenue Abroad, GE? Caterpillar? | GE 54% Caterpillar 67%. |
| Are Multinationals Beneficial? | Responsible for 42% increase in private labor productivity since 1990. Many shifted to low tax countries- bc US is very complex. |
| Capital Intensive | Using more capital than labor in the production process. Wrong kind of tech is transferred to developing nations and do not increase employment. Increase inequality: petroleum |
| 5 Points of Global Marketing Standardization | Production of uniform products for whole world. Hard to keep it the same everywhere. Today: much more standardization but with variation Past: operate differently in each country- diff product, promotion Ted Levitt: People want what they see ads for. |
| Global Marketing Standardization | Production of uniform products that can be sold the same way all over the world. Ex: In some countries: coca-coal is sweeter, or sometimes gets new products. Colgate-Palmolive, and McDonalds- examples of good standardization. |
| Multidomestic Strategy | When multinational firms enable individual subsidiaries to compete independently in domestic markets. Ex: Palmolive: Axion paste: developing countries- La Croix- France. Kraft- Tang drink |
| External Environment Faced by Global Marketers (6) | Culture Economic Factors The Global Economy Political Structure and Actions Legal Considerations Demographics Natural Resources |
| Culture (3) | Language, manners- translations of slogans Practices for negotiations Understanding culture |
| Economic Factors (2) | Larger income mean great purchasing power and demand not for consumer goods but also machinery and workers. Gross National Income (GNI): $10,341 |
| The Global Economy | • Forecasting global demand and economic growth requires an understanding of what is happening economically in other countries. |
| What Attracts Chinese Customers | Quality, high tech, after sale services, low prices. Helpful to understand that price is not the driving force Buying behavior vs US vs UK and Japan 10% only buy best deal: both US and deal Consider more brands than US Very brand conscious |
| Five Challenges Executives expect to meet to achieve success in emerging markets | Make products that fill needs. Locate R&D facilities to gain knowledge. Rethink how to recruit and connect globally. Provide autonomy locally. To detect, correct and manage risks presented by EM such as protecting intellectual property |
| Political Structure and Actions | As rights of private property increase, government-owned industries and centralized planning tend to decrease. World Bank study found that the least amount of regulation fosters the strongest economies. |
| Tariff | a tax levied on the goods entering a country. either reduce the profits of the firms paying the tariff or raise prices to buyers, or both |
| Quota | a limit on the amount of a specific product that can enter a country. Protection from foreign competition. |
| Boycott | exclusion of all products from certain countries or companies, |
| Exchange Control | a law compelling a company earning foreign exchange from its exports to sell it to a control agency, usually a central bank. |
| Market Grouping | (common trade alliance) occurs when several countries agree to work together to form a common trade is that enhances trade opportunities. Ex. European Union. |
| Trade Agreement | stimulates international trade. Ex. Mercosur: largest Latin American trade agreement. |
| The Uruguay Round | an agreement that has dramatically lowered trade barriers worldwide created the World Trade Organization. |
| oWorld Trade Organization | new trade organization that replaced the old General Agreement on Tariffs and Trade (GATT). |
| General Agreement on Tariffs and Trade (GATT) | 1948 a trade agreement that contained loopholes enabling countries to avoid trade-barrier reduction agreements. |
| NAFTA | between Canada, US and Mexico that created the world’s largest free trade zone. |
| Central American Free Trade Agreement | Instituted in 2005, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and US. It has created new commercial opportunities for its members. |
| European Union | a free trade zone encompassing twenty-seven European countries. Largest economy in the world. |
| World Bank | 1944 an international bank that offers low-interest loans, advice and information to developing nations |
| International Monetary Fund 1945 | organization that acts as a lender of last resort, providing loans to troubled nations and also works to promote trade through financial cooperation. Ex. Help Greece |
| Group of Twenty (G20) | a forum for international economic development that promotes discussion between industrial and emerging-market countries on key issues related to the global economic stability. |
| Demographic Make up | The three most densely populated nations in the world are China, India, and Indonesia There is a wide gap between the older populations of the industrialized countries and the vast working-age populations of developing countries. |
| Natural Resources | High price of oil has created inflationary pressures in petroleum importing nations. |
| Global Marketing by the Individual firm | • A company should consider entering the global marketplace only after its management has a solid grasp of the global environment |
| Why are Companies going Global? | Increase Revenue Reduce Costs Using low cost suppliers Faster time to market |
| What challenges do you think executives face as they expand into emerging markets | Target markets change: culture is different. Government corruption in other countries. Different consumer preferences. Competition |
| 5 Methods of Entering the Global Market Place | Export Licensing/Franchising Contract Manufacturing Joint Venture Direct Foreign Investment |
| Export | Sell domestically produced products to buyers in other countries |
| Licensing/Franchising | Legal process allowing use of manufacturing patents/knowledge |
| Contract Manufacturing | Private label manufacturing by a foreign country |
| Joint Venture | Domestic firm buys/ joins a foreign company to create a new entity- very common- Wal-Mart. RISKY |
| Direct Foreign Investment | Active ownership of a foreign company/manufacturing facility |
| Export-> Licensing-> Contract-> joint-> Direct Investment | Low Risk Low Return -> High Risk High Return |
