Business & Finance - Marketing Week Discussion 3 HOMEWORK

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****ANSWER EACH QUESTION****

Also, cite at least one other (apart from the suggested reading) source in your discussion. List any resource you used at the end of your discussion.  Always use APA format.

TEXTBOOK REFERENCES: Donnelly, J., Peter, J. (2018).  A Preface to Marketing Management (15th Edition). McGraw-Hill Higher Education.

Relationship Marketing (RM) represents a paradigm shift from traditional marketing strategies to a more long-term relationship-oriented marketing strategy.  It concentrates efforts on massaging and enhancing customer and employee relationships.  It requires buy-in from everyone in the company to “know the customer” and to ensure that customers trust the company’s intentions and feel a part of the “family”.  This strategy can be costly to implement since it does require that systems within an organization are integrated so that customer value is clearly understood (i.e., the number of relationships or the number of products/services of yours a customer may have).  Data mining is a key component of RM strategy.  In today’s competitive environment, it is important that companies concentrate on retaining existing customers and growing their loyalty base for greater profitability.  Read the suggested articles in this module to acquire a foundation in the tenets of Relationship Marketing before answering the following questions.

Answer all the following questions:

1. Why is it more important to keep existing customers happy (satisfied) and loyal (returning) than it is to generate new customers?

2. As a marketing manager introducing a new product to your target market, talk to at least two tenets of Relationship Marketing that you would employ and why they are so important to the success of your implementation.

3. Use the suggested readings in this module as a basis for understanding Relationship Marketing. 

SEE TEXTBOOK SUMMARY READING BELOW!

Textbook summary reading: Chapter 3/4/&5

The marketing concept emphasizes that profitable marketing begins with the discovery and understanding of consumer needs and then develops a marketing mix to satisfy these needs. Thus, an understanding of consumers and their needs and purchasing behavior is integral to successful marketing. Unfortunately, there is no single theory of consumer behavior that can totally explain why consumers behave as they do. Instead, there are numerous theories, models, and concepts making up the field. In addition, the majority of these notions have been borrowed from a variety of other disciplines, such as sociology, psychology, anthropology, and economics, and must be integrated to understand consumer behavior.

In this chapter, consumer behavior will be examined in terms of the model in Figure 3.1. The chapter begins by reviewing social, marketing, and situational influences on consumer decision making. These provide information that can influence consumers’ thoughts and feelings about purchasing various products and brands. The degree to which this information influences consumers’ decisions depends on a number of psychological influences. Two of the most important of these are product knowledge and product involvement, which will then be discussed. The chapter concludes by discussing the consumer decision-making process.

SUMMARY READING-TEXTBOOK

This chapter presented an overview of consumer behavior. Social, marketing, and situational influences on consumer decision making were discussed first, followed by a discussion of two important psychological factors: product knowledge and product involvement. Consumer decision making, which can be extensive, limited, or routine, was viewed as a series of stages: need recognition, alternative search, alternative evaluation, purchase decision, and postpurchase evaluation. Clearly, understanding consumer behavior is a prerequisite for developing successful marketing strategies.

Key Terms and Concepts

Belongingness and love needs: According to Maslow, the needs related to the social and gregarious nature of humans and the need for companionship.

Cognitive dissonance: A lack of harmony among a person’s thoughts after a decision has been made—that is, the individual has doubts and second thoughts about the choice that was made.

Current conditions: Situational influences such as momentary moods and conditions that influence consumer behavior.

Disconfirmation paradigm: Approach that views consumer satisfaction as the degree to which the actual performance of a product is consistent with expectations a consumer had before purchase. If the product is as good as expected, then the consumer will be satisfied; if not, then the consumer’s expectations are disconfirmed.

Esteem needs: According to Maslow, the needs that consist of both the need for awareness of importance to others (self-esteem) and actual esteem from others.

Experiential sources of information: The information a consumer gets from handling, examining, and perhaps trying a product while shopping.

