Questions form the book Flashcards

Question

What are the criteria for extracting secondary data versus primary data?

Answer 1

Criteria for extracting primary and secondary data: Primary data: To collect primary data there needs to be decisions made regarding research approaches, contact methods, sampling plans and research instrument Secondary data: Needs to be *relevant* to the research in question, *accurate* and reliably collected and resourced, *current* in the sense that it's up to date, *impartial* and objectively collected and reported.

Answer 2

There are four major characteristic groups that affect consumer behaviour. **Cultural**: which is the biggest one and consists of culture, subcultures and social class. **Social**: Second largest and consists of family, roles and status and reference groups. **Personal**: third largest and consists of age-and life cycles, occupation, economic status (income), lifestyle and personal and self concept. **Psychological**: smallest one but closest to the buyer and consists of beliefs and attitude, learning, motivation and perception. How we value products and brands.

Answer 3

**Complex buying behaviour**: occurs when a consumer has high involvement (interest) in a product or service and there are significant differences between the brands that offer it. **Dissonance-reducing buying behaviour:** occurs when a consumer has high involvement in a product or service but there are few differences between the brands that offer it. **Habitual buying behaviour**: occurs when there is low involvement in a product or service and few differences between the brands that offer it. ex. ketchup or salt selection. **Variety-seeking buying behaviour:** occurs when a consumer has low involvement in a product or service but there are significant differences between the brands that offer it. ex. cookies. Products that are susceptible to this type of buying behaviour try to induce the habitual buying behaviour by offering discounts and so on.

Answer 4

Its the process the buyer goes through when deciding to purchase a new product. in some occasions some of the steps may be skipped, for example a frequent makeup buyer might go directly from need recognition to purchase decision. It consists of multiple steps: Need recognition: Realising a problem or a need. Information search: Evaluation of alternatives: evaluating the product through either accessing it for a shorter amount of time or perhaps having a chance to try it. Purchase decision: Whether the product will satisfy the need or solve the problem the consumer has. Post-purchase behaviour: Might include dissonance but overall occurs after a purchase.

Answer 5

A business market is a type of market that is accessible to other businesses/organisations. Business markets is where Companies can sell products or services to other companies or organisations. However, they differ from regular consumer markets on certain points: **Market structure and demand**: Usually B2B marketers have fewer but larger buyers which means that they cater to only a few business partners. However that also means that there is a different type of market demand - business demand/derived demand which means that the demand derives from the demand for consumer goods. I.e. fabric demand is derived from the consumers demand for clothing and if the clothing sales decreases, so does the fabric sales. This usually means that B2B marketers also promote their products to the final costumers. **Nature of the buying unit**: In comparison to consumer purchases, business purchases involve more decision participants and more professional purchase effort. **Types of decisions and the decision process**: Business buyers face more complex business decisions, partially because the purchases often involve large amounts of money, complex technical and economic considerations and interactions among many people at different levels of the company. It's also more complex because the purchases call for detailed product specifications, written purchase orders, careful supplier searches and formal approval; as well as building close and friendly relationships between customers and suppliers. This is caused by B2B marketers keeping customer sales and creating customer value by meeting current needs *and* by partnering with customers to help them solve their problems. However, this also caused many customer companies to start practising **supplier development** - systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

Answer 6

Business buyer behaviour research stems from marketers need and want to know how business buyers respond to various marketing strategies. There's a model that describes marketing stimuli and other stimuli from the environment affect the buying organisation, the buying centre and the buying decision process which in turn affects the buyer responses. A big role in the business buyer behaviour is the buying centre; this consists of multiple other roles but the roles are ever changing because it depends on what products are being purchased and if certain personell at a company are interested in that product and so on. Even though these are the official roles and are parts in a model explaining the business buying process it's not set in stone; meaning that the different roles can be held by different people for each purchase or perhaps the same person. Those roles/participants in the buying process include: Users: members of the organisation that will use the product or service in question. Usually initiate the buying process and will help define product specification. Influencers: Affect the buying decision and often help define specifications and also provide information for evaluating alternatives. Buyers: members of the buying organisation who make the purchase. Have formal authority and their major role is selecting vendors and negotiating. Deciders: have the formal and informal power to select or approve final suppliers. In routine buying the buyers are also the deciders, or at least the approvers. Gatekeepers: people in the organisation that determine where and who the information about the purchase goes. They control the flow of information.

Answer 7

The business buyer process consists pf multiple steps as well as participants. Firstly the business buyer process employs a buying center, decision-making unit of a buying organisation. The buying unit consists of five roles: users, influencers, buyers, deciders and gatekeepers. The process includes the following eight steps that represent a generalised version of the different stages in the business buying process, however usually this only applies in the case of a new-task buying situation: **Problem recognition**: The first stages of the business buying process in which someone in the company recognises a problem or need that can be met by acquiring a product or service. The problem recognition is usually performed by someone with the 'user' role. The problem can arise from internal or external stimuli in the environment. Internally the company may launch a new product that needs new and improved production equipment and materials. Externally, the buyer may get new ideas while having a chat with a friend. **General need description**: In this stage the buyer describes the characteristics and quantity of the product or service they wish to acquire. This is usually a problems with few challenges if it is regarding a standard item, however, with more complex items the buyer may need to assemble a team (engineers, users, consultants) that work together to rank the importance of products reliability, durability, price and other desired attributes. **Product specification**: In this stage the buyer conducts a product value analysis to evaluate the different components and to reduce the price. This stage is where the buying organisation decides and specifies what the best technical product and characteristics for the needed product. Its important to add that the general need description and product specification are written with care and that the agreements are written in the interest of the suppliers only. **Supplier search:** This stage is where the buyer tries to find the be st suppliers for the product/service needed. This is done by reviewing trade directories, doing computer searches, phoning other companies for recommendations and so on. The newer the buying task and the more expensive the item the harder it will be to find a suitable vendor. **Proposal solicitation**: In this stage the buyer invites qualified vendors to submit written proposals. In some cases the suppliers will send a catalogue or a salesperson and in larger business opportunities the suppliers will send a detailed written proposal or presentation from each potential candidate. **Supplier selection:** During this stage the buying centre will most often look through a list of the most desirable supplier attributes and their relative importance and then use that to rate the suppliers in order to find the best one. The attributes include: product and service quality, reputation, on-time delivery, ethical corporate behaviour, honest communications and competitive prices. **Order-routine specification**: In this stage the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties. In certain cases companies might use blanket contracts which create a long-term relationship where the supplier promises to resupply the buyer at a set price for a set period of time. Many large buyers practice the *vendor-managed inventory, in which they turn over ordering and inventory responsibilities to their suppliers. In these systems the buyers share sales and inventory information directly with key suppliers. **Performance review**: The stage in which the buyer assesses the performance of the supplier and decides to continue, modify or drop the arrangement. Here the buyer may contact customers and ask them to rate their satisfaction with this supplier.