| Buyer for export | an intermediary in the global market who assumes all ownership risks and sells globally for its own account. |
| Export Broker | an intermediary who plays the traditional broker’s role by bringing buyer and seller together. |
| Export Agents | acts like a manufacturer’s agent for the exporter; the export agent lives in the foreign market. |
| The Global Marketing Mix | To succeed, firms seeking to enter into foreign trade must still adhere to the principles of the marketing mix. |
| Product Decisions | One product, One Message •The audiences buy the same products, go to the same movies, listen to the same music, and sip the same colas. Global advertising works on that premise. The desire for standardization must give way to practical consideration |
| Product Invention | Logistics has been a growing challenge for U.S. companies seeking to cut costs by shifting more production to countries where manufacturing is cheaper. Complicates Systems Lots of intermediaries Lack of infrastructure |
| Pricing | Must consider transportation and insurance costs taxes and tariffs Determine what costumers will spend Consideration of exchange rates: appreciates or depreciates. |
| Floating Exchange Rates | system, which prices of different currencies move up and down based on the demand for and the supply of each currency. |
| Dumping | is the sale of an exported product at a price lower than that charged for the same or a like product in the “home” market of the exporter |
| 4 Reasons for Dumping | Trying to increase an overseas market share, Temporarily distributing products in overseas markets to offset lack of demand in the home market. Lowering unit costs by exploiting large-scale production. Attempting to maintain stable prices. |
| Countertrade | all or part of the payment for goods or services in the form of other goods or service. |
| One Product One Message | Same message same product |
| Product Adaption | Same message Change product |
| Message Adaption | change message same product |
| Product Invention | change message change product |
| Consumer Behavior | processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use. |
| 5 Steps of Consumer Decision Making | 1) Need Recognition 2)Information Search 3)Evaluation of Alternatives 4) Purchase 5) Post Purchase Behavior |
| Need Recognition | a result of an imbalance between actual and desired states. |
| Want | recognition of an unfulfilled need and a product that will satisfy it. |
| Stimulus | any unit of input affecting one or more of the five senses: sight, smell, taste, touch, hearing Ex: burger |
| Internal Stimulus | occurrences you experience, senses |
| External Stimulus | influence from outside source, someone’s restaurant recommendation, Advertisements, brand name, package design. |
| Want-got gap | difference between what costumer got and would like to have, must be large enough to drive the consumer to do something. --> Goal of marketing manager |
| Recognition of Unfulfilled Wants (3) | When product isn’t working properly Consumer is running out of a product When another product seems superior to the one currently used. |
| Internal Information Search | recalling information stored in memory, experiences. |
| External Information Search | seeking information in the outside environment. |
| Nonmarketing controlled information source | a product information source that is not associated with advertising or promotion. Personal experience- via word of mouth, blogs, web forums, trip adviser |
| Marketing Controlled information source | Originates with marketers promoting product. Radio, newspaper, magazine |
| Costumer searching depends on | Perceived risk, knowledge, prior experience and level of interest. |
| Evoked Set (Consideration set) | a group of brands, resulting from an information search, from which a buyer can choose. |
| Too many choices can lead to | costumer confusion and cause them to not buy at all. |
| Exposure to certain cues can | affect decision criteria and purchase |
| Consumer reviews influenced by | existing consumer reviews |
| 5 Questions on To Buy or not to Buy | 1.Whether to buy 2.When to buy 3.What to buy (product type and brand) 4.Where to buy (type of retailer, specific retailer, online or store) 5.How to pay |
| 54-68% of items are | Unplanned Purchases |
| Post purchase Behavior | Level of expectation, influenced by price. |
| Marketers want to eliminate any doubt after decision though | effective communication with purchasers.--> Costumer service or letters of congrats. |
| Cognitive Dissonance | inner tension that a costumer experiences after recognizing an inconsistency between behavior and values or opinions. |
| To reduce dissonance, what do consumers do (3)? | Seek info that reinforces positive ideas about purchases Avoid information that contradicts the purchase decision Revoking original decision by returning the product |
| Marketing can minimize dissonance through (3)? | Follow Up Guarantees Warranties |
| Involvement | is the amount of time and effort a buyer invests in the search, evaluation and decision processes of consumer behavior. |
| Routine Response Behavior | the type of decision making exhibited by consumers buying frequently purchased, low-cost goods and services; requires little search and decision time. oConsumers buy 1st and evaluate later oOften purchased, may stick with 1 brand decision, quick |
| Limited Decision Making | the type of decision making that requires a moderate amount of time for gathering information and deliberating about an unfamiliar brand in a familiar product category. oEx. Toothpaste, jeans oModerate involvement, cost, evaluates few brands. |
| Extensive Decision Making | the most complex type of consumer decision making, used when buying an unfamiliar, expensive product or an infrequently bought item; requires use of several criteria for evaluating options and much time for seeking information. Long time to decide. |
| Factors Determining the Level of Consumer Involvement | Previous Experience Greater Interest Greater Perceived Risk Situation Greater Social Visibility |
| Previous Experience | involvement decreases -> quick decisions |
| Greater Interest | greater involvement, varies by costumer |
| Greater Perceived risk of negative consequences | risk increases, level of involvement increases. |
| Financial Risk | price increases- involvement increases. |
