Marketing Exam 2 Study Guide

Exam 2 Study Guide Chapters 5, 6, 8, 14 Chapter 17 will not be covered in the exam     Exam 2 will include 45 questions in the multiple choice or T/F format. Each question will be worth 1 point. Students who take the exam will start with 45 points. Exam questions will ONLY come from this guide. Chapter 5 --- (11 Questions)  Difference between B2C (business-to-consumer) and B2B (business-to-business) o Chapter 5: Slides 3 & 4  Consumer Market (B2C): purchasers & household members, intend to personally consume or benefit from the purchased products  Business Market (B2B): purchase a specific kind of product, intended for resale, direct use in producing other products, or use in general daily operations  Members of market segments share similar wants/needs o Chapter 5: Slide 5  Market segmentation: the process of dividing up a market into smaller groups (called segments) – the groups have similar wants & needs  The idea is that firms can use their marketing mix to tailor products for the different groups & target them  Difference between undifferentiated and differentiated targeting strategy (2 Questions) o Chapter 5: Slides 8-11  Undifferentiated strategy: single marketing mix; entire market is target market  Homogenous market: large proportion of customers, similar needs for a product  Rarely used anymore  Differentiated strategy: 2 or more segments, with a marketing mix for each segment  Advantages: may increase sales in total market because marketing mixes are aimed at more customers  Disadvantages: demands more production processes, materials, & people  Marketing different products is more expensive but is justified if it serves customers’ needs better, doesn’t reduce quality or increase price, and/or adds to sales & profits  Be able to identify a concentrated targeting strategy o Chapter 5: Slides 12-13  Concentrated strategy: single market segment, 1 marketing mix  Advantages: allows firm to specialize, permits firm with limited resources to compete with larger organizations  Disadvantages: sales depend on a single segment, can prevent firm from targeting other potentially successful segments  Niche markets/concentrated targeting: one product focused to meet the needs of one very focused segment  Geographic segmentation variables o Chapter 5: Slides 21-22  Difference in location and climate  Geodemographic segmentation  Clusters people in zip code areas & smaller neighborhood units  Based on lifestyle & demographic information  Micromarketing: organizations focus precise marketing efforts on very small geographic markets  Geographic  Region, city size, urban/rural, region  e.g. McDonald’s in India vs China vs Taiwan vs Paris  Demographics: Generational differences between Tweens, Teens, Millennials, Gen X, Boomers o Chapter 5: Slides 24-29 (3 Questions)  Tweens (8-12): fastest growing, mobile gaming  Approx. 80% mobile ownership, approx. 50% own smartphones, 11% spend 8+ hrs/day using screen media  Teens (13-19): command an immense amount of buying power (earning & influencing parental/guardian purchasing)  Family “tech gurus” – early adapters of tech within the family unit, pass technology down to their parents  Millennials (approx. 1979-2004): have surpassed Baby Boomers in size  Consists of 2 groups at different life cycle stages o 1979-1985 – established careers/young families/home ownership o 1994-2004 – entering young adulthood/college  Spend $200 billion annually  Millennials: Old enough to remember 9/11 or education/early career affected by economic downturn (2008 recession)  Post-Millennials: digital natives/oldest were 10 years old when iPhone was introduced/no experiential connection to landline/rotary phones  Generation X (1965-1978)  Lifestyles: independent, resilient, adaptable/education & knowledge are highly valued/saving for children’s education is a priority/many support aging parents  Income/Consumer Behaviors: represent 30% of total income dollars in US/high reliance on internet shopping, banking, consumer research/receptive to personalized ads & increased purchase intent  Baby Boomers (1946-1964): ONLY generation officially established by US Census Bureau  Values: purchase decisions based on price & quality o Main influencers: traditional advertising, sales representatives, word of mouth communications  Income/Consumer Behaviors: outspend younger adults on consumer goods & services/highly attractive target market (77M people, $400B annual spending)  Psychographics: BIG 5 Personality Traits (2 Questions) o Chapter 5: Slides 31-32  Psychographics: personality, motives, lifestyles BIG 5 Personality Traits (OCEAN): o Openness to experience o Conscientiousness o Extroversion o Agreeableness o Neuroticism  Clothing is a huge personality descriptor Behavioristic: usage/volume, benefits, loyalty, price sensitivity   Chapter 6 --- (14 Questions) *Chapter 6 slides coincide with the following suggestions. HOWEVER, blanks are not filled in, as I was present on campus to offer this lecture.  