Answer 8

E-procurement or electronic purchasing as its also referred to, is where companies can purchase products or services they need through electronic connections between buyers and sellers. This gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. This enables business marketers to connect with customer support services and maintain ongoing customer relationships. E procurement can be used in several ways, for example through *reverse auctions* where companies can post their purchasing request and have suppliers bid for the business. Otherwise they can engage in *trading exchanges*, through which companies work collectively to facilitate the trading process. Companies can also set up their own *company buying sites* or create *extranet links* with key suppliers e.g. by creating direct procurement accounts with vendors.

Answer 9

Business-to-business (B2B) digital and social media marketing is important so that business marketers can engage business customers and manage customer relationships. Business marketers must be very engages and enlightened to make sure that the derived demand is always met and high. B2B marketers know that they aren't really targeting business customers, they are targeting individual customers that purchase through other businesses or individuals within a company that affect buying decisions (one of the participants in the buying centre for example).

Answer 10

Institutional and government markets are similar to business markets but have more regulations surrounding them which might make it hard to make beneficial business agreements with them. Institutional market include: schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care. Governmental markets include: national, regional and local units that purchase or rent goods and services for carrying out the main functions of government. A legislation issue that could complicate deals for governmental marketers is the European commission competition legislation that includes principles of non-discrimination or proportionality - meaning that a government can't say that a product needs ti contribute to the growth of a certain municipality because the product doesn't have a natural correlation to the citizen growth.

Answer 11

There are multiple factors that affect the business buyers majorly, but they can be divided into groups of four: Environmental influences: Economic developments, supply conditions, technological change, political and regulatory developments, competitive developments, culture and customs. Organisational: Objectives, policies, procedures, organisational structures, systems. Interpersonal: Authority, status, empathy, persuasiveness. Individual: Age, income, education, job position, personality, risk attitudes.

Answer 12

There are three types of buying decisions: **Straight re-buy**: a business buying situation where the buyer routinely reorders something without any modifications. **Modified re-buy**: a business buying situation where the buyer wants to modify product specifications, prices, terms or suppliers **New-task**: a business buying situation where the buyer purchases a product or service for the first time.

Answer 13

Market segmentation is the practice of segmenting (dividing) the market into different groups based off of certain factors. It is extremely important for a company to establish their market segment as it is through that they find their target customers. A company can have multiple market segments but a good and successful company and marketer knows you can't please everyone and if you try you might not be able to offer your actual customers good quality or good CRM. The following factors decide the segment groups: Geographic segmentation: Dividing a market into different groups based on what nation, region, city, neighbourhood that customers live in. For example, Wester Europe or the middle east, rural areas or metropolitan area. Demographic segmentation: Diving a market into different groups based on age, family structure, gender, income, occupation, generation and nationality. For example, Italian or Thai, Millennials or Gen Z. Psychographic segmenation: Dividing a market into different groups based on social grade, lifestyle and personality. For example, Achievers lifestyle or survivors lifestyle, Compulsive personalities or Authoritarian personalities. Behavioural segmentation: Dividing a market into different groups based on occasions, benefits, user status and rates, loyalty status and attitude towards the product. For example, Holiday or Regular occasions, Non-user or Ex-user status These four are most commonly used for consumer markets, however while some business markets use the four previously mentioned there are also some more: Operating characteristics, purchasing approaches, situational factors and personal characteristics.

Answer 14

Market targeting is the approach a company takes to introduce and establish their product in a market segment. Market targeting's first step is deciding your target market by evaluating it based on: *Segment size and growth*: Size of the company might determine if a large and fast growing segment is right *Segment structural attractiveness*: long term, does the market have a lot of aggressive competition = not attractive *Company objectives and resources*: Some segments don't fit with the company's image. The second step is actually selecting your segments and that is done based on certain criteria. The market segment needs to be: *Measurable*: The size, purchasing power and profiles should be measurable. However, a lot of segmentation variables are hard to measure (religious etc.) *Accessible*: the segments should be effectively reached ans served *Substantial*: large or profitable enough segments *Differentiable*: the segments should be conceptually distinguishable and respond differently to different marketing mix elements and programmes. *Actionable*: effective programmes can be designed for attracting and serving the segments (targets). After that you choose a marketing strategy.

Answer 15

Undifferentiated marketing (mass marketing): a market coverage strategy where the firm decides to ignore market segment differences and go after the whole market with one offer, ex. Coca-Cola 2. Differentiated marketing: a market coverage strategy where the firm decides to target several market segments and design separate offers for each. 3. Concentrated marketing: the firm goes after a large share of one or a few smaller niches, e.g. consultancy company specialised in small business or local market which bigger competitors don't usually serve. 4. One-to-one marketing: the practice of tailoring products and marketing programmes to suit the tastes of specific individuals and locations. Includes local marketing and individual marketing. Also labelled one-to-one marketing sice it treats every customer individually.

