MKTG-3310 Exam 1 Study Guide PDF

MKTG-3310 Exam 1 Study Guide Chapter 1: Marketing and the marketing concept (Chpt 1) - Who determines the value of a product? (pg 9) Consumers - If companies don’t determine value, what do they do? (lecture and pg 10) They offer value propositions, maximize how much customers are w...

MKTG-3310 Exam 1 Study Guide Chapter 1: Marketing and the marketing concept (Chpt 1) - Who determines the value of a product? (pg 9) Consumers - If companies don’t determine value, what do they do? (lecture and pg 10) They offer value propositions, maximize how much customers are willing to pay while making sure customers think they got what they paid for - What is customer’s perceived value? (lecture and pg 8) perceived benefits related to perceived cost - What is satisfaction? Pleasurable fulfillment response to a consumption experience - How is satisfaction determined? What does this tell us about McDonald’s? (lecture) disconfirmation and experctations - What is the ACSI and why does it matter? (lecture) The American Customer Satisfaction Index, national cross-industry measure of customer satisfaction that represents US economy - What is a market? (lecture and pg 5) collection of buyers and sellers interested in making similar or related exchanges, can refer to a group of people, place, or product - What is the unique contribution of marketing to a firm? (lecture) acquire resources from customers, stimulate and evaluate and manage customer value - What is marketing? (lecture and pg 5) people and actions involved in managing exchanges with customers - What is marketing not? (lecture and pg 3) More than just advertising, an art, not involving numbers, marketing is not common sense, marketing can't make people do what they wouldn't do in the first place - How would you answer the statements that marketing is advertising, not necessary, selling more things to more people..., or the devil? In some cases, a higher price is actually better (ex: luxury goods), better service is only more valuable if customers are willing to pay more for it (ex: TJMaxx or Ross), too many options can lower sales (ex: Sears with 500 pages of products), and marketing includes product design and pricing - What is the marketing concept? (lecture and pg 14) A business philosophy that deals with knowing the needs and wants of target markets and delivering desired satisfactions better than competitors do; company focuses on satisfying customer, everything else will take care of itself - What are the different concepts that compete with the marketing concept? (lecture and pg 14) - 1. Simple trade/bartering: focus on transaction - 2. Production orientation: focus on production efficiency - 3. Sales orientation: focus on aggressive selling - 4. Market orientation: focus on customer relationship - 5. Social orientation: focus on social responsibility and sustainability - What does it take to implement the marketing concept (lecture)? The generation (drive), dissemination (spread), and use of customer information across an organization  - What does it take for the marketing concept to actually impact firm performance? Philosophies between thinking and doing have been aligned; combining marketing capabilities and market orientation - What is the role of marketing research? (pgs 10-11) Research focused on assessing the effectiveness of a specific marketing tool or tactic; need to understand the perceived value associated with a particular exchange for a group of customers; find what influences customers' perceptions of value - What is a shareholder concept? (lecture) A focus on maximizing shareholder value; take care of shareholders first rather than employees - What are potential problems with a focus on shareholders? (lecture) Short term perspectives and encourage behavior that maximizes shareholder value at the expense of a business' helath - 1. Profits without prosperity - 2. Stockholders are not holding stocks very long anymore - 3. Pressure to do good on the stock market (quarterly statements) - 4. Stock buy backs Going beyond the marketing concept: Societal Marketing (Chapter 1) - What are the Consumer Bill of Rights current consumer “rights” (lecture and pg 49) - 1. Right to safety - 2. Right to be informed - 3. Right to choose - 4. Right to be heard - What is the argument that consumers need protected rights and not to be held to a “buyer beware” mentality? (lecture) The consumer typically does not know because they are not given the information - What is the Milton Friedman view of businesses role in the world? (lecture) To use their resources and engage in activities designed to increase profit; meaning companies should prioritize maximizing shareholder value above other societal concerns like social marketing campaigns. - What are two arguments for why this is the correct view? (lecture) By engaging in competition, companies innovate to create new products and it creates profit which increases standard of living - What is social responsibility? (lecture and pg 16) Companies acting in part for the best interest of society rather than their own self interest (ex: TOMS donates a pair of shoes to a child in need for each pair sold) - What is societal marketing (lecture) A company makes marketing decisions considering: - 1. Consumer's wants - 2. Company's requirements - 3. Consumer's long run interest - 4. Society's long run interests - What does the consideration