Extensive decision making: Level of decision making that requires the most time and effort since the purchase typically involves a highly complex or expensive product that is important to the consumer.

Family life cycle:  Framework that divides the development of a family into a number of stages based on the needs, assets, debts, and expenditures that change as a family begins, grows, and matures.

Group sources of information: A common source of information for purchase decisions that comes from communication with other people such as family, friends, neighbors, and acquaintances.

Internal sources of information: Stored information and experience a consumer has in memory for dealing with a particular need.

Limited decision making: Level of decision making that requires a moderate amount of time and effort to search for and compare alternatives.

Lower Americans:  Comprise 16 percent of the population and have the lowest education levels and resources; the bottom of the social class hierarchy.

Marketing sources of information:  Include such things as advertising, salespeople, dealers, packaging, and displays offered by marketers to influence consumer decision making and behavior.

Middle class: Middle social class; comprises 34 percent of the population and is concerned with doing the right thing and buying what is popular. This class tends to emulate Upper Americans.

Need recognition:  The first step in the consumer decision-making process; the recognition by the consumer of a felt need or want.

Physical features of a situation: The geographical and institutional decor, sounds, aromas, lighting, weather, and visible configurations of merchandise or other materials.

Physiological needs:  According to Maslow, the primary needs of the human body such as food, water, and sex.

Product knowledge:  The amount of information a consumer has stored in her or his memory about particular product classes, product forms, brands, and models, and ways to purchase them.

Public sources of information:  Publicity, such as newspaper articles about the product, and independent ratings of the product, such as Consumer Reports.

Reference groups:  Groups that an individual looks to (uses as a reference) when forming attitudes and opinions.

Routine decision making: The most common type of decision making, involves little in the way of thinking and deliberation. It is often habitual and is the way consumers commonly purchase packaged goods that are inexpensive, simple, and familiar.

Safety needs: According to Maslow, things such as protection from physical harm, ill health, and economic disaster and avoidance of the unexpected.

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Self-actualization needs: According to Maslow, the desire to become everything one can become and fully realize talents and capabilities.

Situational influences: All of the factors particular to a time and place that have a demonstrable and systematic effect on current behavior.

Social features of a situation:  Include other persons present in a situation, their characteristics, their apparent roles and interpersonal interactions.

Task features of a situation:  Include the intent or requirement to select, shop for, or obtain information about a general or specific purchase.

Time dimension of a situation:  The temporal dimension of a situation such as the time of day or season of the year. It can also be relative to other life events such as the time since the last purchase or time until payday.

Upper Americans: Social class that comprises 14 percent of the population and is differentiated mainly by having high incomes. This social class remains the group in which quality merchandise is most prized and prestige brands are commonly sought.

Working class: Social class that comprises 38 percent of the population; “family folk” who depend heavily on relatives for economic and emotional support.

Organizational buyers include individuals involved in purchasing products and services for businesses, government agencies, and other institutions and agencies. The organizational buying process is influenced by whether the purchase is a straight rebuy, modified rebuy, or new task purchase. It is also influenced by people in various purchasing roles, the orientation, size, and degree of centralization of the organization, the organization’s purchasing policies and procedures, and individuals’ motivations and perceived roles. The organizational buying process can be viewed as a series of four stages ranging from organizational need, vendor analysis, to purchase activities, to postpurchase evaluation. It is important that companies marketing to organizations understand the influences and process by which organizations buy products and services so their needs can be met fully and profitably.

Key Terms and Concepts

Business-to-business (B2B) marketing: Marketing products and services to producers, intermediaries, government agencies, and other institutions rather than to consumers.

Buyers: In buying centers, the persons who have formal authority and responsibility to select the supplier and negotiate the terms of the contract.

Buying center: An organizational group formed from different departments which has the responsibility to evaluate and select products for purchase. Different members of the group may play different roles in the process.

Deciders:  In a buying center, individuals who have the formal and informal power to select or approve the supplier that receives the contract. For routinely purchased products, the decider is likely to be the buyer but for more complex products, the decider could come from R&D, engineering, or quality control.

