Glossary of Marketing Exam I
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- The trade of things of value between buyers and sellers so that each is better off.
- To serve both buyers and sellers, Marketing seeks to
- 1. To discover the needs and wants of prospective customers
2. Satisfy the needs and wants
- 4 different orientations in the history of American business
- 1. Production era(1800 - 1920)
2. Sales era (1920-1960)
3. Marketing era (1960-1990)
4. Customer era (1990 - today)
Each era has its own business worldview or paradigm
- A set of asumptions, concepts, values, and practices that constitute a way of viewing reality of the community that shares them.
- The mental lens through which you interpret reality.
A filter you use to put things into context and develop an appropriate respones.
- What is the goal of business?
- Find a customers (Marketing Activities)
Keep the customers (Operation Activities)
(Acquire, Retain and Reward)
- AMA Definition of Marketing
- An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways the organization and its stakeholders.
- Marketing (Definition from Textbook)
- The process of developing, pricing, promoting, and distributing goods, services, and ideas to satisfy the needs of consumers.
*Marketing is NOT about advertising or selling.
- The key to discovering and satisfying customers' needs is ...
- the idea of exchange = each must be better off after the trade
- Selective Listening
- The tendency of customers to filter out all marketing noise when they are satisfied with the current condition.
- The only approach that works today is...
- Win-Win: Each party should be better off after the trade of things of value. You cannot create value for customers and build relationships any other way.
- People with both the desire and ability to buy a specific product
- Target Market
- One or more specific groups of potential customers toward which an organization directs its marketing program.
- The first task in any Marketing
- Discovering customers' needs
- The challenge of discovering customer needs
- Nearly 94% of the 33,000 new consumable products (food, beverage, health and beauty, etc.) introduced each year do not succeed over the long run!
- Solution to the challenge of discovering customer needs
- Focus on Customer benefits.
Learn from the past.
- A needs occurs when a person feels psychologicallydeprived of basis necessities, such as food, clothing, and shelter.
- A felt need that is shaped by a person's knowledge, culture, and personality
- Consumers' needs and wants
- Marketing does not create person's needs but shape a person's wants.
- To satisfy consumers' needs, firms must...
- focus on their Target Market
- The 4Ps: Controllable Marketing Mix Elements
- 1. Product
- Marketing Mix
- The marketing manager's controllable factors - Product, Price, Promotion, and Place - that can be taken to solve a marketing problem.
- Environmental Factors
- Uncontrollable marketing factors such as social, economic, technological, competitive, and regulatory forces.
- Customer Value
- Buyers' benefits including quality, price, convenience, on-time delivery, and before- and after-sale service
- 3 strategies for customer value & building customer relationships
- 1. Best Price
2. Best Product
3. Best Service
- Examples for 3strategy applications to build customer value and customer relationships
- Best Price: Wal-Mart, Costco, SW Air, Dell
Best Products: Starbucks, Nike, Microsoft, J & J
Best Service: Lands End, Nordstroms, Home Depot
- Relationship Marketing
- Linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit.
- Marketing program
- Plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.
Choice(s) from 3strategies
1. Best Price
2. Best Product
3. Best Service
- Success Principle
- Successful people have an insatiable to pursue what they do not know, and apply it to their life.
Less successful people, would rather talk about what they know, rather than pursue what they don’t know.
- Law of unintended consequences
- You don't know what you don't know
- Marketing Program for Rollerblade
Three key benefits for customers
- 1. Fun
2. Fitness and health
- Four market segments for Rollerblade
- 1.Aggressive segment
- Marketing Mix element in marketing program
- Each segment in the firm might have different Marketing Mix Element (4Ps) as its strategy
- An organization can't satisfy the needs of all consumers, so it must focus on one or more subgroups, which are...
- Target Market
- Marketing Concept
- Idea that an organization should strive to satisfy the needs of consumers while also trying to achieve the organization's goal
- Market Orientation
- Focusing organizational efforts to collect and use information about customers' needs to create customer value
- Societal Marketing Concept
- View that organizations should satisfy the needs of consumers in a way that provides for society's well-being
- Ultimate Consumers
- people who use the goods and services purchased for a household
- Organizational Buyers
- Manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
- The 3 levels of strategy in organizations
- 1. Corporate
2. Business Unit
- Profit is a reward to a business firm for the risk it undertakes in offering a product for sale. It is also the money left over after a firm's total expenses are subtracted from total sales.