| Social Risk | can affect what people think of them: fashion |
| Psychological Risk | making wrong decision can cause concern or anxiety, ex: unhealthy food. |
| Greater Social Visibility | involvement increases- social visibility increases, social risk, brands. Uggs, North face boots- car |
| Product Involvement | product category has high personal relevance, fashion |
| Situational Involvement | circumstances of a purchase may temporarily transform a low-involvement decision into high involvement one, different kinds of liquor for diff visitors. |
| Shopping Involvement | personal relevance in shopping process, ex. People do research at home and just go directly for what they want to the store. |
| Enduring Involvement | ongoing interest in some product or activity. |
| Emotional Involvement | how emotional a consumer gets during some specific consumption activity |
| High involvement purchases require | Extensive and informative promotion to target market. o Career fair: CV, internships in career fair, information for employers. |
| Low involvement purchases require | in-store promotion- eye catching package design- displays-coupons, cents off, 2 for 1 offers. |
| 4 Factors that Affect Consumer Decision Making Process | Cultural Factors Psychological Factors Social Factors Individual Factors |
| Cultural Factors | Culture and Values Subculture Social Class |
| Social Factors | Reference Groups Opinion leaders Family |
| Psychological Factors | Perception Motivation Learning Beliefs and Attitudes |
| Individuals Factor | Gender Age and family life cycle stage Personality, self-concept and lifestyle |
| Culture | a set of values, norms, attitudes and other meaningful symbols that shape human behavior and the artifacts or products of that behavior as they are transmitted from one generation to the next. |
| Value | the enduring belief that a specific mode of conduct is personally or socially preferable to another. Influence consumption patterns. |
| Subculture | homogeneous group of people who share elements of the overall culture as well as unique elements of their own group. |
| African-Americans | the largest spending power of the 3 subcultures While price conscious, motivated by quality and choice. Respond to advertisement of African American pride, heritage and ethnic features |
| Hispanics | o50% are immigrants oMajority under 25 oChallenge because of the diversity and the language barrier. |
| Asians | 70% are immigrants Most under age of 30 Very diverse subculture 2 groups: Assimilated: English, highly educated, typical American Non assimilated: recent immigrants, language and customs of past. |
| Social Class | a group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves. |
| Majority of Americans define themselves as | middle class- working class. |
| Knowing which products appeal to which social classes help marketers | determine where to best distribute products. |
| Reference group | all of the formal and informal groups in society that influence an individual’s purchasing behavior. |
| Primary membership group | group with which people interact regularly in an informal, face-to-face manner, such as family, friends and coworkers. |
| Secondary membership group | group with which people associate less consistently and more formally than a primary membership group, such as a club, professional group, or religious group. |
| Aspirational Reference group | a group someone would like to join. Ex. business fraternity |
| Norm | a value or attitude deemed acceptable by a group. |
| Non-aspirational reference groups | a group with which an individual does not want to associate |
| 3 important implications of reference groups | 1.Serve as information sources and influence perceptions 2.Affect an individual’s aspiration levels 3.Norms either constrain or stimulate consumer behavior |
| Two Main Categories of Reference Groups | Direct-face to face membership Indirect-Non membership |
| Two Types of Direct Reference Groups | Primary- small, informal group Secondary-large, formal group |
| Two Types of Indirect Reference Groups | Aspirational- a group someone would like to join. Non Aspirational- group with which someone wants to avoid being identified. |
| Opinion Leaders | an individual who influences the opinions of others. Ex. Celebrities, young people, social media |
| Socialization Process | how cultural values and norms are passed down to children •Initiators, influencers, decision maker, purchaser, consumer. •Children influence parents, before it was other way around. |
| Three Social Influences on Purchasing Decisions | Reference Groups Opinion Leaders Famiy |
| Individual Influences on Consumer Buying Decisions (3) | Gender Age and Family Life Cycle Stage Personality, Self Concept, and Lifestyle |
| Example of Gender buying | Bride and Grooms Gift List |
| Age and Family Life Cycle Stage | • Young singles, young married couples with children, middle aged married couples without children. The older married, older unmarried. |
| Five Roles of individual family members | information gatherer, influencer, decision maker, purchaser, and user. |
| Lifestyle | oActivities: How a person spends time and resources oInterests: What a person considers important in the environment oOpinions: What a person thinks of self and the world |
| Personality | a way of organizing and grouping the consistencies of an individual’s reactions to situations. |
| Self-Concept | how consumers perceive themselves in terms of attitudes, perceptions, beliefs and self-evaluations. |
| Ideal Self Image | the way an individual would like to be perceived |
| Real Self Image | the way an individual actually perceives himself. |
| Psychological Influences on Consumer Buying Decisions | the tools we use to recognize feelings, gather and analyze information, thoughts and opinions and take action. |
| Perception | the process by which people select, organize and interpret stimuli into a meaningful and coherent picture. |
| Selective Exposure | the process whereby a consumer notices certain stimuli and ignores others. Ex. Carpet cleaning advertisement. Exposed: to 2500 ads a day but only notice 11-20, color packaging, vivid or shock value important. |
| Selective Distortion | a process whereby a consumer changes or distorts information that conflicts with his or her feelings or beliefs. Flu season- you don’t believe it works- ignore it. |