Gatekeepers: The people who control the flow of information to a buying center.

Influencers: In buying centers, the people who affect the buying decision usually by helping define the specifications for what is needed.

Initiators:  In buying centers, the people who start the buying process by recognizing a need or a problem in the organization.

Modified rebuy: A type of organizational purchase that involves the consideration of a limited number of alternatives before making a selection.

NAICS: The North American Industry Classification System which provides information about the number of establishments, sales volume, and number of employees in each industry broken down by geographic area.

New task purchase: A type of organizational purchase that involves an extensive search for information and a formal decision process.

Sole sourcing: Organizational purchasing in which all of a type of product are obtained from a single supplier.

Straight rebuy: A type of organizational purchase that involves routinely reordering a product from the same supplier that it had been purchased from in the past.

Users: In a buying center, the people in the organization that actually use the product to be purchased.

Vendor analysis: The process by which organizational buyers rate each potential supplier on various performance measures such as product quality, on-time delivery, price, payment terms, and use of modern technology.

Chapter 5 Textbook summary:

Market segmentation is one of the most important concepts in marketing. In fact, a primary reason for studying consumer and organizational buyer behavior is to provide bases for effective segmentation, and a large portion of marketing research is concerned with segmentation. From a marketing management point of view, selection of the appropriate target market is paramount to developing successful marketing programs.

The logic of market segmentation is quite simple and is based on the idea that a single product item can seldom meet the needs and wants of all consumers. Typically, consumers vary as to their needs, wants, and preferences for products and services, and successful marketers adapt their marketing programs to fulfill these preference patterns. For example, even a simple product like chewing gum has multiple flavors, package sizes, sugar contents, calories, consistencies (e.g., liquid centers), and colors to meet the preferences of various consumers. While a single product item cannot meet the needs of all consumers, it can almost always serve more than one consumer. Thus, there are usually groups of consumers who can be served well by a single item. If a particular group can be served profitably by a firm, it is a viable market segment. In other words, the firm should develop a marketing mix to serve the group or market segment.

In this chapter we consider the process of market segmentation. We define market segmentation as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. The group or segment that a company selects to market to is called a target market. We break down the process of market segmentation into six steps, as shown in Figure 5.1. While we recognize that the order of these steps may vary, depending on the firm and situation, there are few if any times when market segmentation analysis can be ignored. In fact, even if the final decision is to “mass market” and not segment at all, this decision should be reached only after a market segmentation analysis has been conducted. Thus, market segmentation analysis is a cornerstone of sound marketing planning and decision making.

The purpose of this chapter was to provide an overview of market segmentation. Market segmentation was defined as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. Market segmentation was analyzed as a six-stage process: (1) to delineate the firm’s current situation, (2) to determine consumer needs and wants, (3) to divide the market on relevant dimensions, (4) to develop product positioning, (5) to decide segmentation strategy, and (6) to design marketing mix strategy.

Key Terms and Concepts

A priori segmentation: Approach in which the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on the market.

Benefit segmentation: Approach that focuses on satisfying needs and wants by grouping consumers on the basis of the benefits they are seeking in a product.

Geodemographic segmentation: Approach that identifies specific households in a market by focusing on local neighborhood geography (such as zip codes) to create classifications of actual, addressable, mappable neighborhoods where consumers live and shop.

Market segmentation: The process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve.

Post hoc segmentation: Approach that groups people into segments on the basis of research findings rather than determining the basis prior to any research.

Positioning map: A visual depiction of consumer perceptions of competitive products, brands, or models.

Psychographic segmentation: Approach that focuses on consumer lifestyles as the basis for segmentation. Consumers are asked a variety of questions about their lifestyles (commonly, their activities, interests, and opinions) and then grouped on the basis of the similarity of their responses.

Target market: The group or segment a company selects to serve.

VALS: A product of SRI Consulting Business Intelligence; the best-known psychographic approach; stands for “values and lifestyles.”