- Corporate strategies include;
- Industry Dynamics
Values – Culture
- Corporate Strategy Development
- Deciding the scope and purpose of the business, it's objectives, initiatives, and resources necessary to implement.
- A radical change in business models.
Southwest Airlines, Jet Blue
- Firms become innovative with respect to their business models
- Marketing Strategy
- the means by which a marketing goal is to be achieved, usually characterized by a specific target market and a marketing program to reach it.
- Business Definition
- The most important decision a business makes, and the process a business goes through to define and position itself in its competitive emvironment.
- Business Definition implies...
- that we will serve certain customers but no others, that we will provide certain products but not others.
- Value Migration
- migration of business from one to another
- Shift in firms' business definition
- As firms become more market oriented, strategy has shifted to reinventing the business model to deliver superior customer value
- Example of Railroad Industry
“We are in the Railroad Business”
- Describes the failure in developing its business definition which narrowed their view and falied to compete with other transportation systems.
Business Def. should have been
"We are in Transportation Business."
- A principle, standard, or quality considered worthwhile and desirable. Values are defining. A value communicate what is important. Value form culture in organization.
- Everyone and every organization has values. They are either intentionally defined and become the framework for how the organization operates, or they simply evolve.
- A guiding image of success
- Power of Vision
- When people feel connected to something with a purpose greater than themselves, it inspires them to reach levels they otherwise would not achieve.
- Important ability in leadership
- The ability to cast vision to motivate people in the direction of a common cause is a critical component of Leadership
- A statement of the organization's scope, often identifying its customers, markets, products, techonology, and values.
- A mission statement should be...
- Clear, Succinct, representation of the enterprise's purpose for existance. It should incorporate socially meaningful and measurable criteria.
- Disney “To make people happy.”
Mary Kay “To give unlimited opportunity to women.”
Wal-Mart “To give ordinary folk the chance to buy the same thing as rich people.”
3M “To solve unsolved problems innovatively.”
- Mission statements
- It converts the mission statement into targeted levels of performance to be achieved, often by specific time.
- Successful Principle regarding Goals
- You cannot control outcomes, you can only control activites that lead to outcomes
- Goals should be;
Sales (dollars or units)
- These are the types of...
- Strategic Directions must focus on...
- 1. Customers
- An organization's special capabilities including skills, technologies, and resources that distinguish it from other organizations. It should be distinctive enough to provide competitive advantage, a unique strength relative to competitors, often besed on cost, quality, time, or innovation.
- Example: Lands' End's unconditional gurantee for its producs and acceptance of any return is an example of...
- Customer focus of the firm which set its strategic direction.
- Business Portofolio Analysis
- The quantified performance measures and growth targets to analyze a firm's strategic business unit as though they were a collection of separate investments.
- Business Portofolio consists of 4 measurements, which are...
- 1. Cash Cow: Low Market Growth Rate and High Relative Market Share
2. Stars: High market growth rate and high relative market share
3. Dogs: Low Market growth rate and low market share
4. Question Marks: Low market share and high market growth rate
- Cash Cows
- SBUs (strategic business units)that typically generate large amounts of cash, far more than they can invest profitably in their own product line. They have a dominant share of a slow-growth market and provide cash to pay large amount of company overhead and to invest in other SBUs.
- SBUs with a high share of high-growth markets that may need extra cash to finance teir own rapid future growth.
- Questionmarks / Problem Children
- SBUs wich a low share of high growth market. They require large injection of cash just to maintain their market share, much less increase it. Managers need to choose the right one to invest.
- SBUs with a low share of low-growth markets. Although they might generate enough cash to sustain theselves, they do not hold the promise of ever becoming real winners for the firm.
