Marketing: Creating Value for Customers and Building Strong Customer Relationships
Chapter 1: Introduction to Marketing, What is Marketing?process by which companies create value for customers and build strong customer relationships in order to capture value from customers in returnWhat are the steps in the marketing process?Understand the marketplace and customer needs and wants, Design a customer-driven marketing strategyConstruct an integrated marketing program that delivers superior valueBuild profitable relationships and create customer delightCapture value from customers to create profits and customer equityWhat are the five core customer and marketplace concepts? Understand each.Needs, wants, and demands, Market offerings- Some combination of products, services, information, or experiences offered to a market to satisfy a need or want, Value and satisfaction, Exchanges and relationships, Markets, What are customer needs, wants, and demands?, Needs– states of felt deprivation, Wants– the form human needs take as they are shaped by culture and individual personality, Demands– human wants that are backed up by buying power, What marketing offerings exist?, Products, services, information, and experiences, What are customer value and satisfaction?, Customers form expectations about the value and satisfaction that various market offerings will deliver, What are exchanges and relationships?, Exchange– act of obtaining a desired object from someone by offering something in return., Relationships-, Marketing actions build and maintain exchange relationships with target audiences involving an idea, product, service, or other object, Marketers build strong relationships by consistently delivering superior customer value, What is market segmentation? What is target marketing?, Market segmentation– dividing the market into segments of customers, Target marketing– selecting
one or more segments to cultivate/target, What is a value proposition?, Set of benefits or values a company promises to deliver to consumers to satisfy their needs, What are the different marketing management orientations (i.e., the production concept, the product concept, the selling concept, the marketing concept, the societal marketing concept)?, Marketing management– art and science of choosing target markets and building profitable relationships with them., Production concept– idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency, Product concept– idea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements, Selling concept– idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large- scale selling and promotion effort, Marketing concept– philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do, Societal marketing concept– idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests, What is the Marketing Mix; the 4 P’s?, set of tactical marketing tools— product, price, place, and promotion— that the firm blends to produce the response it wants in the target market., Product (customer solution)- the goods-and-services combination the company offers to the target market, Price (customer cost)- amount of money customers must pay to obtain the product, Place (convenience)- company activities that make the product available to target consumers, Promotion (communication)- activities that communicate the merits of the product and persuade target customers to buy it, What is Customer Relationship Management? Why is it important?, process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction, Customer-perceived value– customer’s evaluation of the difference between all the benefi ts and all the costs of a marketing offer relative to those of competing offers , Customer satisfaction– extent to which a product’s perceived performance matches a buyer’s expectations, Customer managed relationships– Marketing relationships in which customers, empowered by today’s new digital technologies, interact with companies and with each other to shape their relationships with brands., What is Partner Relationship Management? Why is it important?, Working closely with partners in other company departments and outside the company to jointly bring greater value to customers., What is a supply chain? What is supply chain management?, Supply chain– a longer channel, stretching from raw materials to components to final products that are carried to final buyers, What is consumer-generated marketing?, Brand exchanges created by consumers themselves- both invited and uninvited- by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers, In what does superior customer value result?, creates highly satisfied customers who stay loyal and buy more, What is customer Lifetime value, share of customer, and customer equity?, Customer lifetime value– value of the entire stream of purchases a customer makes over a lifetime of patronage, Share of customer– portion of the customer’s purchasing that a company gets in its product categories, Customer equity– total combined customer lifetime values of all of the company’s customers, What is Marketing Myopia?, mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products, Can Demarketing take place? What is it?, Chapter 2: Strategic Planning and the Marketing Process, What is a strategic plan? What is strategic planning?, Plan– plan for long-run survival and growth that makes the most sense given its specific situation, opportunities, objectives, and resources, Planning– process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities, What are the steps in the strategic planning process?, Defining the company mission (corporate level), Setting company objectives and goals (corporate level), Designing the business portfolio (corporate level), Planning marketing and other functional strategies (planning marketing and other functional strategies), What is a mission statement? What are characteristics of a good mission statement? What, is the difference between a market-oriented versus a product-oriented mission statement?, Statement– statement of the organization’s purpose— what it wants to accomplish in the larger environment, Characteristics– should be meaningful and specific yet motivating, emphasize the company’s strengths in the marketplace, should not be stated as making more sales or profits instead should focus on customers and the customer experience the company seeks to create, Difference– market needs may last forever, product/technology needs eventually become outdated, What