2

****ANSWER EACH QUESTION****

Also, cite at least one other (apart from the suggested reading) source in your discussion. List any resource you used at the end of your discussion.  Always use APA format.

TEXTBOOK REFERENCES: Donnelly, J., Peter, J. (2018).  A Preface to Marketing Management (15th Edition). McGraw-Hill Higher Education.

Relationship Marketing (RM) represents a paradigm shift from traditional marketing strategies to a more long-term relationship-oriented marketing strategy.  It concentrates efforts on massaging and enhancing customer and employee relationships.  It requires buy-in from everyone in the company to “know the customer” and to ensure that customers trust the company’s intentions and feel a part of the “family”.  This strategy can be costly to implement since it does require that systems within an organization are integrated so that customer value is clearly understood (i.e., the number of relationships or the number of products/services of yours a customer may have).  Data mining is a key component of RM strategy.  In today’s competitive environment, it is important that companies concentrate on retaining existing customers and growing their loyalty base for greater profitability.  Read the suggested articles in this module to acquire a foundation in the tenets of Relationship Marketing before answering the following questions.

Answer all the following questions:

1. Why is it more important to keep existing customers happy (satisfied) and loyal (returning) than it is to generate new customers?

2. As a marketing manager introducing a new product to your target market, talk to at least two tenets of Relationship Marketing that you would employ and why they are so important to the success of your implementation.

3. Use the suggested readings in this module as a basis for understanding Relationship Marketing. 

SEE TEXTBOOK SUMMARY READING BELOW!

Textbook summary reading: Chapter 3/4/&5

The marketing concept emphasizes that profitable marketing begins with the discovery and understanding of consumer needs and then develops a marketing mix to satisfy these needs. Thus, an understanding of consumers and their needs and purchasing behavior is integral to successful marketing. Unfortunately, there is no single theory of consumer behavior that can totally explain why consumers behave as they do. Instead, there are numerous theories, models, and concepts making up the field. In addition, the majority of these notions have been borrowed from a variety of other disciplines, such as sociology, psychology, anthropology, and economics, and must be integrated to understand consumer behavior.

In this chapter, consumer behavior will be examined in terms of the model in Figure 3.1. The chapter begins by reviewing social, marketing, and situational influences on consumer decision making. These provide information that can influence consumers’ thoughts and feelings about purchasing various products and brands. The degree to which this information influences consumers’ decisions depends on a number of psychological influences. Two of the most important of these are product knowledge and product involvement, which will then be discussed. The chapter concludes by discussing the consumer decision-making process.

SUMMARY READING-TEXTBOOK

This chapter presented an overview of consumer behavior. Social, marketing, and situational influences on consumer decision making were discussed first, followed by a discussion of two important psychological factors: product knowledge and product involvement. Consumer decision making, which can be extensive, limited, or routine, was viewed as a series of stages: need recognition, alternative search, alternative evaluation, purchase decision, and postpurchase evaluation. Clearly, understanding consumer behavior is a prerequisite for developing successful marketing strategies.

Key Terms and Concepts

Belongingness and love needs: According to Maslow, the needs related to the social and gregarious nature of humans and the need for companionship.

Cognitive dissonance: A lack of harmony among a person’s thoughts after a decision has been made—that is, the individual has doubts and second thoughts about the choice that was made.

Current conditions: Situational influences such as momentary moods and conditions that influence consumer behavior.

Disconfirmation paradigm: Approach that views consumer satisfaction as the degree to which the actual performance of a product is consistent with expectations a consumer had before purchase. If the product is as good as expected, then the consumer will be satisfied; if not, then the consumer’s expectations are disconfirmed.

Esteem needs: According to Maslow, the needs that consist of both the need for awareness of importance to others (self-esteem) and actual esteem from others.

Experiential sources of information: The information a consumer gets from handling, examining, and perhaps trying a product while shopping.

Extensive decision making: Level of decision making that requires the most time and effort since the purchase typically involves a highly complex or expensive product that is important to the consumer.