- 4 alternative strategies for SBUs
- 1. Build
- Purpose of Business
- To build its Sustainable Competitive Advantage, which is attained through building a good relationship with customers
- Market Product Analysis
- The way to view growth opportunities in terms of markets and products (Current Product and New product, Current market and new market)
- Market Penetration
- Increasing sales of present products in its existing market (Current Product in a current market)
- Market Product Analysis
- Market Development
- Selling existing products to a new market
(Current Products to new markets)
- Product Development
- Selling a new product to a existing market
(New products to existing markets)
- Developing new products and selling them in new markets.
(New products to new markets)
- 4 alternative strategies to expand the revenue
- 1. Market penetration
2. Market development
3. Product development
- The most failed strategies of 4 alternative strategies attained from a Market-Product Analysis is...
- Strategic Marketing Process
- Approach whereby an organization allocates its marketing mix resources to reach its target markets
- Marketing Plan
- Road map for the marketing activities of an organization for a specified future period of time
- Strategic Marketing Process consist of;
- 1. Planning Phase
(--> Marketing Plan)
2. Implementation Phase
3. Control Phase
- Planning phase of marketing process involve;
- 1. SWOT situation analysis
2. Market-product focus and goal setting
3. Marketing Program
- Situation Analysis
- taking stock of where a firm or product has been recently, where it is now, and where it is headed.
- SWOT analysis
- Organization's appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats
- Step 1 in the Planning phase of the Strategic marketing process include the following processes;
- Situation SWOT Analysis
1. Identify industry trends
2. Analyze competitors
3. Assess own company
4. Research customer
- Step2 in the Planning phase of the Strategic marketing process include the following processes;
- Market-product focus and goal setting stage
1. set market and product goals
2. select target market
3. find points of difference
4. position the product
- Step3 in the Planning phase of the Strategic marketing process include the following processes;
- Marketing program stage
1. Develop the program's marketing mix (4P)
- Price strategy
- Product Strategy
- Promotion strategy
- Place strategy (distribution )
2. Develop the budget by estimating revenues, expenses, and profits
- Strength in SWOT analysis describe...
- the firm's favorable & internal factor
- Weakness in SWOT analysis describe...
- the firm's unfavorable & external factor
- Opportunity in SWOT analysis describe...
- Favorable & External factor of the firm
- Threats in SWOT analysis describe...
- Unfavorable & External factor concerning the firm
- "Consumer concern with fatty desserts; B&J customers are the type who read new government-ordered nutrition lables." This is the example of...
- Threats (External & Unfavorable factor the firm possess)which is analyzed through SWOT analysis.
- Elements of Marketing Mix that comprise a cohesive marketing program;
- 1. Product strategy: features, brand name, packaging, service, warranty
2. price strategy
3. promotion strategy: advertising, personal selling, sales promotion, publicity
4. Place strategy: outlets, channels, coverage, transportation, stock level
- Organizational Culture
- A set of values, ideas, and atitudes that is learned and shared among members of an organization.
- Market Share
- The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
- Market segmentation
- the aggregating (sorting) potential buyers into groups, or segments, that have common needs, and will respond similarly to a marketing action
- Step2 of the planning phase in the strategic marketing process, the firm can identify its target by...
- Market segmentation.
- Points of differences
- Those characteristics of a product or service that make it superior to competitive substitutes.
- In the process of Market-product focus and goal setting, it is important to find...
- Points of difference
(Those characteristics of a product that make it superior to competitive substitutes)
high quality, long life, reliability, ease of use, and low cost
- Marketing tactics
- Detailed day-to-day operational decisions essential to the overall success of marketing strategies.
- Implementation Phase of the Marketing strategy process includes;
- 1. Obtaining resources
2. designing the marketing organization
3. developing schedules
4. executing the marketing program
- "Launch a new product targeted at GenY" this is the example of...
- Marketing strategy decision
- "Form a cross-functional team to work on the gadget" this is the example of...
- Marketing tactics
- Success is..
- doing a whole bunch of little things, right, over a long period of time.
- Environmental Scanning
- Process of acquiring information on events outside the organizxation to identify and interpret potential trends
- Environmental trends typical arise from 5 sources;
- 1. Social
5. regulatory forces
- Environmental forces affect
- Social Forces
- the environment includethe demographic characteristics of the population and its values. Changes in these forces can have a dramatic impact on marketing strategy.