is a business portfolio?, collection of businesses and products that make up the company, What is a strategic business unit (SBU)?, Unit of the company that has a separate mission and objectives and than can be planned independently from other company businesses, What is a portfolio analysis?, Process by which management evaluates the products and businesses that make up the company, Which method/instrument can be used to analyze a current business portfolio? (the, growth-share matrix), Growth-share matrix– A portfolio planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share., What are the two dimensions most standard portfolio analysis methods use to evaluate, SBUs?, Attractiveness of SBU’s market or industry, Strength of SBU’s position within the market or industry, What are the two dimensions of the Boston Consulting Group’s (BCG) growth-share, matrix? What are its components (e.g., stars, cash cows, question marks, dogs)? What are, the four strategies a company can take for its SBUs? What are advantages and, disadvantages of the BCG portfolio matrix?, 2 dimensions– market growth rate (attractiveness) and relative market share (strength), Components-, Stars– high-growth, high-share businesses or products, often need heavy investments to finance their rapid growth, eventually their growth will slow down and they will turn into cash cows., Cash cows– low-growth, high-share businesses or products, these established and successful SBUs need less investment to hold their market share, they produce a lot of cash that the company uses to pay its bills and support other SBUs that need investment, Question marks– low-share business units in high-growth markets, require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out., Dogs– low-growth, low-share businesses and products, may generate enough cash to maintain themselves but do not promise to be large sources of cash, 4 strategies-, Build– increase investment of resources, Hold– maintain minimum investment to keep current position, Harvest– maximize current cash flow, regardless of long term impact, Divest– sell or liquidate, Disadvantages– can be difficult, time-consuming, and costly to implement. Management may find it difficult to define SBUs and measure market share and growth. In addition, these approaches focus on classifying current businesses but provide little advice for future planning., What is the Product/Market Expansion Grid? What strategies can a company use to grow?, portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification., Strategies-, Market penetration– increase sales to current market segments without changing the product, Market development– identify and develop new market segments- demographic or geographic- for current company products, Product development– offer modified or new products to current market segments, Product diversification– offer new products to new markets, What is a value chain? What is a value delivery network?, Chain– series of internal departments that carry out value- creating activities to design, produce, market, deliver, and support a firm’s products, Delivery network– network made up of the company, its suppliers, its distributors, and its customers who partner with each other to improve the performance of the entire system, What is , market segmentation– process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs, market targeting– process of evaluating each market segment’s attractiveness and selecting one or more segments to enter, positioning– arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers, differentiation– differentiating the market offering to create superior customer value, What is a market segment? – group of consumers who respond in a similar way to a given set of marketing efforts, What components does the customer-driven marketing process entail?, What is the marketing mix? What are the 4 Ps?, set of tactical marketing tools— product, price, place, and promotion— that the firm blends to produce the response it wants in the target market., Product (customer solution)- the goods-and-services combination the company offers to the target market, Price (customer cost)- amount of money customers must pay to obtain the product, Place (convenience)- company activities that make the product available to target consumers, Promotion (communication)- activities that communicate the merits of the product and persuade target customers to buy it, Chapter 3: The Marketing Environment, What is the marketing environment and why is it important to study?, actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers., Why- studying the marketing environment allows marketers to take advantage of opportunities and combat threats, Of what is the marketing environment made up of (micro- and macro-envr.)?, Microenvironment– actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics, Macroenvironment– larger societal forces that affect the microenvironment— demographic, economic, natural, technological, political, and cultural forces., What actors is the microenvironment made up of (company, suppliers, intermediaries,, competitors, publics, customers)? Understand what each of these actors entails and what, consequences they have on marketing., Company– department inside of a company; top management, finance, R&D, etc, Supplier– provide resources needed to produce goods and services, Intermediary– help the company promote, sell, and distribute its goods to final buyers, Competitors– those who serve a target market with products and services that are viewed by consumers as being reasonable substitutes, Publics– any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives, Customers– different types of markets that purchase a firm’s goods and services, What types of intermediaries do we distinguish? What types of publics do we, distinguish?, Intermediaries- reseller, physical distribution firms, marketing services agencies, financial intermediaries, Publics- financial, media, government, citizen-action, local, general, internal, What are the five types of customer markets?, Consumer– buy for personal consumption, Business– buy for use in production processes, Reseller– buy to resell at a profit, Government– buy for public purpose, International– buyers in other countries, What are the major forces in a company’s macro-environment (demographic, economic,, natural, technological, political, cultural)? Understand what each of these major forces, entails and what