Family life cycle:  Framework that divides the development of a family into a number of stages based on the needs, assets, debts, and expenditures that change as a family begins, grows, and matures.

Group sources of information: A common source of information for purchase decisions that comes from communication with other people such as family, friends, neighbors, and acquaintances.

Internal sources of information: Stored information and experience a consumer has in memory for dealing with a particular need.

Limited decision making: Level of decision making that requires a moderate amount of time and effort to search for and compare alternatives.

Lower Americans:  Comprise 16 percent of the population and have the lowest education levels and resources; the bottom of the social class hierarchy.

Marketing sources of information:  Include such things as advertising, salespeople, dealers, packaging, and displays offered by marketers to influence consumer decision making and behavior.

Middle class: Middle social class; comprises 34 percent of the population and is concerned with doing the right thing and buying what is popular. This class tends to emulate Upper Americans.

Need recognition:  The first step in the consumer decision-making process; the recognition by the consumer of a felt need or want.

Physical features of a situation: The geographical and institutional decor, sounds, aromas, lighting, weather, and visible configurations of merchandise or other materials.

Physiological needs:  According to Maslow, the primary needs of the human body such as food, water, and sex.

Product knowledge:  The amount of information a consumer has stored in her or his memory about particular product classes, product forms, brands, and models, and ways to purchase them.

Public sources of information:  Publicity, such as newspaper articles about the product, and independent ratings of the product, such as Consumer Reports.

Reference groups:  Groups that an individual looks to (uses as a reference) when forming attitudes and opinions.

Routine decision making: The most common type of decision making, involves little in the way of thinking and deliberation. It is often habitual and is the way consumers commonly purchase packaged goods that are inexpensive, simple, and familiar.

Safety needs: According to Maslow, things such as protection from physical harm, ill health, and economic disaster and avoidance of the unexpected.

page 58 

Self-actualization needs: According to Maslow, the desire to become everything one can become and fully realize talents and capabilities.

Situational influences: All of the factors particular to a time and place that have a demonstrable and systematic effect on current behavior.

Social features of a situation:  Include other persons present in a situation, their characteristics, their apparent roles and interpersonal interactions.

Task features of a situation:  Include the intent or requirement to select, shop for, or obtain information about a general or specific purchase.

Time dimension of a situation:  The temporal dimension of a situation such as the time of day or season of the year. It can also be relative to other life events such as the time since the last purchase or time until payday.

Upper Americans: Social class that comprises 14 percent of the population and is differentiated mainly by having high incomes. This social class remains the group in which quality merchandise is most prized and prestige brands are commonly sought.

Working class: Social class that comprises 38 percent of the population; “family folk” who depend heavily on relatives for economic and emotional support.

Organizational buyers include individuals involved in purchasing products and services for businesses, government agencies, and other institutions and agencies. The organizational buying process is influenced by whether the purchase is a straight rebuy, modified rebuy, or new task purchase. It is also influenced by people in various purchasing roles, the orientation, size, and degree of centralization of the organization, the organization’s purchasing policies and procedures, and individuals’ motivations and perceived roles. The organizational buying process can be viewed as a series of four stages ranging from organizational need, vendor analysis, to purchase activities, to postpurchase evaluation. It is important that companies marketing to organizations understand the influences and process by which organizations buy products and services so their needs can be met fully and profitably.

Key Terms and Concepts

Business-to-business (B2B) marketing: Marketing products and services to producers, intermediaries, government agencies, and other institutions rather than to consumers.

Buyers: In buying centers, the persons who have formal authority and responsibility to select the supplier and negotiate the terms of the contract.

Buying center: An organizational group formed from different departments which has the responsibility to evaluate and select products for purchase. Different members of the group may play different roles in the process.

Deciders:  In a buying center, individuals who have the formal and informal power to select or approve the supplier that receives the contract. For routinely purchased products, the decider is likely to be the buyer but for more complex products, the decider could come from R&D, engineering, or quality control.

