BUS602 Study Guide

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Study Guide Structure

In this study guide, the sections in each unit (1a., 1b., etc.) are the learning outcomes of that unit. 

Beneath each learning outcome are:

• questions for you to answer independently;
• a brief summary of the learning outcome topic; and
• and resources related to the learning outcome. 

At the end of each unit, there is also a list of suggested vocabulary words.

How to Use this Study Guide

1. Review the entire course by reading the learning outcome summaries and suggested resources.
2. Test your understanding of the course information by answering questions related to each unit learning outcome and defining and memorizing the vocabulary words at the end of each unit.

By clicking on the gear button on the top right of the screen, you can print the study guide. Then you can make notes, highlight, and underline as you work.

Through reviewing and completing the study guide, you should gain a deeper understanding of each learning outcome in the course and be better prepared for the final exam!

Unit 1: Marketing and Strategic Planning

1a. Explain the role of marketing in a business 

• What is customer value?
• What are the elements of the Marketing Mix?
• How do the 4Ps relate to the 4Cs?
• Why are positioning and targeting important?
  

Customer value encompasses the benefits a customer receives relative to the cost when buying a good or service relative. Goods and services are communicated to consumers through the marketing mix, which encompasses the 4Ps: Product, Price, Place, and Promotion. Each of these factors works together to present a product or service in a way that connects with the company's target market.

To better reflect the customer's perspective, the 4Ps have been revised to the 4Cs: Customer value, Cost, Convenience, and Communication. For example, Customer Value relates to how the product benefits the customer. Cost to the customer represents Price and other costs such as time spent on the purchase. Convenience for the buyer relates to the Place element of the 4Ps and how easy it is to find out information about a product and make the purchase. Communication corresponds to Promotion in the 4Ps, which is now a two-way dialogue between a company and its customers.

The role of positioning is to differentiate a product from that of the competition. This identifies the company's value proposition and what the product does. Targeting refers to the group of consumers whose needs will be met by that product. By identifying the segment of the marketplace that is most likely to need and want a product, a company will have a greater chance of achieving success.

To review, see Fundamentals of Marketing Basics.

1b. Explain the role of ethical marketing activities 

• What is the purpose of a written Code of Ethics?
• Why is it important to be ethical in the sales process?
• How can salespeople generate trust and goodwill with their customers?
  

Marketing's role within an organization is to communicate what a company has to offer and generate sales for that company. The many demands of this function affect how decisions are made to meet organizational goals. Ensuring that these decisions are made ethically can be challenging.

A written Code of Ethics provides guidelines by which company employees should behave. Since every possible situation cannot be accounted for, all employees should use good judgment when making decisions. Additionally, managers should use their discretion when making decisions or evaluating the decisions of other employees.

When salespeople are honest and ethical, they can better build relationships with their customers and generate trust. Sales in an ongoing and long-term process, and when unethical practices exist, the potential for future sales may be gone.

Salespeople can generate trust by not over-promising and always putting the customer's best interests first. By seeing the problem through the eyes of the customer, a salesperson can address the problems that exist and seek to find appropriate and effective solutions.

To review, see The Importance of Ethical Marketing and Ethics in Sales.

1c. Describe the strategic planning process

• What is a value proposition?
• What is the purpose of a Mission Statement?
• How does a SWOT analysis fit into the strategic planning process?
• What is the difference between strategies and tactics?
  

The strategic planning process is an essential part of the marketing function. This enables an organization to best allocate its resources and leverage opportunities in the marketplace.

Creating a value proposition is the first step in the process. It identifies the product or service being offered and the benefits a consumer will receive by purchasing. This lets the customer know why they should buy a product or service from a company.

A Mission Statement communicates what the company does and its overall philosophy. This statement should be a guiding factor for all of an organization's activities.

When identifying the internal and external factors that can impact an organization, a SWOT analysis is used for conducting a situational analysis. This enables a company to see the threats and opportunities that exist and what elements they can control. A company can identify a competitive advantage, see where improvements are needed, and plan for events that may occur in the future.

Strategies represent the overall approach a company takes to achieve its objectives. Tactics are the specific activities a company takes to meet those objectives. For example, one strategy might be to increase sales of existing products. Tactics for accomplishing this objective might include distributing coupons for a product, offering discounts or promotions, or offering new ways to use a product.

To review, see Components of the Strategic Planning Process, Objectives and Strategies, and Executing Strategy.

1d. Describe the role of marketing within the strategic planning process 

• What are the factors that comprise an organization's external marketing environment?
• How does consumer behavior impact the marketing process?
• What is the purpose of a Marketing Plan?

Forces external to an organization – the external environment – are difficult for a company to control. However, being aware of these factors can enable a company to develop more effective marketing strategies. They can present a company with both threats and opportunities, requiring changes and adjustments to marketing efforts.

These external factors include the political and regulatory environment, the economy, competition, technology, and the social/cultural environment. By understanding the trends and events within each of these factors, a company can develop products and services that will meet consumer needs and have a greater chance of succeeding in the marketplace.

Consumer behavior is the process by which consumers make a purchase decision. Additionally, those purchase decisions are impacted by various influences, including family, society, and psychological factors. The consumer buying process begins with the consumer recognizing a need. This could be as simple as buying a cup of coffee or as complex as buying a new car. Once a need has been identified, the consumer will search for information and evaluate available options. The consumer will then make a purchase, followed by an evaluation of that purchase. Throughout this process, marketing is ever-present through advertising, promotions, public relations, social media, and other channels consumers receive information. These messages seek to address the consumer's needs from practical and emotional perspectives.

No strategy can be implemented without a sound plan in place. The purpose of the Marketing Plan is to identify factors that impact the sales process and how an organization will communicate with its customers in a meaningful way. Elements of a Marketing Plan include an overview of the marketplace, strategies to be implemented, and associated costs.

To review, see The Marketing Environment and Marketing Plan Basics.

