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Chapter 6

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...............................................................

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Consumer behavior

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is the process individuals or groups go through to select, purchase, use and dispose of products in order to satisfy their wants and needs

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The Consumer Decision-Making Process

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problem recognition, information search, evaluation of alternatives, product choice, and post purchase evaluation

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problem recognition

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-Occurs whenever consumer sees difference between current state and desired/ideal state *Marketers can develop ads that stimulate problem recognition.

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information search

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providing information when and where consumers are likely to search

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evaluation of alternatives

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Understand the criteria consumers use in comparing brands and communicate own brand superiority

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product choice

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Understand choice heuristics used by consumers and provide communication that encourages brand decision

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post purchase evaluation

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Encourage accurate consumer expectations

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Behavioral targeting

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Marketers deliver targeted ads to consumers for specific products by watching what they do online

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Heuristics

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are rules of thumb used by individuals to arrive at good decision with less mental effort: Price equals quality Brand loyalty Country of origin

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Perception

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is the process by which we select, organize, and interpret information from the outside world

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Three factors are necessary for perception to occur

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Exposure: capable of registering a stimulus Attention: mental processing activity Interpretation: assigning meaning

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Motivation

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is an internal state that drives us to satisfy needs by activating goal-oriented behavior

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Learning

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is a relatively permanent change in behavior caused by information or experience

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Attitudes

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represent lasting evaluations of a person, object, or issue

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Three components of attitude:

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Affect (feeling): emotional response Cognition (knowing): beliefs or knowledge Behavior (doing): intention to do something

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classical conditioning

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a person perceives two stimuli at about the same time

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operant conditioning

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, which occurs when people learn that their actions result in rewards or punishments. This feedback influences how they will respond in similar situations in the future

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Cognitive learning

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takes place when consumers make a connection between ideas or by observing things in their environment

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Observational learning

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occurs when people watch the actions of others and note what happens to them as a result

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Personality

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is the set of unique psychological characteristics that consistently influence the way a person responds to situations in the environment

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Age

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Goods and services often appeal to individuals within a certain age group Purchases are often associated with a particular stage in the family life cycle

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Lifestyle

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reflect a pattern of living that determines how people choose to spend their time, money, and energy

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Psychographics

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are used to profile, or group consumers according to these psychological and behavioral similarities

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Culture

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represents the shared values, beliefs, customs, and tastes produced or practiced by a group of people

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subculture

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is a societal group who share a distinctive set of beliefs, characteristics, or common experiences

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Microcultures

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are groups of individuals who identify based on a common activity or art form, for instance

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Social class

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is the overall rank or social standing of groups of people within a society, according to factors such as: -Family background -Occupation -Education -Income

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Gender roles

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relate to society's expectations regarding appropriate attitudes, behaviors, and opportunities for men and women

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Business-to-business (B2B) markets

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The group of customer that include manufacturers,wholesalers, retailers, and other organization

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Inelastic

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demand occurs when changes in price have little or no effect on quantity sought

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Fluctuating

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demand is when small changes in consumer demand create large changes in business demand

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Joint demand

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occurs for two or more goods that are used together to create a product

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Producers

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are individuals or firms that purchase products for use in the production of other goods and services. The goods purchased may be raw materials, component parts, semi-finished goods, or services.

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Resellers

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are individuals or firms that buy finished goods for reselling, renting, or leasing. Resellers include wholesalers, distributors, and of course retailers.

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B2B e-commerce

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refers to internet exchanges of information, goods, services, and payments between two or more organizations

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Intranets

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link a firm's departments, employees and databases

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Extranets

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allow authorized suppliers, customers, and other outsiders to access the firm's intranet

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Chapter 7

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.......................................................

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Market fragmentation

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occurs when diverse interest and backgrounds of individuals create greater diversity in needs and wants

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Segmentation

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is the process of dividing a larger market into smaller pieces based on meaningful, shared characteristics

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Income

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Strongly connected to buying power

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Social Class

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Many consumers buy according to an image they'd like to portray, not their actual level

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Segment Profile

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A description of the "typical" customer in a segment

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differentiated targeting strategy

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the marketer assumes that people have similar needs, and an attempt is made to appeal to a broad spectrum of people

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concentrated targeting strategy

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in which the firm develops one or more products (and marketing strategies) for each of several customer groups.

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Mass customization

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is the extreme case, which involves modifying a product to meet the needs and tastes of an individual consumer

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Positioning

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is the process by which marketers seek to influence how a particular product is perceived in the minds of customers relative to competing offerings

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Repositioning

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establishes a new position in response to market changes

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8 Chapter

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...............................................................