| Selective Retention | a process whereby a consumer remembers only that information that supports his or her personal beliefs. Apple 4G- hard criticism but still many people bought because of strong feelings for it. |
| Marketing Implications of Perception | What are the important attributes consumers want in products? Tide: expensive detergents during recession, tide basic: attributes of value with tide determent GM: warranties now increased to 100,000 mile |
| Motive | driving force that causes a person to take action to satisfy specific needs. •Hot truck, example |
| Maslow’s hierarchy of Needs | a method classifying human needs and motivations into 5 categories Physiological Safety Social Esteem Self-Actualization |
| Physiological Need | Hunger or Thirst Ex. Gatorade |
| Safety Need | Security or Protection Ex. Volvo |
| Social Need | Sense of Belonging or Love Ex. EHarmony |
| Esteem Need | Self-Esteem, Recognition, Status Ex. Mercedes |
| Self-Actualization Needs | Self-Development and Self-Realization Ex. Gold Card |
| Learning | process that creates changes in behavior, immediate or expects, through experience and practice |
| Experiential Learning | an experience changes behavior. Changes in major. |
| Conceptual Learning | not learned through direct experience: Brussels sprouts |
| Stimulus generalization | a form of learning that occurs when one response is extended to a second stimulus similar to the first. |
| Stimulus discrimination | a learned ability to differentiate among similar products. •Coca-Cola vs. Pepsi, marketers point out differences in brands. Position Products differently although they're similar |
| Belief | an organized pattern of knowledge that an individual holds as true about his or her world. |
| Attitude | a learned tendency to respond consistently toward a given object. |
| What store was Blackhawk born inside | Safeway |
| 49% of Blackhawk ownership is where? | Mexico |
| Blackhawk around the world | 100 of different gift card brands, in 19 countries around the world |
| Card Partner | provides card stock free of charge, supplies them to BH at a discount. |
| Distribution Partner | Wegmans earns majority of discount on BH cards |
| Why Go Global? | GROWTH |
| Examples of companies going global | IBM 60% GE 53% Apple 62% Wal-Mart 28% |
| 6 Critical Considerations for Entering New Countries | Size (Population GDP) Presence of existing partners Concentrated retail presence Use of prepaid products Competition Language |
| Market Research | Online surveys, country specific, trends over time. |
| Reflections on Going Global | Hire the right people Choose partners carefully Anticipate resistance Long Flights Most countries bilingual |
| 4 Characteristics of a Market | 1. People or orgs with 2.needs or wants and the 3. Ability and 4. The willingness to buy. |
| Market Segment | a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. |
| Market Segmentation | the process of dividing the market into meaningful, similar, and identifiable groups. |
| Importance of Market Segmentation | Markets have a variety of products needs and preferences Marketer can better define a costumer needs Decision makes can define objectives and allocate resources more accurately. |
| Criteria for Successful Segmentation | Sustainability Identifiability and Measurability Accessibility Responsiveness |
| Segmentation | segment must be large enough to warrant developing and maintaining a special marketing mix. In existence for the long run. a.1980’s: home banking failed bc not many people owned PC’s b.Airplane |
| Identifiability and Measurability | identifiable and size measurable. |
| Accessibility | firm must be able to reach members of targeted segments with customized marketing mixes. a.Ex. Illiterate, no English speakers or seniors. b.Posters for people who cant read? |
| Responsiveness | unless one market segment responds differently to a marketing mix than other segments, they do not need to be treated separately. a.Ex. Price b.Vera Bradley, same for everyone c.Under armour: segment for women, children, men, but basic designs same. |
| Bases for segmenting consumer markets | Geography, Demographics, Psychographics, Benefits and Usage rate |
| Segmentation Bases (variables): | characteristics of individuals, groups or organizations |
| Single Variable | advantage- easier and simpler |
| Multiple Variable | harder to use, number of usable secondary data are less likely to be available and as # increases size of individual segments decreases. |
| Current Variable Trend | multiple because it's more precise |
| Geographic Segmentation | •Regional approach: allows consumer companies to react more quickly to competition. •Market Size •Market density •Climate Ex. Subaru: vehicle for winter |
| Benefits of Regional Segmentation (4) | 1.New Ways to generate sales in sluggish and competitive markets 2.Scanner data allow assessment of best selling brands in region 3.Regional brands appeal to local preferences 4.Quicker reaction to competition |
| Demographic Segmentation | (more factual- used the most) segmenting markets by age, gender, income, ethnic background and family life cycle. Describe people using facts. |
| Demographic Characteristics (5) | Age Gender Income Ethnic Background Family Lifestyle |
| Psychographic Segmentation | segmenting markets on the basis of personality, motives, lifestyles and geodemographics. |
| Personality | reflects person’s traits, attitudes and habits. a.About ½ Americans believe their car matches their personality. |
| Emotional Motives | safety motives: Volvo, status motives: BMW, Apple, Uggs, Cleanliness: Lysol |
| Lifestyle | Divides people into groups according to the way they spend their time, importance of things, beliefs, socioeconomic characteristics-income and education. a.Ex. Kashi: healthy |
| Geodemographic Segmentation | segmenting potential costumers into neighborhood style categories. Combines geographic, demographic and lifestyle segmentations |
| Benefit Sought Segmentation | the process of grouping customers into market segments according to the benefits they seek from the product. •Tropicana: 12 different types •Luna bars •Power bars- great meal, healthy on the go. |
| Usage-rate segmentation | dividing a market by the amount of product bought or consumed |
| 80/20 principle | a principle holding that 20% of all costumers generate 80% of the demand. |
