Marketing Fundamentals – Flashcards
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Marketing
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An organized system of activities designed to get the money out of someone else's pockets and into yours
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Exchange
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Trading something of value to receive something perceived to be of greater value
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Production Orientation
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Focus on internal capabilities of the organization and what it can most readily produce
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Sales Orientation
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Employment of a sales force and aggressive sales tactics to push that which the organization can most readily produce
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Marketing Orientation
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Focus on the wants and needs of the target customers, and create offerings to satisfy those wants and needs
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Societal Marketing Orientation
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Extend the Marketing Orientation to have the organization committed to contributing to the best interests of customers and society
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Marketing Concept
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The foundation of a Societal Marketing Orientation: Satisfy the wants and needs of target customers and contribute to the best interests of customers and society, while simultaneously achieving the organization's objectives
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Preconventional Morality
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Child state/Instant gratification
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Conventional Morality
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Do It because everyone else does
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Postconventional morality
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Enlightened self-interest consistent with your own ethically-focused personal value system
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External Marketing Environment
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All elements (Social, demographic, economic, technological, political-legal, competition) outside the organization, aka Uncontrollable variables
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Environmental management
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Actions taken by the organization to shape and influence the "Uncontrollable" variables
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Consumer Product Safety Commission (CPSC)
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Protects the health and safety of consumers using products in and around the home
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Federal Trade Commission (FTC)
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Prevents unfair trade practices including anti-trust and deceptive advertising
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Corrective Advertising
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Clarify Statements believed misleading
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Food and Drug Administration (FDA)
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Safety of Food and Drug products
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Culture
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Values, norms, attitudes, behaviors, and other meaningful behaviors and symbols that characterize a nation or people
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Global Marketing Standarization
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Selling the exact same product everywhere in the world
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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 amount of a specific product that can enter a country
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Boycott
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By nations: Exclusion of all products from certain nations or organizations. By individuals or groups: Refusal to buy products from certain nations or organizations
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Exchange Control
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Impediments or outright inability to convert a nation's currency into convertible currencies such as dollars or euros.
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Market Grouping
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Two or more nations working together to form a common trade area
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Trade Agreement
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An agreement by two or more nations to stimulate international trade by minimizing or eliminating tariffs, quotas, boycotts, and exchange control
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Licensing
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Legal process permitting another firm to use an organization's manufacturing processes, trademarks, patents, and other proprietary knowledge
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Contract Manufacturing
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Outsourcing your manufacturing function to a foreign (or domestic) firm
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Joint Venture
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Two organizations working together to create a new business entity
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Direct Investment
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Buying out another firm or starting your own from the ground up, with your organization having total ownership
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Need Recognition
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Difference between where you're at and where you'd like to be
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Information Search
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May be conscious or unconscious
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Evaluation of Alternatives
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When information search is completed (at least for the time being)
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Evoked Set
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What's "In the pool" for consideratin
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Purchase
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Based on product attributes or, perhaps predominantly, intangibles and image
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Cognitive Dissonance
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Tension/anxiety about the purchase decision
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Routine Response Behavior
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Least Complex, Low Involvement
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Limited decision-making
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Moderately quick limited-consequence decision
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Extensive decision-making
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Major decision, significant risk-consequences
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Subculture
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Groups of consumers with similar component lifestyles
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Component lifestyle
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What do you do on a Saturday night?