of organizations and institutions have to do with the contrast between Milton Friedman’s view of business’s role and the societal concept’s  view? (lecture) Milton is correct that maybe it is the best role of business, but he is wrong in the sense that we decide what we do - What are the arguments for businesses to engage in other causes besides seeking a profit? (lecture) The problems we face are massive, consumer want businesses to tackle issues, for-profit businesses have majority of the resources to fix thee problems, NGOs are penalized for marketing, and there are self interested reasons to engage in social orientation - Does marketing theory apply to both for-profit and non-profit organizations? Does marketing in practice differ between the two? (lecture) Yes, their product is their idea and they must define who their customers/donors are. However, nonprofits are often hindered; if they spend money on advertising, they get "docked" for not spending their money on the cause they are advocating for - What factors determine whether firms are “rewarded” for engaging in CSR? (lecture) Quality is strong, stakeholders make intrinsic attributions about a firm's motive, Corporate Social Responsibility (CSR) spending is synergetics with Research and Development (R&D), advertising spending is higher compared to competitors - Which two mechanisms are the primary ones in effect to explain firm’s CSR spending? (lecture) - 1. good management, a strategic initiative to CSR that is ingrained in the company. - 2. penance CSI (irresponsibility), when a company does something bad then goes and tries to make-up for it - Which one leads to financial returns? (lecture) Good Management - What is cause-related marketing? (lecture) When charitable actions of a firm are tied directly to consumer revenue - What is the annual amount of money spent on cause related marketing? (lecture) $2.24 billion - What is this amount in relation to advertising spending? Big or small? (lecture) Small, $250 billion - Why is cause-related marketing so hard to get right? (lecture) Companies need conceptual congruence and perceptual congruence, quality has to be sufficient, the donation has to be transparent, and consumers must care about the cause (cause and company have to match) Chapter 2: Marketing Strategy (Chapters 2, 7, & 14) - What is a mission statement? How do you evaluate it (lecture and pgs 26ish) The firm's business focus that provides direction for the company; account for potential market trends and environmental changes - What is marketing myopia? Why does it matter? (lecture and pg 26) Defining a company too narrowly and focusing on the company instead of the customer and missing key environmental trend; eventually will lead to a company's demise - What happens if a firm goes too far and defines itself too broadly? Leads the company to not focus on what you do well; all over the place; more products = more failures (ex: amazon, angry birds) - What are: - Competitive advantage (lecture and pg 28) An advantage gained over competitors by offering greater customer value; needs to be valuable and heard to imitate; more profitable when the company can sustain them over a long period of time - What is differentiation? (pg 27) A marketing strategy that differentiates a product from its competitors - What is the marketing mix? (lecture and pgs 34, 147-149) Unique combination of marketing activities used to encourage and facilitate changes by delivering value to the customer; need to ask what the customers are interested in - What are the 5 Ps? - 1. Product - 2. Place - 3. Price - 4. Promotion - 5. Participation - What are the 5 Cs? - 1. Customer benefits - 2. Convenience - 3. Cost - 4. Communication - 5. Connection - What kind of activities fit under each of the Ps? - 1. Product affects customer benefit - 2. Place affects convenience - 3. Price affects cost - 4. Promotion affects communication - 5. People affect connection - Can you recognize what it means to change/vary the marketing mix? Beware of what the activities are. If you change the four Ps, you are changing the marketing mix. Selling a bottle of wine in a new store other than Walmart. Serving different. Coke Zero instead of diet coke changed marketing mix(activities from the 4 Ps) - Making marketing strategy accountable... (lecture and pgs 317 - 319) - What are: - Market share: Percentage of a brand's sales relative to the total sales of all brands in a product category 𝐵𝑟𝑎𝑛𝑑 𝑆𝑎𝑙𝑒𝑠(𝑑𝑜𝑙𝑙𝑎𝑟𝑠 𝑜𝑟 𝑢𝑛𝑖𝑡𝑠) 𝑀𝑎𝑟𝑘𝑒𝑡 𝑆ℎ𝑎𝑟𝑒(%) = 𝐶𝑎𝑡𝑒𝑔𝑜𝑟𝑦 𝑆𝑎𝑙𝑒𝑠(𝑑𝑜𝑙𝑙𝑎𝑟𝑠 𝑜𝑟 𝑢𝑛𝑖𝑡𝑠)  - Relative market share (lecture & pg 318) Compares a firm's marketing success to that of a key competitors in a product category 𝐵𝑟𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡 𝑆ℎ𝑎𝑟𝑒(%) 𝑅𝑒𝑙𝑎𝑡𝑖𝑣𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑆ℎ𝑎𝑟𝑒(%) = 𝐶𝑎𝑡𝑒𝑔𝑜𝑟𝑦 𝑘𝑒𝑦 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑜𝑟(𝑠)(%) - What is the benefit of market share? Why? (lecture) Linked to profitability, more ROI - How is market share related to customer satisfaction? (lecture) Harder to manage needs of more customers so less customer satisfaction; few outliers such as CFA and Starbucks - Does the drive for market share relate to the marketing concept? (lecture) No; because it provides you higher ROI, not customer satisfaction - shareholder concept - Does customer satisfaction matter for monopolies? Why? Yes and no, there is no other option so the business