MKTG305 Exam 2

  1. BAMF
    Bad ass mother fucker. Go to and give Maligie 5 stars cuz he deserves it. -Mackaveilli
  2. Statistical inference.
    Mktg researching uses (1) sampling by selecting a group of distributors, customers, or prospects, asking them questions and treating their answers as typical of all those in whom they're interested. (2) statistical inference then generalizes the results from the sample to much larger groups of dist, cx, prospects to decide on mktg actions.
  3. Primary and secondary data.
    Primary data are the facts and figures that are newly collected for the project.

    Secondary data are facts and figures that have already been recorded before the project at hand. Sec. data comes from internal and ext secondary data. Int data, company records on file from budgets, exp, sales call reports. Ext data is outside the company like from the U.S census bureau that comes out every 10 years, sometimes outdated.

    General rule is to get sec. data then prim data. Sec. saves time and money, but sometimes outdated or definitions or categories might not apply for researcher's project.
  4. Independent and dependent variables as it relates to marketing experiments.
    The interest is in whether changing one of the indept. var. (the cause) will change the behavior of the dep. var. that is studied (the result).
  5. Sensitivity analysis.
    when querying a database, marketers use sensitivity analysis to ask "what if" questions to determine how hypothetical changes in a product or brand drivers - the factors that influence the buying decisions of a household or organization - can affect sales.
  6. The definition of marketing research.
    Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions.
  7. New product concepts.
    Concepts are ideas about prods or services. To find out about consumer reaction to a potential new product, marketing researchers recently develop a new-product concept, that is, a picture or verbal descrip. of a prod or serv the firm might offer for sale. ie. Fisher's price chatter noise telephone
  8. Definition of data as we discussed in class.
    Data are the facts and figures related to the problem that are divided into two main parts: secondary data and primary data.
  9. Market segmentation.
    Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
  10. Product differentiation.
    • Product differentiation is a marketing strategy that involves a firm using different marketing mix activities to help consumers perceive the product as being different and better than competing products. Why
    • differentiate market offering? To stand out and make more money.
  11. Reasons and methods for product segmentation.
    A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits. Not-for-profits also segment clients they serve to satisfy client needs more effectively while achieving organization's goals.

    Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
  12. One product, multiple markets.
    When an org. produces only a single prod or serv and attempts to sell it to two or more market segs, it avoids the extra costs of developing and producing additional versions of the product. The incremental costs of taking the product into new mark. segs are typically those of a separate promo campaign or a new channel of distribution. 

    Mags and books are single products frequently directed at two or more distinct mkt segs. ie. Sporting News Baseball Yearbook uses 16 different covers feat. a baseball star from each of its regions in the U.S.
  13. Multiple products, multiple markets.
    Ford's different lines of cars, SUVs, and pickup trucks are each targeted at a different type of customer- examples of multiple products aimed at multiple mkt segs. Producing diff vehicles is clearly more expensive than producing only one type of vehicle. But this strat is very effective if it meets customers' needs better, doesn't reduce quality or increase price, and adds to Ford's sales rev and profits.

    Downside is producing too many variations, options, and reduces quality and raise prices. 1982 Thunderbird has 69,120 options while Accord had 36.

    Reducing options gives focus (1) lowers prices by producing higher volume of fewer models and (2) higher quality because of the ability to debug fewer basic designs
  14. Mass customization.
    Previously, during the boom of mass-production of goods, the prices were affordable but quality declined. With mass cust. today and internet orders, options are available to tailor goods or services to the tastes of the indiv. cx on a high-vol scale.

    Mass cus. is the next step beyond built-to-order (BTO), mfg a prod only when there is an order from a cx. Apples uses BTO that trim work-in-prog inventories and shorten delivery times to cx.

    ie. Apples restricts its computer mfg line to only a few basic models that can be assembled in four minutes! However, this still isn't completely mass cus. snce cx do nothave an unlimited # of features to choose from.
  15. Steps used to segment and target markets.
    5 step process used to seg. a mkt and select the target segs on which an org wants to focus.