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Reference group
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Groups that influence and individual's AIO's (Activities/Interest/Opinion) and purchasing behavior
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Primary membership group
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Meet with regularly and face-to-face (family, friends, co-workers)
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Secondary membership groups
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meet with less frequently, more formally (professional associations, clubs)
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Direct Membership group
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Actually belong to it
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Indirect aspirational group
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Desire to belong/Want to emulate
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Nonaspirational group
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Want nothing to do with it or its members
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Selective Exposure
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Choose which stimuli to see/not see
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Selective perception
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Notice certain stimuli/fail to notice others
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Selective distortion
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Distort what you hear to make it consistent with preconcieved attitudes/beliefs
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Selective retention
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Only remember that which is consistent with feelings/beliefs
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Decision support system (DSS)
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In-house data and information system
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Marketing research
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Process of planning/collecting/analyzing data relevant to a specific marketing decision
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Define problem:
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What is happening/what should be happening
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Situation analysis
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What are we doing/what's happening in the external environment
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Tentative hypothesis
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Cause-and-effect relationships
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Secondary data
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What information is already available, in-house or on-line
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Plan research design
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Questions to be answered/how-what data to be collected-analyzed
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Collect primary data
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Precisely relevant to the problem at hand
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In-home interview
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Comfy setting/can show-tell-demonstrate
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Mall intercept
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Questionably representative, but can still show-tell-demonstrate
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Telephone interview
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High refusal rate and the cell phone problem, but quick-and-dirty
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Mail survey
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Low quality, low cost
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Executive interview
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B-2-B equivalent of an in-home interview
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Focus group
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Loosely-structured interview with 7-10 people discussing product/concept/issues
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Watching customers
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Traffic patterns, shopping habits, how customers use product
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Mystery shoppers
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See how employees deal with customers, especially demanding customers
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EXPERIMENT
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Verify cause-and-effect relationships employing Scientific Method
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Universe
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Total population of interest
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Representative sample
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An exact proportional representation of the universe, in miniature
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Probability sample
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Every element has known non-zero likelihood of being selected
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Random sample
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Every element has an equal likelihood of being selected
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Non-probability sample
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not Representative
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Measurement error
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Information provided not reliable
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Sampling error
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Sample is not representative of the universe
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Non-response error
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Those who do not respond are different than those who do
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Frame error:
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Sample drawn from non-representative population
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Random error
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Any sample will yield readings + or - the actual universe
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External validity
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Everything about the research is done right, but results are not projectable to the real world
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Strategic planning
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Managerial process of creating and maintaining a fit between the organization's objectives/resources and evolving market opportunities
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Mission statement
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Defines the business mission by answering the questions "What business are we in?" and "Where are we going?"
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Marketing myopia
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Narrow such statement defining the firm in terms of present products/services rather than the benefits customers seek
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Strategic Business Unit (SBU)
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"Company within a company" that controls its business independently of other SBUs in the organization
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SWOT (Strengths/Weaknesses/Opportunities/Threats) analysis
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Assess how you're doing, plus assess the external environment, to determine your competitive advantages, as a prelude to setting objectives
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Star
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High share within a high growth segment
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Problem child/Question mark
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Low share within a high growth segment
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Cash cow
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High share within a low growth segment
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Dawg
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Low share within a low growth segment
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Set objectives
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to exploit whatever differential advantage you enjoy
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Market penetration:
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Present product/present market
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Market development:
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Present product/new market
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Product development:
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New product/present market
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Diversification:
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New product/new market
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Marketing mix:
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The 4 Ps: Product/Place/Promotion/Price Implementation/evaluation/control: In bottom-up marketing, this is where you begin
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Sacred cows
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All those formulas/beliefs/practices which built success in the past, but won't take you to the future.
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Producers (aka Original equipment manufacturers = OEMs):
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Manufacture products/provide services used by business customers
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Resellers:
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Buy finished goods/Sell to final customers or other business customers
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Governments & Institutions:
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Including schools, health care facilities, public service organizations
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North American Industrial Classification System (NAICS):
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Numbering system developed for NAFTA to use in classifying businesses by their predominant economic activity
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Derived demand:
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Demand for consumer products drives demand for business products
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Inelastic demand
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Item comprises a small percentage of final product cost
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Joint demand
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1-to-1 relationship
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Fluctuating demand (aka multiplier effect/aka accelerator principle)
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Drop in demand for final product has an inordinately strong effect on the marketing organization and its suppliers
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Major equipment (aka Installations)
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Expensive capital goods that will last a long time
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Accessory equipment
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Less expensive—but significant—goods with a shorter life span
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Raw materials
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Unprocessed—often agricultural—products
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Component parts
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Finished items that become part of the final product
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Processed materials
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Some processing/to be used in manufacturing final product
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Supplies
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Consumables that do not become part of final product
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Business services
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Outsource to specialists!
