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Marketing

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the 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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Exchange

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People giving up something to receive something they would rather have

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Production orientation

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A philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace

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Sales Orientation

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The idea that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits.

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Marketing Concept

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The idea that the social and economic justification for an organization's existence is the satisfaction of customer wants and needs while meeting organizational objectives.

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Market Orientation

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A philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer's decision to purchase a product. It is synonymous with the marketing concept.

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Products

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offering to a market for acquisition, use or consumption. Tangible

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Services

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benefits that are essentially intangible and don't result in the ownership of anything .

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Relationship Marketing

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A strategy that focuses on keeping and improving relationships with current customers.

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Societal marketing orientation

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The idea that 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 value

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The relationship between benefits and the sacrifice necessary to obtain those benefits.

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Customer Satisfaction

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Customers' evaluation of a good or service in terms of whether it has met their needs and expectations.

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Empowerment

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Delegation of authority to solve customers' problems quickly- usually by the first person that the customer notifies regarding a problem.

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Teamwork

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Collaborative efforts of people to accomplish common objectives.

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Relationship Marketing

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A strategy that focuses on keeping and improving relationships with current customers.

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Buyer's Market

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One on one marketing - Customer needs/wants/loyalty

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Buyers and Society's Market

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Societal Marketing Orientation Customer Needs/Wants Society's Welfare

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Implementing the Marketing Concept

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1. Top Management to endorse concept 2. Management to encourage its spread across rank and file 3. Changes in authority and responsibility necessary. Flatten hierarchy. 4. Management should be provided with front-line experience.

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4 P's of Marketing

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Product Price Place Promotion

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"Marketing should be introduced at the beginning rather than the end of the production cycle and integrated into each phase of the business, " is consistent with a(n) ____________ orientation.

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Market

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The objective of one to one marketing is to:

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build and maintain customer loyalty

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Production

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focuses on efficiency of internal operations

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Sales

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Focus on aggressive techniques for overcoming customer resistance

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Market

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Focuses on satisfying customer needs and wants

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Societal

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Focus on satisfying customer needs and wants while enhancing individuals and societal well-being

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Target Market

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A defined group most likely to buy a firm's product.

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Environmental Management

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When a company implements strategies that attempt to shape the external environment within which it operates.

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Component Lifestyles

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The practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle.

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Demography

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The study of people's vital statistics, such as their age, race, and ethnicity, and location.

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Purchasing Power

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A comparison of income versus the relative cost of a set standard of goods and services in different geographic areas. increased standard of living are a function of purchasing power

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Inflation

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A measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.

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Recession

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A period of economic activity characterized by negative growth, which reduces demand for goods and services.

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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 or phenomenon.

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Applied Research

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An attempt to develop new or improved products.

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CPSC

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Consumer Product Safety Commission A federal agency established to protect the health and safety of consumers in and around their homes

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FDA

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Food and Drug Administration A federal agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous food and drug products.

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FTC

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Federal Trade Commission A federal agency empowered to prevent persons or corporations from using unfair methods of competition in commerce.

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Production Concept

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Consumers favor products that are available and highly affordable Improve production and distribution

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Product Concept

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Consumers favor products that offer the most quality, performance, and innovative features

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Selling Concept

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Consumers will buy products only if the company promotes/ sells this product(s)

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Marketing Concept

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Focuses on needs/ wants of target markets and delivering satisfaction better than competitors

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Societal Marketing Concept

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Focuses on needs/ wants of target markets and delivering superior value Society's well-being

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Current Customers

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How, Where, What, and When they buy

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Decision Drivers

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Cost, quality, performance, assortment, etc.

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Valuable Customers

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20/80, Loyalty, retention

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Competition

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Competition offers threats and opportunities to capture business

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Values

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a strongly held and enduring belief, and they are determinants of what is important and not important. INFLUENCE BUYING HABITS.

