Ch. 1-7: Marketing Concepts Flashcards

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Marketing management philosophies
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1. production orientation 2. sales orientation 3. market orientation 4. societal marketing orientation
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Production orientation
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focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace – management assesses its resources and asks these questions: “what can we do best?” “what is our engineers design?” “what is easy to produce, given our equipment?”
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Sales orientation
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belief that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. – marketing means selling things and collecting money
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market orientation
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social and economic justification for an organizations existence is the satisfaction of customer want and needs while meeting organization objectives. – what a business thinks it produces is not of primary importance – sale does not depend on an aggressive sales force but rather on customer decision to purchase a product
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societal marketing orientation
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an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals and society’s long term best interests.
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Customer relationship management (CRM)
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company wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups
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Marketing
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activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
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Marketing mix
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– product (tangible, intangible) – price (value) – place(includes advertising) – promotion (distribution)
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outline of a marketing plan
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1. business mission statement 2. SWOT analysis 3. objectives 4. marketing strategy 5. implementation evaluation control
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Mission statement
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answers the question “what business are we in?” – focus on the market rather than its goods and services -based on analysis of benefits sought
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marketing myopia
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mission statements that are stated too narrowly – defining a business in terms of goods and services rather than in terms of benefits sought
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SWOT analysis
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internal strengths and weaknesses and also examine external opportunities and threats.
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Competitive advantage
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set of unique features of a company and its products that are perceived – includes three types: cost, product/service differentiation, and niche strategies
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Cost competitive advantage
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being low-cost competitor in an industry while maintaining satisfactory profit margins – obtains inexpensive raw materials – create efficient plant operations -sources: experience curve, production innovations, reengineering
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Product/service differentiation
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– provides a longer lasting competitive advantage – provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition – brand names, strong dealer network (AIMSOIL), image, service
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Niche competitive advantage
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-advantage achieved when a firm seeks to target an effectively serve a small segment of the market – targets and serves a single segment – product line may be focused on a specific product category
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Marketing strategy
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involves the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets
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Marketing mix (product)
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– Heart of the marketing mix – not only involves the physical unit but also its package, warranty, after-sale service, brand name, company image, value…etc.
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Marketing mix (place)
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-physical distribution which involves all the business activities concerned with storing and transporting raw materials or finished products
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Marketing mix (price)
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– most flexible of the four p’s and the quickest element to change.
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Marketing mix (promotion)
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– bring about mutually satisfying exchanges with target markets by informing, educating, persuading, and reminding them of the benefits of an organization of product.
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Corporate social responsibility (CSR)
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business concern for society’s welfare – demonstrated by managers who consider both the long range best interests of the company and relationship to the society – buss word = “sustainability”
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Pyramid of corporate social responsibility
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top to bottom – philanthropic responsibilities (good corporate citizen) – ethical responsibilities ( what was is right, just, and fair) – legal responsibilities ( obey the law) – economic responsibilities (be profitable)
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factors within external envrionment
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1. demographics 2. social factors 3. economic conditions 4. political and legal factors 5. technology 6. competition
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social factors
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– most difficult external variable – attitudes, values, lifestyles
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Demographic factors
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– age, race and ethnicity, and location – strongly related to consumer buying behavior -generation Y (millennials), baby boomers, tweens, teens, generation x
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Generation y
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– people born between 1979 and 1994 – most tech savy generation, spend more time surfing the web and on social media
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Generation X
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– born between 1965 and 1978 – spend 62% more on housing, 50% on apparal, and 27% more on entertainment
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Baby boomers
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– born between 1946 and 1964 – carrying financial burdens, including education, mortgages, and health care – willing to change brands
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Economic factors
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– consumers income – purchasing power – inflation -recession
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Consumers income
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-education is the primary determinant of a person’s earning potential
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purchasing power
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– comparison of income versus the relative cost of a standard set of goods and services in different geographic areas (referred to as the cost of living) – when income is high, relative to cost of living, people have more discretionary income (more money to spend) -think of it as income – cost of living -consumers with high purchasing power can afford to spend more money without jeopardizing their budget
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inflation
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measure of the decrease in the value of money expressed as the percentage reduction in value since the previous year – inflation of 5%, you can expect that on average price has risen by about 5% since the pervious year – in times of low inflation, businesses seeking to increase their profit can do so by increasing efficiency
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Recession
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period of economic activity characterized by negative growth, which reduces demand for goods and services
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Technological factors
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Research (basic and applied) – companies attempting to innovate often limit their searches to areas they are already familiar with
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Basic research
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pure research that aims to confirm an existing theory or to learn more about a concept phenomenon
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Applied research
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attempt to develop new or improved products
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Political and legal factors
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laws and regulations protect: new technology, society, businesses, and consumers – need to protect innovators of new technology, interests of society in general, one business from another
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Competitive factors
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– how many competitors – how big are the competitors – how interdependent is the industry ** management has little control over the competitive environment
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Global marketing
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marketing that targets markets throughout the world