Gatekeepers: The people who control the flow of information to a buying center.

Influencers: In buying centers, the people who affect the buying decision usually by helping define the specifications for what is needed.

Initiators:  In buying centers, the people who start the buying process by recognizing a need or a problem in the organization.

Modified rebuy: A type of organizational purchase that involves the consideration of a limited number of alternatives before making a selection.

NAICS: The North American Industry Classification System which provides information about the number of establishments, sales volume, and number of employees in each industry broken down by geographic area.

New task purchase: A type of organizational purchase that involves an extensive search for information and a formal decision process.

Sole sourcing: Organizational purchasing in which all of a type of product are obtained from a single supplier.

Straight rebuy: A type of organizational purchase that involves routinely reordering a product from the same supplier that it had been purchased from in the past.

Users: In a buying center, the people in the organization that actually use the product to be purchased.

Vendor analysis: The process by which organizational buyers rate each potential supplier on various performance measures such as product quality, on-time delivery, price, payment terms, and use of modern technology.

Chapter 5 Textbook summary:

Market segmentation is one of the most important concepts in marketing. In fact, a primary reason for studying consumer and organizational buyer behavior is to provide bases for effective segmentation, and a large portion of marketing research is concerned with segmentation. From a marketing management point of view, selection of the appropriate target market is paramount to developing successful marketing programs.

The logic of market segmentation is quite simple and is based on the idea that a single product item can seldom meet the needs and wants of all consumers. Typically, consumers vary as to their needs, wants, and preferences for products and services, and successful marketers adapt their marketing programs to fulfill these preference patterns. For example, even a simple product like chewing gum has multiple flavors, package sizes, sugar contents, calories, consistencies (e.g., liquid centers), and colors to meet the preferences of various consumers. While a single product item cannot meet the needs of all consumers, it can almost always serve more than one consumer. Thus, there are usually groups of consumers who can be served well by a single item. If a particular group can be served profitably by a firm, it is a viable market segment. In other words, the firm should develop a marketing mix to serve the group or market segment.

In this chapter we consider the process of market segmentation. We define market segmentation as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. The group or segment that a company selects to market to is called a target market. We break down the process of market segmentation into six steps, as shown in Figure 5.1. While we recognize that the order of these steps may vary, depending on the firm and situation, there are few if any times when market segmentation analysis can be ignored. In fact, even if the final decision is to “mass market” and not segment at all, this decision should be reached only after a market segmentation analysis has been conducted. Thus, market segmentation analysis is a cornerstone of sound marketing planning and decision making.

The purpose of this chapter was to provide an overview of market segmentation. Market segmentation was defined as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. Market segmentation was analyzed as a six-stage process: (1) to delineate the firm’s current situation, (2) to determine consumer needs and wants, (3) to divide the market on relevant dimensions, (4) to develop product positioning, (5) to decide segmentation strategy, and (6) to design marketing mix strategy.

Key Terms and Concepts

A priori segmentation: Approach in which the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on the market.

Benefit segmentation: Approach that focuses on satisfying needs and wants by grouping consumers on the basis of the benefits they are seeking in a product.

Geodemographic segmentation: Approach that identifies specific households in a market by focusing on local neighborhood geography (such as zip codes) to create classifications of actual, addressable, mappable neighborhoods where consumers live and shop.

Market segmentation: The process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve.

Post hoc segmentation: Approach that groups people into segments on the basis of research findings rather than determining the basis prior to any research.

Positioning map: A visual depiction of consumer perceptions of competitive products, brands, or models.

Psychographic segmentation: Approach that focuses on consumer lifestyles as the basis for segmentation. Consumers are asked a variety of questions about their lifestyles (commonly, their activities, interests, and opinions) and then grouped on the basis of the similarity of their responses.

Target market: The group or segment a company selects to serve.

VALS: A product of SRI Consulting Business Intelligence; the best-known psychographic approach; stands for “values and lifestyles.”