Intro. to Marketing – Test #2 – Flashcards
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Business Buyer Behavior
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the buying behavior of the organizations that buy goods and services for use in production of other products and services that are sold, rented, or supplied to others.
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Business Buying Process
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process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brands; COMPLETELY different from the consumer buying process; MORE EXPENSIVE = COMPLEX
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Consumer Market v. Business Market
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Consumer - all of the personal consumption of final consumers Business - more people involved
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Business Markets Decision Process
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More complex; more decision participants, more people involved; more professional purchasing effort
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Supplier Development
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systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that why will use in making their own products or resell - "when we need supply, we have!"
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Straight Rebuy
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routine purchase decision such as reorder without any modification
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Modified Rebuy
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purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliers
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New Task
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purchase decision that requires thorough research such as a new product
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Systems Selling
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the purchase of a packaged solution from a single seller
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Buying Center
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all of the individual and units that participate in the business decision-making process, ex: users, influencers, buyers, deciders, gatekeepers; this is also known as the Purchasing Department
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Importance of Influencers & Deciders
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two catalyst people that are a part of the decision-making process - both of these people are who you want to spend the MOST time with convincing in acquiring YOUR product
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Users
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those that will use the product or service
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Influencers
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help define specifications and provide information for evaluating alternatives
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Buyers
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have formal authority to select the supplier and arrange terms of purchase
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Deciders
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have formal or informal power to select and approve final suppliers
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Gatekeepers
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control the flow of information
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Major Influences on Business Buyers
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Economic, Personal, Environment, Organizational, and Individual Factors
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Economic Factors
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Price & Service
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Personal Factor
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Emotion
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Environmental Factors
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Demand for Product, Economic Outlook, Cost of Money, Supply of Materials, Technology, Culture, Politics, and Competition
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Organizational Factors
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Objectives, Policies, Procedures, Structure, Systems
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Individual Factors
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Motives, Perceptions, Preferences, Age, Income, Education, Attitude toward Risk
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Problem recognition occurs when...
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someone in the company recognizes a problem or need
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General Need
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part of the buying process; describes the characteristics and quantity of the item
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Product Specification
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part of the buying process; describes the technical criteria
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Value Analysis
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part of the buying process; an approach to cost reduction where components are studied to determine if the can be redesigned, standardized, or made with less costly methods of production
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Supplier Search
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part of the buying process; involves compiling a list of qualified suppliers
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Proposal Solicitation
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part of the buying process; the process of requesting proposals from qualified suppliers
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Supplier Selection
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part of the buying process; the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions
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Order-Routine Specifications
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part of the buying process; the final order with the chosen supplier and lists all of the specification and terms of the purchase
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Performance Process
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involves a critique of supplier performance to the purchase terms
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E-Procurement
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- Online purchasing - Company buying sites - Extranets
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Advantages of E-Procurement
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- access to new suppliers - lower costs - speeds order processing and delivery - shares information - sales - service and support
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Disadvantages of E-Procurement
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- Can erode relationships as buyers search for new suppliers - Security
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Institutional Markets
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consists of hospitals, nursing homes, and prisons that provide goods and services to people in their care; characteristics - low budgets, "captive" audience
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Government Markets
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tend to favor domestic suppliers and require suppliers to submit bids and normally award to the lower bidder; affected by environmental factors, non-econimic factors considered; LARGEST CONSUMER MARKET
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Marketing Segmentation
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dividing a market into smaller segments with distinct needs, characteristics, or behavior, that might require separate marketing strategies or mixes; segmenting consumer, business, international markets = requirements for effective segmentation
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Consumer Markets
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Geographic, Demographic, Psychographic, Behavioral
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Geographic Segmentation
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divides the market into difference geographical units such as nations, regions, states, counties, or cities
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Demographic Segmentation
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divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
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Age & Life-Cycle Stage Segmentation
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the process of offering different products or using different marketing approaches for different age and life-sycle groups
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Gender Segmentation
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divides the market based on sex (male of female)
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Income Segmentation
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divides the market into affluent, middle-income or low-income consumers
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Psychographic Segmentation
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divides buyers into different groups based on social class, lifestyle, or personality traits
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Behavioral Segmentation
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divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product - occasions, benefits sought, user status, usage rate, loyalty status
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Multiple Segmentation
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is used to identify smaller, better-defined target groups
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Using Multiple Segmentation Bases
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these bases segment people and locations into marketable groups of like-minded consumers that exhibit unique characteristics and buying behavior based on a host of demographic factors
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Segmenting International Markets
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Geographic location, Economic Factors, Political-legal Factors, Cultural Factors
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Intermarket Segmentation
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divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
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To be useful, market segments must be:
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Measurable, Accessible, Substantial, Differentiable, Actionable
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Target Market consists of a set of....
