Exam 2 Flashcards
3 reasons why businesses purchase products?
Resale, direct use in producing products, use in general daily operations
Market characteristics of organizational buyers
Derived demand, size of order or purchase, number of potential buyers, and purchases tend to be made by committee
Difference between B2C vs. B2B purchase decision process
In B2C its a simple decision process. In B2B there is a longer decision process. Business customers are better informed, demand me detailed product information, goals of a purchasing agent may include advancement or financial awards, and some suppliers and business customers build and maintain mutually beneficial relationships or partnerships.
Buying center
Consists of the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to purchase decisions.
Buying center roles
Users: members who frequently initiate the purchase, use the product and evaluate the product.
Influencers: technical personnel who develop the specifications and evaluate alternative products.
Buyers: select suppliers and negotiate terms.
Deciders: actually choose the products.
Gatekeepers: control the flow of information to and amount people who occupy other roles in the buying center.
3 types of buying classes
New-task purchase: initial purchase of an item for use in performing a new job or solving a new problem.
Straight rebuy purchase: routine purchases of the same products under approximately the same terms of sale.
Modified rebuy purchase: when new-task purchases are changed on repeat orders or straight rebuy purchases are modified.
Traditional vs. Reverse auction
Traditional has one seller and multiple buyers so price goes up as more buyers come.
Reverse has more sellers and one buyer so price goes down.
Market segmentation
Aggregating prospective buyers into groups, or segments, that have common needs/wants and will respond similarly to a marketing action
Market segments
Relatively homogeneous groups of prospective buyers that result from the market segmentation process.
Effective segmentation does what two things?
Forms meaningful groupings and develops specific marketing actions
One product multiple markets vs. multiple products multiple market segments
The costs can be cheaper because you don’t have to spend a lot of money on production costs.
Synergies
Combining markets or products.
Ex. Retail business that sells clothes starts selling accessories to increase revenue. It can be a negative.
Cannibalization
A loss in sales caused by a company’s introduction of a new product that displaces one of its won older products.
Mass Customization
Tailoring goods or services to the tastes of individual customers on a high-volume scale
Build-to-Order
Manufacturing a product only when there is an order for it
5 Steps in segmentation
- Group potential buyers into segments
- Group products sold into categories
- Develop a market-product grid and estimate size of markets
- Select target markets
- Take marketing actions to reach target markets
Ways to segment consumer markets
Demographic, geographic, psychographic, and behavioristic variables
Product positioning (head-to-head vs. differentiation)
Head-to-head: as a kin to primary competitors. Same thing, same way.
Differentiation: competing similar ways but do it differently
Repositioning
Move to reach new markets.
Ex. Chocolate milk as an adult option instead of just for kids
Product
-a good (tangible physical entity),
-service (intangible result of the application of human & mechanical efforts to people/objects),
- or idea (concept, philosophy, image, issue)
3 layers of a product
Core product: the basic need/want the product fulfills (e.g. communication, productivity etc.)
Actual product: the actual product itself (e.g. IPhone)
Augmented product: All additional, non-tangible benefits the product provides (e.g. service, warranty, delivery, etc.)
Non durable goods
1 or few uses, consumed in short period of time (3 yrs. or less), focus on consumer advertising
Durable goods
Many uses, consumed over longer period of time (> 3 yrs.), focused on personal selling
Benefits of packaging
Communication benefits: information conveyed to the consumer
Functional benefits: storage, convenience, protection, or quality
Perceptual benefits: shape, color, graphics, etc. distinguish brands, packaging can enhance brand image
4 types of classifying products
Convenience products: relatively inexpensive, purchase frequently, low involvement.
Shopping products: somewhat expensive, mid-to-high involvement
Specialty products: unique items, buyers willing to expend significant effort to obtain
Unsought products: solve “sudden problems”, people don’t think about buying
Product item
A specific product
Stock keeping unit (SKU)
Product Line
Group of product or service items that are closely related
Product Mix
All of the product lines offered by an org.
Product Breadth vs. Depth
The depth of the product line includes the number of different products offered within the product line such as many different types of basketball sneakers for Nike. The breadth of the product line refers to the different categories of products in which the brand or company offers products.
4 I’s of Services
Intangibility: services cannot be touched or seen before purchase.
Inconsistency: services depend on the people who provide them
Inseparability: services are consumed immediately, consumer cannot distinguish service from the provider itself
Inventory:
-idle product capacity: occurs when the service provider is available but there is no demand for the service.
RATER framework
Reliability: did the company provide the promised service consistently, accurately, and on a timely basis?
Assurance: Did the knowledge, skills, and credibility of the employees insource trust and confidence?
Tangibles: were the physical aspects of the service appealing?
Empathy: was there a good relationship b/t employees & customers?
Responsiveness: Did the company provide fast, high-quality service to customers?
Goods-services continuum
Enables marketers to see the relative goods/services composition of total products
New product organizations perspective
Extend product line, jump in innovation, brand extension, true innovation
New product: consumers perspective
Have to learn a new product, disrupts routine, can require new consumption patterns by consumers
Why so many new products fail?
Insignificant point of difference, no economical access to buyers, not satisfying critical customer needs, bad timing, poor quality, too little market, and Poor marketing mix (4 P’s)
Product Life Cycle
Introduction, growth, maturity, and decline
Primary vs. selective demand
Primary demand is intended to promote product interest regardless of the brand. Selective demand refers a type of advertising that is intended to increase interest in a specific brand.
Skimming vs. Penetration pricing
Price skimming sets prices higher to attract customers most interested in the product or service to maximize short-term profits. Penetration pricing uses lower prices to build a customer base for new products or services.
Product Adoption
the process by which people learn about your product or app and start using it to accomplish their goals.
Branding
A marketing decision by an org to use a name, term/phase, design, and/or symbols, or combination of these to identify its products and distinguish them from those of competitors.
Brand equity
The added marketing/financial value a brand name gives to a product beyond the functional benefits provided.
4 branding strategies
Multi product: ex Toro: snowblowers, lawn mowers, etc.
Multi-branding: ex Procter & Gamble: tide, cheer, ivory snow, and bold
Private branding: ex Sears: Kenmore appliances, craftsman tools, and diehard batteries
Mixed branding: ex Michelin: Michelin tires, sears tires. Ex Epson: Eason printers, ibm printers
