Principles of Marketing Exam 2 UTSA 3013

  1. Know all the major legislations and agencies.
    • 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).
  2. What are the four types of competition that can exist in a marketplace?
    • 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
  3. Know the four major agreements that exemplify economic integration
    • 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.
  4. What are the main demographic changes happening in the US?
    •  Population is becoming getting older
    •  Population is becoming more diverse
    •  Household structure is changing; fewer married couples
    •  Values
    •  Culture
  5. What are the major generational cohorts?
    • 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
  6. What are the main core values in the US?
    • Self-Sufficiency
    • Upward Mobility
    • Work Ethic
    • Conformity
    • Sustainability
  7. What are the three main global market entry strategies?
    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
  8. Stages of the decision making process:
    • 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
  9. What are the types of perceived risk?
    • 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
  10. What is involvement? How does it influence consumer decision making?
    • 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
  11. What are the main consumer behavior patterns of the different racial/ethnic groups?
  12. What is social class?
    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.
  13. What are the temporary situational influences on consumer behavior?
    • 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?
  14. What are the components of perception?
    • 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.
  15. What is learning?
    • 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.
  16. What are attitudes? How are attitudes formed and changed?
    • 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
  17. What are the main types of individuals/groups that can influence consumer behavior?
    •  Opinion leaders
    •  Reference groups:  Associative  Brand community  Aspirational  Dissociative
    •  Family/friends
    •  Word of mouth
  18. What are the 2 main types of motivation?
    • 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.
  19. What are the motives in Maslow’s hierarchy?
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  20. Economic protectionism
    • placement of legal restrictions on international trade, includes tariffs, quotes, subsidies and other bureaucratic barriers
  21. Economic integration
    • 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
  22. Purchasing power
  23. Purchasing power parity
    • 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.
  24. Gross vs. disposable vs. discretionary income
    • Gross Income: Total income before taxes
    • Disposable Income: Income after taxes
    • Discretionary Income: Income after taxes and necessities
  25. 4 Ps
    Price, Product, Place, Promotion
  26. Economic infrastructure
    • 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.
  27. Exporting versus joint venture versus direct investment
    • 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)
  28. Dumping
    • when foreign buyers are charged
    • lower prices than domestic buyers for an identical product, after
    • allowing for transportation costs and tariff duties
  29. Gray Market
    • 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.
  30. Involvement
    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
  31. Evaluative criteria
    Evaluative criteria

    represent both the objective attributes of a brand and the subjective ones you use to compare different products and brands.
  32. Consideration set
    • 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.
  33. Evoked set
    Evoked set: alternative brands or stores considered when purchasing
  34. Conversion rate
    Conversion rate= number of buyers/number of visitors
  35. features vs. benefits
    • Features are facts
    • Benefits are opinions
Card Set
Principles of Marketing Exam 2 UTSA 3013
Principles of Marketing Exam UTSA 3013