| 6 Stages of Usage | Never used, former, first time, light or irregular, medium users, heaver users Ex. Beer |
| 4 Bases for Segmenting Business Markets | Producers, resellers, government, and institutions. |
| Company Characteristics | geographic location, type of company, size, product. •Buyers prefer to buy local |
| Buying Processes | how they buy, ranking key purchasing criteria: price, quality, technical support, service. |
| Satisficers | business costumers who place an order with the first familiar supplier to satisfy product and delivery requirements. |
| Optimizers | a business costumer who considers numerous suppliers(both familiar and unfamiliar), solicits bids, and studies all proposals carefully before selecting one. |
| Steps in Segmenting a Market: Ex. Home Depot (Segmentation Steps) | 1.Select a market or category to study: 2.Choose a basis for segmenting market 3.Select segmentation descriptors 4.Analyze segments |
| Steps in Segmenting a Market: Ex. Home Depot (Marketing Steps) | 5) Select Markets 6) Design, implement, and maintain appropriate marketing mixes |
| Strategies for Selecting Target Markets: (next step after segmentation process) | •Ford T-model: consumers can have anything as long as it is the model. Any color as long as black? •Trader Joes: differentiate from other grocery stores. •Jeeps: each one appeals to a different consumer |
| Undifferentiated Targeting Strategy | a marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix. Ex. Model T |
| Advantages of Undifferentiated Targeting Strategy | low cost of production, consistency of product. Potential savings on production and marketing costs |
| Disadvantages of Undifferentiated Targeting Strategy | oUnimaginative product offerings oCompany more susceptible to competition: easier to duplicate product |
| Product lifecycle | introductory phase- testing the market- 1 version- successful- if you don’t have variation competition will come. |
| Concentrated Targeting Strategy | used to select one segment of a market for targeting marketing efforts. •Niche: one segment of a market |
| Advantages of Concentrated Targeting Strategy | oConcentration of resources oMeets narrowly defined segment oSmall firms can compete oStrong positioning |
| Disadvantages of Concentrated Targeting Strategy | oSegments too small, or changing.- might not be sustainable(criteria for segmenting market) oLarge competitors may market to niche segment. Adding sections to their stores with organic and specialty foods. oWhen Trader Joes first started |
| Multisegment Targeting Strategy | chooses 2 or more well -defined market segments and develops a distinct marketing mix for each Ex. Ford |
| Advantages of Multisegment Targeting Strategy | oGreater financial success oEconomies of scale |
| Disadvantages of Multisegment Targeting Strategy | oHigh costs: production for all kinds of products, and totally different marketing campaigns. oCannibalization |
| Cannibalization | a situation that occurs when a sales of a new product cut into sales of a firm’s existing products. Too many differentiated products, sales stay the same but different products, at the same time costs will probably increase. |
| Costumer Relationship Marketing as a Targeting Tool | strategy companies can use to develop specific target markets |
| Costumer Relationship Marketing | Personalizations Time Savings Loyalty Technology |
| Personalization | One size fits all, marketing no longer relevant |
| Time Savings | Direct and personal marketing efforts will grow to meet need of busy consumers |
| Loyalty | Consumers will be loyal to companies that have earned and reinforced loyalty-strong relationships |
| Technology | Mass media approaches will decline as technology allows better customer tracking. •Ex: Omega watches, Apple |
| Positioning | developing a specific marketing mix to influence potential costumers overall perception of a brand, product line or organization in general. |
| Position Examples | Ex. Holland America: elegant, average age: 55 premium lifestyle, Celebrity: well educated, 35-54,$75K*, well traveled, Carnival Cruises: families P&G Detergents: Procter and Gamble- Tide: tough, Gain: freshness, Solo: softness different functionalities. |
| Effective Positioning (3) | oAssess the positions occupied by competing products oDetermines the dimensions underlying these positions oChoose a market position where marketing efforts will have the greatest impact. |
| Product differentiation | positioning strategy that some firms use to distinguish their products from those of competitors. |
| Perceptual Mapping | means of displaying or graphing in 2 or more dimensions the location of products , brands or groups of products in costumer’s minds. |
| 7 Position Bases | 1.Attribute 2.Price and Quality 3.Use or Application 4.Product User 5.Product Class 6.Competitor 7.Emotion |
| Repositioning | changing consumer’s perceptions of a brand in relation to competing brands |
| Market Research Annual Spending | •7 billion is spent every year on market research •Often firms contract services from Nielsen to get data, and do research |
| Marketing information | everyday information about developments in the marketing environment that managers use to prepare and adjust marketing plans. |
| Marketing decision support system (DSS) | is an interactive, flexible, computerized information system that enables managers to obtain and manipulate information as they are making decisions. |
| 4 Characteristics Marketing Decision Support Systems | Interactive Flexible Discovery Oriented Accessible |
| Computerized Information system | enables managers to obtain and manipulate information, they can probe for trends, isolate problems and ask “what if” questions as they are making decisions |
| Database marketing | the creation of a large computerized file of customers' and potential customers' profiles and purchase patterns •Successful for one to one and fastest growing use of DDS |
| 3 Roles of Marketing Research | Descriptive- Gather and Present Facts Diagnostic- Explaining Data Predictive- Address The "What If" Questions. |
| Descriptive Market Research | gather and present factual information. Ex. Nielsen data used to understand what happened |
| Diagnostic Market Research | Explaining data. Ex. What happened to sales with package design |
| Predictive Market Research | Address what if q’s |