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Durable goods

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are consumer products that provide benefits over a period of months, years, or even decades Cars Furniture Appliances

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Nondurable

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goods are consumed over the short term

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Convenience products

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are typically nondurable goods or services bought with minimal effort

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Shopping products

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are goods and services for which consumers will spend time and effort

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Specialty product

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have unique characteristics that are important to buyers

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Unsought products

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are goods and services for which a consumer has little awareness

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continuous innovation

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is a modification to an existing product Most common form of innovation

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knockoff

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is a new product that copies, with slight modification, the design of an original product

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dynamically continuous innovation

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is a pronounced modification to an existing product

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Convergence

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is the coming together of two or more technologies to create a new system

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discontinuous innovation

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the product must create major change in the way people live

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New Product Development

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Idea generation,Product concept development and screening,Marketing strategy development,Business analysis,Technical development,Test marketing,Commercialization

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Idea generation

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Marketers use a variety of sources to come up with ideas for new products

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Product concept development and screening

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Product ideas are tested for technical and commercial success

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Marketing strategy development

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Developing a plan to deliver the product to the marketplace

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Business analysis

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The product's commercial viability is assessed

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Technical development

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Engineers work to develop and refine a working prototype

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Test marketing

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The complete marketing plan is tested in a small geographic area similar to the larger market

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Commercialization

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The new product is launched into the market

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Product adoption

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is the process by which a consumer or business customer begins to buy and use a new good, service, or idea

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Diffusion

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is the process by which a product or innovation spreads throughout a population

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Relative advantage

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is the degree to which a consumer perceives a new product as offering superior benefits

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Compatibility

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is the extent to which an innovation is consistent with the consumers' way of doing things

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Complexity

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refers to the degree to which consumers perceive a new product as difficult to understand and use

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Trialability

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refers to the ease of sampling a new product and its benefits

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Observability

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refers to the degree to which others can see the new product and the benefits it provides

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Processed materials

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are produced by firms when they transform raw materials from their original state

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Specialized services

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are those which are essential to the organization buy are not a part of the actual production of a product

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Component parts

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are manufactured goods or subassemblies of finished items that firms need to complete their own goods

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Chapter 9

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...............................................................

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Product management (brand management )

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is a systematic and team-based approach to coordinating all aspects of a product's marketing mix

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product line

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is the firm's total product offering designed to satisfy a single need or desire of target customers

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product mix

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is the total set of products a firm offers for sale

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product life cycle (PLC)

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is a useful way to explain how market response and marketing activities change over the life of a product

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Growth stage of the PLC

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The product is accepted and sales rapidly increase

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Maturity stage of the PLC

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Typically longest phase Sales peak while profit margins narrow

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Decline stage of the PLC

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Sales decrease as customer needs change

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Trademark

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is the legal term for a brand name, brand mark, or trade character

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Brand equity

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to a brand's value to its organization over and above the value of the generic version of the product

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Self concept attachment - Product helps establish the user's identity (e.g., Ralph Lauren Polo brand)

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Product helps establish the user's identity (e.g., Ralph Lauren Polo brand)

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Nostalgic attachment

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Product serves as a link with a past self (e.g., Eating the insides of an Oreo cookie take people back to childhood)

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Interdependence

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Product is part of a user's daily routine. (e.g., Getting a Starbuck's coffee every day)

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Love

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Product elicits emotional bonds of warmth, passion, or other strong emotions (e.g., Hershey's

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Brand meaning

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encompasses the beliefs and associations a consumer has about the brand

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brand storytelling

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marketers seek to engage consumers with compelling stories about brands

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Brand extensions

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arise from a firm leveraging brand equity to sell new products using the same brand name

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Sub-branding

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occurs when a firm creates a secondary brand to help differentiate a product line (e.g., Virgin Mobile, Virgin Atlantic, Virgin Galactic)

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National brands

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are those produced and marketed by a manufacturer.

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Store (or private label) brands

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are those which are offered by a retail store or chain under an exclusive trade name

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Generic brands

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is a strategy in which products are not branded and are sold at lowest price possible Typically packaged in white with black letters that only names product itself ("Green Beans")

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Licensing

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when one firm sells another firm the right to use a brand name for a specific purpose for a specific period of time

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Cobranding

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Two brands agree to work together to market a new product

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A package

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is the covering or container for a product

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Ingredient branding

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Branded materials become "component parts" of other branded products

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Fair Packaging and Labeling Act (1966):

answer

Federal legislation aimed at making labels more helpful to consumers by providing useful information

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VIEW is an acronym which stands for the four basis elements of the model

answer

V= Visibility: the package's ability to stand out on the shelf and to attractive attention. I = Information: the presence or absence of warnings, directions, nutritional information, product information, UPC code, recipes, or any other written information. E = Emotional appeal: Similar to brand names, product packages have the ability to function as perceptual or surrogate cues in that they may suggest that specific attributes or benefits are provided by the brand. W = Workability: Workability from the perspective of the retailer details issues such as whether the package fits easily onto the retail shelf and whether multiple units can be stacked upon one another, as well as whether the package actually protects the product.