consequences they have on marketing., Demographic– study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics, Economic– economic factors that affect consumer purchasing power and spending patterns, Natural– natural resources that are needed as inputs by marketers or that are affected by marketing activities, Technological– forces that create new technologies, creating new product and market opportunities, Political– laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society, Cultural– Institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors, What generational groups do we distinguish and how are they different from each other?, Baby Boomers– 78 million people, born between 1946-1964, wealthiest in history, Generation X– 49 million people, born between 1965-1976, most educated to date, Millenials– 83 million people, born between 1977-2000, ethnically diverse and fluent with digital technology, What is environmental sustainability?, Developing strategies and practices that create a world economy that the planet can support indefinitely, What is socially responsible behavior and cause-related marketing?, Social- actively seeking out ways to protect the long-run interests of consumers and the environment, Cause- exercise social responsibility and build more positive images by linking to a worthwhile cause, What are core beliefs and values? What are secondary beliefs and values? Which ones are, more open to change?, Core beliefs and values– passed on from parents to children and reinforced by schools, churches, business, and governments, Secondary beliefs and values– more open to change, What are the major cultural views?, Views of Themselves, Others, Organizations, Society, Nature, Universe, What is the difference between reactive and proactive firms in terms of their response to, the marketing environment? Can you provide examples for each?, Reactive– react and adapt passively accepting the marketing environment and do not try to change it, Proactive– instead of letting the environment define their strategy, they craft a strategy that defines your environment. (change the environment), Chapter 4: Marketing Research and Information Systems, Why is marketing information important?, To create value for customers and build meaningful relationships with them, Consumer needs and motives for buying are difficult to determine, Challenge for companies is to make better use of information to gain customer insights, To develop a competitive advantage, What are customer insights?, Fresh understandings of customers and the marketplace derived from marketing information that becomes the basis for creating customer value and relationships, What is a Marketing Information System (MIS)? What are its benefits?, People and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights., What are sources of marketing information (internal databases, competitive marketing, intelligence, and marketing research)?, Internal databases– electronic collections of consumer and market information obtained from data sources within the company network, Marketing intelligence– systematic collection and analysis of publicly available information about competitors and developments in the marketing environment, Marketing research– systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization, What is marketing research? What are the steps in the marketing research process?, systematic design, collection, analysis, and reporting of data relevant to a specifi c marketing situation facing an organization, defining the problem and research objectives, developing the research plan for collecting information, implementing the research plan- collecting and analyzing the data, interpreting and reporting the findings, What objectives might a research project have (exploratory, descriptive, causal)?, Exploratory– gathering preliminary information that will help define the problem and suggest hypotheses, Descriptive– generating information to better describe marketing problems, situations, or markets, Causal– testing hypotheses about cause-and-effect relationships, What is exploratory, descriptive, and causal research?, What are sources of existing data? What is the difference between secondary and primary, data?, Secondary data– Information that already exists somewhere, having been collected for another purpose, Difference– cheaper and faster to obtain than primary data, Primary data- Information collected for the specific purpose at hand., What are specific approaches for gathering primary data (observation, ethnographic, research, survey, experiment)?, Observational research– gathering primary data by observing relevant people, actions, and situations, Ethnographic research– form of observational research that involves sending trained observers to watch and interact with consumers in their natural environments, Survey research– gathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior, Experimental research– gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses, Online research– Collecting primary data online through Internet surveys, online focus groups, Web- based experiments, or tracking consumers’ online behavior, What methods are there to contact people? What are advantages and disadvantages of, each method?, Mail questionnaires, Pros- large amounts of info at low cost, more honest responses than interviews, absence of interviewer bias, Cons- inflexible, low response rate, researcher has little control over sample, Telephone interviewing, Pros- gathers info fast, high response rate, greater flexibility than mail, strong sample control, Cons- higher cost than mail, interviewer bias, limited quantity of data collection, Personal interviewer, Pros- high flexibility, gathers great deal of data, good control of sample, speed of data collection, and response rate, Cons- high cost per respondent, subject to interviewer bias, Online research, Pros- speed and low costs, lowest cost per respondent of all contact methods, excellent sample control, good flexibility and response rate due to interactivity, Cons- difficulty in controlling sample, *Focus Groups/Online Focus Groups, What is a sampling plan and what components does it entail? What is the difference, between a probability and a non-probability sample?, Sample– segment of the population selected for marketing research to represent the population as a whole, Sampling plan– marketing researchers draw conclusions about large groups of consumers by studying