Answer 16

Segmenting: Dividing the market into smaller groups based on certain factors that connect them. One segment should only require one marketing strategy and mix. 2. Targeting: The process of evaluating the different segments attractiveness and selecting one or more. 3. Differentiation: Differentiating the market offering to create superior customer value. 4. Positioning: arranging for a market offering to create superior customer value.

Answer 17

Companies create market segments based on geographic, demographic, psychographic and behavioural factors. To create an effective segmentation the following points are also considered: - Measurable: the size, purchase power and profiles should be measurable - Accessible: Should be easy to reach and serve them effectively - Substantial: large and profitable enough - Differentiable: they need to be able to respond differently to different marketing strategies and mixes. - Actionable: effective programmes can be designed for attracting and serving the segments (targets)

Answer 18

Differentiation and positioning are two major factors in order to achieve a competitive advantage over competitors. Achieving it can be done by lowering prices or by adding enough benefits to the product so that the price is justifiable. Differentiation means changing something in the market offering in order to create customer value (adding a benefit or feature). Similarly, positioning is to arranging for that product (market offering) to create customer value through defining the product by its attributes. Companies should prioritise this as it will get a definition either way just not one the company might have intended for.

Answer 19

You can choose a point by which to differentiate your product, for example: - Parity products - Product, channel, service, people - Features, performance, style, design - Different levels of service - Image However a company should use a point that meets the following criteria: - Important - Distinctive - Superior - Communicable - Affordable - Profitable

Answer 20

Positioning is arranging for a product to occupy a distinctive, clear and desirable market offering relative to competitors in a customers mind. Basically making sure the product is defined by its benefits and attributes in order for the product to be seen as offering superior customer value. User-based, Attribute-based, Benefit-based

Answer 21

The full positioning of a brand: full mix of the benefits upon which it is positioned, is called a value proposition. So one strategy could be for example as Volvo has done to position their cars in our minds as super safe and prioritising safety.

Answer 22

Branding is the process a company goes through when working on the brand - the symbol of a product and its meaning. For example, branding is the strategy for business practitioners to build a company on, while marketing involves the tactical goals (4Ps - product, price, place, promotion)

Answer 23

The branding strategy includes the following steps: Brand equity and brand value: Brand equity is the differential effect of consumers recognising the brand name has on their response to a product or its marketing. For example a lot of consumers see Volvo as a very safe car manufacturer and therefore they view their new cars as safe as well. Building strong brands: This is a process involving 4 steps. Brand positioning: Marketers need to position the brand within the customers minds, this is usually done on three levels where the lowest is product attributes (Pampers disposable nappy), the middle level is through desirable benefit (Volvo and safety & Chanel and design), the highest level is through beliefs and values - meaning that brands should engage customers on a deep emotional level (buying a Rolex and then wearing it gives the feeling of being superior and luxurious). Brand name selection: Choosing a brand is important since it will represent the company, its also important to note that the brand shouldn't be named something too niche since it will be hard to extend the brand later on but it still needs to reflect the product and company's values somehow. There are different opinions on whether a brand name should be completely made up, sound cool or quite literally reflect the product. Brand sponsorship: A manufacturer had 4 sponsorship options: National brand (manufacturers brand), private brand (store/distributor brand), licensed brand, co-brand. Brand development: You can develop a brand and its product/ place on the market in four different ways. 1. Line extension: If a an already existing brand promotes an already existing product by extending it to new forms, colors, sizes, ingredients, flavours etc. 2. Brand extension: Extending the brand to cover more product lines/product categories. 3. Multibrands: A way to establish different features and appeal to different buying motives. 4. New brands: Offering a new brand for the new product because either the already existing brand won't do it justice or just isn't applicable to this product (toyota making a new brand for their higher end cars, lexus)

Answer 24

The definition product, in a marketing perspective, includes anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need. A product can therefore be an actual item but also something like a service, which is any activity or benefit that one party can offer another that doesn't result in ownership of anything. Products are usually divided into two major categories - consumer products and industrial products. **Consumer products** are products or services that are bought by final consumers for personal consumption and includes: **Convenience products**: a consumer product that customers usually buy frequently, immediately and with a minimum pf comparison and buying effort. i.e. laundry detergent **Shopping product**: A consumer product that customers, in the process of selection and purchase, usually compare in such bases as suitability, quality, price and style, i.e. hotel and airline services. **Speciality product**: a consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make special purchase effort. i.e. brands of cars Unsought product: a consumer product that the consumer either doesn't know about or knows about but doesn't normally think of buying it. i.e. life insurance **Industrial products** are products that are purchased for further processing or for use in conducting a business and include: **Materials and parts**: raw materials and manufactured materials and parts, i.e. farm products, natural products, component materials and component parts. **Capital items**: products that aid buyer's production and operations, including installations and accessory equipment, i.e. buildings, fixed equipment, factory equipment and tools, office equipment. **Supplies and services:** operating supplies and repair maintenance items . Supplies are convenience products in the industrial field. Business services include maintenance and repair services and business advisory services, i.e. management consulting.

Answer 25

Product levels are levels outside of the core product that add customer value to the product. The first level is the core product and the core customer value which addresses the following question: *what is the buyer really buying?* The second level consists of the actual product, meaning developed product and service features, design, quality level, brand name and packaging. The final level is the augmented product, this is the value adding level, that adds additional consumer services and benefits, such as installation, delivery and credit, warranty and after-sale service.

Answer 26

The product life cycle (PLC) consist of 5 steps: 1. Product development: At this stage the company begins to find and develop a new product idea. here the company's investment costs increase while there are no sales. 2. Introduction: This period has slow sales growth as the product is introduced to the marketplace. Normally there are no profits in this stage since there are heavy expenses for product introduction and marketing. 3. Growth: This period has rapid market acceptance and increasing profits. 4. Maturity: This stage is where the sales slow growth slows and the profits wither off or decline. The product has achieved market acceptance by most potential buyers, 5. Decline: Final stage when sales fall off and profit drops.