Identify different ways that marketers trigger problem recognition for consumers o Chapter 6: Slides 3-4  Problem recognition begins with consumer awareness  “There is a difference between my actual condition & an ideal, desired state of being”  Experienced internally  Recognition can be rapid or slow  People may not recognize a problem or need until marketers point it out  Strategies to trigger problem recognition:  Sales personnel  Advertising  Packaging  What are the differences between internal and external information search? (2 Questions) o Chapter 6: Slides 5-7  Internal Search:  Buyers search their memories/experience, recall information about products  Goal: to solve their “consumer problem” individually  External Search:  Buyers seek info from sources other than their memories o Occurs when internal search is insufficient to solve their “consumer problem”  Personal contacts, marketer-dominated resources (the internet), independent sources (government & product-testing organizations)  Customers seek MORE info when there is…  High risk, high interest  Low product knowledge/experience, low confidence  Examples: house, laptop, doctor  Customers seek LESS info when there is…  Low risk, low interest  High product knowledge/experience, high confidence  Examples: ketchup, mints, T.P.  Understand framing, and what types of consumers are influenced by it o Chapter 6: Slide 9   Evaluative criteria: product characteristics that are important to a buyer – can be objective or subjective Framing: strategy of influencing consumer evaluations  Describes alternatives & their attributes in a positive/negative manner  Can add perceived importance to a product characteristic  Framing effects are stronger on inexperienced buyers  What is cognitive dissonance? What types of purchases are likeliest to cause it? (2 Questions) o Chapter 6: Slide 11  Cognitive dissonance: consumer doubts shortly after a purchase  More common when the purchase is expensive, high-involvement, and/or lacking desirable features of competing brands  Two paths: o Return the product o Justify the purchase  Reduced by salespeople contacting customers after purchase  Identify what type of decision making (routine/limited/extended) would be most appropriate for a specific product (2 Questions) o Chapter 6: Slide 12  Routinized: frequently purchased, low-cost items, very little search-and-decision effort (example: deodorant)  Limited: occasionally purchased, need info about an unfamiliar brand in a familiar product category (example: nice hair dryer)  Extended: infrequently purchased or entirely unfamiliar, expensive (washing machine)   Distinguish high/low/enduring/situational involvement (2 Questions) o Chapter 6: Slide 14  High-Involvement: visible to others (public consumption), more expensive (example: clothing you wear in public)  Low-Involvement: little social risk, less expensive  Enduring Involvement: ongoing long-term interest in a product or product category  Situational Involvement: temporary, circumstantial (example: tow truck companies for flat tire or pest control for an infestation)  Difference between selective exposure/distortion/retention o Chapter 6: Slide 22    Selective Exposure: the process by which some inputs are selected to reach awareness & others are not  Baader-Meinhof phenomenon (aka Frequency Illusion) Selective Distortion: an individual’s changing or twisting of information that is inconsistent with personal feelings or beliefs (“I believe this team is the best, show me stats to prove me wrong and I’ll still believe they’re the best”) Selective Retention: remembering information inputs that support personal feelings & beliefs & forgetting inputs that do not  Role of Family Influence o Chapter 6: Slide 29  Consumer socialization: acquisition of the knowledge/skills to function as a consumer, children observe parents/older siblings in purchase situations  Example: “my family always bought Tide growing up so now that I’m in college I will continue to buy Tide”  Family roles related to buying decisions:  Gatekeeper: collects & controls information  Influencer: tries to sway decisions  Decider: makes buying choice  Buyer: makes purchase  When are opinion leaders used as sources of influence? o Chapter 6: Slides 31-32  Opinion Leaders: credible source of information, easily accessible, viewed by others as being well-informed  Most influential when:  Consumers have high product involvement but low product knowledge  Consumers share opinion leader’s values & attitudes  Product details are numerous or complicated  Characteristics of Culture o Chapter 6: Slide 33  Pervasive – this is water (eat, drink, dress, think)  Functional – expectations/acceptable behavior  Learned – friends/family/peers/teachers  Dynamic – constantly evolving (example: smartphone etiquette) Chapter 8 --- (9 Questions) *Chapter 8 slides have been updated to coincide with the following suggestions. All blanks are filled in.  