Unit 1 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• 4Cs
• Code of Ethics
• consumer behavior
• consumer buying process
• customer value
• external environment
• Marketing Mix (4Ps)
• Marketing Plan
• Mission Statement
• positioning
• strategies
• SWOT Analysis
• tactics
• targeting
• value proposition

Unit 2: Environmental Scanning, Firm Resources, and Capabilities

2a. Explain the role and importance of environmental scanning in developing the marketing plan 

• What are the objectives of horizon or environmental scanning?
• What are some of the challenges associated with evaluating data from an environmental scan?
• What are some of the ways to assess trends?
  

The objectives of environmental scanning are to detect social, cultural, technological, and other situations or events, identify opportunities and threats, determine the organization's strengths and limitations, and provide an analysis for decision-making. When these factors are uncovered and analyzed, an organization can then develop marketing activities. One of the keys to this practice is to look at the data collected to evaluate how the future will be different than it is currently.

When conducting a scan, there is a great deal of uncovered information. However, some filters can impact how we view that data and determine whether or not it is useful or meaningful. For example, people tend to look for familiar patterns, and when we don't see those patterns, we might ignore the information. Also, there are many different thinking styles, which can cause us to miss important information or make incorrect assumptions. These factors can result in marketing decisions that are not based on accurate events or situations.

Trends are part of numerous other events and activities and are not isolated by themselves. However, their future is uncertain. This is why taking the time to explore them in-depth is important. Opposing views should be explored, research should be done about past events, actions by the competition should be anticipated, and factors that are critical to the analysis should be identified.

To review, see The Scanning Process.
 

2b. Describe various macro-environmental, industry, and competitive forces, from economic and natural to rivals and customers 

• What are the factors that comprise the PESTEL analysis?
• What are the components of an industry analysis?
• What are the elements of Porter's Five Competitive Forces?
  

A PESTEL analysis enables an organization to look at its external environment in depth. PESTEL is an acronym that represents the following: political factors, economic factors, sociocultural factors, technological factors, environmental factors, and legal factors. By exploring these areas, an organization can better understand the elements that can impact its strategies and position in the marketplace.

When evaluating an overall industry, organizations should look at news and innovations that are occurring and take an in-depth analysis of consumer trends and market data. It is important to evaluate the competition in the industry and the economic factors that exist which could influence market conditions. Much like the evaluation of legal factors in a PESTEL analysis, an industry analysis should also include a close look at government regulations and how they affect overall practices in that field.

Michael Porter's Five Competitive Forces Model illustrates the foundation of his theories, which state that competition in an industry is driven by the structure of the industry. As competition in an industry increases, the attractiveness for other players in the industry decreases. Competition within an industry goes beyond the established entities in the marketplace, which he called extended rivalry. The five competitive forces that impact this include rivals within the industry, potential new entrants, substitute products and services, buyers' bargaining power, and suppliers' bargaining power.

To review, see PESTEL, Introduction to Industry Analysis, and Five Competitive Forces Model.

2c. Evaluate a firm's resources and capabilities 

• What are the four questions associated with the tool known as VRIO?
• What are some of the difficult-to-imitate resources within an organization?
• What is the foundation of Resource-Based Theory?
  

VRIO helps a company assess the resources available to them and their capabilities. The acronym – which represents "valuable", "rare", "difficult to imitate", and "organized to capture value" – focuses on the questions that managers should be asking when evaluating their capabilities. These questions are:

• Does the resource or capability create value for an organization?
• Is the resource or capability rare within the industry?
• Would it be difficult for other companies to imitate the resource or capability?
• Is the firm sufficiently organized to capture the value of the resource of capability?
  

A competitive advantage exists if the company can answer "yes" to any of these questions.

Companies can have a difficult time duplicating resources that are hard to imitate. For example, companies cannot generally imitate trademarks or patents, which are legally protected. Companies also cannot imitate the culture of their competitors since these are unique to that organization and generally evolve over time. Additionally, a factor such as culture cannot be substituted for something else since there aren't other ways in which a company can gain the same benefits.

Resource-Based Theory is founded on the principle that an organization's resources provide a sustainable competitive advantage. This also highlights how all qualities come together and represent more than their parts. While individual strategic resources and capabilities may be imitated, the combination of these factors cannot.

To review, see The Internal Environment and Four Characteristics of Strategic Resources.

2d. Determine the specific marketing mix for a firm 

• What are the components of the marketing mix?
• How is a product defined, and what are its characteristics?
• What are some of the introductory pricing strategies companies use, and what are some of the pricing approaches companies implement?
• What is the role of a promotional strategy, and what are the elements of the promotional mix?
• What are the elements of AIDA strategies?
• What are the factors that impact an organization's choice of distribution strategy?
  

The marketing mix encompasses the 4Ps: product, price, place, and promotion. A product is any good, service, or idea that creates value for a customer. Tangible benefits can include packaging and utility, while intangible factors can include image or prestige. Additionally, there are several categories of products, including consumer products, unsought products, convenience products, shopping products, and specialty products.

When a company is introducing a new product, they might consider a skimming price strategy, which is when a company sets an initial high price for their product. A penetration pricing strategy is when an initial low price is set. This strategy is typically used when there are many competitors in the marketplace. An everyday low price strategy is used when the initial price is the one that will be asked throughout the life of the product.

Pricing approaches included cost-plus pricing, which is when a company will add a profit to the cost of the product to determine the price. Odd-even pricing relates to the actual dollar amount, which assumes there is a psychological aspect to pricing something at $9.99 vs. $10.00. Prestige pricing focuses on brand image and the quality associated with a higher-priced item. Leader pricing is used to entice people to come into a store by pricing certain items lower, anticipating that shoppers will buy more than planned.

A promotional strategy aims to generate awareness, encourage trials, provide information, retain loyal customers, increase product usage, and identify potential customers. The elements of a promotional mix include traditional advertising, personal selling, sales promotion, public relations, social media, and e-commerce.

The acronym AIDA represents attention, interest, desire, and action. Attention is the ability to immediately capture the audience. The next element requires the marketer to make the information interesting and demonstrate the problem being solved for the consumer. Creating desire through marketing can be challenging, which is where branding becomes especially important. Finally, it is important to have a clear value proposition that leads to a clear call to action.