| Steps in a Marketing Research Project | Virtually all firms that have adopted the marketing concept engage in some marketing research because it offers decision makers many benefits |
| Marketing Research Process (7 steps) | 1.Identify and Formulate Opportunity/ Define Problem 2.Plan the research design and gather secondary data 3.Specifying Sampling Procedures 4.Collect( primary) Data 5.Analyze Data 6.Prepare/present report 7.Follow up Ex: Pantene |
| Marketing research problem | determining what information is needed and how that information can be obtained efficiently and effectively |
| Marketing research objective | the specific information needed to solve a marketing research problem; the objective should be to provide insightful decision-making information |
| Management decision problem | a broad-based problem that uses marketing research in order for managers to take proper actions |
| What is Marketing Research used for by Managers (6) | oImprove the quality of decision making oTrace problems oFocus on keeping existing customers: Apple oUnderstand the market place- external environment oAlert them to market place trends oGauge the value of goods and services. |
| External Marketing Environment | SWOT Analysis: Opportunities and Threats- Target Market oIdentify Opportunities: because it is changing all the time oTrigger Market Research oSome type of change in the marketing mix: 4 P’s |
| What is the difference between primary and secondary data? | •2ndary: looking at research that has already been done by someone else. Ex. US census •Primary resource: tailored for a specific question •Most firms will do both, combination of primary and secondary |
| Secondary Data | data previously collected for any purpose other than the one at hand • includes documents such as annual reports, reports to stockholders, product testing results perhaps made available to the news media, and house periodicals |
| Sources of Secondary Data | •Internal Corporate Information: decision support system- order info •Government Agencies: Census •News Media: |
| Advantages of Secondary Data | Don't have to spend money Save time and money Aids in direction for primary data collection Pinpoints kinds of people to approach Serves as basis of comparison for other data |
| Disadvantages of Secondary Data | May not give adequate info May not be on target with research problem Quality and accuracy of data may pose a problem |
| Marketing Research Aggregators | a company that acquires, catalogs, reformats, segments, and resells reports already published by marketing research firms |
| Research design | specifies which research questions must be answered, how and when the data will be gathered, and how the data will be analyzed |
| Primary Data | information that is collected for the first time; used for solving the particular problem under investigation |
| Pros of Primary Data | 1.Answers specific research question 2.Data are current- data time period? 3.Source of data is known- 4.Secrecy can be maintained. Ex.secret, recipes NESTLE |
| Cons of Primary Data | 1. Expensive 2. Piggy Backing 3. Quality declines if interviews are lengthy. Reluctance to participate in lengthy interviews. Disadvantages are usually offset by the advantages of primary data. |
| In-Home Interviews | ethnographic research P&G: how people use febreze- go and see it, what rooms how much they spray? Package? Interview people in the place where they do what you are interested in. Surfing—Hawaii |
| Mall Intercept Interview | a survey research method that involves interviewing people in the common areas of shopping malls |
| Computer-assisted personal interviewing | an interviewing method in which the interviewer reads questions from a computer screen and enters the respondent's data directly into the computer |
| Computer-assisted self-interviewing | an interviewing method in which a mall interviewer intercepts and directs willing respondents to nearby computers where each respondent reads questions off a computer screen and directly keys his or her answers into a computer |
| Telephone Interviews | less costly but refusals to participate. |
| Central-location telephone (CLT) facility | a specially designed phone room used to conduct telephone interviewing |
| Mail Surveys | oBenefits: relatively low cost, elimination of interviewers and field supervisors, centralized control, and actual or promised anonymity for respondents oDisadvantage: low response rates oMail panels |
| Executive Interviews | a type of survey that involves interviewing business people at their offices concerning industrial products or services oSuper market industry: higher level info, visionary and strategic- talk to executives |
| Focus Groups | seven to ten people who participate in a group discussion led by a moderator |
| Observation Research | a research method that relies on four types of observation: people watching people, people watching an activity, machines watching people, and machines watching an activity |
| People watching people Example | Mystery shoppers in a supermarket, retail stores… Watching costumer interaction with product |
| People Watching Phenomena | Observer at an intersection counting traffic. Ex. Open a café- walkability-. |
| Machines Watching People | Video cameras recording behavior- cameras in traffic lights. Security but good information. |
| Machines Watching Phenomena | Traffic counting machines monitoring traffic flow. |
| Behavioral targeting (BT) | a form of observation marketing research that combines a consumer's online activity with psychographic and demographic profiles compiled in databases |
| Etnographic Research | the study of human behavior in its natural context; involves observation of behavior and physical setting. |
| Virtual Shopping | the computer unobtrusively records the amount of time the consumer spends shopping in each product category. |
| Advantages | •Creates an environment with a realistic level of complexity and variety. Ex. Simulation- easy to fix problems. •Allows quick set up and altering of tests. •Low production costs •High flexibility. |
| Experiments | a method of gathering primary data in which the researcher alters one or more variables while observing the effects of those alterations on another variable used by researchers to gather primary data |
