Marketing Flashcards
Marketing 4Ps
Price, place, promotion, product
What is marketing?
Marketing is the activity, set of institutions and processes for creating, communicating, delivering, offerings that have value for customers, partners and society at large. - American Marketing Association 2013.
Production concept
It is the idea that consumers will favor products that are available or highly affordable.
Product concept
Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which organization should therefore devote its energy to making continuous improvements.
Selling concept
Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort.
Marketing concept
Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.
Societal marketing concept
Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests.
3 “E” of sustainbility
Ecological - Marketing should not negatively impact the environment
Equitable - Marketing should not allow or promote inequitable social practice
Economic - Should encourage long-term economic development.
Resources in marketing
Tangible Financial Warehouses Transports and logistics ICT Infrastructures Intangible Brand Marketing knowledge Relational capital Social capital Human Research, design Sales, services Communication
Core marketing concepts
Needs, wants, and demands Market offerings Value and satisfaction Exchanges and relationships Market.
Needs
State of felt deprivation; not created by marketers (? Controversial) – part of human makeup.
Wants
Form that a human need takes, as shaped by culture and individual personality and described in terms of objects that will satisfy needs.
Maslow’s Hierarchy of Needs
In order top to bottom: • Self-actualization • Esteem • Social • Safety • Physiological
Marketing offerings
Some combination of products, services, information or experiences offered to a market to satisfy a need or want.
Customer percieved value
Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.
Customer satisfaction
Extent to which the product’s perceived performance matches/exceeds a buyer’s expectations.
Exchange
– the act of obtaining a desired object from someone by offering something in return
– aimed at building and maintaining relationships with customers.
Relationships
Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object.
Marketers build strong relationships by consistently delivering superior customer value.
Definition of a market
The set of actual and potential buyers of a product. They share a need or want that can be satisfied through exchange relationships.
The 5 step marketing process
- Understand the marketplace and customer needs and wants
- Design a customer-driven marketing strategy
- Construct a marketing program that delivers superior value
- Build profitable relationships and create customer satisfaction, loyalty, engagement
- Capture value from customers to create profits and customer quality.
Legal environment
laws and regulation that influence an organization business.
Culture
An integrated system of learned behavior patterns that are distinguishing characteris of the members of any given society.
A high power distance ranking
This indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens.
E.g. Korea, India, Japan, Mexico
A low power distance ranking
This indicates the society de-emphasizes the differences between citizen’s power and wealth. In these societies equality and opportunity for everyone is stressed.
E.g. Australia, US, Germany
Individualism Index
This index focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships.
Power Distance Index
This focuses on the degree of equality, or inequality between the societies of different countries.
High IDV Index ranking
This indicates that individuality and individual rights are paramount within the society. Individuals in these societies may tend to form a larger number of looser relationships.
E.g. US, Australia, UK, Canada
Low IDV Index ranking
This typifies societies of a more collectivist nature with close ties between individuals. These cultures reinforce extended families and collectives where everyone takes responsibility for fellow members of their group.
E.g. Japan, China, Thailand
Masculinity Index
This index focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power.
High Masculinity ranking
This indicates that the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination.
E.g. Japan, Mexico, Brasil
Low Masculinity ranking
A low MAS ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.
E.g. Sweden, France, The Netherlands
Uncertainity Avoidance Index (UAI)
This index focuses on the level of tolerance for uncertainty and ambiguity within the society - i.e. unstructured situations.
A high UAI ranking
This indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty.
E.g. Japan, France, Mexico
A low UAI ranking
This indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks.
E.g. US, Hong Kong, UK
Long-term orientation Index (LTO)
(LTO) focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values.
What does a high Long-term orientation (LTO) ranking indicate?
This indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today’s hard work. However, business may take longer to develop in this society, particularly for an “outsider”.
What does a low long-term orientation ranking indicate?
This indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change.
Technology environment
This is forces that create new technologies, creating new products and marketing opportunities and making old products to become obsolete.
Ecological envionment
The concept of “marketing sustainability” is now well established and increasing numbers of consumers express concern about the impact that companies are having on ecological environments.
Legal environment
The laws and regulation that influence an organization’s business.
Micro-environment
The microenvironment consists of those organizations that either directly or indirectly influence an organization’s operational performance.
Three types of organizations in the micro-enviroment.
Companies that compete against the organization in the pursuit of its objectives;
Companies that supply raw materials, goods, and services and those that act as distributors, dealers and retailers, that have the potential to directly influence the performance of an organization by adding value through production, assembly, and distribution of products prior to reaching the end user;
Companies that indirectly influence the performance of an organization offering services such as consultancy, financial services, marketing research etc.
Actors close to the company that affect its abilitiy to serve its customers.
Suppliers, Marketing intermediaries, Competitors, Publics/stakeholders and Customers.
Suppliers
Important components in the overall customer value delivery system that provide resources needed to produce goods and services.
Marketing intermediaries
(resellers, physical distribution firms, marketing services agencies, financial intermediaries) help the company to promote, sell, and distribute its goods to final buyers.