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buyers who share common needs or characteristics that the company decides to serve
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How do you evaluate market segments?
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by segment size and growth, structural attractiveness, and company objectives/resources
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Undifferentiated Marketing
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targets the WHOLE market with ONE offer; mass marketing; focuses on common needs rather than what's different; ex: gas, water
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Differentiated Marketing
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targets SEVERAL different market segments and designs SEPARATE offers for each; goal is to achieve higher sales and stronger position; MORE EXPENSIVE than undifferentiated marketing
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Target Market Strategies
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- concentrated marketing targets a small share of a large market - limited company resources - knowledge of the market - more effective and efficient
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Micromarketing
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type of target market strategy; the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations; local marketing, individual marketing
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Local Marketing
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type of target market strategy; involves tailoring brands and promotion to the needs and wants of local customers groups; cities, neighborhoods, stories
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Individual Marketing
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type of target market strategy; involved tailoring products and marketing programs to the needs and preferences of individual customers; also known as "one-to-one marketing," mass customization
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When choosing a targeting marketing strategy, it depends on...
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- company resources - product variability - product life-cycle stage - market variability - competitor's marketing strategies
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Socially Responsible Target Marketing
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- benefits customers with specific needs - concern for vulnerable segments - children (alcohol, cigarettes, internet abuses, etc)
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Product Position
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the way the product is defined by CONSUMERS on important attributes - the place the product occupies in CONSUMER'S MIND relative to competing products; perceptions, impressions, feelings
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Positioning
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maps that show consumer perceptions of their brands versus competing products on important buying dimensions
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Choosing a Differentiation and Positioning Strategy
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- identifying a set of possible competitive advantages to build a position - choosing the right competitive advantages - selecting an overall position strategy - communicating and delivering the chosen position to the market
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Competitive Advantages
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an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
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Identifying a set of possible competitive advantages to build a position by providing superior value from:
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1. Product Differentiation (unique) 2. Services Differentiation (customer service, etc) 3. Channel Differentiation (selling DIRECTLY) 4. People Differentiation (variety of help) 5. Image Differentiation
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Choosing the right competitive advantage....
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difference to promote should be: important, distinctive, superior, communicable, preemptive, affordable, profitable
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Value Proposition
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the full mix of benefits upon which brand is positioned
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Developing Positioning Statement
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" To (target segment and need) our (brand) is (concept) that (point of difference)."
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Product
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anything that can be offered in a market for attention, acquisition, use, or consumption that satisfy a need or want
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Service
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a product that consists of activities, benefits or satisfaction that is essentially intangible and does not result in the ownership of anything
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Experiences
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represent what buying the product or service will do for the customer
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Consumer Products
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products and services for PERSONAL consumption; classified by how consumers buy them - convenience products, shopping products, speciality products, unsought products
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Convenience Products
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consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort - ex: newspapers, candy, fast food, toothpaste, shampoo, etc
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Shopping Products
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consumer products and services that the customer compares carefully on suitability, quality, price, and style - ex: furniture, cars, appliances, etc
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Speciality Products
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consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort - ex: medical services, designer clothes, high-end electronics, makeup, special cookware, gluten products, etc
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Unsought Products
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consumer products that the consumer does not know about or knows about but does not normally think of buying - ex: life insurance, funeral services, blood donations, etc.
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Industrial Products
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products purchased for further processing or for use in conducting a business; classified by the purpose for which the product is purchased - ex: materials and parts, capital, raw materials
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Capital Items
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industrial products that aid in the buyer's production or operations
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Materials and Parts
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include raw materials and manufactured materials and parts usually sold directly to industrial users (EXTERNAL)
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Supplies and Services
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including operating supplies, repair and maintenance items, and business services (INTERNAL)
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Organization Marketing
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consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an ORGANIZATION - ex: sports
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Person Marketing
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consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward PARTICULAR PEOPLE - ex: Martha Steward, Rachel Ray
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Place Marketing
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consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward PARTICULAR PLACES - ex: Las Vegas
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Social Marketing
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the use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society
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Product or Service Attributes
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Communicate and deliver the benefits - quality, features, style and design
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Product Quality includes ______ and __________.