Distribution channel selection is based on a variety of factors. If a company wants to sell its product in as many locations as possible, it will choose an intensive distribution strategy. This is generally used for convenience products consumers purchase without spending too much time on the purchase decision. A selective distribution strategy is used for items purchased at specific locations, such as electronics or jewelry. Exclusive distribution applies to items sold at a few locations and strategically placed in those stores to increase demand.

To review, see The 4Ps of Marketing, What is a Product?, Pricing Strategies, Promotion Strategy, AIDA Marketing Strategies, and Marketing Channel Strategies.

Unit 2 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• AIDA
• channels
• environmental scanning
• exclusive distribution
• extended rivalry
• filters
• Five Competitive Forces
• industry analysis
• intensive distribution
• Marketing Mix
• patterns
• PESTEL
• place
• price
• product
• promotion
• Resource-Based Theory
• selective distribution
• trends
• VRIO

Unit 3: Segmentation, Targeting, and Positioning

3a. Describe the different methods of market segmentation 

• What are the benefits of targeting and segmenting markets?
• What are the factors associated with geographic segmentation?
• How do organizations use demographic data for market segmentation?
• How does psychographic data enhance demographic segmentation?
• What are the factors associated with behavioral segmentation?
  

Segmenting and targeting markets can enable a company to better adapt its offerings and enlarge its customer base. This can help a company avoid directly competing with other companies, re-market some of their older items, develop new offerings, re-allocate marketing dollars, retain customers, and identify early adopters.

Geographic segmentation divides a market based on location. From the information gathered about a customer's locale, companies can map the data through a process known as geocoding. This helps the organization identify where customers are clustered and use that information to develop targeted marketing activities. Further, by combining geographic data with demographics, companies can better understand consumer profiles in an area.

Demographic segmentation is based on consumer data that can be quantified. Some of the factors marketers use to identify different population segments include age, income, education level, religion, family life cycle, and other characteristics. Marketers use this information to create a general profile of different population groups who may be making purchase decisions based on those factors. Also, groups of consumers are segmented into categories that encompass certain age ranges. Within each group, certain common characteristics define a generation. Some of these groups include seniors born in 1945 or earlier. Marketers need to be aware of the needs of this aging and diminishing population to ensure that appropriate products and services are available. On the other hand, Millennials have the largest spending power of any generation and are the biggest aging group in US history. This population segment is tech-savvy, which is an essential part of target marketing to this consumer group.

Psychographics encompasses the lifestyles, values, and attitudes of consumer groups. Because of these variations, consumers within the same demographic segment might live different lives, which impacts their consumer behavior and purchase decisions.
One of the tools marketers use to segment consumers based on psychographics is VALS, which stands for values, attitudes, and lifestyles. Based on this survey, marketers have identified various categories that can be integrated into marketing strategies, including characteristics and behaviors. These groups are innovators, thinkers, achievers, experiencers, believers, strivers, makers, and survivors.

Behavioral segmentation focuses on how consumers act toward a product. One aspect of this is benefits segmentation, which categorizes consumers based on the benefits they seek in a product or service. Usage rates relate to how often a product or service is used, which can help marketers identify additional ways consumers utilize a brand. These may have been invented by the consumer and may not have been known to the organization. This can provide the company with opportunities to create new marketing strategies.

To review, see Segmentation, Geographic Segmentation, Demographic Segmentation, Psychographic Segmentation, and Behavioral Targeting.

3b. Identify the target market(s) of a firm's offerings 

• What are the factors that make a target market attractive to an organization?
• How do companies determine the number of markets they will target?
  

When looking for attractive target markets, the size of market matters - organizations look for segments that are large enough to be profitable. The segment growth is also important so that future sales are possible. There has to be room in the marketplace for a new competitor, and the market has to be accessible through marketing channels. When there is limited competition in a product category, major firms can dominate the marketplace by charging higher prices, offering inferior goods, and blocking access to the market. Further, barriers to accessibility could include geography, politics, technology, and social factors. The company needs to have available resources to compete in the marketplace and ensure that the product fits in with the company's goals and mission.

Many companies will choose more than one target market to make them less vulnerable to competition. This is known as multisegment marketing. For example, the world's largest retailer of diamond jewelry, Signet, operates various jewelry stores that meet the needs of consumers in different income categories. While they don't face much competition from smaller and independently owned shops, their diversification into different brands gives them an overall market advantage.

In a concentrated marketing strategy, companies will target a select group of consumers. However, this can be risky if there is a decline in the need for that product. Niche marketing focuses on an even smaller segment, with the company seeking to gain a large share of a small marketplace. Microtargeting has come under scrutiny for violating consumer privacy and ethics since this involves gaining specific details about an individual consumer's lifestyle, habits, and purchases.

To review, see Selecting Target Markets and Leverage Facebook with Hyper Targeted Ads.

3c. Explain the concept of product positioning

• What is head-to-head positioning?
• What is the role of a unique value proposition?
• Why do companies reposition their brands?
• What are some of the risks of repositioning?
  

Head-to-head positioning is when a company directly competes with another brand in the same product category. Overall, positioning is how a company differentiates its goods and services from the competition and how the consumer perceives a brand.

The unique value proposition focuses on how a product or service is different from the competition. This helps the consumer identify your brand relative to other brands in the marketplace and the associated brand benefits. This is what makes one brand stand out from others.

Sometimes, a company will choose to reposition a brand when necessary to leverage new opportunities. Some of the factors that can initiate a decision to reposition a brand include a change in competition; changes in market conditions, such as the economy, politics, or social causes; changing consumer trends and preferences; and changes in organizational leadership and internal innovations.

While repositioning can bring new life to a brand, there are also potential risks. For example, decisions for change should be based on solid research to ensure that the change is based on data rather than emotion. Sometimes, companies will go too far in their efforts and overreach in ways that lose consumer confidence and trust. Companies may also miss the most important factors to a consumer and infuse new ideas where none are desired. A repositioning strategy can also result in overpromising what a brand can deliver and confusing the consumer about what a brand has to offer.