a small sample of the total consumer population, Components-, Who is to be studied (sampling unit), How many people should be included (sample size), How should the people in the sample be chosen (sampling procedure, Probability Sample– each population member has a known chance of being included in the sample, Simple random sample, Stratified random sample, Cluster area sample, Non-probability sample– sampling error cannot be measured, Convenience sample, Judgement sample, Quota sample, What is customer relationship management (CRM)?, Managing detailed information about individual customers and carefully managing customer touch points to maximize customer loyalty, Chapter 5: Consumer and Business Buyer Behavior, What is consumer buyer behavior? What is business buyer behavior?, Consumer buyer behavior– buying behavior of final consumers— individuals and households that buy goods and services for personal consumption., Business buyer behavior– refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others, What are consumer markets? What business markets?, Consumer markets– All the individuals and households that buy or acquire goods and services for personal consumption, Business Markets– all businesses that buy or acquire goods and services for use in the production of other products and services that are sold, rented, or supplied to others, What is the “Black Box” of the buyer behavior model (the stimulus-response model of, buyer behavior)? What components does it entail? What components is the buyer, behavior model made up of?, Black Box– measure the whats, wheres, and whens of consumer buying behavior. But it’s very difficult to “see” inside the consumer’s head and figure out the whys of buying behavior (that’s why it’s called the black box), Components– buyers characteristics and buyers decision process, Components of the whole model– the environment (marketing stimuli [4 p’s] and other [economical, technological, social, cultural]), black box, and buyer responses, What factors influence the “why” of buying in both consumer and business buyer, behavior (cultural, social, personal, and psychological factors)? Understand the different, components of these factors., Cultural– cultural factors exert a broad and deep influence on consumer behavior. Marketers need to understand the role played by the buyer’s culture, subculture, and social class, Culture- set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions, Subculture- group of people with shared value systems based on common life experiences and situations, Social class- Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors, Social– consumer’s behavior also is influenced by social factors, such as the consumer’s small groups, family, and social roles and status, Reference groups- Two or more people who interact to accomplish individual or mutual goals, Family, Role- expected activities, Status- esteem given to role by society, Personal– buyer’s decisions also are influenced by personal characteristics such as the buyer’s age and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept, Age and lifecycle stage, Occupation, Economic situation, Lifestyle- person’s pattern of living as expressed in his or her activities, interests, and opinions, Personality and self-concept- unique psychological characteristics that distinguish a person or group, Psychological– person’s buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes, Motivation- need that is sufficiently pressing to direct the person to seek satisfaction of the need, Perception- process by which people select, organize, and interpret information to form a meaningful picture of the world, Learning- Changes in an individual’s behavior arising from experience, Beliefs- descriptive thought that a person holds about something, Attitude- person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea, What are the major American social classes?, Upper Class, Upper Uppers 1%, Lower Uppers 2%, Middle Class, Upper Middle 12%, Middle Class 32%, Working Class 38%, Lower Class, Upper Lowers 9%, Lower Lowers 7%, What are the different components of Maslow’s Hierarchy of Needs?, Self-actualization needs- self development and realization, Esteem needs- self-esteem, recognition, status, Social needs- sense of belonging, love, Safety needs- security, protection, Physiological needs- hunger, thirst, What is the consumer buyer decision process? How does the consumer buyer decision, process differ from the business buyer process? Understand each step in these decision, processes., Need Recognition, Information search, Evaluation of alternatives, Purchase decision, Post-purchase behavior, business buyer process, Problem recognition, General need description, Product specification, Supplier search, Proposal solicitation, Supplier selection, Order routine specification, Performance review, Differences– business buyers face more complex buying decisions, business buying process tends to be more formalized, buyers and sellers are much more dependent on each other in business markets, What is customer satisfaction? How is it measured? What are disappointment,, satisfaction, and delight?, Customer satisfaction– function of consumer expectations and perceived product performance, Disappointment– performance Satisfaction– performance = expectations, Delight– performance > expectations, Why is it important to satisfy customers?, Customer satisfaction is a key to building profitable relationships with consumers to keeping and growing consumers and reaping their customer lifetime value. Satisfied customers buy a product again, talk favorably to others about the product, pay less attention to competing brands and advertising, and buy other products from the company., Do consumers or businesses go always through all of the decision-making stages (not, only in high involvement or non-routine purchases)?, What is cognitive dissonance?, Buyer discomfort caused by postpurchase conflict. After making a purchase, buyers often doubt whether they made the right decision., What are the major types of Business Buying Situations (straight rebuy; modified rebuy;, new buy/new task)?, Straight rebuy– business buying situation in which the buyer routinely reorders something without any modifications, Modified rebuy– business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers, New buy/new task– business buying situation in which the buyer purchases a product or service for the first time., What is a