| Probability Samples | a sample in which every element in the population has a known statistical likelihood of being selected |
| Cluster Samples | The population is divided into mutually exclusive groups (such as geographic areas); then a random sample of clusters is selected. |
| Systematic Samples | A list of the population is obtained—e.g., all persons with a checking account at XYZ Bank—and a skip interval is obtained by dividing the sample size by the population size. Every kth individual |
| Random sample | a sample arranged in such a way that every element of the population has an equal chance of being selected as part of the sample |
| Stratified Sample | The population is divided into mutually exclusive groups (such as gender or age); then random samples are drawn from each group. |
| Convenience Sample | The researcher selects the easiest population members from which to obtain information. |
| Judgment Sample | The researcher selects the easiest population members from which to obtain information. The researcher's selection criteria are based on personal judgment that the elements (persons) chosen will likely give accurate information. |
| Quota Sample | The researcher finds a prescribed number of people in several categories—e.g., owners of large dogs versus owners of small dogs. Respondents are not selected on probability sampling criteria. |
| Snowball Sample | Additional respondents are selected on the basis of referrals from the initial respondents. This method is used when a desired type of respondent is hard to find |
| Field service firm | a firm that specializes in interviewing respondents on a subcontracted basis |
| Cross-tabulation | A method of analyzing data that lets the analyst look at the responses to one question in relation to the responses to one or more other questions |
| Preparing and Presenting the Report | Conclusions and recommendations to management |
| Following up | Determine why management did or did not carry out the recommendations in the report. |
| Advantages of Internet Surveys | •Rapid development, rapid returns, rapid decisions, results in ½ time •Reduced costs. 25-40% cost reduction. •Personalized questions and data •Higher response rated: more convenient, more stimulating, engaging. •Contact with the hard-to-reach |
| Web Communities | Jersey Shore Hurricane News: events in community, weather, repair Social but also marketing. Barefoot wine: marketing localized to areas- community around FB page- reactions- thoughts- powerful way for market research. |
| Better Participation Rates | Typically, online focus groups can be conducted over the course of days; once participants are recruited, they are less likely to pull out due to time conflicts. |
| Cost-Effectiveness | Face-to-face focus groups incur costs for facility rental, airfare, hotel, and food. None of these costs is incurred with online focus groups. |
| Broad Geographic Scope | Time is flexible online; respondents can be gathered from all over the world. |
| Accessibility | Online focus groups give you access to individuals who otherwise might be difficult to recruit (e.g., business travelers, senior executives, mothers with infants). |
| Honesty | From behind their screen names, respondents are anonymous to other respondents and tend to talk more freely about issues that might create inhibitions in a face-to-face group. |
| Consumer-generated media (CGM) | media that consumers generate and share among themselves -Trusted more than ads |
| Scanner Based Research | is a system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy. |
| Behavior Scan | a scanner-based research program that tracks the purchases of 3,000 households through store scanners in each research market |
| Info Scan | a scanner-based sales-tracking service for the consumer packaged-goods industry |
| Neuromarketing | a field of marketing that studies the body's responses to marketing stimuli |
| Competitive Intelligence | an intelligence system that helps managers assess their competition and vendors in order to become more efficient and effective competitors |
| Sources of competitive intelligence | internet, company sales people, experts, govt agencies, ucc fillings, suppliers, periodicals, yellow pages, trade shoes |
| Nielsen | do market research and sell it … website Why you do what you do when you do it. Top 10 list of week programs: what is trending |
| Business/ industrial product | a product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other customers. Components used to manufacture-parts of laptop. |
| Consumer product | a product bought to satisfy an individual’s personal wants .The laptop itself. |
| level of involvement heirchy | Convenience->shopping->specialty->unsought |
| Convenience Products | a relatively inexpensive item that merits little shopping effort. wide distribution to max sales ex. coffee or gum |
| Shopping Product | ○more expensive than convenience ○compare several brands ○more shopping effort(time) ○found in fewer stores. Jeans or tennis shoes. |
| Specialty Products | extensive searches reluctant to accept substitutes(marketing-research-evoked set-decision) a particular item for which consumers search extensively and are very reluctant to accept substitutes. Rolex, ipa, highly specialized medical care. |
| Unsought Products | a product unknown to the potential buyer or a known product that the buyer does not actively seek. Often requires aggressive personal selling. Life insurance-not on the radar. |
| Product Item | a specific version of a product that can be designated as a distinct offering among an organization’s products.Ex.Nestle’s CRUNCH, UPC code |
| Product Line | a group of closely related product items, Nestle’s snack chocolate bars |
| Product Mix | all products that an org sells |
| Example Company for Product Mixline Strategies | Nestle |
| Product mix width | the number of product lines an organization offers |
| Product line Depth | the number of product items in a product line |
| Increase width of product mix (Nestle) | add another line: chocolate milk beverage, a.helps diversify risks and spread dependency b.capitalize on established repitation |
| Increase depth of product line | add another flavor of soup a.attract buyers with different preferences b.increase sales and profits c.capitalizing on economies of scale in production and marketing |