- A population according to characteristics such as age, gender, ethnicity, income and occupation
- Mature household
- household headed by someone over 50 years of age
- Population Shifts in 1990s
- A major regional shift in the U.S. population toward western and Sun Belt states occured in the 1990s. (Nevada, Arizona, Colorado, Utah, Idaho grew significantly)
- Population shits within states
- CMSA: Consolidated metropolitan statistical area, conrtining PMSA
PMSA: primary metropolitan statistical area, containing MSA
MSA: Metropolitan Statistical Area (the Center of the city)
- Racial and Ethinic Diversity impact on marketing
- marketers who recognize and respond to diversity in the U.S. population will be rewarded for their efforts because consumer needs will be better satisfied.
- The set of values, ideas, and attitudes that are learned and shared among members of a group.
- Baby boomers
- Generation of children born between 1946 and 1964
- Generation X
- - born between 1965 and 1976
- Grown up in the difficult economic condition in the U.S.
- first generation to be raised by mainly dual-career households
- Generation Y
- Americans born after 1976, the year that many baby boomers began having children
- Generation or Age cohort
- a group of persons who experienced a common social, political, historical, and economic environment.
- Cohort Analysis
- The process of describing and explaining the attitudes, values, and behaviors of an age group as well as predicting its future attitudes, values, and behaviors.
- Mature Market
- Age groups of age 50 and over;
- Babyboomers (1946-1964)
- Postwar (1928-1945)
- WWII generation (19221927)
- Depression (1912-1921)
- Pre-depression (before 1912)
- Age groups
- - Babyboomers (1946-1964)
- Gen.X (1965-1976)
- Gen.Y (1977-Now)
- Four segments in mature market
- - Healthy Indulgers (7 million, rapidly growing)
- Ailing Outgoers (18 million)
- Health Hermits (20 million)
- Frail Recluses (18 million)
- Pre-depression Generation
- born before 1930
living through Depression, WWII, and witnessing radical social, economic, and technologic change throughout their lives.
- Pre-depression Generation's attributes
- - conservative
- concerned with financial and personal security
- Attrbutes of Depression Generation
- born between 1930-1945
- grown up with music and TV
- 60's music
- active lifestyle
- breaking with sterepotypical old cutomers
- Babyboom generation
- Born between the end of WWII and 1964
80million (preceding more than 2 of the formar generations combined)
- influenced by JFK assasination
- Vietnam War, cold war
- recreational drugs
- the sexual revolution
- the enregy crisis
- rapid growht of divorce
- Beatles, Rock'n roll, beachboys
- Babyboomers' attributes
Compared to formar generations, babyboomers are...
- - higher income
- higher education
- more tech savvy
- difining retirement differently
- Marketer's view of Babyboomers;
- - strong market for "anti-aging" products, travel, and financial services
- often alienated by overly youth-oriented appeals in ads.
- Marketers' view of generation X
- - consumers who are self reliant, entrepreneurial, supportive of racial and ethnic diversity and better education than any previous generation.
- Xgen women are more educated than Xgen men
- Xers are getting married, having families and facing the pressure of these events
- Reaching Xers requires special attention to media, especially online.
- Generation Y (echoboom generation)
- - characterized by strong sense of independence and autonomy
- assertive, self-reliant, emotionally and intellectually expressive, innovative, and curious.
- muti-racial generation, with black and hispanic often being fasion leaders
- Attributes of Generation Y
- -compose of 2 markets; teens and twenty's
-expected to have the highest education of previous generations with the income levels to follow
- very tech savvy with media option including internet, cell phones, and video games
- a strong market for automobiles with brands
e.g. Toyota creating edgy and affordable models such as the Scion to target them
- - the newest generations born after 1994 with estimated 62 million people by 2010
- Tweens: marketers are increasingly targeting older millenials (8-14)going after early loyalty and hefty allowances (e.g. DKNY)
- Income, expeditures, and resourcevs that affect the cost of running a business or household
- Economic forces
- - Macroeconomic conditions
- Microeconomic conditions
- Consumer income include;
- - Gross income
- Disposable income
- discretionary income
- 3 major economic forces include;
- 1. Macroeconomic conditions
2. Microeconomic conditions
3. Consumer income
- Macroeconomic forces include;
- inflation, unemployment, all other dynamic effects of economy
- Gross income
- total amount of money made in one year by a person, household, or family unit
- Disposable income
- Money that remains after paying taxes. (gross income - taxes)
- Discretionary income
- money that remainsafter paying for taxes and necessities. Used for luxury items such as vacations, etc.