3d. Describe the importance of branding 

• What is the definition of branding?
• How can a company achieve branding?
• What are the benefits of strong brand equity?
  

A brand is the name, term, sign, or symbol differentiating one offering from another. Additionally, the goal of branding is to encourage consumers to identify various traits of your particular product. This leads to consumers developing an emotional connection and relationship with the product.
Branding aims to increase awareness and is achieved through marketing, advertising, public relations, and direct marketing. Brand awareness can lead to higher sales, build greater trust between a company and its customers, simplify the marketing process, and enable companies to reach their target markets better.

Brand equity is the value a company has by having a well-known brand name. Consumers tend to believe that a product with a well-known name is better than a product that is not as well known, which can lead to higher sales levels. According to psychologists, consumers believe that a strong brand name equates to product quality. Companies also use this data to develop pricing structures, knowing that higher prices can be charged for products with strong brand equity. Additionally, the valuation of brand equity can include changes in market share, profit margins, logo recognition, consumer perceptions, and consumer brand knowledge.

To review, see Branding Basics and Brand Equity.

Unit 3 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• barriers to accessibility
• behavioral segmentation
• benefits segmentation
• brand
• brand awareness
• brand equity
• branding
• concentrated marketing
• demographics
• geographic segmentation
• head-to-head positioning
• limited competition
• microtargeting
• multisegment marketing
• niche marketing
• psychographics
• repositioning
• segmentation
• segment growth
• size of market
• targeting
• unique value proposition
• usage rates

Unit 4: Consumer, Organizational, and Service Marketing

4a. Describe the characteristics of consumer marketing and buyer behavior

• What are the differences between high-involvement and low-involvement purchase decisions?
• What are the stages in the consumer buying process?
• What are the factors that impact consumer decision-making?
  

Routine response behavior is when consumers make relatively automatic purchases based on limited information or information they learned in the past. Impulse purchases are when consumers make an unplanned purchase without previous thought. Both of these types of buying decisions are considered low-involvement purchasing decisions because they carry little risk if a mistake is made.

Consumers engage in extended problem solving when they purchase higher-priced items and carry a greater risk if a mistake is made. These purchases are considered high-involvement purchasing decisions, and consumers will spend a considerable amount of time gathering information before making a purchase decision.

Whether a consumer makes a simple purchase or a complex purchase, they will go through the same process. The amount of time spent on each stage will vary depending on the cost of the item and the importance associated with making the right decision. The stages of the buying process are need recognition, information search, product evaluation, purchase decision, post-purchase evaluation, and product disposal.

Many factors influence our buying behavior. These can include the situations in which we find ourselves, store environments, the time of day, and the weather. Social and cultural factors can affect our decisions, lifestyles, and the people we associate with. Our mood and motivations impact our decisions (be sure to review Maslow's Hierarchy of Needs) and how we perceive the world around us. Of course, general demographics play a role in our purchase choices. Additionally, the influence of all of these factors can change as we age, mature, and go through different phases of the family life cycle.

To review, see The Consumer's Decision Making Process, Impulse Buying, Factors That Influence Consumers' Buying Behavior, and More on Factors.

4b. Explain the aspects of organizational markets and buying procedures 

• What are the primary characteristics of a business-to-business market?
• What are the stages of the B2B buying process?
• What are the different types of B2B buying situations?
• What is a buying center, and who are its members?
  

In a business-to-business (B2B) market, there are generally fewer customers than in a business-to-consumer market, and a small number of customers account for the company's sales. More transactions have larger dollar amounts, and the purchase decision process is lengthy. There is a greater reliance on personal selling and more rigid product standards.

While there are some similarities between a business-to-consumer purchase and a business-to-business purchase, the differences are significant. The B2B buying process begins the same way, with need recognition. However, this is where it diverges from a consumer purchase process. The next step is to describe and quantify the need, followed by a search for potential suppliers. This is followed by a request for proposal (RFP) from those suppliers, which are then evaluated and a supplier selected. The order is then agreed upon, and a purchase is made. As with all purchases, a post-purchase evaluation is conducted.

B2B buying situations are similar to consumer purchases. A business may make a straight rebuy when the company buys the same products from the same supplier. A new-buy situation is when a company buys something for the first time. A modified rebuy is when a company buys something they have purchased in the past but makes some changes such as product updates, delivery options, or quantities.

A buying center in an organization comprises the people who will be involved in making purchase decisions. The center members include initiators, who are those who first identify a need. The users in an organization are the people who will actually use the product and may also be the initiators. Influencers may or may not use the product but can add their experience to the buying decision. Gatekeepers control the flow of suppliers who have access to the decision-makers within the company. The deciders are the people who ultimately make the purchase decision. The position in an organization for a decider can vary based on the cost and importance of the purchase itself.

To review, see Characteristics of B2B Markets, Stages in the B2B Buying Process, and Buying Centers.

4c. Describe the distinctive characteristics of marketing services 

• What are the "4 Is" of marketing services?
• How can a service business benefit from referrals, reactivation, demonstrating results in advance, and personal interaction?
  

Services differ in many ways from tangible goods. As a result, they can be more difficult to market. The 4 I's of service marketing include intangibility (because they cannot be touched and may not be seen), inconsistency (because they are delivered by people, which can vary from provider to provider), inseparability (because the service and the provider cannot be separated), and inventory (because services cannot be stored).

When a company does a good job for a customer, they are more likely to refer you to other customers. However, sometimes companies have to ask for those referrals. When doing so, it is important to ask for a few other companies similar to this company since they are more likely to have the same purchase needs.

Reactivation is when a company utilizes other aspects of their business to bring in new business. This is when a company follows up on all leads and sends personalized emails to determine levels of interest, which can open up new opportunities. Additionally, companies can better leverage their websites for lead generation by providing valuable information and content.

Sometimes, a company can benefit from giving away some information or content for free. In this way, a potential customer can see the value you are offering and recognize that what they pay for can be even more significant.