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New buy
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New need/buying certain product-service for first time
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Modified rebuy
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Modest change in specifications from current supplier/Same thing from different supplier
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Straight rebuy
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Low-involvement reordering of same things from same vendor
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Intangible
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Can't see/feel/taste prior to purchase
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Inseparable
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Simultaneously sold/produced/consumed
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Heterogeneous
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Often wide variation in performance of each individual service provider
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Perishable
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Can't be warehoused/stored
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Service quality
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Degree to which service performance matches customer expectations
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Core offering
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The most basic customer benefit, essentially a commodity
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Supplemental offering
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The extras that build value and customer loyalty through the marketing of your differential advantage
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Mass customization
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Application of technology to customize the offering within the cost-effective context of standardization
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NONPROFIT PUBLIC SERVICE ORGANIZATIONS
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1. Start by defining objectives 2. Avoid over-generalized objectives 3. Possible challenge: May be dealing with apathetic or even strongly opposed target markets 4. In the marketing mix, seek to promote with PSAs = Public Service Announcements
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Start with a market
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People/organizations who want/need your product/service and are qualified to buy
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Break into market segments
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Subgroups with similar needs
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Substantial
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Large enough to be profitable
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Identifiable/Measurable
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Who/how many are there?
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Accessible
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Can you reach them?
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Responsiveness
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Each segment must respond differently to a marketing mix, or no need to segment
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BASES FOR SEGMENTATION
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Geography Demographics Benefits sought/Usage rate (Often a function of other bases)
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Psychographics
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Persons with similar personalities and motives tend to have similar component lifestyles
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Geodemographics
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Particular neighborhoods feature similar psychographics and similar component lifestyles
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Undifferentiated
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One product/one marketing mix for all customers
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Concentrated
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Target a single segment most receptive to your differential advantage
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Niche marketing aka Guerilla marketing
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Target a segment small enough to defend, small enough that the big guys won't mess with you
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Majority fallacy:
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Go after the biggest segment, just like everyone else
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Multisegment
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More than one target market, with a separate marketing mix for each
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Cannibalization
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New product sales come out of existing lines
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Positioning
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Where your product (or your company) fits in the mind of the customer and how you are differentiated vav the competition
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Repositioning
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Change where you are in the customer's mind (if you can). Easier to expand a position than to totally change it
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Product
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All the tangibles and intangibles a customer receives in an exchange
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Convenience product
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Usually a relatively inexpensive item, routinely purchased with little shopping effort
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Shopping product
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More expensive, less intense distribution, requires some shopping effort
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Homogeneous shopping product
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All basically the same, price is the key
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Heterogeneous shopping product
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Identifiable differences such as style/quality/image
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Specialty product
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Perceived as unique: Brand loyal, will accept no substitutes
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Unsought product
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Unknown/not aware of until need arises/made aware of
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Product item
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Specific version of a particular product/service
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Product line
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Group of closely-related product items
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Product mix
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Composite list of everything offered by the firm
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Product mix width
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Number of product lines
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Product line depth
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Number of product items in a product line
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Product modification
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Functional improvement or change in style
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Line extension
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Adding new product items under an existing brand name
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Line contraction
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Get rid of the dawgs, sooner, not later
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Brand
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Use of a name/term/symbol/design—or any combination thereof—which identifies and differentiates a product
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Brand name
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Words that can be spoken
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Brand mark
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Symbols that cannot be spoken
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Logo
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Symbol or script that represents the brand or the company
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Trademark/Service mark
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Legally protected brand name/brand mark/logo/phrase
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Brand equity
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Reputation/loyalty for which customers are willing to pay more
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Generic product