business buying center?, All the individuals and units that play a role in the purchase decision- making process, What is systems/solutions selling?, Buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation, What is derived demand?, business demand for products and services that ultimately derives from the demand for consumer goods, What is e-procurement?, Purchasing performed through electronic connections between buyers and sellers— usually online, What is the Consumer Buyer Decision Process for NEW Products (i.e., Stages in the, Adoption Process)?, Awareness– Consumer becomes aware of the new product, but lacks information about it, Interest– Consumer seeks information about new product, Evaluation– Consumer considers whether trying the new product makes sense, Trial– Consumer tries new product on a small scale to improve his or her estimate of its value, Adoption– consumer decides to make full and regular use of the new product, What are the adopter categories based on time of adoption (innovators; early adopters;, early majority; late majority; laggards)?, Innovators 2.5%, Early adopters 13.5%, Early majority 34%, Late majority 34%, Laggards 16%, What product characteristics influence the rate of adoption?, Relative advantage– is the innovation superior to existing products?, Compatibility– Does the innovation fir the values and experience of the target market?, Complexity– is the innovation difficult to understand or use?, Divisibility– can the innovation be used on a limited basis?, Communicability– can results be easily observed or described to others?, Chapter 6: Marketing Segmentation, Targeting, and Positioning, What is market segmentation?, Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes, What segmentation variables can be used to segment markets? What sub-categories, does each segmentation variable have? Understand the different ways marketers can, segment markets., Segmenting Consumer Markets, Geographic segmentation– Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods, Demographic segmentation– Dividing the market into segments based on variables such as age, life- cycle stage, gender, income, occupation, education, religion, ethnicity, and generation, Age and life-cycle segmentation– Dividing a market into different age and life- cycle groups, Gender segmentation– Dividing a market into different segments based on gender, Income segmentation– Dividing a market into different income segments, Psychographic segmentation– Dividing a market into different segments based on social class, lifestyle, or personality characteristics., Behavioral segmentation– Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product, Occasion segmentation– Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item, Benefit segmentation– Dividing the market into segments according to the different benefits that consumers seek from the product, User status– segments include nonusers, ex-users, potential users, first-time users, and regular users, Usage rate– segmentation by light, medium, and heavy product users, Loyalty status– segmentation by degree of loyalty, Segmenting Business Markets, Segmenting International Markets, Can marketers use more than one variable to segment markets? Can you name, examples?, Example- multivariable segmentation systems merge geographic, demographic, life-style, and behavioral data to help companies segment their markets down to siz codes, neighborhoods, and even households, How can marketers segment business markets? In what aspects is the segmentation of, business markets similar to/different from that of consumers markets? Understand the, different ways marketers can segment business markets., Operating characteristics, Purchasing approaches, Situational factors, Personal characteristics, Similar to consumer markets– geographic, demographic, benefits, user status, usage rate, and loyalty status, Different to consumer markets– operating characteristics, purchasing approaches, situational factors, personal characteristics, How can marketers segment international markets?, Geographic location, Economic factors, Political and legal factors, Cultural factors, What is intermarket segmentation?, Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries, What are the five requirements for effective segmentation?, Measurable– size, purchasing power, and profiles of the segments can be measured, Accessible– market segments can be effectively reached and served, Substantial– market segments are large or profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program, Differentiable– segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments, Actionable– Effective programs can be designed for attracting and serving the segments., What is market targeting (= or, target marketing)? What is a target market?, Market Targeting– process of evaluating each market segment’s attractiveness and selecting one or more segments to enter, Target market– set of buyers sharing common needs or characteristics that the company decides to serve, What market target (= or, target market) strategies exist? Understand what, undifferentiated (mass) marketing, differentiated (segmented) marketing,, concentrated (niche) marketing, and micromarketing (local and individual) marketing, are and how they differ from each other., Undifferentiated (mass) marketing– market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer, Differentiated (segmented) marketing– market- coverage strategy in which a firm decides to target several market segments and designs separate offers for each., Concentrated (niche) marketing– market-coverage strategy in which a firm goes after a large share of one or a few segments or niches., Micromarketing (local and individual) marketing– Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing, Local– Tailoring brands and promotions to the needs and wants of local customer segments- cities, neighborhoods, and even specific stores, Individual– Tailoring products and marketing programs to the needs and preferences of individual customers, What is mass customization?, process by which firms interact one-to-one with masses of customers to design products and services tailor- made to individual needs, What are the factors marketers need to consider when deciding on a target market, strategy?, Company resources, Market variability, Product’s life-cycle stage, Competitors’ marketing strategies, What is socially responsible target marketing?, Marketing generates