If possible, conducting workshops, conferences, webinars, and other special events can highlight what a service organization has to offer in a personal and direct way. As many people aren't comfortable speaking in public, these events will enable your company to stand out, giving your organization a competitive advantage. Personal interaction between a company and their customers can help build stronger relationships, generate customer loyalty, and ensure that customers' interests are most important.

Having a sound and effective presentation is important. This can highlight the company's specific process, differentiating their offerings relative to the competition.

To review, see The "4 Is" of Service Marketing and Services Marketing.

Unit 4 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• B2B buying process
• business-to-business markets
• buying behavior factors
• buying center
• complex purchases
• free content
• high-involvement purchase decisions
• impulse purchases
• inconsistency
• information search
• inseparability
• intangibility
• inventory
• low-involvement purchase decisions
• Maslow's Hierarchy of Needs
• modified rebuy
• need recognition
• new-buy
• personal interaction
• post-purchase evaluation
• product disposal
• product evaluation
• purchase decision
• reactivation
• referrals
• straight rebuy

Unit 5: Product Life Cycle, Marketing Research, and Product Development

5a. Explain the stages of the product life cycle 

• How does the product life cycle contribute to the marketing process?
• What are the characteristics of each stage of the product life cycle?
• What are the elements in the Boston Consulting Group matrix?
  

The product life cycle helps marketers manage the acceptance of a product in the marketplace throughout the life of that product. Each phase requires a different marketing strategy, and understanding the market dynamics at each phase is essential.

The first stage of the product life cycle is the introductory phase when a product first comes out of product development and is made available to the public. The length of this phase can vary from product to product, and profits are generally low.

The second stage of the product life cycle is the growth phase. Competition is likely to be high, but sales and profits will increase. Promotional activities are also increased to generate greater awareness and encourage purchase.

The third stage of the product life cycle is the maturity phase, where most customers are repeat purchasers. Prices may be reduced, and promotional messaging focuses on value and benefits.

The final stage of the product life cycle is the decline phase. This is when technology has likely advanced and consumer preferences have changed. Sales decline, and companies will take steps to "harvest" their products to earn as much profit as possible from products whose demand has diminished.

The Boston Consulting Group analysis is a tool that enables companies to look at their business units in terms of market share and growth. Products placed in the "star" quadrant have high market share and growth. Companies tend to spend a high percentage of their promotional budgets on these products. "Cash cows" have a high market share but low growth. There is less competition, and companies spend less on promoting these products. "Question marks" have a low market share but the potential for high growth. Large amounts of research and promotional efforts are needed to facilitate success. A product that has been categorized as a "dog" has a low market share and low growth. Often, these products are dropped from a company's offerings.

To review, see The Product Life Cycle, Product Life Cycle Management, and Analysis of Product Life Cycle.

5b. Explain the importance and types of marketing research 

• What is a marketing information system?
• What are the steps in the market research process?
• What is the difference between quantitative research and qualitative research?
• What is the difference between primary research and secondary research?
  

Marketing information systems enable companies to gather and manage information about their internal and external environments. These systems help companies to analyze their data for better decision-making. Analytics software, data mining, and business intelligence all play a role in how companies collect, record, and use the information available to them.

Conducting market research is essential for companies to make the right business decisions. The market research process enables companies to determine the kinds of research that should be conducted, how to best collect that data, and how to analyze it properly. The steps in the research process are:

• Define the problem
• Design the research
• Design the collection format
• Specify the sample
• Collect the data
• Analyze the data
• Write the research report
  

Quantitative research is data that can be quantified and easily measured. Examples include online and paper surveys, face-to-face interviews, telephone surveys, longitudinal studies, and systematic observations.

Qualitative research provides information about emotions, attitudes, and other non-numerical data. This information provides a more in-depth look at the problem and can enable marketers to better understand how consumers feel about their products. Examples of qualitative research include focus groups, interviews, and record keeping. Observational research, in particular, can enable a marketer to directly see how a consumer or target market behaves in their natural environment. This can lead to new product innovations, new marketing strategies, and a greater understanding of consumer behavior.

Primary research is original and is being done for the first time. It is research that an organization designs and implements. The benefits of this kind of research are that it can be designed with the company's specific needs and problems in mind; it is as current as possible; it is relevant, and the company has control over the process. However, it can be time-consuming and expensive.

Secondary research includes information that is already published. It is easily accessible through newspapers, magazines, and other print media; government reports, annual reports, archived information, and other documents. In addition to being readily available, this data is often free of charge. However, the information might be out-of-date and not relevant to the question being researched.

To review, see Marketing Information Systems, Steps in the Marketing Research Process, Qualitative and Quantitative Research, Primary and Secondary Research, and Observational Research Introduction.

5c. Describe the importance and process of product development 

• What are the components that comprise an offering?
• What are the four categories of consumer offerings?
  

Offerings are products or services that provide value to a customer to satisfy a need or a want. The first component is the actual tangible product, including features and benefits. The price of a product is not only what a consumer pays for their purchase, but also includes the cost of ownership. Finally, service includes all intangible purchases. They cannot be stored and are only of value when the consumer uses them.

Convenience offerings are products that consumers purchase with minimal effort. Consumers generally do not see a great deal of difference between brands. Bread, milk, and candy are considered convenience offerings.

Consumers will take more time to compare and select a brand when buying shopping offerings. Consumers will typically do research, visit different retail locations, and read product reviews before deciding. Toothpaste and laundry detergent are shopping offerings.

Specialty offerings vary greatly from their competition and seek to distinguish themselves in ways that will appeal to their target markets. Cars and designer clothing are specialty offerings.

Unsought offerings are purchases made when they are needed and unexpected. Towing and locksmith services are unsought purchases.

To review, see Creating Offerings, New Product Development, Bringing Products to Market: Crocs, and Product Redevelopment and Adaptation.