Answer 27

**Product quality:** Major marketer positioning tool. Quality has direct impact on performance and is therefore linked to customer value and satisfaction. The product quality has 2 dimensions: level and consistency. When developing a product, a quality level must be set; which in this case means performance quality (products ability to perform its functions). When it comes to consistency, it refers to conformance quality - consistency in delivering a targeted level of performance with each product/service. **Product features:** Features can be added to give a product extra added benefits/value; its the most effective way to compete with others in the same market. The company should constantly try to add new features in order to be able to compete. **Product style:** Another way to add value to a product is through design and style. Style simply describes appearance of a product. However design implies attributes that contribute to a products usefulness as well as looks. **Product packaging:** The packaging is important in order to compete with competitors products on the shelf and therefore needs to capture attention, describe the product and make the sale. Usually companies try to use the power of good packaging to create an immediate consumer recognition of a brand. By launching a logo in a lot of ads and then putting it on packaging, the consumer will be more familiarised to the brand. Innovative packaging can boost sales and offer competitive advantage.

Answer 28

Companies need to make decisions regarding individual products and services, specifically the product attributes, branding, packaging and labelling, but also product support services. More importantly companies need to make product line decisions. A group of products that are similar in function, sold and marketed to the same target groups and sold in the same price ranges is usually referred to as a **product line**. Decisions regarding the product line usually involves the product line length since that determines a companies success. If a product line is too short then the managers can add products in order to increase profit and vice versa. Increasing profit to the product line can be done in two ways; product line filling and product line stretching. - **Product line filling**: adding more items to an already existing product line - **Product line stretching**: lengthening the product line by either **upward stretching** - companies can also decide to stretch their product line into the more exclusive markets, in order to add prestige to their current product, or being attracted to the higher growth rates or higher margins or **downward stretching** - usually done by companies in a more exclusive marketplace in order to fill out the market and plug holes that other competitors could take advantage off, this was done by Armani when they introduced Armani Exchange (clothing available at much cheaper rates). - Product mix decisions regarding the product mix/product portfolio - all the product lines and items a particular seller offers for sale. These decisions involve the product mix depth and consistency. - **Product mix depth**: refers to different versions that each product in the product line has, for example Playstation 4 and 5. - **Product mix consistency**: refers to how closely related the various product lines are in end use, production requirements, distribution channels etc. For example, Rusta offers what products are available in the market at a low price, their consistency is not in regards to the products they sell but in regards to the low prices of products in their markets.

Answer 29

**New product development**: The development process of original products, product modifications, product improvements and new brands through a companies own development process. Has 8 stages: 1. Idea generation 2. Idea screening 3. Concept development and testing 4. Market strategy development 5. Business analysis 6. Product development 7. Test marketing 8. Commersialisation

Answer 30

The **service-profit chain** links the profit of service firms from employees with customer satisfaction through five dimensions. 1. Internal service quality 2. Satisfied and productive employees 3. Greater service value 4. Satisfied and loyal customers 5. Healthy service profits and growth It is important to note that within the service market the growth goals and service profits begin with taking care of those who will take care of others. Which is why internal marketing is important withing service marketing - orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction like McDonalds. Managing service differentiation - competing with competitors in the service market- is executed by: - providing an offer that has innovative features that sets the company's offer apart - Delivering higher quality consistently than competitors, here it is crucial to empower frontline service personell. - increasing service productivity - industrialising the company, like McDonalds has done which means they can offer lower prices, raise customer satisfaction and increase profitability. - Using a perspective called **service-dominant logic** - meaning that the product is the provider of the service to the customer.

Answer 31

Price is the amount of money charged for a product or service, or the sum of values the customers offer in exchange for benefits of having/using a product or service.'

Answer 32

**Customer perceptions of value**: This is the pricing ceiling, meaning that if a product surpasses the customers perceived value there will be no more demand. **Production costs**: This is the price floor, i.e. the minimum a company can charge in order to either break-even or make profit. **Internal or external considerations**: *Marketing mix, objectives and strategy* - pricing strategy might be pretty straight forward if the overall strategy is clear. *Competitors pricing and their strategies* - Needs to be considered on a regular basis. A company's presence in a market/industry affects the competitive mechanism of the market/industry. *Nature of the market and its demand* - level and type of competition, price-demand relationships, price-elasticity of demand.

Answer 33

There are two new-product pricing strategies: **Market-skimming pricing/ Price skimming**: setting a high price for a new product in order to skim maximum revenues amongst different segments. This is done by for example Sony and Samsung, they launch their product with a high price in order to profit off of those who would by the product regardless of the price, then they lessen the price little by little to maximise profit from each layer of segment customers. **Market-penetration pricing**: Entering the market with a lower cost than competitors in order to establish a solid market share and attracting a large amount of buyers

Answer 34

**Product line pricing**: Setting different prices between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors prices. - **Optional-product pricing**: Offering to sell optional or accessory products along with the main products and thereby taking advantage of the existing purchase transaction. - **Captive-product pricing**: Setting higher prices on products that must be used with the main product, e.g. replacement cartridges or spare parts. Often with high mark-ups - large difference between the cost of the product and the price the company sells the product for. - **By-product pricing**: the company prices low-value products to get rid of them, and in doing so they seek a market for the by-products that are created in the process of making the main product. - **Product bundle pricing**: Setting a price for products or offers sold together (in a bundle)

Answer 35

**Discount and allowance pricing**: Reducing prices in order to get customer responses, such as volume purchases or promoting the product. **Segmented pricing**: Adjusting the pricing to allow for differences in customers, locations and products. **Geographical pricing**: Adjusting the pricing to account for the geographic locations of customers. **Psychological pricing**: Adjusting prices for psychological effect, for example using prices ending in 8s because it supposedly 'eases the mind'. **Promotional pricing**: Temporarily adjusting prices to promote short-term sales. **Dynamic pricing**: Adjusting the prices continually to meet the characteristics and needs of individual customers and situations. **International pricing**: Adjusting the prices for international markets, i.e. basing prices off of competitors prices in one country can differ from the market in another country.