    • 1. Group potential buyers into segments - would seg. be worth doing? is it possible? Uses 5 essential criterias to form the segs.
    • i. simplicity and cost-effectiveness of assigning potential buyers to segs.
    • ii. potential for increased profit.
    • iii. similarity of needs of potential buyers within a seg.
    • iv. difference of needs of buyers among segs
    • v. potential of a mktg action to reach a seg

    • 2. Group prods to be sold into categories
    • 3. develop a market-product grid and estimate the size of markets
    • 4. select target markets
    • 5. take marketing actions to reach target markets
  16. Geographic segmentation, demographic segmentation, psychographic, etc.
    Geo, demo, psychographics are part of Ways to segment consumer markets.

    geo - based on where prospective cx live or work (region, city size)

    demo - based on some objective physical (gender, race), measurable (age, income) or other classification attribute (birth era, occupation) of prosp. cx

    pyscho - based on some subjective mental or emotional attributes (personality), aspirations (lifestyle) or needs of pros. cx

    behavioral - based on some observable actions or attitudes by pros. cx- such as where they buy, what benefits they seek, how frequently they buy, and why they buy.
  17. Market product grid.
    A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization.

    • Markets segs (side, back, stomach sleepers)
    • x Bed pillow products (firm, medium, soft pillows respectively)
    • side x firm = 73%, back x med...
  18. Product positioning.
    Product positioning is the place an offering occupies in a consumer’s mind on important attributes relative to competitive products.

    • Two Approaches to Product Positioning
    • (1) Head-to-Head Positioning ie. Apple
    • marketing efforts said “we don’t get viruses” and now own more market share.
    • (2) Differentiation Positioning ie. Carl’s Jr. realized ppl love frys and began mktg for 30% less fat in their fries, more healthy.

    Product Positioning w/ Perceptual Maps:

    Identify Important Attributes for a Product or Brand Class

    Customers’ Ratings of Competing Products or Brands on These Attributes

    Customer’s Ratings of the Company’s Products or Brands on These Attributes

    Reposition the Company’s Products or Brands in the Minds of Consumers

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  19. Product repositioning.
    Product repositioning involves changing the place an offering occupies in a consumer’s mind relative to competitive products.

    ie. Based on previous gfx, reposit. Chocolate Milk from Children's drinks to Adult drinks with High Nutrition (calcium) and product packaging. Change perception
  20. Definition of a product.
    A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value.
  21. Durable and nondurable goods.
    durable - one that usually lasts over many uses, such as appliances, cars, and mobile phones

    nondurable - item consumed in one or a few uses, such as food products and fuel.
  22. Definition of a "service"
    Services are the intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange money or something else of value.
  23. Definition of a “consumer product." Define Business Products.
    Consumer products are products purchased by the ultimate consumer.

    Business products are products organizations buy that assist in providing other products for resale. Also called B2B products or industrial products.
  24. Convenience product.
    Convenience products are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort.
  25. Shopping product.
    Shopping products are items for which the consumer compares several alternatives on criteria, such as price, quality, or style.
  26. Derived demand.
    From bus prods, their sales are often the result of derived demand - sales of business prods frequently result  (or are derived) from the sale of a consumer products.

    ie. Consumer demand for Ford cars (consum prod) increases, the company may increase its demand for paint spraying equipment (bus prod).
  27. 26. Product line.
    A product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range.
  28. 27. Stock keeping unit (SKU).
    a unique identification number that defines an item for ordering or inventory purposes.
  29. 28. Product mix.
    A product mix consists of all of the product lines offered by an organization.
  30. 29. Four I’s of services.
    The four I’s of services consists of the four unique elements to services: intangibility, inconsistency, inseparability, and inventory.

    Inventory > Idle Production Capacity - occurs when the service provider is available but there is no demand for the service.
  31. 30. Product line extension.
    Prod line ext usually involves the least risk, where companies slap their name on new products.