- Most discretionary income is holded by;
- baby boomers
- Technological forces
- inventions from aplied science or engineering research.
- Techonology have significant impacts in marketing in ways that;
- 1. derease in cost lead to declined price, which lead customers to assess value on the basis of other dimensions such as quality, service, and relationships
2. development of new product
3. changes in existing products and the ways they are produced may be changed
- information-and-communication-based electronic exchange environment occupied by digitized offerings.
- activity that uses electronic communication in the marketing of goods or services
- Recent development in technologies that significantly affected marketing are;
- - internet
- market space
- Alternative firms that could provide a product to satisfy a specific market's needs
- 4forms of competitions are;
- 1. pure competition
2. monopolistic competition
4. pure monopoly
- Small businesses in the U.S. should be considered to be...
- all firm's competitors
- Regulations that are made to protect competition are;
- - Sherman Antitrust Act
- Clayton Act
- Robinson Patman Act
- Product-related legislations that are meant to protectcompanies are;
- - Patent law
- Copyright law
- Digital Millennium Copyright Act (1998)
- Product-related legislations that are meant to protect consumers are;
- - Nutritional Labeling
- Consumer Product Safety Act (1972)
- Product-related legislations that are meant to protect both companies and consumers are;
- - Landham Act
- Trademark Law Revision Act
- Madrid Protocol
- Federal Dilution Act
- Distribution-related legislations are;
- - Exclusive Dealing
- Requirement Contracts
- Exclusive Territorial Distributorship
- Tying Arrangement
- an alternative to government control where an industry attempts to police itself
- About 80 percent of start-up businesses fail within five years. What reasons explain Flyte Tyme’s continuing success?
- - Artists selection based on the target which is determined through marketing analysis.
- Domain knowledge
- Purely based on “the best idea wins”
- The 15% of the U.S. population born between 1965 and 1976 is classified as;
- X generation
- 72 million Americans born between 1977 and 1994 are classified as;
- Y generation
- Muticultural Marketing consists of;
- Combination of marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyle of different races.
- Ristrictions state and federal laws place on businesses with regard to conduct of its activities
- Grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.
- The moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.
- A society's values and standards that are enforceable in the courts.
- Current Perceptions of Ethical Behavior;
- There has been a public outcry about the unethical practices of businesspeople. Public opinion polls show:
58% of U.S. adults rate ethical standards of business executives as “fair” or “poor.”
b. 90% think white-collar crime is “very common” or “somewhat common.”
c. 76% say the lack of ethics in businesspeople contributes to tumbling societal moral standards; only the U.S. government is viewed as less trustworthy than corporations.
- Possible reasons for the current state of perceived business ethical conduct;
- 1.Increased pressure on businesspeople to make decisions in a society characterized by diverse value systems.
2. Growing tendency for business decisions to be judged publicly by groups with different values and interests.
3. Ethical business conduct may have declined.
- A framework for understanding ethical behavior consists of;
- - societal culture and norms
- business culture and industry practices
- corporate culture and expectations
- personal moral philosophy and ethical behavior. This is influenced by the culture defined above (Societal, Business, Corporate culture)
- An individual's worldview is typically...
- Developed by 13
shaped by age of 20
Difficult to be changed after 20
- Societal culture
- Culture serves as a socializing force that determines what is morally right and just.
- Moral standards can be...
- different in different cultures, which can create moral dilemmas between different societies
- Societal values affect..
- ethical and legal relationships among individuals, groups, business institutions, and organizations.
- In the U.S., the unauthorized use, reproduction, or distribution of another’s intellectual property (copyright, trademark, or patent) is...