Answer 36

The perceived value of customers is what sets the ceiling for the prices. When setting prices a company needs to weigh the market demand against the possible profits. Exceeding the value that customers perceive the product is worth will mean a decrease in demand which means that the product won't be profitable.

Answer 37

The costs that the company has put into developing the product (product cost) is the pricing floor, i.e. the minimum amount the company can charge for the product in order to break-even, however, in order to make a profit the company needs to charge a higher price than what the production cost is.

Answer 38

Competitors strategies and pricing - Needs to be considered and monitored on a regular basis. A company's presence in the market/industry influences the competitive mechanisms in the market/industry. Market and its demand - the prices are dependant on the price-demand relationships, the level and type of the competition and the price-elasticity of demand. Company's market strategy, objectives and mix - if the overall strategy is clear it might be easier to set prices on determine a pricing strategy.

Answer 39

Based on the table below the following strategies can be applied when price changes have been initiated/ will be initiated. *Hold current price*: continue to monitor competitors prices. This is applied if the competitors HAVEN'T cut their prices. *Reduce prices*: Is applied if competitors have cut their prices and it will negatively affect the company's market share and profit and effective action needs to be taken. *Raise perceived quality*: Is applied if competitors have cut their prices and it will negatively affect the company's market share and profit and effective action needs to be taken. *Improve quality and increase price*: Is applied if competitors have cut their prices and it will negatively affect the company's market share and profit and effective action needs to be taken. *Launch low-price 'fighting brand'*: Is applied if competitors have cut their prices and it will negatively affect the company's market share and profit and effective action needs to be taken.

Answer 40

The key issues related to initiating and responding to price changes are that if a luxury brand decides to cut its prices, as a response to its competitors lowering prices, the brand image is affected since customers now don't see the exclusiveness of that brand as the same anymore. Another issue is that a company that initiates price increases might be seen as a 'price gouger' which means that a company only wants to make profit at the expense of its customers. This might make customers hostile towards the company.

Answer 41

SRAC and LRAC are terms used when examining price elasticity in regards to the demand. SRAC: Short-run average cost LRAC: Long-run average cost

Answer 42

Cost-plus pricing involves adding standard mark-up to the cost of the product. This is decided by dividing the fixed cost with the unit sales and then adding the variable cost in order to get the unit cost. Then using the unit cost and dividing it by 1 - desired return on sales (%), you get the mark-up.

Answer 43

Price elasticity is a measure of how sensitive the demand is to changes in price. For example one product might increase their price by 5% and then the demand goes down by 10% meaning that they won't make as much profit as they thought, this is called elastic demand - meaning that the demand is very sensitive to price changes. However, another product could increase also increase their price by 5% and the demand might lessen with 5% as well, this is called an inelastic demand meaning that the demand isn't extremely sensitive to price changes.

Answer 44

Break-even pricing / target profit pricing: Setting a price to break even on the costs of making and marketing a product or setting price to make target profit. Uses the following formula: break even volume = fixed cost / price - variable cost

Answer 45

**Sustainable marketing** refers to socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. It is important in order to market towards customers future as well as the business' future. Sustainability has become more and more of an active topic amongst businesses since it offers many new business opportunities.

Answer 46

he sharing economy is a sustainability and business opportunity, for example appliances that might not be needed that often could be rented at a certain rate. Here are some examples of sharing and platform business models: - *services facilitated by online platforms*: co-ordinated and regulated through apps and include, ride-sharing, accommodation rental (Airbnb) - *sharing skills and knowledge*, for example universities offering online courses or collaborative encyclopedias such as Wikipedia. - *financing platforms,* for example crowdfunding or P2P loans - *placement platforms,* for example Shareville where investment proposals are shared. However there are some issues with the sharing economy, for example a store that allows you to rent a lawnmower for say 500kr an hour which is cheaper than buying a new lawnmower for 2500 kr. Let's say you use the lawnmower for 2 hours and pay 1000 kr that's still cheaper than a brand new lawnmower. However, what if you get called into work or there's a family emergency and you don't have time to return it or use it. In that case you will most likely pay more than triple the price for a brand new lawnmower without having used it. Most of the sharing economy business models are platform-based but it's important to distinguish between the different types of platforms: - Tightly controlled 'franchiser' platforms with competition between providers in combination with tight control from the franchisee. Uber, Foodora etc. place very strict demands on those who do the job which results in lower job security for the employees but at the same time means that the customers will receive high quality service.

Answer 47

Greenwashing is a term used for companies that market their environmentally friendly approach without being able to back up their statements, meaning that they're not really being as environmentally friendly as the marketing suggests. There are many versions of greenwashing and one of them is adding labels that look like certificates even though they are company made for example some brands mimic the fair trade certificates to appear as though they've gotten that certificate. Other examples is using country-of-origin effect - meaning that brands use the associations we have to certain countries in order to make you think about their product the same way. For example fish that is captured from Norway isn't that different from Swedish fish, however the brand Norsk fisk has decided to market their fish as Norwegian because people associate Norway with beautiful nature and fresh air and there for the fish needs to be healthy as well.