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Nutrition Labeling and Education Act (1990)

answer

Law requires food labels to state how much fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving

question

Chapter 10

answer

#############################

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Price

answer

is the assignment of value, or the amount the consumer must exchange to receive the offering

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Profit objectives

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are typically used in the pricing of B2B goods. For consumer goods firms, profit objectives may focus on a product line or portfolio of products.

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Variable Costs

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Per-unit costs of production that will fluctuate depending on how many units a firm produces

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Fixed Costs

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Costs that do not vary with the number of units produced

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Markup

answer

is an amount added to the cost of the product to create a price at which the channel member will sell the product

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Demand based pricing

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firm bases selling price on an estimate of volume it can sell in different markets at different prices

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Target costing

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allows marketers to match price with demand, by first identifying the level of quality and functionality customers need and the price they're willing to pay before designing product.

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Yield management

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pricing is very popular in the service industry to the perishable nature of services

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Skimming pricing strategy

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a very high premium price is charged by the manufacturer when the product first hits the market, with the intention of reducing price in the future.

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Trial pricing

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sets a low price initially, but only for a limited period of time, after which the price is raised to "normal" levels.

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penetration pricing

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a firm introduces a new product at a very low price to encourage more customers to purchase it

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Payment pricing

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simply allows consumers to break up the cost of a purchase over time.

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Captive pricing

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is appropriate when two products can only work when used together.

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price bundling

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in which the cost of the combined items is less than if each item were purchased individually.

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Two-part pricing

answer

is appropriate for services or products that require separate payments to purchase the product.

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F.O.B. origin pricing

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means the customer must pay the cost of shipping the items from the factory to the customer's location.

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F.O.B. delivered pricing

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means the seller pays both the cost of the loading and the cost of transporting the goods to the customer.

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basing-point pricing

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which is also used in B2B transactions, means marketers choose one or more locations to serve as intermediate delivery locations

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Uniform delivered pricing

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adds an average shipping cost to the price, no matter what the distance is from the manufacturer's plant.

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Freight absorption pricing

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the seller takes on part or all of the cost of shipping

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Trade or functional discounts

answer

usually set a percentage discount off of the suggested retail or list price for each channel level.

question

Quantity discounts

answer

are useful for encouraging larger purchases, as the amount of the discount varies according to the quantity purchased

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Dynamic pricing strategies

answer

are those in which the Internet seller can easily adjust the price to meet changes in the marketplace.

question

pricing model

answer

is a business strategy in which a product in its most basic version is provide free of charge but the company charges money (the premium) for upgraded versions of the product with more features, greater functionality, or greater capacity.

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Internal reference prices

answer

A set price or price range consumers have in mind when evaluating a product's price

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Price-quality inferences

answer

When consumers use price as a cue to infer product quality

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Price fixing

answer

occurs when two or more companies conspire to keep prices at a certain level

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Horizontal price fixing occurs

answer

when competitors making the same product collude by sharing price information and jointly determine what they will charge for the product.

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Vertical price fixing

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when a manufacturer or wholesaler attempts to force retailers to charge a certain price for their product, usually the "suggested retail price".

question

`Predatory pricing occurs

answer

when a firm sets a very low price for purpose of driving competitors out of business, then later raise prices once the competitor is gone and they have a monopoly again

question

chapter 11

answer

###################################

question

Physical distribution

answer

refers to activities that move finished goods from manufacturers to final customers.

question

channel of distribution

answer

is a series of firms or individuals that facilitates the movement of a product to a final consumer

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Manufacturer-Owned Intermediaries

answer

are separate business units that perform all the functions of independent intermediaries while still maintaining complete control over the channel.

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Independent intermediaries

answer

do business with many different manufacturers and many different customer firms and thus help the flow of goods throughout the marketplace.

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Administered VMS: Independent channel members work together due to power of a dominant channel member

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Independent channel members work together due to power of a dominant channel member

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Corporate VMS:

answer

A single firm owns manufacturing, wholesaling, and retailing operations.

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Contractual VMS:

answer

Channel member cooperation enforced by contracts that spell out rights and responsibilities of each member.

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Intensive distribution

answer

Maximize coverage by selling through as many outlets as possible.