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level, consistency
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Quality Level
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the level of quality that supports the products positioning
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Conformance Quality
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the product's freedom from defects and consistency in delivering a targeted level of performance
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Product Features
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competitive tool for differentiating a product from competitors' products; they are assessed based on the value to the customer versus the cost to the company
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Style v. Design
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Style: the appearance of the product Design: product's usefulness as well as to its looks
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Brand
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the name, term, sign, or design - or a combination of these - identifies the maker or seller of a product or service
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Packaging
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involves designing and producing the container or wrapper for a product
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Labels
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identify the product or brand, describe attributes, and provide promotion
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Product Line
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group of products that are closely related because they function in a similar manner; are sold to the SAME customer groups; marketed through the same types of outlets, or fall within the given price ranges
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Product Line Length
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the number of items in the product line; line stretching, line filling
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Product Mix
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consists of all the products and items that a particular seller offers for sale; width, length, depth, consistency
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Types of Service Industries
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- Government - Private non-profit organizations - Business services
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Internal Marketing
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means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction; must PRECEDE external marketing
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Interactive Marketing
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means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter; service differentiation, service quality, service productivity
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Managing Service Differentiation....
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creates a competitive advantages from the offer, delivery, and image of the service; offer can include distinctive features, delivery includes more able and reliable customer contact people, and image can include symbols and branding
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Managing Service Quality.....
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provides a competitive advantage by delivering consistently higher quality than its competitors; always varies depending on interactions between employees and customers
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Managing service productivity refers to the cost side of.....
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marketing strategies for service firms.
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Brand Equity
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the differential effect that knowing the brand name has on customer response to the product or its marketing
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Brand Strategy decisions include....
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- product attributes - product benefits - product beliefs and values
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Price
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the amount of money charged for a product or service; sum of all the values that consumers give in order to gain the benefits of having or using a product or service; ONLY "P" THAT IS REVENUE GENERATING
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Value-Based Pricing
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the buyers' PERCEPTIONS OF VALUE, not the sellers cost, as the KEY TO PRICING; customer driven
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Good-Value Pricing
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offers the right combination of quality and good service at a FAIR PRICE; existing brands are being redesigned to offer more quality for a given price or the same quality for less price
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Everyday Low-Pricing
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involves the charging a constant everyday low price with few or no temporary price discounts - ex: Walmart
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High - Low Pricing
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involves charging higher prices on an everyday basis, but running frequent promotions to lower prices temporarily on selected items
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Value-Added Pricing
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attaches value-added features and services to differentiate offers, support higher prices, and build pricing power
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Cost-Based Pricing
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setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk; adds a standard markup to the cost of the product = "buy products, but need to make profit"
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Types of Costs
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- Fixed - Variable - Total
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Fixed Cost
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the costs that DO NOT vary with production or sales level - ex: rent, heat, interest, executive salaries
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Variable Cost
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the costs that vary with the level of production - ex: packaging, raw materials
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Total Cost
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the sum of the fixed AND variable costs for ANY give level of production; TOTAL FOR EVERYTHING
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Experience or learning curve is when.....
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average costs FALLS as production INCREASES because fixed costs are spread over more units
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Benefits of Cost-Plus Pricing
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- adds a standard markup to the cost of the product - sellers are certain about costs - prices are similar in industry and price competition is minimized - consumers feel it is fair
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Disadvantages of Cost-Plus Pricing
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- ignores demand AND competitor prices
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Break-Even Pricing
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the price at which total costs are EQUAL to TOTAL REVENUE and there is no profit
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Target Profit Pricing
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the price at which the firm will break even or make the profit it's seeking
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Competition-Based Pricing
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setting prices based on competitors' strategies, costs, prices, and market offerings; consumers will base their judgments of a product's value on the prices that a competitors charge for similar products
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Target Costing
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starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met
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Before setting prices, the marketer must understand the.....
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relationship between PRICE and DEMAND for its products
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Types of Competition
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Pure, Monopolistic, Oligopolistic, Pure Monopoly
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Pure Competition
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a lot of sellers, but not too much of a difference in product - ex: wheat, salt, fruit
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Monopolistic Competition
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a lot of sellers, a lot of differences in prices in product
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Oligopolistic Competition
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few sellers, very in-tune with prices - ex: gas
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Pure Monopoly
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one company owns all - ex: government
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Price Elasticity of Demand
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illustrates the response of demand to a change in price; inelastic and elastic
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Inelastic Demand
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occurs when demand hardly changes when there is a small change in price
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Elastic Demand
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occurs when demand changes greatly for a small change in price
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Factors to consider when setting prices....
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- Economic Conditions - Reseller's Response to Price - Government - Social Concerns