What is “global marketing”? o Chapter 8: Slide 2  Global Marketing: targeting markets throughout the world  Global vision: recognizing & reacting to international marketing opportunities, using effective global marketing strategies, being aware of threats from foreign competitors in all markets  4 Methods of entering a global market: Risk/Return & Characteristics (3 Questions) o Chapter 8: Slides 14-17       Least to Most Risky: Exporting, Licensing, Joint Venture, Wholly-Owned Subsidiary Lowest risk also equals lowest return & vice versa Exporting: selling domestically produced products to buyers in other countries  Example: Guinness Draught made in Ireland, shipped & sold to consumers in USA Licensing: a firm gets rights to produce & pays ongoing royalty payments  Example: Labatt’s in Canada brewing Guinness Extra Stout Joint Venture (JV): 2 companies create new joint firm to combine expertise of both parties  Example: Guinness from Ireland & Al Ahram Beverages from Egypt combine to serve Muslim markets in Middle East & Africa Wholly-Owned Subsidiary (WOS): operations fully owned by a foreign parent firm (may involve marketing, assembly, and/or full-scale integrated production operations)  Example: Guinness brewery in Baltimore, MD  Country of Origin, Consumer Ethnocentrism/Animosity (3 Questions) o Chapter 8: Slides 8-9  Consumer Ethnocentrism: purchasing from home country as a form of nationalistic duty (example: buying “American Made” products)  Consumer Animosity: NOT purchasing from certain countries due to poor political, military, economic relations (example: boycotting Russian vodka due to tampering with elections)  Product Adaptation (2 Questions) o Chapter 8: Slides 19-22  One product, one message – developing a single product for all markets, exactly the same in US & abroad (maybe a slight change, but strong visual relationship  Product invention – either creating a new product for a market or drastically changing an existing product  Product adaptation – alter basic product to meet local needs Chapter 14 --- (11 Questions)  What is multi-channel retailing? o Chapter 14: Slide 2  Multichannel Retailing: multiple distribution channels  Complement brick-and-mortar stores with websites, catalogs, & apps  Approximate percentage of companies that dominate retail in the US o Chapter 14: Slide 4  Comprises mostly small businesses – 98.6% of retailers have < 50 employees  However, retail is dominated by the remaining 1.4% of small number of large companies (Walmart, Costco, etc.)  Benefits of Chain stores v. Independent stores (2 Questions) o Chapter 14: Slide 7  Independent retailers: establishment is owned by an individual or group  Chain stores: part of a group of the same stores owned & operated by a single organization; managed by a home office, which ensures consistency across different locations  Product assortment: Width v. Depth o Chapter 14: Slide 9  Width: assortment of products offered  Depth: number of different brands offered within each assortment  Department stores, Drugstores, Supermarkets and Convenience stores (2 Questions) o Chapter 14: Slides 13-15  Department Stores: wide/deep product assortment (specialty goods, apparel, cosmetics, housewares, electronics, furniture)  Organized into separate departments (each department often functions as a self-contained business)  At least 25 employees  Service-oriented  Examples: JC Penney, Macy’s  Drugstore: primarily stocks pharmacy-related products & services  Cosmetics, health & beauty aids  Seasonal merchandise, greeting cards  Some non-refrigerated convenience foods  Examples: Walgreens, Rite Aid, CVS Pharmacy  Supermarkets: specialized in food & some non-food items  Departmentalized  Self-service  Arranged by department  Centralized checkout  Lower cost than neighborhood grocery  Convenience Store: high-turnover convenience goods  500 items/store  Advantages of TV Home Shopping o Chapter 14: Slide 24  Advantages: easy demonstration, adequate time spent on each product (viewers feel entertained and informed), convenient  Local v. National Retail Advertising (2 Questions) o Chapter 14: Slide 28  Local: provides store information (location, available merchandise, hours/prices/sales  National: focuses on image, more abstract & general  Difference between “trading up” and “suggestion selling” o Chapter 14: Slide 37  Trading up: persuading customers to buy a higher-priced item than they originally intended to buy  Suggestion Selling: seeking to broaden customers’ original purchases with related items