- both unethical and illegal.
- Business Cultures
- The effective rules of the game, the boundaries between competitive and unethical behavior, and the codes of conduct in business dealings.
- Business Culture deal with two major ethical issues;
- 1. Ethics of exchange
2. Ethics of competition
- Ethics of exchange
- Exchange between a buyer and a seller should result in both parties being better off after a transaction.
- caveat emptor
- The legal concept of "let the buyer beware", which was believed before 1960s.
- Consumer Bill of Rights
- Codified the ethics of exchange between buyers and sellers, including right to
to be informed,
to choose, and
to be heard.
(outlined by JFK in 1962)
- The U.S. Consumer Product Safety Commission checks the safety of 15,000 consumer products.
This is one of the protection for consumer outlined in
- Consumer Bill of Right
- Marketers have a responsibility to give consumers complete and accurate information about products and services. This is protected consumers right in...
- Be informed
Consumer Bill of Rights
- Consumers should have access to public-policy makers to make complaints about products and services.This is protected right outlined in...
- Be heard
Consumer Bill of Rights
- Ethics of competition
- 1. Espionage
- the clandestine collection of trade secrets or proprietary information about a company’s competitors. It is both illegal and unethical.
- trespassing, theft, fraud, misrepresentation, wiretapping, searching competitors’ trash, and violations of written and implicit employment agreements with non-compete clauses are the examples of...
- Bribes & Kickbacks
- Giving and receiving bribes (when money is paid before an exchange occurs) or kickbacks (when money is paid after an exchange occurs) is considered unethical behavior in American business culture.
- Federal Trade Commission
- A commission that plays an active role in educating consumers and businesses about the importance of personal information privacy on the internet.
- Corporate Culture
- The shared values, beliefs, and purpose of employees that affect individual and group behavior.
- The dress, manner of work, and compensation of its employees reflect...
- Corporate Culture
- Codes of ethics
- A formal statement of ethical principles and rules of conduct.
- Workers sometimes violate ethics codes because of ...
- how they perceive the behavior of top management and co-workers.
- Employees who report unethical or illegal actions of their employers
- 8 Governing Ethical Principles
- 1. Fiduciary principle
- Diligence, Loyalty is outlined in..
- Fiduciary principle
- Protection, Theft are mentioned in...
- property principle
- contracts and committment is mentioned in...
- the reliability principle
- Truthfulness, Deception, Disclosure, Candor, Objectivity of the firm is mentioned in...
- the transparency principle
- Respect for the Individual, Health and Safety, Privacy and Confidentiality, Use of Force, Associatiation & Expression, Learning & Development, Employment Security is mentioned in...
- the dignity principle
- Fair Dealing, Fair Treatment, Fair Competition, Fair Process is mentioned in ...
- the Fairness principle in the 8 governing ethical principle.
- Law & Regulation, Public Goods, Cooperation with Authorities, Political Noninvolvement, Civic Contribution are mentioned in..
- the citizenship principle
- Addressing Concerns, Public Involvement is mentioned in...
- the responsiveness principle
- Ethical choices are based on...
- the personal moral philosophy of the decision maker.
- A person’s moral philosophy is:
- Learned through the process of socialization with friends and family, and by formal education, influenced by the societal, business, and corporate culture.
One's conscious determines.
- The Stewardship Principle
- Whoever is a good steward with the “little things”, will be rewarded with more. (Opportunities, Responsibilities, Compensation, Recognition)
- Moral Idealism
- moral philosophy that consider certain indvidual rights or duties as universal, regardless of the outcome
- Moral philosophy that focuses on the "greatest good for the greatest number"
- View assessing the costs and benefits of the consequences
- Social Responsibility
- Idea that organizations are part of a larger society and are accountable to that society for their actions.
- Profit Responsibility
- A Company has a simple duty - maximizing profits for their owners or stockholders.
- Stakeholder responsibility
- the obligations an organization has to those who can affect achievement of its objectives (customers, employees, suppliers, and distributers)
- It occurs when a company makes excessive profits, usually by taking advantage of a shortage of supply to charge extremely high prices.