would be profiting regardless of customer satisfaction, but yes because customer satisfaction means decreased cost of dealing with dissatisfied customers and unhappy employees and fosters an increase in trust and cooperation from customers - ROI (lecture & pg 318) Return on investment: net profit return on a 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡($) particular investment 𝑅𝑂𝐼(%) = 𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠($) - CLV (lecture) Customer lifetime value: total stream of purchases a customer contributes over their lifetime 𝐶𝐿𝑉 = 𝑀𝑎𝑟𝑔𝑖𝑛 × 𝐿𝑖𝑓𝑒𝑡𝑖𝑚𝑒 , 𝐶𝐿𝑉 = (𝑂𝑟𝑑𝑒𝑟 𝑉𝑎𝑙𝑢𝑒 × 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑚𝑎𝑟𝑔𝑖𝑛) × 𝐿𝑖𝑓𝑒𝑡𝑖𝑚𝑒 - Customer equity (lecture) Total combined CLVs of a company's customers - Customer satisfaction (pg 319) Customer's comparison of actual performance to expectations - What do the four metrics above allow a firm to do? (lecture) Consider customers as long term resources worth investing in - What is the idea of value creation and appropriation? (lecture) - Value creation: innovating, producing, and delivering products to market - Value appropriation: extracting profits - Who are the main appropriators? (lecture) Firms, competitors, society/public - Is marketing more related to value creation or appropriation? (lecture) Appropriation because of advertising and branding to make profits for the product - What do fidget spinners, Beanie Babies, Nike, and Legos tell us about marketing’s role in value creation and appropriation? (lecture) - Beanie babies: value creation because limited quantity and exclusive not everyone can make - Fidget spinner: value appropriation because fad that blew up fast and fell fast - Nike: value creation because sell limited quantity of shoes and allow a secondary market to provide them with free marketing - Legos: chinese company value appropriated legos but got sued and went to jail causing value in legos to rise again after a decline Chapter 3: The Marketing Environment - What is a SWOT analysis? (pg 32, from Chpt 2) Identifying internal strengths, weaknesses, external opportunities, and threats - Can you recognize external forces (opportunities and threats) from internal ones (strengths and weaknesses)? - Internal (strengths and weaknesses): personal skill sets, financial resources, technology, perception in the market, production capabilities, cost structure, marketing capabilities - External (opportunities and threats): potential new markets, new technology, new products, market changes - Can you recognize positive forces (opportunities and strengths) from negative ones (threats and weaknesses)? - Positive (opportunities and strengths): market trends, technological advances, brand reputation, strong customer relationships - Negative (threats and weaknesses): competitive pressure, negative publicity, economic downturns, limited resources, outdated technology - What are the micro and macro environmental forces? (lecture and pgs 45-58) - Micro: anything that the environment directly affects or is directly affected by the marketing manager's decisions; internal environment - Macro: environment that includes general trends the company doesn't directly influence; external environment - What is critical thinking? (lecture) Reflective thinking involved in the evaluation of evidence relevant to a claim that a sound or good conclusion can be drawn from the evidence - What are the 5 cognitive biases we went over? - Gambler’s fallacy/hot hands: thinking a trend must reverse or continue - Ex: Atkins diet ended abruptly so C2 failed - Anchoring bias: relying heavily on the 1st piece of information - Ex: we heard of robots first in movies, so Americans are scared of AI - Sunk cost fallacy: following a course of action due to past costs - Ex: already put money into a construction project so might as well continue with the company rather than find a new one even though I don’t like what they have done - Confirmation bias: the tendency to look for confirming evidence - Ex: watching Fox News as a conservative. Survivorship bias: conclusion based only on survivors - Ex: talking to businesses that were successful, not that failed - What does critical thinking and the cognitive biases have to do with this chapter? (lecture) To make predictions about what will impact your business Chapter 4: Buyer Behavior - What is the general model of customer experience? (lecture and pg 64) Purchase decision process; cognitive/rational not emotion - Know each stage and what happens in each stage. - 1) Need Recognition: bringing awareness to a need - 2) Information Search: - a. What information is needed and where will the customer get the needed information - b. Customers search their memory first, then externally, credibility = personal resources then third party sources then company sponsored information - 3) Evaluation of Alternatives: assessing perceived value and evaluation criteria - 4) Purchase/Choice: how, when and where to buy the product - 5) Post-Purchase: satisfaction v dissatisfaction, cognitive dissonance: want justification that they made a good choice in the purchase - (ex: company sending a survey) - What does marketing look like that tries to influence these stages? If I were to give you an ad, could you pinpoint the stage that the ad is targeting? (lecture) - To do with factors that influence buyer behavior - What is an attitude? How stable is it and how easy is it