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No physical difference among brands
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Generic brand:
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No brand
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Generic product name
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Common name, which may once have had trademark protection, now in the public domain
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Manufacturer's brand
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Named by its producer, who distributes it wherever
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Private brand
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Brand owned by retailer/wholesaler/other intermediary and only available there
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Individual brand
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Different names for different products
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Family brand
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Same brand name identifies different product items in product line(s)
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Master brand
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Positioning of the brand is synonymous with the category itself
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Co-branding
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2 or more brand names together
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New-to-the world products (aka discontinuous innovations)
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Truly new products that change the world
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NEW PRODUCT DEVELOPMENT PROCESS
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Idea Generation Idea Screening Concept tests focus group Storyboards Business Analysis Development Test Marketing Commercialization
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CATEGORIES OF ADOPTERS (aka DIFFUSION PROCESS)
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Innovators (2%) Early adopters (14%; Total 16%) Early majority (34%; Total 50%) Late majority (34%; Total 84%) Laggards (16%; Total 100%) Non-adopters
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Accumulating
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Buy up in smaller quantities and sell in large
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Bulk-breaking
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Buy/produce in large quantities and sell in smaller
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Discrepancies of Assortment
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Combine products from several-to-many sources to be available at one location
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Temporal Discrepancy
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Difference in time produced and time needed
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Drop shippers (a merchant wholesaler)
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Take order/Have producer-supplier ship directly to buyer
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Rack jobbers (a merchant wholesaler)
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Handle products/sections in the store that chain management doesn't want to mess with
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Agents/Brokers
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Facilitators who handle selling/negotiating functions or who bring buyers and sellers together, but who do not take title to goods
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Independent retailer
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One--or a very few--units under the same ownership
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Chain store
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Multiple units under the same ownership
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Franchise
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Independent owner-operator licensed by larger support organization
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Product & trade name franchising
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Contractual vertical marketing arrangement
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Business format franchising
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Recognized name + expertise
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Department store
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Large store organized into many separate departments
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Specialty store
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Single-limited lines/High margin/High service
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Supermarket
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Large departmentalized self-serve retailer that specializes in food and some non-food items
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Scrambled merchandising
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Offering non-traditional goods such as cards/gadgets
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Drug store
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Pharmacy-related items +++
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Convenience store
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Limited lines/High margin/High turnover
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Full-line discount store aka Mass merchandiser
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Moderate to low prices/Less atmosphere and service than department store/High volume and turnover
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Category superstore aka Specialty discount store
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Single to very limited lines/Low prices/High turnover/More-or-less self service (Often--erroneously--called category killers)
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Warehouse membership club
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Limited assortment/In bulk to members only
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Off-price retailer
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Buy up manufacturers' overruns and unsold merchandise
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Factory outlet store
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Vertically-integrated off-price retailer
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Break-even analysis
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How many units must you sell at a given price to recover fixed costs
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Price skimming (Profit maximization strategy)
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Come in with high initial price, lowering it when/if competition enters
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Penetration pricing (Sales maximization strategy)
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Come in with low initial price to match or pre-empt competition
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FOB (Free on board)
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Point at which title passes
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FOB Origin
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Title passes at seller's dock
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FOB Origin pricing:
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Buyer pays for transportation
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DAGMAR
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Defining advertising goals for measured advertising results
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Point-of-purchase (POP) materials/Display equipment
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2x sales, especially important for discretionary impulse products
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Trade allowances
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Price reduction/rebate/free merchandise for performance of some kind
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Non-discretionary items
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Traffic builder
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Discretionary items
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"Plus" business
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Push money
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Financial incentives to inside salespeople in retail outlets
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Conventions/Trade shows
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Industry get-togethers for B2B meeting & schmoozing
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Push strategy
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Promo $ directed toward channel members-MUST do this if your product is undifferentiated/you are not a category leader
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Pull strategy
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Promo $ directed toward ultimate consumer-MAY do this if your product has a competitive advantage/you are a category leade
