Principles of Marketing Exam 2 UTSA 3013

• Sherman Act: 1890 Against monopolies, trusts and conspiracies that can restrict competition in the marketplace.
• Clayton Act: 1914 Builds on Sherman Act. Prohibits price discrimination and pricing contracts.
• Federal Trade Commission Act: 1914 Wheeler-Lea Amendments to FTC Act, 1938 Created the Federal Trade Commission. Broadens FTC’s powers; prohibits false/deceptive advertising.
• Lanham Act: 1946 Establishes trademark protections.
• Foreign Corrupt Practices Act: 1977 Prohibits bribing foreign officials for business purposes.
• Economic Espionage Act: 1996 Foreign entities stealing trade secrets is a federal crime.
• Controlling the Assault of Non- Solicited Pornography and Marketing Act: 2004 Regulates how firms collect and use information from online data sources.
• Consumer Product Safety Act: 2008 Regulates products designed for children (12 years and younger).

• Pure competition: Many sellers with homogenous products
• Pure monopoly: One firm sells one product
• Monopolistic competition : Many sellers with similar products
• Oligopoly: Few firms control the industry

• European union: • 28 member states; largest economy in the world. • Free trade zone; allows goods, capital, services and people to move freely within the market. • Greater uniformity in product and packaging standards. • Removal of most tariffs that affected pricing
• North American Free Trade Agreement (NAFTA): • 3 member states. • Opened Mexican and Canadian markets to US companies. • Cheaper imports for US. • Significant impact on jobs (gains and losses) in all countries.
• WTO: 161 member states in the WTO Trade agreement covers services, intellectual property rights, and trade-related investment measures. Provides a plan for building and maintaining international trade agreements.
• Trans-Pacific Partnership: Signed on 4 February, 2016. Not quite in effect yet. 12 countries (800 million people  2x EU market) Strengthen economic relationships, reduce tariffs, and foster trade.

•  Population is becoming getting older
•  Population is becoming more diverse
•  Household structure is changing; fewer married couples
•  Values
•  Culture

• Greatest generation: Before 1928 Community-minded, rule-minded, respect for authority, strong loyalty
• Depression cohort, Silent Generation: 1928 - 1945 Hardworking, financially conservative, respect for authority and hard work
• Baby Boomers: 1946 - 1964 Life defined by work, question everything, willing to change brands and try new things, have the largest net worth
• Generation X: 1965 - 1980 Independent, resilient, better-educated than previous generations, skeptical
• Generation Y, Millennials: 1980 - 2000 Biggest segment, highly tolerant, more trusting of institutions, more demanding/entitled, want personal and memorable experiences
• Generation Z: digital natives After 2000 Most tech-savvy, most diverse, independent, curious, global outlook, need to express themselves

• Self-Sufficiency
• Upward Mobility
• Work Ethic
• Conformity
• Sustainability

Exporting: Producing in one country and selling in another. Common strategy for small to medium sized firms. Indirect exporting good when limited/no resources in foreign country. Direct exporting good when no need for intermediary.

Joint venture: Foreign company + local company invest together Shared ownership, control and profits May be required by foreign government Potential for conflict

Direct investment: Involves investment/ownership of foreign asset Often occurs at a later stage

• PROBLEM RECOGNITION: Recognizing that there is a discrepancy between a desired state and an actual state that is sufficient to arouse and activate the decision process.
• Internal Search: Two types of search:  Internal search  External search  Ongoing search: external information search even when there is no problem because it might be useful later on and it’s enjoyable.  Two routes to information acquisition  Active  Passive
• Alternative Evaluation Stage: Evaluative criteria: objective and subjective attributes used to compare alternatives.  Consideration set: the acceptable alternatives from among all the alternatives of which the consumer is aware.  Evoked set: the alternatives that will be considered for purchase
• Purchase Decision: Desired alternative has been selected. Now two decisions:  Where to buy?  When to buy?  Purchases can be:  Planned  Impulse  Factors that can decrease the conversion rate:  Attitudes of others  Unexpected situational factors
• Post-Purchase: 
• POST-DECISION REGRET: Occurs when selected option is perceived to be worse than an alternative.  Can exist even if you have no concrete information about alternatives and only a fear of inferiority.  Can influence future purchase intentions. 
• POST-DECISION DISSONANCE: Uncertainty about whether you’ve made the right choice  Most likely to occur when more than one alternative  The decision is difficult to reverse  The decision is important  The decision involves considerable risk  Creates anxiety that needs to be reduced  Often leads to information search that confirms decision and reduces dissonance. 
• DISSATISFACTION: Consumer dissatisfaction: a mild, negative emotional state resulting from an unfavorable appraisal of a consumption experience.  Dissatisfied customers stop purchasing, complain, spread negative word-of-mouth  95% of complainers will do business with you if complaint is resolved quickly  Average business does not hear from 96% of its unhappy customers SATISFACTION:Consumer satisfaction: a mild, positive emotional state resulting from a favorable appraisal of a consumption experience.  Satisfied customers are profitable customers:  Consumer in supermarket spends $50,000+ in lifetime  Satisfied customer can provide $150,000 of business to car dealer over lifetime