Competitors
Firms that offer products that are similar to those offered by the company (industry competitors) or that satisfy the same need or that target the same customer group as the company (market competitors).
Publics/stakeholders
(Financial, Media, Government , Citizen- action, Local, General, Internal) any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.
Customers
Individuals or organizations that purchase a company’s goods and services at home and abroad – for personal consumption (consumers) – for use in their production processes (business) – to sell (resellers) – to produce public services or transfer to others (government).
Porter’s Five Forces
Industry rivalry in the middle and surrounding it: Bargaining power of buyers, Threat of substitutes, Bargaining power of suppliers and threat of new entry.
SWOT
Strength: something that an organization is good at doing, or something that gives it particular credibility and market advantage
Weakness: something that an organization lacks or performs in an inferior way in comparison to others
Opportunity: potential way in which the organization might advance by developing and satisfying an unfulfilled market need
Threat: something that at some time in the future may destabilize and/or reduce the potential performance of the organization.
SWOT External Factors
Opportunities and Threats: Technology, competition, economic, political, legal and social trend.
SWOT Internal Factors
Strengths and Weaknesses: Finanical, technical, competition position, human resources, product line.
Quantitative analysis of demand
Taking a structural approach; this includes: Actual and potential demand, market share, demand elasticity and sales forecasting.
Qualitative analysis of demand
Taking a more behavioral approach; this includes: Consumer behavior, buying behavior, customer behavior and organization buying behavior.
Potential market
The potential market is the set of consumers who profess a sufficient level of interest in a market offer.
Available market
The available market is the set of consumers who have interest, income, and access to a particular offer.
Target market
The target market is the part of the qualified available market the company decides to pursue.
Penetrated market
The penetrated market is the set of consumers who are buying the company’s product.
Market potential
Market potential is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. It is the theoretical maximum limit that demand can reach, considering a certain space and a certain time interval and assuming that cumulative marketing investments (i.e. those made by all companies operating in the specific business) reached the maximum level.
Market potential formula
MP = (N(ts) * P(t)) * F(ts) * DP(ts)
Where:
N: number of potential consumer of the product
P: percentage of consumers who are able to access the purchase
F: Average frequency of use of the product
DP: potential consumption pro-capite (or full dosage)
“s”: market space
“t”: reference time interval
Potential gap
A gap in the market is a place or area that current businesses aren’t serving.
1st and 2nd order factors of a potential gap
2nd Order causes
Product gap
Price gap
Distribution gap
Communication gap
1st order causes
Non-use gap
Light use gap
Competitive gap calculation
Competitive gap = Total sales - Firm’s sales
Market share calculation
Firm’s sales / Total sales = Market share
Methods for estimating future demand (Qualitative)
Investigation of purchase intent
Seller reviews
Expert opinions
Secondary data
Secondary data are pieces of information that have already been collected for a different purpose, but may be relevant to the research problems at hand.
Primary data
Primary data are survey, observation or experimental data collected to address the problem currently under investigation.
Marketing information system
The marketing information system integrated and dynamic structure people, technologies and procedures aimed is made up of at collecting, selecting, evaluating and disseminating analysing, timely and accurate information (in useful, the management perspective) involved in decision-making processes.
Marketing intelligence
The set of organizational procedures and data sources that marketing executives use to constantly monitor developments in the environment in which the company operates.
Advantage of secondary data
• Low Cost • Less Effort • More Timely • Some info is available only from secondary data sources; for example: – Market shares – Industry data from trade associations.
Sources of secondary data
The company itself (interal databases).
or
Other organisations or persons (external databases).
Internal database
– Is the creation of large computerized files of customers’ and potential customers’ profiles and/or purchase patterns.
– Is the fastest-growing use of internal database technology.
External sources of secondary data
■ Government publications – Census, Statistics, etc. Bureau of Labor
■ Trade Associations - Newsletters, special reports, annual “state of the industry” reports, etc.
■ Other publications - periodicals (WSJ etc.)
■ Computer retrievable databases (syndicated) - Lexis/Nexis, scanner data (IRI, Nielsen,…)
■ Internet
Computer retrievable sources of secondary data
■ Surfing the web –Search Engines
■ Newsgroups on the Internet – Internet sites devoted to a specific topic where people can read and post messages.
■ Databases – A number of companies offer database packages on DVD for personal computers or by subscription over the internet.
Limitation of secondary data
Lack of availabiilty,
Lack of relevance,
Inaccuracy
Interviews
In qualitative research the interview is called in-depth interview and has two main features:
• It is always personal, since only with direct relationship between the interviewee and the interviewer it is possible to grasp the most profound aspects of a phenomenon and obtain a holistic view;
• It is at least semi-structured, or it may be completely de-structured for some research purposes.
Qualitative Research
A market research method that focuses on obtaining data through open-ended and conversational communication.
Focus groups
A technique in which data collection takes place in small groups of individuals, stimulated to discuss the topics that constitute the object of the research.
Exploratory focus group
It is aimed at investigating a phenomenon in the absence of any basic knowledge, in order to bring out the relevant constructive variables, often in view of a quantitative phase which aims to verify the generalized existence of these variables and the relationship between them (e.g., brainstorming).