to change? Once an attitude is stable, what causes it to change? (lecture and pg 67) - Attitude: a person's relatively consistent evaluations, feelings, and tendencies, toward an object or idea - a. the stronger the attitude, the more resistance to change - b. the stronger the force (number of recalls, scandal, etc), the more attitude is likely to change (multiple events build a stronger force) - c. consistency is a powerful ability to change negative attitudes but hard to do - Understand the influences of buyer behavior. Maslow’s Hierarchy - What are the levels of Maslow’s Hierarchy? (lecture and pg 76) physiological, safety, love/belonging, esteem, self actualization - What are the two ideas related to MH? (lecture) lower order needs to come first, but then higher needs are more important than lower order needs once lower needs are met - Can the levels be used by any product (e.g. a bottle of water)? (lecture) Yes, depends how you portray it - What would marketing campaigns and ads look like that targeted each of the levels? (lecture) - What is routine vs limited vs extended problem solving? (lecture and pg 76) - Routine: decisions that are repeated and require no or limited effort on the customer's part  - Limited: customer's utilize external information search and evaluation but also employ heuristics ("rules of thumb" that save time and effort by providing shortcuts to complex decisions, ex: more expensive=best quality) - Extensive: decision that is perceived to be important and higher risk (when products are expensive, reflect social image, and have great personal consequence) - What percentage of our behavior is habitual? (lecture) - How do each of the problem solving types relate to thinking and judgments? (lecture) - Routine: no thinking - Limited: shortcuts in thinking, uses heuristics - Extensive: elaboration in thinking, uses evidence and logic for judgements - How do they relate to celebrity endorsers? (lecture) When using extensive problem solving, celebrity endorsements don't matter as much as they do with limited problem solving - What are the forms of selective perception? How do these relate to marketing phenomenon? (lecture and pg 72) - Selective attention: how we pay attention; focusing on some information while ignoring other information (ex: reading magazines about golf if you like golf but not soccer) - Selective interpretation: how we interpret; paying attention to or interpreting information in a way that matches one's beliefs - Selective retention: how we remember; remembering some but not all of the information one was given - What is the self-concept? (lecture) the idea a person has about their appearance, abilities or personality - How does the self-concept relate to self-image? (lecture) tapping into a customer's self image is a powerful motivation for purchase and engagement - What is the difference in defining oneself as roles vs traits? (lecture) - Traits: more individual focused, adjectives, what makes me different - Roles: what connects me to other individuals, groups that are important to you - What is the actual and ideal self-concept? Generally, which form of the self- concept should be used in marketing? Why? What could make it so that the ideal self-concept is used? (lecture) - Actual: who we are right now; high self esteem (ex: Dove) - Ideal: perfection, aspirational, don't think I am there yet; low self esteem; want to show this in marketing (ex: Disney) - Is consumer purchasing typically rational or irrational? (lecture and pg 71) Rational at the time in the context  - How is organizational buying different from consumer buying? (lecture and pgs 78-83) Organizational purchasing is typically larger, more formalized, involves more people, more relational, emphasize service more, and more complex overall - When does consumer buying start to look like business buying (lecture) When groups are involved and purchasing more expensive products - What is the buying center? (lecture and pg 78) The group that makes a purchase decision for a business (deciders, influencers, users, gatekeepers, buyers, initiators) - Is organizational buying purely rational? (lecture) No - How does the General Model of Customer Experience look for businesses as compared to consumers? (pg 78, Figure 4.12) - Need recognition: purchase is most likely planned in advance - Information search: buyer determines specifications from users - Evaluation of alternatives: buyer evaluates bids based on benefits/costs - Purchase: lowest bid or based on contract - Evaluate: calculate return on investment - How does the marketing typically differ for B2B vs B2C? (pgs 81-83) - Marketing to businesses requires a more thorough understanding of product features and benefits appropriate for different business uses (value and demand higher quality products) - B2B has more of a narrower focus and are more direct - B2B prices are often negotiated and consider a range of purchase outcomes when buying - Personal selling is the promotion tool of B2B - Connections are more formalized Chapter 6: Segmentation - What is segmentation? (lecture and pg 118) Process of categorizing groups of customers to divide a market into manageable pieces based on customer differences - What are the two things that are stressed? (lecture) Meaningful groups and customized marketing mix - What are the two things that should result? (lecture) Better value propositions and increased likelihood