concern when targeting vulnerable, minority or disadvantaged populations and children and teens, Controversy arises when an attempt is made to profit at the expense of these segments, What is differentiation? What is positioning? What is a value proposition?, Differentiation– differentiating the market offering to create superior customer value, Positioning– way a product is defined by consumers on important attributes— the place the product occupies in consumers’ minds relative to competing products., Value proposition– how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments, *Or– the full positioning of a brand- full mix of benefits on which it is positioned, What is a perceptional map/positioning map?, Show consumer perceptions of their brands versus compet-ing products on important buying dimensions., What is a unique selling proposition (or, USP)?, Each brand should pick an attribute and tout itself as “number one” on that attribute., What are the factors to consider when choosing a differentiation and positioning, strategy?, Identifying a set of differentiating competitive advantages on which to build a position, Choosing the right competitive advantages (USP), Selecting an overall positioning strategy, What is a competitive advantage?, An advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices., What are the five categories marketers can create differentiation on?, Product, Services, Channels, People, Image, What are the criteria marketers need to take into account when selecting a, competitive advantage?, How many differences to promote, Which differences to promote, Important– The difference delivers a highly valued benefit to target buyers., Distinctive– Competitors do not offer the difference, or the company can offer it in a more distinctive way, Superior– The difference is superior to other ways that customers might obtain the same benefit, Communicable– The difference is communicable and visible to buyers., Preemptive– Competitors cannot easily copy the difference, Affordable– buyers can afford to pay for the difference, Profitable– company can introduce the difference profitability, What are possible value propositions for marketers? What are two meaningful, dimensions such value propositions can be based on?, More for more– provide the most upscale product and charge a higher price to cover the higher costs, More for the same– attack a competitor’s positioning by introducing a brand offering comparable quality at a lower price, The same for less– offer similar products at much reduced prices, Less for much less– meet consumers’ lower performance or quality requirements at a much lower price, More for less– offer the best products at the lowest prices, 2 dimensions- Benefits and Price, How does a positioning statement look like? What components does it have?, Positioning statement– statement that summarizes company or brand positioning using this form (look like): To (target segment and need) our (brand) is (concept) that (point of difference), Chapter 7: Product and Service Strategies, What is a product? What is a service? What is an experience?, Product– anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need., Service– An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything, Experience– what those offers (products/services) will do for them, What types of products do we distinguish?, Anything that may satisfy a want or need, What are the three levels of a product? Can you name examples?, Core customer value– what the consumer is really buying, Ex: freedom, convenience, etc, Actual product– brand name, service features, design, packaging, quality, etc, Augmented product– additional services and benefits, Ex: delivery and credit, instructions, installation, warranty, service, What two broad classes do products and services fall into?, Consumer Products– a product bought by final consumers for personal consumption, Industrial Products– product bought by individuals and organizations for further processing or for use in conducting a business, What are consumer products? What types of consumer products do we distinguish?, Convenience product– consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort., Shopping product– consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style., Specialty product– consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort., Unsought product– consumer product that the consumer either does not know about or knows about but does not normally consider buying., What are convenience, shopping, specialty, and unsought products? How do they, differ from each other?, Convenience products- low priced, placed in many locations to make readily available, Shopping products- less frequently purchased, distributed through fewer outlets, greater sales support, Specialty products- different brands are not usually compared, Unsought products- require a lot of advertising, personal selling, and other marketing efforts. New innovations are generally unsought till advertised, What are industrial products? What types of industrial products do we distinguish?, Materials and parts– raw materials as well as manufactured materials and parts., Capital items– aid in the buyer’s production or operations, including installations and accessory equipment, Supplies and services– operating supplies and repair and maintenance items, What are materials and parts, capital items, and supplies and services?, Material and parts- sold directly to industrial users, price and services are the major marketing factors, branding and advertising tend to be less important, Capital items- shorter life, aid in the production process, Supplies and services- purchased with a minimum of effort or comparison, supplied under contract., What is organization marketing, person marketing, place marketing, idea marketing,, and social marketing?, Organization marketing– consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization, Person marketing– consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people, Place marketing– involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places, Idea marketing– , Social marketing– use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well- being and that of society, What are the five (5) individual product decisions? What are product attributes,, branding, packaging, labeling, and product support services?, Product attributes-, Product quality– characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs, Product