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Social Factors

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Values, Time pressure, component lifestyles, changing roles of women

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Demographic Factors

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Age, race, ethnicity, location Demographics affect buyer behavior Predicts what they will buy

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Tweens

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Ages 8 to 12 population more than 20 million access to information and sophistication well beyond their years and purchasing power to match They want their own look, does not reflect parents PARENTS IN CONTROL

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Teens

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25 million Very electronic- spend roughly 72 hrs plugged in (TV, Social Media, etc.) Real friends Make product modern and convenient Involve in promotions- experience, interactive contests, provide ideas Shopping has become social sport online and/or at the mall.

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Generation Y

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People born between 1979 and 1994 Millennials' 75 million impatient, family orientated, relatively stable childhood inquisitive, tech savvy, encouraged to share opinions, ethnically diverse, time managers, street smart, much more aware of the world around them shop less and buy more per trip they want fulfillment, multitaskers

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Generation X

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People born between 1965 and 1978 40 million Latchkey kids- dual career, divorced Independent, resilient, cautious and skeptical- savvy consumers more protective and involved with kids home ownership is important goal avid buyers of latest clothes, technology, recreational products want honesty from retailers or they will loose gen x consumer, communication is key they want communication on a personal level, don't want to be grouped

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Baby Boomers

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People born between 1946 and 1964 75 million Average life expectancy at all time high typically reach spending peak at age 54 Postponing retirement socially conscious, productive spending cuts by boomers have left upscale retailers scrambling Happy and confident group that looks forward to future heavily involved in word of mouth promotion trailblazers- challenged status quo don't need to be reminded of how old they're getting link brands with major life event skeptical of empty promises due to tv ads

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Greatest Generation

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Grew up during great depression generation before baby boomers

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Hispanics

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often prefer products from their native country very brand loyal often not aware of mainstream US brands, if native country brand unavailable they'll choose brands that reflect their native culture and values

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Technological Factors

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Faster pace and lower costs -Computer chips and Internet High Research and Development Budget (10-20%) - Basic Research (US) vs. Applied Research (China) Promote Innovation -- Competitiveness -Ideas from web, firms use teams of writers with diverse perspective to create complex scenarios of what future markets may look like, talk to early adopters and innovators, find out what customers like and dislike, create innovative environment, cater to entrepreneurs

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Economic Factors

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High Unemployment- depressed demand and purchasing power, reduced disposable/ discretionary incomes Inflation- price increases Low -- Increase efficiency, not price High -- Low prices, coupons and sales Recession- demand reduction improve existing and introduce new -- value Expand customer service - postpone top of line - high priced, high value

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Political and Legal Factors

answer

Regulation for - protecting consumers and innovators, increasing competition, pricing practices, false advertising

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Sherman Act, Clayton Act, FTC Act, Celler-Kefauver Anti-merger Act, Hart-Scott-Rodino ACt

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were passed to regulate the competitive environment.

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Robinson-Patman Act

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was designed to regulate pricing practices

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Wheeler-Lea Act

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was created to control false advertising

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Lanham Act

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protects trademarks

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Battle over consumer privacy

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Due to growth of internet marketing, collecting consumer data has alarmed privacy- minded consumers.

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CAN-SPAM Act of 2004

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Protects consumers against unwanted email, or spam. Does not ban spam but prohibits using a false address and presenting false misleading information

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Gramm-Leach-Bliley Act

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aimed at financial companies, requires corporations to tell their customers how they use their personal information

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Identity Theft

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9 million Americans have identity stolen each year

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Health Insurance Portability and Accountability Act

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aimed at the health care industry limits disclosure of individuals medical information and imposes penalties on organizations that violate privacy rules

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Competitive Factors

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-as US population growth slows, global competition increases, cost rise and available resources tighten -firms must work harder to maintain profits and market share -Technology advances can usher in a whole new set of competitors that can change a firms business model

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Global Marketing

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Marketing that targets markets throughout the world

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Global Vision

answer

Recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets

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Environmental Differences

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Cultural Values, Religion, Roles, Status Colors symbolic- Coca Cola Customs and Traditions Time, Space Relationships - Trust