Phenomenological focus group
Used to describe in depth the known characteristics of a phenomenon and the elements connected to it in causal terms. Compared to the previous ones, they provide a basic knowledge of the phenomenon to be studied (e.g., discovering the causes of customer dissatisfaction after administering a questionnaire).
Clinics focus group
Used to verify the presence of unconscious, implicit and difficult to verbalize elements at the base of customers motivations, the formation of preferences and the assumption of certain behaviours of the subjects that one intends to analyse.
Observation
The observation involves the interaction with the phenomenon that we want to investigate.
The collection takes place without the cognitive and emotional filter of the respondent since the phenomenon that we want to investigate is observed when it manifests itself.
Participant observation
The observer participates completely in the phenomenon he intends to investigate, without revealing his identity as an observer, but acting like any other actor involved in the phenomenon.
Participant observer
The observer reveals his identity and his goals, obtaining the consent of the actors to his participation.
Observer participant
Participation is reduced to simple observation, minimizing social interaction.
Ethnography
The ethnographic method derives from the studies of cultural anthropology, highlighting how a market phenomenon process can be traced within the cultural codes of a social group.
Snowball sampling
Nonprobability samples in which selection of additional respondents is based on referrals from the initial respondents (friend of friend..) Initial respondents are selected by probability methods.
Quota sampling
The population is divided into clusters. Based on previous knowledge of the population, the researchers select only a few clusters and, within these, proceed to a random extraction
Convenience sampling
Sample is selected from elements of a population that are easily accessible(i.e. convenient).
Repeated sampling
In repeated sampling the same particpants are tested under different conditions.
Stratified casual sampling
The population is first divided into subgroups on the basis of a specific characteristic (e.g., income). We proceed to the random extraction of each subgroup in order to know how the population is stratified.
Cluster sampling
The population is divided into subgroups but in this case the members are not necessarily divided on the basis of a homogeneous variable (e.g., zip code). One proceeds to random extraction from one or more clusters.
Systematic casual sampling
Probability sampling in which the entire population is numbered. The first number is drawn randomly. Subsequent elements are drawn using a skip interval (i.e. systematic).
Simple casual sampling
Randomness of draws Every member of the population has the same probability of being extracted it is required to know the exact number of the population members.
Ways of analysing data
▪ Regression and causal models: cause / effect relations between a dependent variable and one or more independent variables
▪ Factor analysis: reduction of the relevant variables in a lower number of common factors
▪ Cluster analysis: observations are subdivided into groups that are homogeneous inside and heterogeneous with one another
▪ Conjoint analysis: configuration of the ideal product and importance of attributes through simulation of the typical trade offs of the selection process
▪ Discriminant analysis: positioning maps with respect to discriminating attributes
▪ Multidimensional scaling (MDS): non-attribute-based positioning maps
▪ Correspondence analysis: correlations between two qualitative variables (e.g.,: brands and lifestyles).
Structuralist approach (quantitative analysis of demand)
Actual and potential demand
Market share
Demand elasticity
Sales forecast
Behavioral apporach (qualitative analysis of demand)
Consumer behavior
Buying behavior
Customer behavior
Organization buying behavior
Simplified stimulus-response model
Stiumli enters the brain of the customer
The marketing management must try to work out the factors of the brain
The characteristics influence how he or she perceives the stimuli; the decision-making process determines what buying behavior is undertaken.
The first stage of understanding consumer behavior is to focus on the factors that determine the “consumer characteristics” in the brain.
Factors affecting behaviour of purchasing
Economic, personal, cultural and social
Herzberg theory
The two-factor theory (also known as Herzberg’s motivation hygiene theory and dual-factor theory) states that there are certain factors that cause satisfaction (i.e., motivational factors) while a separate set of factors cause dissatisfaction (i.e., hygiene factors).
Emotion
Emotions are strong, relatively uncontrolled feelings that affect behavior.
They are strongly linked to needs, motivation, and personality.
Unsatisfied needs create motivation which is related to the arousal component of emotion.
Personality also plays a role, e.g., some people are more emotional than others, a consumer trait referred to as affect intensity.
Consumer personality
Personality reflect individual consistent and enduring differences
Personality is that aspect of our psyche that determines how we respond to our environment in a relatively stable way over time.
Fiver personality dimensions
Extraversion (sociable) Openness (original, imaginative) Conscientiousness (careful) Neuroticism (worry, nervous) Agreeableness (soft-hearted, sympathetic)
Culutural factors
Culture is the most basic cause of a person’s wants and behavior. - The system of shared beliefs, values, customs, behaviors, and artifacts that the members of society use to cope with their world and with one another, and that are transmitted from generation to generation through learning.
Social class
Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. - Measured by a combination of occupation, income, education, wealth, and other variables.
Expected value model
According to the expected value model (or Fishbein model) the consumer evaluates products and services weighing their opinions on the individual attributes of the brand with the relative importance of the attributes and makes the global attitude descend from a weighted evaluation.
EV (A) = ∑ Wi x PiA
Wi indicates the relative weight of the i-th attribute Pi indicates the relative performance of the i-th attribute with reference to the brand under assessment (A).