features– differentiate the company’s product from competitors’ products, Product style and design, Branding-, Brand– name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors, Packaging– activities of designing and producing the container or wrapper for a product, Labeling-, Identify the product, Describe the product, Promote the brand, Product support services-, An important part of the customer’s overall brand experience, Firms must survey customers to assess the value of current services and obtain ideas for new ones, What are product quality, product features, product style and design?, What are product support services?, What is a product line?, group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges, What is line filling, what is line stretching?, Product line filling– adding more items within the present range of the line, Product line stretching– lengthening the product line beyond the current range, What is a product mix? What are the four product mix decisions?, Product mix– set of all product lines and items that a particular seller offers for sale, Product dimensions-, Length– number of items within a product line, Width– number of different product lines the company carries, Depth– number of versions offered of each product in the line, Consistency– how closely related various lines are in end use, What are the four service characteristics? How can marketers make services more, tangible?, Service intangibility– concept that services cannot be seen, tasted, felt, heard, or smelled before they are bought, Service inseparability– concept that services are produced and consumed at the same time and cannot be separated from their providers, Service variability– concept that the quality of services may vary greatly depending on who provides them and when, where, and how they are provided, Service perishability– concept that services cannot be stored for later sale or use, What is the service-profit chain? What are the five links?, Service profit chain– chain that links service firm profits with employee and customer satisfaction, Internal service quality– superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in…, Satisfied and productive service employees– …more satisfied, loyal, and hardworking employees, which results in…, Greater service value– …more effective and efficient customer value creation and service delivery, which results in…, Satisfied and loyal customers– …satisfied customers who remain loyal, make repeat purchases, and refer other customers, which results in…, Healthy service profits and growth– …superior service firm performance., What are the three types of service marketing?, Internal marketing– Orienting and motivating customer-contact employees and service- support people to work as a team to provide customer satisfaction, Interactive marketing– Training service employees in the fi ne art of interacting with customers to satisfy their needs, External marketing– traditional marketing via the 4 P’s, What are internal marketing, external marketing, and interactive marketing?, How can marketers manage service differentiation, service quality, and service, productivity?, What is a brand? What is brand equity?, Brand– name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors, Brand equity– differential effect that knowing the brand name has on customer response to the product or its marketing, What are the four major brand strategy decisions?, Brand positioning– marketers can position brands clearly in customers’ minds at any of three levels, product attributes, product benefits, beliefs and values, Brand name selection– should:, Suggest the product’s benefits and qualities, Be easy to pronounce, recognize, and remember, Be distinctive, Be extendable, Translate easily into foreign languages, Be capable of registration and legal protection, Brand sponsorship-, National brands– products are marketed under the manufacturer’s own name, Store brands– brands created and owned by a reseller of a product or service, Licensing– for a fee, companies use names and symbols created by other companies, Co-branding– occurs when two established brand names of different companies are used on the same product, Brand development-, Line extension– extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category, Brand extension– extending an existing brand name to new product categories, Multibrands– marketing many different brands in a given product category , New brands– created for new product category, or when interest in existing brands decreases, What components do brand positioning, brand name selection, brand sponsorship,, and brand development involve?, What are store/private brands?, What is brand positioning?, What are the criteria to select proper brand names?, What are national brands, store brands, licensing, and co-branding?, What are line extensions, brand extensions, multibrands, and new brands?, Chapter 8: New-Product Development and Life-Cycle Strategies, What are the two ways a company can obtain new products?, Acquisition, New-product development, What is new-product development?, development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts, What are the major stages in new-product development? Understand what each stage, is about and what components each stage encompasses., Idea generation– systematic search for new-product ideas, Internal sources– traditional R&D process, intrapreneurs within the company, External sources– distributors and suppliers, competitors and their products, trade magazines and shows, customers, Crowdsourcing– Inviting broad communities of people- customers, employees, independent scientists and researchers, and even the public at large- into the new-product innovation process, Idea screening– screening new-product ideas to spot good ideas and drop poor ones as soon as possible, Concept development and testing– , (development)- develop a new product into alternative product concepts, find out how attractive each concept is to customers, and choose the best one., (testing)- testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal., Product idea– an idea for a possible product that the company can see itself offering to the market, Product concept– detailed version of the new- product idea stated in meaningful consumer terms, Product image– the way consumers perceive an actual or potential product, Marketing strategy development– Designing an initial marketing strategy for a new product