Answer 48

**No proof sin**: Making an environmental claim that cannot be substantiated by easily accessible supporting information or by reliable third-party certifications, ex. claims of being 'eco-friendly' or 'green' without the proof to back it up. 2. **Irrelevance**: When an environmental claim is technically true but is ultimately unimportant or irrelevant to the product and its impact. Ex, caliming a product is CFC-free even though CFC is banned under the Montreal protocol. 3. **Hidden trade-off**: Companies make an environmental claim about a product based on a narrow set of attributes while ignoring other, potentially more significant environmental impacts 4. **Lesser of 2 evils**: Promoting an environmental benefit of a product that is only marginally better than the environmental harm caused by the product's overall existence. Ex, a fuel-efficient full-size SUV, organically grown tobacco but the cigarettes still cause cancer and litter the planet harming wildlife and humans alike. 5. **Vagueness:** This occurs when environmental claims are so poorly defined or broad that their true meaning is likely to be misunderstood by consumers. For instance, using terms like 'all-natural' or 'environmentally-friendly'. 6. **Lying:** This involves outright lying or providing false information about the environmental attributes of a product. Ex, claiming a product is certified by an independent organisation when it isn't. 7. **Worship false labels**: When a products packaging or marketing prominently displays a certification or eco-label that is either nonexistent, irrelevant or unverifiable. This misleads consumers. There are other sins that aren't in the top 7 such as **sin of fear-mongering** - claims that fabricate insecurity related to not ' buying in' such as altering the public perception of risk, of fear of missing the boat so to speak. Ex, pushing customers to buy fossil fuel cars by emphasising the environmental har of EV batteries.

Answer 49

High prices: greedy marketing channel intermediaries mark up prices beyond value of their service. Critics claim there are too many intermediaries that charge which leads to high prices. However, marketers argue that intermediaries do the work that manufacturers or even consumers would have done otherwise. - High advertising and promotion costs: pushing up prices in order to finance heavy advertising and sales promotion to attract a larger customer base. However, products that have a lot of marketing have lower sales according to some studies. - Excessive mark-ups: companies mark up goods excessively. However marketers argue that consumers don't understand the reason for high mark-ups, ex, pharmaceutical companies have high mark ups because 'today's medicines finance tmrws miracles' - High-pressure selling: - Shoddy, harmful or unsafe products: - Planned obsolescence: Companies use materials that are of poor quality or harmful materials so they will break and the customers need to repair it early. However, companies want to meet customer expectations in order to CRM. - Poor service to disadvantaged consumers: Marketings impact on society as a whole includes: - False wants and excessive materialism: - Too few social goods: - Cultural pollution:

Answer 50

**Consumerism**: an organised movement of citizens and government agencies attempting to improve the rights and power of buyers in relation to sellers. In many areas, there has been substantial progress and consumers now have a lot more rights than they used to. Consumer advocates call for more and stronger consumer rights - The right to be well informed about important aspects of the product - The right to be protected against questionable products and marketing practices. - The right to influence products and marketing practices in ways that will improve the quality of life. - The right to consume, ow in a way that will preserve the world for future generations of consumers. **Environmentalism**: an organised movement of concerned citizens, business and government agencies to protect and improve people's current and future living environment. This involves working with environmental sustainability - a managing approach that involves developing strategies that both sustain the environment and produce profits for the company. Some reactive companies do only what is needed to avoid the new regulations or to keep the environmentalists happy, while other *proactive* companies are taking action, not because they're forced to but because it's the right thing to do.

Answer 51

Consumer-oriented marketing: - Customer-value marketing: - Innovative marketing: - Sense-of-mission marketing: - Having a 'double bottom-line' of values and profits - Applying societal marketing: a principle which holds that a companyshould make marketing decisions by considering consumers' wants, the company's requirements and consumers' and society's long-term interests (similar to sustainable marketing but less explicitly emphasising environmental concerns)

Answer 52

Salutary products: Low immediate satisfaction and high long-run consumer benefit - Desirable products: High immediate satisfaction and high long-run consumer benefit - Deficient products: Low immediate satisfaction and low long-run customer benefit - Pleasing products:High immediate satisfaction and low long-run customer benefits

Answer 53

Ethics play an important role in marketing when it comes to managing situations a company can find itself in. The company should have guidelines and marketing ethics policies in place in order to offer support when needed. Marketers have their own code of ethics: - *Do no harm*: consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering in all applicable ways to laws and regulations. - *Foster trust in the marketing system*: striving for good faith and fair dealing so as to contribute toward the efficiency of the exchange process as well as avoiding deception in the product design, pricing, communication, delivery or distribution.' - Embrace ethical values: building relationships and enhancing consumer confidence in the integrity of marketing by affirming these core values: - honesty - responsibility - fairness - respect - transparency - citizenship

Answer 54

Competitor analysis is the process of analysing a company's competitors by assessing their objectives, strategies, strengths, weaknesses and reaction patterns. Then selecting what competitors to attack or avoid. The first question a company should ask is *what industry are we operating in?* (oil industry, pharmaceutical industry etc.) then you find the other competitors in that industry/market and asses their objectives and strategies, strengths and weaknesses and reaction patterns in order to determine if they are good or bad, weak or strong. When assessing the competitors a company can **benchmark** themselves against the competitor - meaning comparing the company's products and processes to those of competitors or leading firms in other industries. This is done in order to identify the best practices and find ways to improve quality and performance. It is also smart to identify a company's **strategic group** - a group of firms in an industry following the same or similar strategy. For example, Bosch, Electrolux, Samsung all produce a full line of medium.price appliances supported by good service. A competitors objectives, strategies, strengths and weaknesses goes a long way to understand their likely reactions. They also explain a company's moves such as price cuts, promotion increases, new-product introductions.