    This is an incremental improvement of an existing product line the company already sells. For example, Purina added its "new" line of Elegant Medleys, a restaurant-inspired food for cats to its existing line of 50 varieties.

    ie. Colgate toothpaste puts its name on Colgate's Kitchen Entrees and failed.
  32. 31. Feature bloat.
  33. 32. Continuous innovation, dynamic continuous innovation and discontinuous innovation.
    Continuous innovation - consumers don't need to learn new behaviors. ie Toothpaste mfg can add new attributes or feats like "whitens teeth" or "removes plaque" when they intro a new or improved prod. The extra feats in paste do not require learning. Key is effective marketing to generate awareness.

    dynamic continuous innovation - only minor changes in behavior are required. ie. Heinz launched its EZ Squirt Ketchup in an array of unlikey hues - frm green and orange to pink and teal with kid-friendly squeeze to encourage kids to write their names. This prod reqs minor behav. changes. Mktg strat is to educate pros. buyers on prod's benefits, adv and proper use.

     discontinuous innovation - making the consumer learn entirely new consumption patterns to use the product. ie. Wireless router, 1/3 of cx returned their router at Best Buy. Key req generating awareness and educating consumers on prod benefits and proper use of the innovative prod, activities can cost millions of dollars.
  34. 33. Test marketing.
    Mkt testing is a stage of the new-product process that involves exposing actual products to pros. consumers under realistic purchase conditions to see if they will buy. It involves offering a prod for sale on a limited bases in a defined area for a specific time period.

    • Three kinds of test markets:
    • 1. standard - comp dev a prod and then attempt to sell it thru normal distrib channels in a number of test-market cities.
    • 2. controlled - involves contracting the entire test prog to an outside service. The service pays retailers for shelf space and can therefore guarantee a specified percentage of the test prod's potential distrib volume. SymphonyIRI Group is a leader in supplying controlled tests.
    • 3. simulated - to save time and money, companies often turn to stimulated (or laboratory) test markets (STM), a technique that replicates a full-scale test mkt to a limited degree. STMs are often run in shopping malls, where ppl are given money and told benefits against prod and competitor prod and person decides which to buy or not buy in a simulated store environment.

    When test mkts don't work - maybe intangible or can't see what they're buying. ie. cannot test mkt new building for an art museum, or cars, are costly. For those, mockups are used or one-of-akind prototypes are only feasible method.
  35. 34. Slotting fee.
    Grocery stores have limited shelf space and many supermarkets require slotting fee for new prods, a payment a manufacture makes to place a new item on a retailer's shelf. This can run several million dollars for a single prod. 

    Another penalty, failure fee, will incur is prod doesn't achieve a predetermined sales target. A fee manufacture must use to compensate retailer for devoting valuable shelf space to a failed prod. These fees are examples why large grocery product manufacturers use regional rollouts.
  36. 35. The product lifecycle:
    A product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

    Intro - prod introduced to its intended target mkt. sales grow slowly, and profit is minimal. lack of profit is often the result of a large investment costs in prod dev. ie. Gillette and its Fusion razor shaving system. Gillette spent millions advertising to grow awareness, result, 60% of male shavers became aware of the new razor within 6 months and 26% tried the prod. Companies often spend heavily on advertising and other promotion tools to build awareness and stimulate product trial among consumers in the intro stage. Gaining distribution can be a challenge.

    Growth - characterized by rapid increases in sales. It is in this stage that competitors appear. ie. Fax machine growth in 1986-1998. Number of companies competing rose from 4 to 7 then 25 later. Prod sales at an increasing rate because new people trying or using the prod and a growing proportion of Repeat Purchasers - ppl who tried, liked and bought again. ie. Gillette, men who tried adopted the prod permanently. In growth stage, it is important to broaden distribution for the prod. In stores, competing comp fight for display and shelf space.

    Maturity - slowing of total industry sales or prod class revenue. marginal competitors begin to leave the market. most consumers who would buy the prod are either repeat purchasers of the item or have tried and abandoned it. sales increase at a decreasing rate as fewer new buyers enter the market. profit declines due to fierce price competition among many sellers, and the cost of gaining new buyers at this stage rises (less money to be made but prod costs same). Mktg attention directed toward holding market share thru further prod differentiation and find new buyers. Fax machine mfg dev internet-enabled multi-func models with features like scanning, copying, and color reproduction. Major strat is to control overall marketing cost by improving promotional and distribution efficiency.