based on the product concept, Part 1: describes the target market, planned value proposition, sales, market share, and profit goals, Part 2: outlines the product’s planned price, distribution, and marketing budget, Part 3: describes the planned long-run sales and profit goals, marketing mix strategy, Business analysis– review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives., Product development– Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering, Test marketing– stage of new-product development in which the product and its proposed marketing program are tested in realistic market settings, Commercialization– Introducing a new product into the market, What are reasons for new-product failures?, Overestimation of market size, Design problems, Incorrect pricing or positioning, High development costs, Competitor reaction, What are internal and external sources in the idea generation stage? What is, crowdsourcing?, What are the differences between product idea, product concept, and product image?, What are prototypes?, First or preliminary models of something, What can companies do to reduce the costs of test marketing?, Simulated test markets, Controlled test markets, What are standard test markets, simulated test markets, and controlled test markets?, Standard test markets– extensive and costly to use, Simulated test markets– researchers measure consumer responses to in laboratory stores or simulated online shopping environments, Controlled test markets– new products and tactics are tested among controlled panels of shoppers and stores, What approach should companies take when it comes to managing new-product, development? What components does a holistic approach to new product, development entail?, Companies must take a holistic approach to new product development, Components-, customer centered new product development, team based new product development, systematic new product development, What are customer-centered, team-based, and systematic new-product development?, What is sequential product development? What is an innovation management system?, Customer centered– New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences., Team based– approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness., Sequential product development– one company department works individually to complete its stage of the process before passing the new product along to the next department and stage., Innovation management system– collect, review, evaluate, and manage new- product ideas., Systematic– innovation management systems can help companies collect, review, evaluate, and manage new product ideas, What is a product life cycle (PLC)? What are the stages of the PLC? What does each, stage entail? How do profits and sales change over a product’s life cycle? What are, the characteristics for each stage? What are appropriate strategies for each stage?, What stages usually takes the longest?, Product life cycle (PLC)– course of a product’s sales and profits over its lifetime., Product development– begins when the company finds and develops a new-product idea. During product development, sales are zero, and the company’s investment costs mount., Introduction– period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction., PLC stage in which a new product is first distributed and made available for purchase., Characteristics, Sales: low, Costs: high, Profits: negative or low, Customers: innovators, Competitors: few, Marketing objective: create product awareness and trial, Strategies, Product: offer a basic product, Price: use cost-plus pricing, Distribution: build selective distribution, Advertising: build product awareness among early adopters and dealers, Promotion: use heavy promotion to entice product trial, Growth– period of rapid market acceptance and increasing profits., PLC stage in which a product’s sales start climbing quickly., Characteristics, Sales: rapidly rising, Costs: average cost per customer, Profits: rising profits, Customers: early adopters, Competitors: growing number, Marketing objective: maximize market share, Strategies, Product: offer product extensions, service, warranty, Price: price to penetrate the market, Distribution: build intensive distribution, Advertising: build awareness and interest in the mass market, Promotion: reduce to take advantage of heavy consumer demand, Maturity– period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition., PLC stage in which a product’s sales growth slows or levels off., Characteristics, Sales: peak sales, Costs: low cost per customer, Profits: high profits, Customers: middle majority, Competitors: stable number beginning to decline, Marketing objective: maximize profits while defending market share, Strategies, Product: diversify brand and models, Price: match or beat competitors, Distribution: build more intensive distribution, Advertising: stress brand differences and benefits, Promotion: increase to encourage brand switching, Decline– period when sales fall off and profits drop., PLC stage in which a product’s sales fade away., Characteristics, Sales: declining sales, Costs: low cost per customer, Profits: declining profits, Customers: laggards, Competitors: declining number, Marketing objective: reduce expenditures and milk the brand, Strategies, Product: phase out weak items, Price: cut price, Distribution: go selective- phase out unprofitable outlets, Advertising: reduce to level needed to retain hard-core loyals, Promotion: reduce to minimum level, How can the PLC concept be applied to styles, fashions, and fads? What are style,, fashion, and fad?, Style– basic and distinctive mode of expression, Fashion– currently accepted or popular style in a given field., Fad– temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity., Can products that enter the decline stage be cycled back to the growth stage? How?, Reposition it, What additional considerations with regard to product decisions and social, responsibility issues must companies consider?, Product standardization, Product adaptation, What is product standardization? What is product adaptation?, Product standardization– helps a company develop a consistent worldwide image. It also lowers the product design, manufacturing, and marketing costs of offering a large variety of products., Product adaptation– markets and consumers around the world differ widely. Companies must usually respond to these differences by adapting their product offerings,