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Exclusive distribution

answer

Limit distribution to a single outlet in a particular region Selective distribution: Seeks to strike a balance between intensive and exclusive distribution

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Logistcs

answer

is the process of designing, managing, and improving the movement of products through a supply chain

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Supply chain

answer

is all activities needed to turn raw materials into a product delivered to a customer

question

Order processing

answer

includes activities that occur between time an order comes in and the product goes out

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Chapeter 12

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###################################

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Retailing

answer

is the process by which organizations sell goods and services to consumers for their personal use

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Retailtainment

answer

is all about marketing strategies that enhance the shopping experience

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Merchandise breadth, or variety

answer

is the number of different product lines available.

question

narrow assortment

answer

as we encounter in convenience stores, means that shoppers will find only a limited selection of product lines, such as candy, cigarettes, and soft drinks.

question

broad assortment

answer

as a warehouse store like Costco or Sam's Club offers, means there is a wide range of items from eyeglasses to barbecue grills.

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Merchandise depth

answer

is the variety of choices available within each specific product line

question

shallow assortment

answer

means that the selection within a product category is limited, so a factory outlet store may sell only white and blue men's dress shirts (all made by the same manufacturer, of course) and only in standard sizes.

question

deep assortment

answer

of dress shirts (but not much else) in varying shades and in hard-to-find sizes.

question

Self service retailers

answer

(e.g, Sam's Club), they make their product selection without any assistance, they often must bring their own bags or containers to carry their purchases, and they may even handle the checkout process with self-service scanners.

question

Full service retailers

answer

(e.g, Bloomingdales)Department stores like Bloomingdale's and specialty stores like Victoria's Secret provide supporting services such as gift wrapping, and they offer trained sales associates who can help us select that perfect gift.

question

category killer

answer

is a specialty store that carries a large section of products within a given category EX: Best Buy Home Depot Toys-R-Us Amazon (books

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Direct selling

answer

occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise

question

B2C e-commerce

answer

is online exchange between companies and individual consumers

question

Services

answer

are acts, efforts, or performances exchanged from producer to user without ownership rights.

question

SERVQUAL

answer

scale is a popular instrument to measure customer service quality.

question

SERVQUAL identifies consumer perceptions of service quality on five components:

answer

Tangibles Reliability Responsiveness Empathy Assurance

question

Servicescapes

answer

are the actual physical facility where the service is performed, delivered, and consumed

question

Characteristics of Services

answer

Intangibility,Perishability,Variability,Inseparability

question

Intangibility

answer

Can't see, touch, or smell a service. This means services can't be inspected or tried prior to purchase, which makes it much more difficult to evaluate services offered by different providers.

question

Perishability

answer

Services can't be stored for later sale or consumption and instead MUST be used at the time they are available. There are so many appointment periods in a doctor's day . . . An empty slot at 8 am cannot be saved and used later.

question

Variability

answer

The characteristic of a service that means that even the same service performed by the same individual for the same customer can vary.

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Inseparability

answer

: Because services must be experienced to be used, it is impossible to separate the production of a service from its consumption.

question

Integrated marketing communication

answer

involves the planning, execution, and evaluation of coordinated, brand communication programs over time to targeted audiences

question

Encoding

answer

is the process by which the idea is translated into a physically perceivable form that conveys meaning Words, music, and images Spokespeople Animated characters

question

Promotion mix

answer

to communication elements that the marketer controls.

question

Mass (One-to-Many) Communication

answer

Includes advertising, sales promotion, and public relations

question

Personal (One-to-One) Communication

answer

Includes personal selling and direct marketing

question

Public relations

answer

is the communication function that seeks to build good relationships with an organization's publics

question

Push money

answer

is often used to motivate the sales force to sell older models, unpopular colors, or just to sell more product or demonstrate a certain item.

question

Point-of-purchase (POP)

answer

displays include temporary, semi-permanent, and permanent displays, as well as in signs, banners, floor ads, plastic reproductions of products, shopping cart ads and in-store television.

question

M-commerce

answer

refers to promotional and other e-commerce activities transmitted over mobile phones and other mobile devices

question

Transactional selling

answer

approach that focuses on making an immediate sale with little concern for developing a long-term relationship with the customer. Relationship selling: process by which a salesperson secures, develops, and maintains long-term, profitable customer relationships

question

Guerrilla marketing

answer

involves "ambushing" consumers with promotional content in places they don't expect to encounter such messages

question

Ambient advertising

answer

is a popular type of guerilla marketing. This term describes the placement of messages in nontraditional media Some examples include the backs of garage and theater receipts, screens attached to the back of supermarket carts, signs on elevator doors, or the ever popular signs on urinals in bars and restaurants—the possibilities are endless.

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