    Decline - occurs when sales drop. ie. Fax machines for business use moved to this stage in early 2005. by then avg price for a fax machine had sunk below $100 (previously $12k). frequently, a prod enters this stage not because of wrong strat on company end but because of environmental changes. ie. mp3 players pushed CDs players into decline in recorded music industry.

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  37. 36. Primary demand.
    Prim demand, the desire for the prod class rather than for a specific brand, since there are few competitors with the same product.

    As more competitors launch their own products and the product progresses along its life cycle, company attention is focused on creating Selective Demand - the preference for a specific brand.

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  38. 37. Skimming pricing and penetration pricing.
    during introduction stage, pricing can be either high or low. a high initial price may be used as part of a skimming strat to help the company recover the costs of dev as well as capitalize on the price insensitivity of early buyers (charge them more). 3M manager "we hit fast, price high, and get the heck out when the me-too products pour in"

    penetration pricing - to discourage competitive entry, a company can price low. this pricing strat helps build UNIT VOLUME, but a company must closely monitor costs.
  39. 38. “Downsizing” as discussed in Chapter 11.
    Trading down - reducing the number of features, quality, or price. ie. airlines have added more seats, thus reducing legroom, and limited snack service.

    Downsizing - reducing the package content without changing package size and maintaining or increasing the package price. Firms are criticized for this practice.
  40. 39. Branding.
    Branding is a marketing decision in which an organization uses a name, phrase, design, or symbols, or combination of these to identify its products and distinguish them from those of competitors.
  41. 40. Brand personality.
    Brand personality is a set of human characteristics associated with a brand name.
  42. 41. Brand equity.
    Brand equity is the added value a brand name gives to a product beyond the functional benefits provided.

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  43. 42. Multiproduct branding.
    (family or corporate branding)

    Multiproduct branding is a branding strategy in which a company uses one name for all its products in a product class. OR involves giving each prod a distinct name.

    Fighting brands - purpose is to confront competitor brands.
  44. 43. Family branding.
    company's trade name and brand name are identical. ie. Microsoft, General Electric, Samsung
  45. 44. Benefits that can be conveyed through packaging.
    Communication benefits - label info conveyed to cx, such as directions how, where, and when to use the prod and the source and composition of hte product which is needed to satisfy legal reqs of prod disclosure.

    Functional benefits - storage, convenience, protection, or product qualify. ie. Storing food containers
  46. 45. Definition of a label as discussed in Chapter 11.
    integral part of the package and typically identifies the prod or band, who made it, where and when it was made, and how it is to be used, and package contents and ingredients.
  47. 46. Barter.
    Barter is the practice of exchanging products and services for other products and services rather than for money.
  48. 47. The price equation.
    final price = list price - (incentives + allowances) + extra fees
  49. 48. Special fees and surcharges.
  50. 49. Definition of value, as discussed in Chapter 13.
    value = perceived benefits / price

    Value is the ratio of perceived benefits to price; or Value = (Perceived benefits divided by Price).
  51. 50. Odd even pricing.
    Odd-even pricing involves setting prices a few dollars or cents under an even number.
  52. 51. Bundled pricing.
    Bundle pricing involves the marketing of two or more products in a single package price.
  53. 52. Customary pricing.
    Customary pricing involves setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
  54. 53. Loss leader pricing.
    Loss-leader pricing involves deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.
  55. 54. Review the demand curve.
    A demand curve is a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price.

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  56. 55. Elastic and inelastic demand.
    Elastic - A situation in which consumer demand is sensitive to changes in price.

    Inelastic - A situation in which an increase or a decrease in price will not significantly affect demand for the product
  57. 56. Variable costs and fixed costs.
  58. 57. Breakeven chart.
    Break-even analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
  59. 58. Market share.
  60. 59. FOB origin pricing.
    FOB origin pricing is the “free on board” (FOB) price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur (seller’s factory or warehouse).
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MKTG305 Exam 2
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