Unit 5 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• Boston Consulting Group (BCG)
• convenience offerings
• decline phase
• focus groups
• growth phase
• interviews
• introductory phase
• marketing information systems
• market research process
• maturity phase
• observational research
• offerings
• primary research
• product life cycle
• qualitative research
• quantitative research
• secondary research
• shopping offerings
• specialty offerings
• surveys
• unsought offerings

Unit 6: Channels of Distribution, Supply Chain, and Logistics

6a. Identify the various channels of distribution, such as wholesale and retail, undertaken by different companies 

• What are the different types of channel partners companies utilize for distribution?
• What is the difference between B2B (business-to-business) and B2C (business-to-consumer) channels?
• What are the factors companies consider when making channel selections?
  

Channel partners are the intermediaries manufacturers use to get products into the hands of the consumer. Wholesalers procure products from the producers and store them in ways that make it convenient for retailers to sell. Merchant wholesalers, also known as distributors, offer manufacturers a wide range of services, including warehousing, supplying credit, and delivering goods to customers. Brokers don't purchase any goods or take title but act as a negotiator between buyers and producers. Retailers obtain goods from the above intermediaries and sell them directly to the consumer. Retail retailers include supermarkets, specialty stores, department stores, warehouse clubs, outlets, and online retailers, among many others.

A business-to-business purchase begins with the producer and then moves on to either an agent/broker or an industrial distributor. Goods then move on directly to the business or government agency making the purchase.

A business-to-consumer purchase goes through many more steps before making it to the ultimate user. Goods move from the producer to an agent, wholesaler, or distributor. This is followed by a move to the retailer, who then sells the goods to the consumer.

A business will consider several factors in channel selection to determine which channel will be most effective. One of the first things to consider is the type of customer being targeted. This is especially important when distinguishing between consumer buyers and business customers. The nature of the product can also help a company identify the proper channel. For example, channels for non-perishable goods can be quite different from channels for fresh fruits, vegetables, dairy, and meat products. Channel partner capabilities can impact decisions since some partners may be more suited to a company's specific needs. The economy and changing exchange rates can be factors when determining a channel, as can the available technology. Finally, it is important to evaluate the channels being used by the competition. If their products make it to the marketer more quickly, then a change in channel distribution is needed.

To review, see Using Marketing Channels to Create Value for Customers, Distribution Measures, and Distribution Systems in Omni-Channel Retailing.

6b. Describe the importance of a firm's supply chain and its relationship to the value chain 

• What are the four main elements of the supply chain?
• What is the role of sourcing in the supply chain?
• What are the keys to value chain success?
  

The main elements in the supply chain begin with purchasing. This involves buying all of the materials needed to produce finished goods. Once materials are purchased, manufacturing and operations follow. This is where raw materials are turned into finished products; the entire process is monitored for quality and consistency. Once goods are completed, various modes of transportation will move the goods to various locations. This distributes the merchandise to various outlets, including warehousing, where the goods are stored as inventory.

Sourcing is how companies seek suppliers for the goods and services they need to manufacture their products. While some companies own their supply chain, many companies seek other firms, known as outsourcing. For example, rather than having their own fleet of trucks and other modes of transportation, companies will hire companies for logistics. However, there are advantages and disadvantages to this strategy. Companies can place a greater focus on their core business, but they may also lose some control over the process.

Supply chain management must correlate directly with meeting market and consumer needs. This way, an organization can provide real and meaningful value to a customer. This begins with fully understanding a customer's needs and habits. This is followed by ensuring that a company can differentiate its product from the competition. This includes understanding how those products are manufactured and marketed, as well. Next, it is important to understand the producers and suppliers of the materials used to create the product. The finished product will only be as good as its parts. Finally, a company must seek effective ways to build the brand and communicate the benefits to the consumer.

To review, see Using Supply Chains to Create Value for Customers, What is Supply Chain Management?, and Value Chain Management in a Food Export Business.

6c. Describe the various logistical challenges of delivering the product to the customer, such as time to market and cost 

• What is the role of logistics in supply chain management?
• How do companies determine the most efficient mode of transportation for their goods?
• How do warehousing and transportation influence distribution costs?
  

Logistics involves getting goods from one point to another. This complex process requires careful planning and execution and impacts the overall supply chain by adding value to the offering. Resources managed through logistics include tangibles such as food, materials, equipment, and liquids, and intangible factors such as time and information. Additionally, logistics includes integrating packaging, production, warehousing, transportation, and security.

There are many ways in which a company can transport its merchandise. Some of these modes of transportation include trucking, shipping, rail, air, and pipeline. Often, merchandise may be transported through more than one mode. However, choosing the right mode or modes can be complex. For example, the nature of the product can impact how quickly a product needs to get to market. Dairy products and fresh flowers require modes of transportation that will get them into the hands of the consumer quickly, while transportation choices for furniture and clothing can include slower modes. Additionally, items of high value need to be transported quickly to avoid the risk of theft along the way.

Warehousing is a way for companies to ensure sufficient inventory to meet consumer demand. However, this also results in additional costs associated with storage and handling. Further, product damage is greater because the merchandise is moved more often and to more locations before reaching the consumer. The distribution of goods has evolved and is more efficient through distribution centers and fulfillment houses. These are often owned by third-party logistics providers, known as 3PLs.

The overall goal of the operations discussed here is to make the most of a business' operations and increase profit. Value chain management is essential in reaching these goals. By having a strong value chain management process in place, a company can better monitor and manage all elements that go into manufacturing, procurement, production, quality control, and distribution.

To review, see The Function of Logistical Management, Modes of Transport, and Warehousing and Distribution.

Unit 6 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• brokers
• channel partners
• channel selections
• distribution
• intermediaries
• logistics
• manufacturing and operations
• modes of transportation
• purchasing
• retailers
• sourcing
• supply chain management
• third-party logistics
• value chain management
• warehousing
• wholesalers

Unit 7: Promotion and Pricing

7a. Explain the various means of product promotion, such as direct mail and TV advertising 

• What are the elements of the promotional mix?
• What factors influence the choice of methods to promote a product or service?
  

Companies seek to have a consistent message when developing marketing campaigns, known as an Integrated Marketing Communications (IMC) strategy. They accomplish this through their promotional activities, known as the promotion or communication mix. The components of this mix include advertising, sales promotion, direct marketing, professional selling, public relations, and sponsorships.