Answer 55

**Competitive advantage**: an advantage over competitors gained by offering consumers - or employees, visitors or patients etc. - greater value than competitors. The source of the competitive advantage can be internal or external. For example an internal source could be efficient manufacturing process, an external source could be offering more or better products than competitors in that area. Other sources include a company being sustainable or easy-to-copy. **Competitive marketing strategies** are strategies that strongly position the company against competitors and that give the company the strongest possible strategic advantage. There are two major competitive strategies: According to Porter's classical competitive strategic framework, companies should be aware of three winning - and a losing strategy: **Overall cost leadership**: the company works hard to achieve the lowest production and distribution costs. Low costs let it price lower than its competitors and win a large market share. Ex, Ryanair, Dacia and Walmart are leaders within this strategy. **Differentiation**: the company concentrates on creating highly differentiated product lines and marketing programmes so that it becomes the class leader. Ex, Miele, Range Rover **Focus**: the company focuses its effort on serving a few market segments well rather than going after the whole market. Ex, Ritz-Carlton hotel chain focuses on the top 5% of corporate and leisure travellers. However, according to Treacy and Weirsema the competitive strategies are more customer-centred: **Operational excellence**: leading its industry in price and convenience (Ryanair, Skoda) **Customer intimacy**: providing superior value by precisely segmenting its markets and tailoring its products to match exactly the needs of targeted customers (Lexus, Ritz-Carlton) **Product leadership**: continuously offering leading-edge products and services (Audi and Apple)

Answer 56

If a company only focuses on its competitors it will get stuck with competitor myopia - meaning that a company is so focused on its current competitors that it loses sight of indirect or new competitors. For a example a cinema company that only focuses and competes with other companies that offer cinematic experiences will fail to see the threat of DVDs. The textbook approach would be a customer-centred company instead if the previously mentioned competitor-centred company, however, in practice the best company approach is to be market-centred company - a company that watches both their customer needs and the competitors capabilities.

Answer 57

Balancing customer and competitor orientations: Competitor-centred company: a company whose moves are mainly based on competitors actions and reactions Customer-centred company: a company that focuses on customer developments in designing its marketing. Market-centred company: a company that balances their attention between both the customer and competitors in designing its marketing strategies. Its important for a company to find the balance between competitor and customer focus because it serves a reminder to another issue - balancing focus on the company and focus on the market environment

Answer 58

A marketing channel is a distribution channel that made up of a set of organisations that help make a product or service available for use or consumption by the consumer or business user. The important part about marketing channels is that every member in that channel needs to add value, usually you divide the responsibilities to different intermediaries in order to make sure each member or 'station' focuses on their job and makes sure they can perform it in a valuable way. These intermediaries make sure the manufacturers for example, can focus on manufacturing and can leave the selling to another member of the channel. There are different structures to the marketing levels such as: - Direct marketing channels: A marketing channel that has no intermediary. The manufacturer delivers the product directly to the consumers, ex. IKEA, Zara'' - Indirect marketing channels: A marketing channel that has one or more intermediaries. Could be manufacturer -> retailer -> consumer or perhaps manufacturer -> wholesaler -> jobber -> retailer -> consumer. This is similar for business marketing channels they also have direct and indirect marketing channels where the longest looks like this: - Manufacturer -> Manufacturer's representatives or sales branch -> business distributor -> business consumer. There are different types of systems that marketing channels can develop into, starting with: - Conventional marketing channel: one or more independent producers, distributors, wholesalers and retailers. Each in a separate business seeking to maximise its own profits and no channel member has much control over the other member. - Vertical marketing system (VMS): producers, wholesalers and retailers acting as a unified system. The leader of the marketing channel is normally the company with the most market power and is called the channel captain. - Horizontal marketing system (HMS): a channel arrangements in which 2 or more companies are at the same level jointly look for marketing opportunities - Indirect marketing channel as mentioned above - Direct marketing channel as mentioned above

Answer 59

The supply chain - the system of organisations, people, technology, and other resources and activities required for the movement of materials, products and services from supplier to customer. The supply chain usually looks like this: 1. Raw materials 2. Components 3. Manufacturer 4. Retailer 5. Consumer The supply chain requires supply chain management which means managing the upstream and downstream value-added flows of materials, final goods and related information among suppliers, the company, resellers and final consumers.

Answer 60

Channel behaviour systems include the: - Conventional marketing channel: one or more independant producers, ditributors, wholesalers and retailers that each are in a separate business seeking to maximise their profit. No channel member has any control over the other members. - Horizontal marketing system: a channel arrangement where two companies (or more) are at the same level in the market and choose to jointly seek out new marketing opportunities. - Vertical marketing system: producers, wholesalers, retailers acting as a unified system. The leader is usually the one with the most market power and is called the channel captain. - There are also indirect marketing channels - when 2 or more intermediaries are involved in the makreting channel (manufacturer to... to consumer) and direct marketing channels - when there are no intermediaries in the marketing channel and the manufacturer provides the consumers directly with products.

Answer 61

A marketing channel's approach that integrates the buyer experience from from various marketing channels into a consistent whole.

Answer 62

Supply chain management involves the management of value-adding flows of materials, final goods and related informaiton among suppliers, resellers, the company and final customer. If some part of the supply chain doesn't increase or add value the producers might need to change that member.

Answer 63

1. Decising what market to enter through exporting, joint venturing and direct investments 2. Marketing channel management decisions in order to select, manage and motivate the individual channel members and evaluating their performance over time. 3. Marketing logistics: planning, implementing and controlling the flow of goods, services and related information from points of origin in consumtion.

Answer 64

Marketing logistics means planning, implementing and controlling the physical flow of goods, services and related information from points of origin of consumption. These following steps need to be evaluated constantly in order for the flow to work: Warehousing: storage function overcomes difference in required quantities and timing ensuring that products are available when customers are ready to buy them. Inventory management: maintaining the delicate balance between carrying too little inventory and carrying too much. Transportation: choosing transportation carrier affects pricing, delivery, performance, delivery terms and environmental impact. 5 transpotation modes. Integrated logistics management: logistics information being shared through internet based Electronics Data Interchange (EDI) Many companies outsource their logistics to 3 party logistics (3PL) providers an independant company that performs any or all types of logistics.