of customer response - What are micromarketing, differentiated marketing, and niche marketing? (pg 129) - Micromarketing: a marketing approach where a company considers every customer to be a segment of one (expensive and not necessary) - Differentiated marketing: a marketing approach where the company identifies large groups that share similar characteristics (various segments)  - Niche marketing: a marketing approach where the company identifies a subsegment that has special needs that typically isn't large enough for the larger competitors in a market to pursue - What does mass marketing attempt to do? Is there anyone who truly mass markets? (lecture) One product and you don't differentiate between customer groups at all; no one truly mass markets - What are the two ideas of the long tail? (lecture) people will increasingly look for niche products, and as niche product demand increases, creators will follow - What is the long tail enabled by? (lecture) Breaking free of the constraints of physical space, finding ways to talk to market segments economically, new distribution systems - Based on the theory, where does the majority of potential revenue fall, in the head or the tail? Where are the products with the majority of demand? (lecture) Majority of revenue is in the tail; majority of demand is head - If I were to give you a market, could you pick a product or marketing avenue that would best follow the idea of the long tail (i.e. which takes advantage of those technological factors that enable the long tail?) (lecture) - What are the criteria used to assess segments? Be able to name all of the criteria and understand why each criteria is used (lecture and pgs 130-131). - Identifiable: can you see the segments - Measurable: can you find them in the data - Substantial: is it worth it - is the group large enough to create profit - Accessible: can you get your message to them - Responsive: is the segment different - Could you identify the criteria in an example problem ala Bumblebee? Responsive - What do you do if a segment is not profitable? (lecture) - What are geographic, demographic, behavioral, or psychographic variables? (lecture and pgs 118-125) - What are examples of these variables? (see Table 6.3) - Geographic: region, city size, statistical area - Demographic: age, gender, marital status, income - Psychographic: personality, needs, values - Behavioral: usage rate, visits, spendings - Which variables are generally the hardest / easiest to use and collect? (lecture) - What is a problem with demographic variables? Does this problem also hold for geographic variables? (lecture) Variability within the groups - What is variability and how does this effect segmentation? (lecture) Having much variation or diversity - What is a problem with psychographic variables? (lecture) - If there is a problem with psychographic variables, can they be used? How? Not very measurable; weak at predicting what people will actually purchase; use behavioral variable - Which is the best predictor of future behavior? (lecture) Past behavior  - What is user status, usage rate, Pareto principle, and share of wallet? What kind of variables are these? What is their purpose? How can you measure share of wallet? - Usage rate: light/medium/heavy usage - Pareto: 20% of users are 80% of the results - Share of wallet: where else are your customers spending money - What kind of data is VALS, Tapestry and PRIZM using? (lecture and book...see Figure 6.2 & 6.3) Psychographic - If you want to create segments that will be inclined to purchase more, what must you segment on (i.e. what did the Miller Lite case study tell us?) Need to find out what customers want and why they buy the drinks and advertise that; segmentation variables must be related to purchase dimensions - How similar and/or different are the variables for business customers as compared to consumers (see Table 6.3) Mostly the same - What are the steps in the segmentation process? (lecture and pg 124 and Table 6.4) - Define broad market → narrow market → select categories for segmentation → select variables within each category → identify groups based on variables → develop profiles of the segments - What is a shortened version of these steps? (lecture) rank → exclude → prioritize - What is targeting and a target market? (pg 132) - Targeting: focusing marketing mix efforts on a specific customer segment to maximize perceived value to that segment and increase the likelihood of a successful marketing exchange - Target market: the primary group of customers towards which a company directs its marketing efforts - Why is choosing a target market a high risk activity? (pg 132) Choosing the wrong market can have serious financial consequences for the company - Why should companies initially focus on one segment? (pg 133) Forces the company to become an expert on the group of customers to give the company an advantage and it makes it more likely to use its marketing resources effectively - What is positioning? (lecture and pg 134) creating a specific perception in the customer's mind relative to other options - What are the two “key ideas” of positioning? (lecture) you can only own one position and a position can only be owned by one brand - What are perceptual maps? (pg 137...see Figure 6.12) A graphical representation of customer perceptions of competitive products (can suggest product features important to customers)