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Economic and Technological

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Development Traditional ---> Industrialized Agriculture --> Mfg. --> Services Per capita income -GDP per capita US vs. India/China Buying power, underground economy Income distribution - skewed Rich and Middle classes

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Importance of Global Marketing

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U.S. exports a fifth of industrial production U.S. is leading exporter of farm products- 60 billion in agricultural exports Also exports chemicals, computers, autos, aircraft, electrical and industrial machinery Exports create 10 million jobs for Americans and represent 13% of GDP Trade and Investment- 1/3 of profits U.S. is the world's largest importer Imperative to compete

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GDP

answer

Gross Domestic Product the total market value of all final goods and services produced in a country for a given time period

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Multinational corporation

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A company that is heavily engaged in international trade, beyond exporting and importing

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Multinational firms

answer

Operate in several Countries straddle boundaries- Goods, Services Overcome Trade Barriers Sidestep regulatory problems -lower labor costs leverage ideas globally - sharing larger than many countries politics

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Capital-intensive

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using more capital than labor in the production process

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Exchange rate

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the price of one country's currency in terms of another country's currency

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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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Multidomestic strategy

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when multinational firms enable individual subsidiaries to compete independently in domestic markets

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EU

answer

European Union a free trade zone encompassing 27 European countries

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Mercosur

answer

the largest Latin American trade agreement; includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela

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Uruguay Round

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an agreement to dramatically lower trade barriers worldwide; created the World Trade Organization

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WTO

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World Trade Organization a trade organization that replaced the old General Agreements on Tariffs and Trade (GATT)

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GATT

answer

General Agreements on Tariffs and Trade a trade agreement that contained loopholes that enabled countries to avoid trade-barrier reduction agreements

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NAFTA

answer

North American Free Trade Agreement an agreement between Canada, the United States, and Mexico that created the world's largest free trade zone

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CAFTA

answer

Central America Free Trade Agreement a trade agreement, instituted in 2005, that includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States

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World Bank

answer

an international bank that offers low-interest loans, advice, and information to developing nations

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IMF

answer

International Monetary Fund an international organization that acts as a lender of last resort, providing loans to troubled national, and also works to promote trade through financial cooperation

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G-20

answer

Group of Twenty a forum for international economic development that promotes discussion between industrial and emerging- market countries on key issues related to global economic stability

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Exporting

answer

selling domestically produced products to buyers in another country

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Buyer for export

answer

an intermediary in the global market that assumes all ownership risks and sells globally for its own account

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Export broker

answer

an intermediary who plays the traditional broker's role by bringing buyer and seller together

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Export agent

answer

an intermediary who acts like a manufacturer's agent for the exporter. The export agent lives in the foreign market

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Licensing

answer

the legal process whereby a licensor agrees to let another firm use its manufacturing process, trademarks, patents, trade secrets, or other proprietary

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Contract manufacturing

answer

private-label manufacturing by a foreign company

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Joint venture

answer

when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity

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Direct foreign investment

answer

active ownership of a foreign company or of overseas manufacturing or marketing facilities

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Dumping

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the sale of an exported product at a price lower than that charged for the same or a like product in the "home" market of the exporter

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Countertrade

answer

a form of trade in which all or part of the payment for goods or services is in the form of other goods or services

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Global Vision

answer

Take advantage of international marketing opportunities - addl. profits Be aware of threats from foreign competitors Use international distribution networks Leverage a unique product or technological advantage Utilize "economies of scale"

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The Negatives of Global Trade

answer

Millions of Americans have lost jobs- imports, outsourcing. New jobs pay less Millions fear loosing jobs Workers face pay-cut demands, if not, face outsourcing Service and white-collar jobs are vulnerable to operations moving offshore

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Advantages of Global Trade

answer

Rise from poverty for underdeveloped nations Productivity and living standards increase Competition keeps inflation low Open economy spurs innovation Export jobs pay more