• Monetary/financial: Losing money due to the purchase
• Functional/performance: Purchase won’t solve the problem
• Physical: Purchase may lead to injury
• Social: Purchase may lead to embarrassment
• Psychological: Purchase may lead to internal conflict
• Time/effort: Loss of time/effort due to the purchase

• High involvement: • High cost • High perceived risk
• Low involvement: • Low cost • Low perceived risk
• Routine: Short time, Low cost, Internal info search, one alternative
• Limited: Short to moderate time, low to moderate cost, mostly internal info search, few alternatives
• Extensive: long time, high cost, internal and external info search, many alternatives
• High previous experience, low involvement
• high interest, high involvement
• high risk, high involvement
• high visibility, high involvement

Social class: Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors  Determined by a number of factors  Consumers of the same social class tend to behavior similarly.

• Purchase task: What are you buying and why
• Social surroundings: Who is around when you are buying? Who will be around when you’ll be using?
• Physical surroundings: Where are you buying? Where will you be using?
• Temporal effects: What time of the day are you buying/using
• Antecedent states: What’s going on right before you buy?

• Selective exposure: Consumers are very selective about what they are willing to be exposed to.
• Selective comprehension: Interpreting information so that it is consistent with your attitudes and beliefs.
• Selective retention: Consumers remember only a small portion of all the information they’re exposed to.

• A process that produces a relatively enduring change in behavior or knowledge as a result of an individual’s experience.  Happens over time.  Should influence behavior for a while.  Can occur as a result of one’s own experiences or someone else’s.  Types of learning  Associative  Reasoning/analogy
• LEARNING ASSOCIATIONS: Learning the association between a stimulus and a response.  Marketing implications:  Stimulus generalization: Stimulus generalization is the tendency to respond to stimuli that are similar to the original conditioned stimuli. Stimulus discrimination
• LEARNING BY REASONING: Observing how others solve a problem and applying that information to one’s own problems.  Using one’s own thinking and reasoning abilities.

• Beliefs: consumer’s subjective thoughts about how a product or brand performs on different attributes.  Can be evaluative (benefits) or non-evaluative (features)
• Attitude: learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way.
• Change beliefs
•  Change importance of attributes
•  Add/remove attributes

•  Opinion leaders
•  Reference groups:  Associative  Brand community  Aspirational  Dissociative
•  Family/friends
•  Word of mouth

• Utilitarian: motivations that drive us toward behavior that solves problems and accomplishes a task.
• Hedonic: motivations that drive us toward behavior that is personally gratifying.

• placement of legal restrictions on international trade, includes tariffs, quotes, subsidies and other bureaucratic barriers

• agreements between countries in a
• geographic region to reduce tariff and non tariff barriers to the free
• flow of goods, services, and factors of production between each other

• purchasing power parity (PPP) is the relative ability of two countries'
• currencies to buy the same "basket" of goods in those two countries. Thus, although the law of
• one price holds for single products, PPP is meaningful only when applied
• to a basket of goods. In the context of exchange rates, the principle
• of purchasing power parity can be interpreted as the exchange rate
• between two nations' currencies that is equal to the ratio of their
• price levels. In other words, PPP tells us that a consumer in Thailand
• needs 21.67 units (not 41.45) of Thai currency to buy the same amount of
• products as a consumer in the United States can buy with one dollar.

• Gross Income: Total income before taxes
• Disposable Income: Income after taxes
• Discretionary Income: Income after taxes and necessities

Price, Product, Place, Promotion

• a country's communications,
• transportation, financial, and distribution system Is critical in
• determining whether to try to market to a country's consumers and
• organizations.

• Joint Venture: when a domestic firm buys a part of a foreign company to create a new entity
• direct investment: A global market-entry strategy that entails a domestic firm actually investing in and owning a
• foreign subsidiary or division

export, licensing, contract manufacturing, joint venture, direct investment (from least risky and lowest reward to highest)

• when foreign buyers are charged
• lower prices than domestic buyers for an identical product, after
• allowing for transportation costs and tariff duties

• A grey market or gray market also known as parallel market is the trade
• of a commodity through distribution channels which, while legal, are
• unofficial, unauthorized, or unintended by the original manufacturer.

You are involved when the product:

• is important to your self-image,
• is of continual interest to you (e.g. fashion or computers), entails
• significant risks, has emotional appeal and is identified with group
• norms

A low involvement purchase is one in which consumers do not consider the product important to their belief system and


do not strongly identify with it


















Low involvement vs High involvement

• Low 1) brand beliefs formed by
• passive learning 2)a purchase decision is made 3)brand may or may not be
• evaluated afterwards. High 1)brand beliefs are formed first by active
• learning 2)brands are evaluated 3)a purcahse decision is made

Evaluative criteria


represent both the objective attributes of a brand and the subjective ones you use to compare different products and brands.

• the group of brands that a
• consumer would consider acceptable from among all the brands in the
• product class of which he or she is aware.

Evoked set: alternative brands or stores considered when purchasing

Conversion rate= number of buyers/number of visitors

• Features are facts
• Benefits are opinions