- Cause Marketing
- Tying the charitable contributions of firm directly to sales produced through the promotion of oneof its products.
- Green Marketing
- Marketing efforts to produce, promote, and reclaim environmentally sensitive products.
- Social Audit
- Systematic assessment of a firm's objectives, strategies, and performance in the domain of social responsibility
- Subjective, relative to particular groups
- objective and universally valid
- Consumer Behavior
- actions a person takes in purchasing and using products and services
- Purchase Decision Process
- stages a buyer passes through in making choices about which products or services to buy;
1. Problem recognition
2. Information search
3. evaluation of alternatives
4. purchase decision
5. postpurchase behavior
- Problem recognition
- = perceiving a need
The initial step in the purchase decision, occurs when a person realizes that the difference between what he or she has and what he or she would like to have.
- Marketers technique to let customers recognize problem (wants)
- In marketing, advertisements or salespeople can activate a consumer’s decision process by showing the shortcomings of competing or currently owned products.
- Information Search
- = seeking value
A consumer begin to search for information about what product or service might satisfy the newly discovered need.
1. Internal search
2. External search
- Internal search
- scanning one’s memory for previous experiences with products or brands. Internal search is often sufficient for frequently purchased products.
- External search
- necessary when past experience or knowledge is insufficient, the risk of making a bad decision is high, and the cost of gathering information is low.
- Primary source of external information about purchase decision;
- 1. Personal sources (relatives, friends)
2. public sources (consumer reports, government agencies)
3. marketer dominated sources (information from sellers, ads, websites, salespeople, displays at stores)
- Alternative Evaluation
- = assessing value
- The information stage clarifies the problem for consumers by:
- 1. suggesting criteria
2. suggesting points to consider
3. developing consumer value perceptions
- Evaluative criteria
- = attributes
Both the objective attributes of a brand and the subjective ones you use to compare different products and brands
- Evoked set (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
- Word of mouth
- The power of word of mouth influence is well known in marketing.
- Focusing on customer satisfaction which leads to the power of word of mouth will result in
- increase in sales along with decrease on Marketing Expense
- Brand Loyalty can be
- a shortcut to mind of customers in purchase-decision making process
- New car buyers have fairly well-defined evaluative criteria.
- 1. warranty/gurantee
2. ease of maintainance
3. quality compared to other brands
- Purchasing decisin (buying value)
In this stage, two remained choices are;
- 1. from whom to buy
2. when to buy
The Internet adds a technological dimension to the consumer decision process by allowing consumers to gather information, evaluate alternatives, and make buying decisions
- Postpurchase behavior
- after buying a product, the consumer compares it with his or her expectations and is either satisfied or dissaisfied.
- What affects customer's perceives after purchasing a product?
- A company's sensitivity to a customer's consumption experience.
- Satisfied buyers tell 3 other people about their experience, while dissatisfied ones complain to...
- 9 people.
- Satisfied buyers tend to...
- Buy from the same seller each time a purchase decision arises, creating a huge financial impact.
- Many firms focus attention on postpurchase behavior to maximize customer satisfaction and retention by offering...
- Toll-free telephone numbers, liberalized return policies, and engaging in staff training to handle complaints.
- Consumers, faced with two or more highly attractive alternatives and purchasing one of them, may ask the question, “Should I have purchased this?” This feeling of postpurchase psychological tension or anxiety is called
- Cognitive Dissonance
- After a purchase, consumers seek to ...
- affirm their choice, often seeking information or approval from others or reading ads or reviews about the brand chosen.
- Firms often use ads or follow-up calls from salespeople in the postpurchase stage to...
- Try to comfort buyers that they made the right decision.
- personal, social, and economic significance of a purchase to the consumer
- Consumers might skip or minimize one or more steps of purchase-decision making process when...
- the level of involvement is low.
- High-involvement purchase typically...
- - are expensive
- can have serious personal consequences
- could reflect on one's social image
- When the purchase has a high level of involvement...
- Consumer engage in extensive information search, consider many product attributes and brands, form attitudes, and partcipate more in word-of-mouth communication
- For routine product, consumers tend to...
- skip steps of purchase-decision process since the level of involvement is low.
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