Answer 65

Retailing: the last steps in the marketing channel and typically includes all the activities involved in selling to final customers. Many manufacturers, wholesalers and retailers perform retailing. Shopper marketing: the idea that the retail store itself is an important marekting medium. Mystery shoppers: shoppers who act like real customers with the mission of measuring service quality levels of a retailer, a hotel etc. Wholesaling: Wholesaling includes all actitivites involved in selling product or services to resellers or use in businesses. Wholesalers add value by performing one or more of the following channels: Selling and promoting Warehousing - storing so that suppliers and customers can save space Transportation - provde quicker deliver Financing - finance by gicing customers credit

Answer 66

IMC is meant for carefully intergating and coordinating the company's many communication channels to deliver a clear, consistent and compelling message about the comapnies services and products. This is done through advertising, sales promotion, personal selling, public relations and direct and digital marketing (aka promotion/marekting communications mix)

Answer 67

The specific blend of communication tools that a comapany uses to persuesively communicate customer value. Consists of 5 major tools. 1. Advertising: paid exposire, clearly identified sponsor. Reaches the masses, low cost per person, large-scale adv. says something positive about the seller's size, popularity and success. When doin advertising you always plan for some objectives, mesagge strategy, advertising media, evaluating the effect and ROI. 2. Sales promotion: Most short-term tool, making people buy things NOW by for example, coupons, buy 1 get 1, price packs. 3. Personal selling: Most effective tool at certain stages in the buying process, specifically in building up buyers preferences, convictions and actions. Can give imprtant feedback. HAs a lot of stigma but today sales people, well educated, add value 4 customers and maintain long turn customer relationships. 4. Public relations: Building good relations woth the company's various publics - by obtainig favourable piblicity, organising events. PR departments may perform some of the following functions: press relations, product publicity, public affairs, lobbying, etc. 5. Direct and digital marketing: different forms such as email, social media etc, but all share distinctive traits: More targetes, personalised and allow dialogue between company and consumer. Connecting directly with targeted consumers to get fast response and maintain and create lasting customer relationships. Grass-root makreting, User generated content etc.

Answer 68

Informational: used when introducing a new product to build primary demand. Persuasive: more important when competition increases and focuses on emotional appeal. Comparative: Directly or indirectly compares a brand to its competitor. Reminder: Important for mature products, helps CRM and to keep the product in consumers' mind.

Answer 69

A sample is a segment of a population, ideally the sample represents a part of the larger population so the researcher can estimate thoughts and behaviours.

Answer 70

Strategic planning is about developing and maintaining a strategic fit between the company's goals and capabilities and the changing market opportunities.

Answer 71

1. Defining a company's mission: starts with deciding who the customers are and what do the value? What is the business? Here the company can develop a mission statement - statment of the organizations purpose and what it wants to accomplish in the larger environment. Can be product oriented but preferably market oriented. 2. Setting company objectives and goals: the mission develops into the company's objectives and what ot wants to accomplish its goals. The objectives are detailed guidelines based on the mission. How to execute the mission 3. Designing the business portfolio: This is guided by the company's mission and statements. The business portfolio is the collection of business and products that make up the company. A business portfolio can be analysed in order for management to evaluate the porducts that make up the company. This can mean that fashion stores close physical stores to focus on online websites instead. The BCG-matrix is a portfolio planning method that is widely used. 4. Planning marketing and other functional strategies: For example developing strategies for growth and downsizing, for example:' Market-penetration: a growth strategy focused on increasing sales of current products to current market segments without changing the products. Market development: a growth strategy focused on identifying and developing new market segmetns for current products. Product development: a grwoth strategy focused on offering modified or new products in current markets. Diversification: a growth stategy focused on starting up or buying business outside of current products and markets. Downsizing: reducing the business portfolio by eliminating business or products that are not profitable.

Answer 72

The Boston consulting group growth share matrix is a portfolio planning methis that evaluates a companies strategic business units (SBUs) in terms of its market growth rate and relative market share. Companies may own multiple business to manage risks in different marekts, for example H&M. There are 4 types of SBUs. 1. Stars: high growth, high rate businesses and products. Often need heavy investments to finance their rapid growth. Growth will eventually slow down and they'll turn into cash cows. 2. Question marks: low-share business units in high growth markets. They require a lot of cash to hold its place, let alone grow it. Management need to think about which question marks to build into stars and which to phase out. 3. Cash cows: low growth and high share business products. These established and successful SBUs need less investment to hold their market share. Needs to produce a lot of cash so that the company can use it to proote other products into cash cows. 4. Dog: low growth, low share business and products. Generates enough cash to maintain themselves but don't promise large sources of cash.

Answer 73

Marketing strategy is the makreting logic by which the company hopes to create customer value and achieve profitable relationships in return. They discuss which customers to serve (segmentation and targeting) and how (differentiation - differentiating the market offering to create superior customer value or competitive advantage, and positioning - arranging for a product to occupy a clear, distinctive and desireble place relative to competitors in the minds of consumers). Marketing mix is the controllable marketing tools which the firm blends to produce the response it wants in the target market thought the 4 Ps: Price, product, place and promotion.

Answer 74

Value chain: the series of departments that carry put value-creating activities by desing, produce, market, deliver and support a firm's product. Major functional departments in each departments of the business unit: marketing, HR, finance, controlling, accounting, purchasing, operations and others must work together to accomplish strategic objectives and make sure the company reaches its overall goals in terms of growth, profitability and sustainability. Contains all the steps from designing it to manufacturing it.

Answer 75

A valuable tool with the goal of matching a companies strengths to attractive business opportunities in the environment while eliminating or overcoming the company's weaknesses and minimising the threats to it. It is especially valuable when conducting situation analyses or analysing business cases. S: strenght (internal and positive) Internal capabilities that may help a company reach its objectives W: weakness (Internal and negative) Internal limitations that may interfere with a company's ability to achieve its objectives O:opportunities (external and positive) external factors that the company may be able to exploit to its advantage. T: threats (external and negative) current and emerging external factors that may challenge the company's performance.

Answer 76

Return on investment: the net return from a marketing investment divided by the cost of marketing investments. Measures profits made on investments in marketing activities.