Companies consider various factors when formulating strategies for their promotion and communication mix. The available budget can help determine the reach and frequency associated with advertising. Reach reflects the number of people exposed to a message, while frequency represents the number of exposures.

The stage in the product life cycle (discussed in an earlier Unit) can also impact the level of promotion. For example, a product in the introduction stage will require more promotional activity than a product in the decline stage. A complex or higher-priced product will require a more robust campaign effort than a convenience product purchased regularly. Knowing the habits of the target market can also influence promotion mix decisions. Understanding when consumers may make a decision and where they make their purchases will help determine where marketing is placed. Additionally, companies will consider the type of media preferred by the target market in the decision-making process. Increasingly, digital media and platforms, mobile devices, and social media are playing a more prominent role in promotion strategy decisions.

To review, see The Promotion (Communication) Mix, Factors Influencing the Promotion Mix, Communication Process, and Message Problems,  and Integrated Marketing Communications.

7b. Determine the type of promotional methods that are best suited to the product, target markets, and positioning strategy of a firm 

• What are some of the brand awareness factors marketers consider when developing their promotional activities?
• What are the primary online and social media outlets available to marketers?
  

When choosing promotional methods, marketers must consider various factors that relate to brand awareness. First, brand recognition can play a role in the promotional choices made. Marketing activities for a brand with strong recognition will differ from marketing for a brand with relatively little brand awareness.

A well-known trademark can also impact the promotional methods used to communicate with a target market. Consider the Nike swoosh or the Coca-Cola logos and how those are integrated into marketing communications. Additionally, the associations consumers have with brands will impact the content of a message, which will seek to generate positive attitudes about a brand.

A company's reputation and recognition go hand-in-hand. They can dictate the types of marketing messaging, a brand's position in the consumer's mind, and how a company can use this position to reach wider target audiences.

Brand loyalty will also influence the promotional activities a company develops. The content of those messages will also vary when reaching repeat customers vs. customers who may be new to a brand.

The variety of internet marketing tools available to companies grows and expands. The company website is one of the first places a consumer may visit to gather information about a company and their offerings. An effective website should be attractive, informative, and easy to use. For companies that sell directly from their websites, making a purchase should be quick and straightforward.

Digital advertising offers marketers a wide range of options from search engines, emails, videos, display ads, and mobile advertising.

Social media marketing provides companies with numerous ways to reach mass markets and niche markets. The ever-increasing number of social media platforms can enable a company to reach consumers in all demographic groups and craft messages that specifically address the needs of consumers in all segments of the population.

To review, see Raising Brand Awareness Through Internet Marketing Tools.

7c. Explain the various pricing methods, such as everyday low prices and penetration pricing, that firms can use for their products and services

• What are some of the pricing objectives companies consider when setting prices for their offerings?
• What are the factors that impact pricing decisions?
• What are the different pricing strategies available to companies?
  

Before setting a selling price for their products or services, a company must first identify their objectives for those products. ROI (return on investment) can play a role in pricing offerings, with companies determining they want to achieve a set profit level. Additionally, companies may set pricing to maximize profits so that as much revenue as possible can be earned, which can be at a high price point or a low price point. However, companies need to recognize the price/value relationship their customers will be evaluating.

Companies may also price to maximize sales, or generate as high a level of sales as possible, even if that pricing strategy does not profit. This might be done to generate needed cash, but this is generally a short-term strategy.

Maximizing market share leads to specific pricing strategies, as well. By generating a greater share of the marketplace, a company can remain viable, even if this doesn't translate to higher profits.

Sometimes a company is seeking only to maintain the status quo. Competitors will keep their prices relatively in line with each other to continue to capture target markets.

The factors that can impact pricing decisions can be external and internal to an organization.

One of the external factors focuses on a company's customers. For example, price sensitivity refers to how sensitive a customer is to price changes or how they perceive value plays a role in the price that is set for a product or service.

Competitors' pricing can play a role in the price set for a company's goods. If the price for a similar item is set at a lower price point, the consumer is more likely to buy from that company. Also, prices for substitute products can impact pricing strategies. For example, if someone is taking a trip, they will compare airline prices and may also look at prices for trains or rental cars.

Other external factors include the economy and government regulations. Consumers are less willing to buy expensive items or items they feel should cost less in a weak economy. Additionally, several laws, including the Robinson-Patman Act, regulate pricing decisions so that there is fair competition and ethical behavior among companies.

Finally, internal factors that affect pricing include production, distribution, and marketing costs. All of these elements are integrated into the selling price so that companies can meet their pricing objectives.

There are many pricing strategies companies use to bring their products to market. Often, this relates to the product life cycle. For example, a product that is new to the market will be subject to different kinds of introductory pricing strategies. These can include a skimming strategy, where an initial high price is set for a product, or a penetration pricing strategy, where the initial price is set at a low point.

Cost-plus pricing occurs when a company takes the cost of a product and adds a specific profit level to determine the price. Prestige pricing is used to showcase a product with a high-quality image; leader pricing is when a store prices certain items at a low point to attract shoppers, anticipating that they will buy higher-priced items in addition to low-priced merchandise.

To review, see Price, the Only Revenue Generator.

7d. Determine the pricing strategy, such as pricing for profit and increased sales, of various firms and industries 

• How is the market equilibrium price point determined?
• What is the impact of excess supply and excess demand on pricing strategies?
• What is the elasticity of demand?
  

When the demand for a good increases, the price tends to increase. When the supply for a good increases, the price also tends to decline. When we combine both the supply and demand curves, we can see where the two curves intersect. This is known as the market equilibrium, where the quantity demanded matches the quantity supplied.

An excess in supply forces companies to compete more aggressively, which results in pressure to lower prices. This continues until market equilibrium is reached once again. Excess demand generates greater competition for goods to be sold, which causes prices to rise. Again, this process will continue until market equilibrium is reached.

Elasticity of demand is the relative change in the quantity people will buy where there is a price change. Low elasticity is when there is little change in quantity purchased relative to a change in price. However, inelastic demand, which is high elasticity, is when there is a big change in the quantity purchased relative to a change in price.

