Study guide exam 1 from review sheet.

Anything in highlight is from the review

sheet. Rest is extra info I thought is useful
What is marketing

 A process by which companies create value and build strong customer relationships in order to
capture value from customers in return

Customer driven market strategy

Market segmentation:

 Dividing a market into distinct groups of buyers who have different needs, characteristics, or
behaviors and who might require separate marketing strategies or mixes.

Why do marketers segment?

 A market segment consists of consumers who respond in a similar way to a given set of
marketing efforts. In the car market, for example, consumers who want the biggest, most
comfortable car regardless of price make up one market segment. Consumers who care mainly
about price and operating economy make up another segment. It would be difficult to make one
car model that was the first choice of consumers in both segments. Companies are wise to focus
their efforts on meeting the distinct needs of individual market segments.
 Market targeting: is the process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
 Market positioning: is the arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target consumers.
 Differentiation: begins the positioning process. Actually differentiating the market offering
to create superior customer value.

Important properties of market segmentation

 Distinct and Meaningful”

Different market segmentations for consumer markets

 Age and life-cycle stage segmentation divides a market into different age and life-cycle groups.
 Gender segmentation divides a market into different segments based on gender.
 Income segmentation divides a market into different income segments.
 Psychographic segmentation divides a market into different segments based on social class,
lifestyle, or personality characteristics.
 Behavioral segmentation divides a market into segments based on consumer knowledge,
attitudes, uses of a product, or responses to a product.

What is a marketing mix

 Marketing mix The set of tactical marketing tools— product, price, place, and promotion— that
the firm blends to produce the response it wants in the target market.

What is a target market

 Target marketing refers to which segments to go after.

 A target market is a set of buyers who share common needs or characteristics that the company
decides to serve.

Different target market segments

 Undifferentiated marketing targets the whole market with one offer.•

 Mass marketing
 Focuses on common needs rather than what’s different

 Differentiated marketing targets several different market segments and designs separate offers
for each.

 Goal is to achieve higher sales and stronger position•

 More expensive than undifferentiated marketing

 Concentrated marketing targets a smaller market.

o Limited company resources

 Knowledge of the market

 More effective and efficient

 Micromarketing is the practice of tailoring products and marketing programs to suit the tastes
of specific individuals and locations.

o Local marketing

o Individual marketing
What is product positioning

A product position is the way a product is defined by consumers on important attributes—the place the
product occupies in consumers’ minds relative to competing products. Products are made in factories,
but brands happen in the minds of consumers.

What are components of Micro environment

Intermediaries

Resellers are distribution channel firms that help the company find customers or make sales to them.
These include wholesalers and retailers that buy and resell merchandise. Physical distribution firms help
the company stock and move goods from their points of origin to their destinations. Marketing services
agencies are the marketing research firms, advertising agencies, media firms, and marketing
consulting firms that help the company target and promote its products to the right markets. Financial
intermediaries include banks, credit companies, insurance companies, and other businesses that help
finance transactions or insure against the risks associated with the buying and selling of goods.

What are components of macro environment

Strategic planning, what it is and its components

The process of developing and maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities.

 Steps for strategic planning

 o Defining the mission statement
o Setting the company objectives and goals
o Designing the business portfolio

Why do governments make laws regulating businesses?

Legislation regulating business is intended to protect

 companies from each other

 consumers from unfair business practices
 the interests of society against unrestrained business behavior

What is portfolio analysis

The process by which management evaluates the products and businesses that make up the company.

Growth-share matrix

A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and
relative market share.

1. Stars: Stars are high-growth, high-share businesses or products. They often need heavy
investments to finance their rapid growth. Eventually their growth will slow down, and they will
turn into cash cows.

2. Cash cows: Cash cows are low-growth, high-share businesses or products. These established and
successful SBUs need less investment to hold their market share. Thus, they produce a lot of the
cash that the company uses to pay its bills and support other SBUs that need investment.

3. Question marks: Question marks are low-share business units in high-growth markets. They
require a lot of cash to hold their share, let alone increase it. Management has to think hard
about which question marks it should try to build into stars and which should be phased out.

4. Dogs: Dogs are low-growth, low-share businesses and products. They may generate
enough cash to maintain themselves but do not promise to be large sources of cash.
Product/market expansion grid: A portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development, or
diversification.
  Market penetration: Company growth by increasing sales of current products to current market
segments without changing the product.
 Market development: Company growth by identifying and developing new market segments for
current company products.
 Product development: Company growth by offering modified or new products to current market
segments.
 Diversification: Company growth through starting up or acquiring businesses outside the
company’s current products and markets.

Return on Marketing Investment (Marketing ROI)

Net return from a marketing investment divided by the costs of the marketing investment

Measurement of the profits generated by investments in marketing activities

Total Available Market –

TAM: The worldwide market for a broad category of goods or services

Served Available Market

–SAM: The specific part of the TAM your company’s products address

Share of Market

–SOM: How much of the market does your company capture? Your company’s revenue
Porters 5 force model

Marketing research samples- important characteristics

 A sample is a segment of the population selected for marketing research to represent the
population as a whole.
 Ideally, the sample should be representative so that the researcher can make accurate
estimates of the thoughts and behaviors of the larger population.
 Large samples give more reliable results than small samples. However, larger samples usually
cost more, and it is not necessary to sample the entire target market or even a large portion to
get reliable results.

Steps in consumer buying behavior

 Cognitive dissonance is buyer discomfort caused by post purchase conflict.

 The adoption process is the mental process an individual goes through from first learning
about an innovation to final regular use.
 Steps for adoption process

]Business buying decisions vs consumer buying decisions

Business buyers usually face more complex buying decisions than do consumer buyers. Compared with
consumer purchases, a business purchase usually involves:
  More decision participants
 More professional purchasing effort
 More buyer and seller interaction

Business buying process

Different business buying situations

 Straight rebuy is a buying situation in which the buyer routinely reorders something without any
modifications.
 Modified rebuy is a buying situation in which the buyer wants to modify product specifications,
prices, terms, or suppliers.
 New task is a buying situation in which the buyer purchases a product or service for the first
time.
 Systems selling is buying a complete solution to a problem from a single seller.

Competitive advantage is an advantage over competitors gained by offering consumers greater value,
either through lower prices or by providing more benefits that justify higher prices.

Layers of a product

 The most basic level is the core customer value, which addresses the question: What is the
buyer really buying? When designing products, marketers must first define the core, problem-
solving benefits or services that consumers seek.
 At the second level, product planners must turn the core benefit into an actual product. They
need to develop product and service features, a design, a quality level, a brand name, and
packaging. For example, the iPad is an actual product. Its name, parts, styling, operating system,
 features, packaging, and other attributes have all been carefully combined to deliver the core
customer value of staying connected
 Finally, product planners must build an augmented product around the core benefit and actual
product by offering additional consumer services and benefits.

How can companies add new products to their portfolio

 Acquisition refers to the buying of a whole company, a patent, or a license to produce someone
else’s product.
 New product development refers to original products, product improvements, product
modifications, and new brands developed from the firm’s own research and development.

Product life cycle