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The goal of the Free Trade Area of the Americas (FTAA) is to:

answer

establish a free trade zone throughout the Western Hemisphere

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In the context of global marketing, when a company either creates a new product for a market or dramatically changes an existing product, the company is using a ______________ strategy

answer

product invention

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Marketer's Checklist for identifying Potential Market

answer

1. Demographic characteristics 2. Geographic characteristics 3. Economic factors 4. Technological factors 5. Sociocultural factors 6. National goals and plans

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Global Marketing into the 21st century

answer

Global competition is intensifying No company is immune U.S. companies are continuously improving products expanding into foreign markets becoming Global Firms

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Global Firms

answer

Face several major problems: -variable exchange rates -unstable governments -protectionist tariffs and trade barriers

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Consumer Behavior

answer

The process consumers go through when they make purchases. It involves factors that influence their decision and usage

question

Factors that influence the Consumer's Decision-Making Process

answer

Individual/ Psychological Factors: Perception, Motivation, Learning, Beliefs and attitudes, Lifestyles Consumer decision-making process Buy or Don't Buy Social/ Culture factors: Reference groups, opinion leaders, family, culture and subculture

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Consumer Decision-Making Process

answer

The consumer decision-making process consists of five steps: 1. Need recognition 2. Information search 3. Evaluations of alternatives 4. Purchase 5. Post-purchase behavior

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Consumer Decision-Making process

answer

Need recognition due to stimulus (SSTTH) -Internal, external Information search -Internal (memory) -External (seeking information in outside environment) -Risk, Knowledge, Experience -Result in an evoked set options -most preferred alternatives Evaluation of Alternative -analyze product attributes -what is the most important (quality, price, location, option, etc.) -use cutoff criteria (could be financially based- will not spend more than) Purchase- buy or not to buy Postpurchase Behavior -cognitive dissonance- is the inner tension that a consumer experiences after recognizing an inconsistency between behavior, value and opinions. -warranties, communication, justification Satisfaction -expectation -performance

question

Need Recognition

answer

Very first step in the process is when consumers realize that they have a need for something. Marketers want to create an imbalance between their present status and their preferred status. Need recognition occurs when a consumer is faced with a difference between an actual and desired state

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Internal stimuli

answer

a need can occur immediately and can be a very basic impulse that you experience, example hunger pains.

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External stimulus

answer

is when you are affected by outside influences, such as a friend recommending a movie, restaurant, or an ad for a car.

question

There are three ways that consumers recognize unfulfilled wants:

answer

1st- is when a consumer becomes frustrated with the fact that a product he or she has is not performing properly. Perhaps the car that the consumer owns is now requiring time in the shop for repairs, or the jeans he owns have developed holes. The consumer now has developed a want and need for a new car and new jeans. Marketers will even act fast and use advertising and sales to further move the consumer to a new purchase. Car brochures, test drives, sales, promotions and rebates are all ways for the consumer to be drawn further into the need recognition process. 2nd- a consumer recognizes an unfulfilled want is when the consumer runs out of the product. This can be as simple as an empty shampoo bottle or a need for more bread. Marketers can tempt consumers to purchase their products through coupons, deals, contests and promotions. 3rd- consumers can recognize an unfulfilled need is if they become aware of a product that is better than their current product. Marketers love to create newer versions of their product in order to tempt consumers to upgrade their old versions, such as technology and automobile companies, which consistently upgrade to newer models.

question

Marketers can prevent _________ ___________ by excellent communication of their product's benefits and features, customer service follow up by email and even small gifts, such as calendars or pens with the company name.

answer

Cognitive dissonance

question

Culture is the chief shaper and transmitter of:

answer

Values

question

Types of Consumer Decision Behavior

answer

Routine Response Behavior -Low involvement, time, cost, search options Limited Decision Making Extensive Decision Making -High involvement, time, cost, search, options

question

On any given day, a person may be subjected to over 1,500 advertising messages but may only be aware of ten to twenty of them. This is called:

answer

selective exposure

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