To review, see Explain and Calculate Demand Elasticity: Market Equilibrium: Demand and Supply Curves and Elasticity of Demand.

Unit 7 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• brand awareness
• brand loyalty
• brand positioning
• competitor pricing
• cost-plus pricing
• demand
• digital media
• elasticity of demand
• Integrated Marketing Communications
• internet marketing
• introductory pricing
• leader pricing
• market equilibrium
• market share
• maximizing profits
• maximizing sales
• prestige pricing
• price/value relationship
• price sensitivity
• pricing objectives
• promotional mix
• Robinson-Patman Act
• ROI
• skimming
• social media
• social media marketing
• status quo
• substitute products
• supply
• trademarks

Unit 8: Developing a Marketing Plan

8a. Analyze the alignment of a marketing plan with the mission and vision of a firm and stated company objectives within the organizational strategic plan 

• What is the purpose of a marketing plan?
• How do the various elements of the marketing plan help an organization develop effective strategies?
  

A marketing plan enables a company to identify its customers' needs and determine if the organization has the capabilities to meet those needs. A Mission Statement is created so that the company can develop offerings to specifically address consumer needs and demands. This Mission Statement will communicate why the company exists, its overall goals, and the goods and services provided to its customers. Additionally, a Vision Statement can guide the organization's desired long-term results of their efforts. These will lead to crafting marketing activities – advertising, promotion, and public relations – which enable the company to engage in meaningful communications with their customers.

The elements in the Marketing Plan encompass an overall description of the purpose of the plan and the goals it is seeking to achieve. A comprehensive evaluation of the market will include customer analysis, company analysis, competitive analysis, and an evaluation of the business climate. Once this information is known, the company can begin developing a strategy for their offerings and a communication plan to generate awareness of the product. However, goals might be other than awareness and can include reminder marketing, promotions to generate quick sales, new product introductions, etc.

A detailed budget will be included to ensure that funds are appropriately allocated and are effective in helping the company reach their objectives.

It is important to note that a Marketing Plan should be evaluated regularly to determine if goals are being met and to identify any changes in the marketplace that would require revisions to the company's strategies.

To review, see Components of the Marketing Plan.

8b. Explain how to create specific action plans to execute on a given strategic objective 

• How do SMART marketing objectives impact strategic development?
• What is a product strategy?
• What is the purpose of brand positioning?
• How can marketers leverage the elements in the promotional mix to achieve their goals?
  

The acronym for SMART marketing objectives represents Specific, Measurable, Achievable, Realistic, and Time-Bound. This provides a guideline for marketers to set meaningful and specific objectives. This tool ensures an observable way to identify goals and determine if they have been met. For example, suppose a company wants to increase customer loyalty through social media. In that case, they might set a goal of repeat customer purchases by 20% within three months and create an inbound marketing campaign. At the end of that time, the company will be able to evaluate the results of their efforts to determine if goals have been met.

A product strategy encompasses user needs, the market, and the business goals for the product. The product strategy resides directly within the value proposition, which identifies the company's promise to its customers stating why the customer should buy that product. A product strategy should identify long-term objectives, how the company will achieve the vision and current conditions that can affect success.

Brand positioning enables a company to stand out from the competition. It provides the consumer with a reason to purchase one brand over another in the marketplace and can identify how it best meets consumer needs.

First, it is important to identify the target market and determine why they seek your product. Another component of brand positioning is to ensure that customers can find your brand when searching for alternatives. It is essential to understand the competition to identify and promote distinct differences. This is where a brand will promote their USP (unique selling proposition).

A clear brand position statement that identifies the target market and your competitive advantage will illustrate what you have to offer and to whom. The overall purpose of this is to help develop strategies within the marketing plan and maximize the company's return on investment.

The promotional mix is a component of the marketing mix, known as the 4Ps. This can include advertising, such as television, radio, newspapers, outdoor, and direct mail. Additionally, personal selling, in-store displays, brochures, mobile apps, websites, sales promotions, online efforts, and public relations may also figure into a company's plans. The key to any organization's success is determining the appropriate combination of activities that will enable the company to reach their goals.

To review, see Statement of the Firm's Marketing Objectives: Business Objectives, Product Strategy Overview, Brand Positioning, Report of the Promotional Strategy and Execution: Promotion Mix.

8c. Determine how to measure the effectiveness of a marketing execution strategy given the stated objectives of a marketing plan, and how often to conduct that measurement 

• What is the purpose of benchmarking in performance measurement?
• What are the performance measures used to evaluate product differentiation strategies?
• What metrics would a company measure when conducting a digital marketing campaign?
  

Benchmarking is the process by which performance standards are based on a company that is superior to all others within an industry. The Ritz-Carlton hotel, for example, might be the standard by which other hotel brands measure their levels of customer service. Additionally, this helps to illustrate what a company needs to change to improve performance. This can include quantitative data and qualitative data related to best practices.

There are a variety of tactics a company may use to demonstrate product differentiation. Additionally, different types of performance measurements are used to evaluate success. For a product differentiation strategy that revolves around innovation, the performance measure will focus on the number of new products launched. For a product differentiation strategy that seeks to increase customer satisfaction, measuring customer complaints is most meaningful. Finally, for a product differentiation strategy that seeks quality improvement, the measurement used will address product defect rates.

There are a variety of activities a company will engage in when implementing a digital marketing campaign. These can include social media marketing, email marketing, paid media, and website marketing. As with all marketing efforts, each component of the campaign should be monitored to ensure that goals are being met. These metrics include: reach and engagement for social media activities; opens and click-throughs for email marketing campaigns; costs and impressions for paid media; and various aspects of "visits" when measuring website activities.

To review, see Measuring and Evaluating Strategic Performance and Metrics.

Unit 8 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• benchmarking
• best practices
• brand positioning
• business climate
• communication plan
• company analysis
• competitive analysis
• customer analysis
• digital marketing campaigns
• marketing plan
• metrics
• objectives
• product differentiation
• product strategy
• promotional mix
• SMART
• target market
• unique selling proposition