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Importance of global marketing
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– 10 million jobs in the U.S. are supported by exports – GDP = total market value of all final goods and services produced in a country for a given time period – exports account for 25% of U.S. economic growth
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Multinational Corporations
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a company that is heavily engaged in international trade, moving products and services across national boundaries
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Global marketing standardization
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production of uniform products that can be sold the same way all over the world
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Multi domestic strategy
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when multinational firms enable individual subsidiaries to compete independently in domestic markets
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External environment facing global marketers
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-culture – economic and technological development – political structure – demographic makeup -natural resources
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Culture
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the common set of values shared by citizens that determine what is socially acceptable – each country has its own unique customs and traditions that determine business practices and influence negotiations
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Economic and technological development
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-Developed country–> complex, sophisticated industries – less developed country–> basic industries
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Political structure and actions
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– Tariffs – quota – boycott – exchange control – market grouping
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Tariff
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tax levied on goods entering a country
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quota
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limit on the amount of a product entering a country
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boycott
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exclusion on the amount of a product entering a country
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Exchange control
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foreign exchange must be sold to a control agency
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Market grouping
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common trade alliance
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Demographic makeup
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-population density – urban or rural – personal income -age
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natural resources
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-petroleum -foodstuffs -precious metal -timber -water
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Why go global
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– earn additional profits – utilize economies of scale – saturated domestic markets – leverage a unique product or technological advantage
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Risk levels of entering the global market place
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-export ** least complicated and least risky -licensing – contract manufacturing -joint venture -direct investment ** high risk and high return
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steps in decision making (5 steps)
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1. needs recognition 2. information search 3. evaluation of alternatives 4. purchase 5. post purchase behavior
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1. need recognition
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result of an imbalance between actual and desired states
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Want
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recognition of an unfulfilled need and a product that will satisfy it
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Stimulus
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any unit of input affecting one or more of the five senses: sight, smell, taste, touch, hearing
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2. Internal information search
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process of recalling past information stored in the memory
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External information search
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the process of seeking information in the outside environment
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marketing controlled search
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product information source that originated with marketers promoting the product – examples: TV, newspaper, magazines
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nonmarketing controlled information source
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product information source that is not associated with advertising or promotion – sources include personal experiences or personal sources (family)
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3. Evaluation of alternatives and purchase
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– analyze product attributes – use cut off criteria ( i can pay this much but not this) – rank attributes by importance
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4. purchase
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– cognitive dissonance = inner tension that a consumer experiences after recognizing an inconsistency between behavior and value
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reducing dissonance
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-seeking info that reinforces positive ideas – avoiding info that contradicts purchase – revoking original decision
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Buying decisions: routine response
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frequently bought, low cost goods and services and low involvement – buy first,evaluate later
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Buying decisions: limited response
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– consumer has previous product experience but unfamiliar with current brand
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Buying decisions: Extensive decision
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unfamiliar expensive product or infrequently bought item
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Factors influencing buying decisions
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– cultural factors – social factors – individual factors – psychological factors
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Cultural factors
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– values: belief shared by a society that a specific mode of conduct is personally or socially preferable to another mode of conduct.
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Social factors
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– reference groups – opinion leaders – family
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reference groups
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all of the formal and informal groups in society that influence an individuals purchase behavior
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opinion leaders
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– people you know, celebrities
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Individual factors
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– gender -age life cycle – personality life cycle
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Psychological factors
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– perception – motivation – learning -beliefs and attitudes *** tools used to recognize feelings, gather and analyze information to formulate thoughts and opinions
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Perception: selective exposure
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consumer notices certain stimuli and ignores others
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Perception: selective retention
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consumer remembers only that information that supports his or her personal beliefs
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Perception: Selective distortion
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consumer changes or distorts information that conflicts with feelings or beliefs
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Motivation
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Maslows hierarchy of needs : (bottom to top) psychological needs, safety needs, social needs, esteem needs, self-actualization
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Learning: two kinds
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– experiential = experience changes your behavior – conceptual = not acquired through direct experience
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Categories of business customers
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1. producers ( OEM= original equipment manufacturer) 2. resellers (retailers, wholesalers) 3. governments 4. institutions (hospital and universities)
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Demand in business markets
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– demand for business products results in demand for consumer products (DERIVED) – change in price will not significantly affect demand for product (INELASTIC) – multiple items are used together in final product (JOINT) – demand for business products is more volatile than consumer products (FLUCTUATING)
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Types of goods and services
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-raw material = aluminum ore – major equipment = extruding machine – accessory equipment = tool cart – business service= uniforms – supplies = paper – component part – processed material = extruded metal
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Product defined as a business product rather than consumer good is on the basis of what?
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