| Product Line Extension | adding additional products to an existing product line in order to compete more broadly in the industry |
| Benefits From Organizing Related Items Into Product Lines | Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution |
| Advertising Economies | Product lines provide economies of scale in advertising. Several products can be advertised under the umbrella of the line. Campbell’s can talk about its soup being “M’m, M’m, Good!” and promote the entire line. |
| Package Uniformity | A product line can benefit from package uniformity. All packages in the line may have a common look and still keep their individual identities. Again, Campbell’s soup is a good example.red and white. |
| Standardized Components | Product lines allow firms to standardize components, thus reducing manufacturing and inventory costs. For example, General Motors uses the same parts on many automobile makes and models. |
| Efficient Sales and Distribution | A product line enables sales personnel for companies like Procter & Gamble to provide a full range of choices to customers. Distributors and retailers are often more inclined to stock the company’s products if it offers a full line. |
| Equivalent Quality | Purchasers usually expect and believe that all products in a line are about equal in quality. Consumers expect that all Campbell’s soups and all Gillette razors will be of similar quality. Go across consumer line. |
| Product Modification | changing one or more of a product’s characteristics |
| Extension | adding products to an exisiting product line to compete more broadly in the industry. Gap: clean couches-opportunity-clean soft surfaces Pledge:fabric sweeper-enter another market. |
| Planned Obsolescence | the practice of modifying products so those that have already been sold become obsolete before they actually need replacement. Iphone |
| 3 Benefits of Product Line Contraction | 1)resources become concentrated on important products 2. managers no longer waste resources trying to improve poorly performing products. 3. New products have a greater change of being successful because more resources are available. |
| Branding | major tool marketers have to distinguish their product from competition. brand:a name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products |
| Brand Name | part of the brand that can be spoken |
| Brandmark | elements that can't be spoken ex. mercedes benz and delta airlines |
| Benefits of Branding | Product Identification Repeat Sales New Product Sales |
| Product identification | allows products to be different from others and serves as an indicator for quality to consumers. |
| Brand Equity | value of the company and brand names |
| Global Brand | a brand that obtains at least a third of its earnings from outside its home country, is recognizable outside its home base of customers, and has publicly available marketing and financial data |
| Brand Loyalty(repeat sales) | consistent preference for one brand over all others- daily used products, college students prefer the brands they used at home over price. |
| Manufacturers Brand | fruit of the loom- The brand name of a manufacturer |
| Private Brand | brand name owned by whole sale or retailer. also known as private label or store brand(Target Archer farms) ● Retailer love consumer’s greater acceptance of private brands, low overhead and no marketing costs. |
| Captive Brands | a brand manufactured by a third party for an exclusive retailer, without evidence of that retailer’s affiliation |
| Key Advantages of Carrying Manufacturers’ Brands | Heavy ads by Manufacturers (P&G) Well known brands attract new customers(Fisher-Price) Rapid Delivery enables less inventory. |
| Key Advantages of Carrying Private Brands | Higher Profits on it's own brands Manufacturer can decided to drop a brand. Private brand ties customer to the retailer. Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brands |
| Captive Brands | No evidence of store affiliation Sold exclusively at the chain Can ask price similar to manufacturer-s brands. |
| individual branding | using different brand names for different products. |
| Family branding | marketing several different products under the same brand name. |
| Co-branding | two or more brand names on a product or its package |
| Ingredient Branding | identifies the brand of a part that makes up the product |
| Cooperative Branding | 2 brands receive equal treatment and borrow from each other’s brand equity. |
| Complementary Branding | products are advertised or marketed together to suggest usage. |
| Trademarks | the exclusive right to use a brand or part of a brand Service Mark: trademark for service Trademark rights come from use rather than registration, 2 years |
| Generic Product Name | identifies a product by class or type and cannot be trademarked. Brands that were not protected- aspirin, cellophane, thermos, monopoly. |
| Packaging | to hold and protect product, but also to promote, storage but also recycle. |
| 4 Packaging Functions | 1.Containing and Protecting products:measure 2.Promoting Products: labels-info, green package- associated with healthy 3.Facilitating Storage, Use and Convenience: easy opening important. 4.Facilitating Recycling and Reducing environmental damage. |
| Persuasive labeling | focuses on a promotional theme or logo consumer information is secondary. |
| Informational labeling | Consumers make proper product selections and Lower their cognitive dissonance after the purchase Includes use/care |
| Universal Product Codes | a series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products |
| 6 Global Issues in Branding and Packaging | 1.Labeling 2.One Brand Name Everywhere 3.Adaptations and modifications 4.Different Brand names in Different Markets. 5.Climate considerations 6.Aesthetics |
| 3 aspects of packaging | Labeling, aesthetics, and climate |
| Warranty | a confirmation of the quality or performance of a good or service |
| Express Warrenty | a written guarantee- 100% cotton, complete satisfaction guaranteed |
| Implied Warranty | an unwritten guarantee that the good or service is fit for the purpose for which it was sold |
| Categories of New Products | New to the World Everything else |
| New Product Success Factors | Long Term Commitment Company-Specific Approach |
| New-Product Development Process | New-product strategy Idea generation |
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