Key terms of Principles of Marketing

Principles of Marketing

(Key Notes)

 Chapter -1

Creating and capturing customer value

Marketing: Marketing is the process by which companies creates value for customers and build strong customer relationship in order to capture value from customers in return.

Needs: State of felt deprivation.

Wants: The form human needs take as shaped by culture and individual personality.

Demands: Human wants that are backed by buying power.

Market offering: Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

Marketing myopia:The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.

Exchange: The act of obtaining a desired object from someone by offering something in return.

Market: The set of all actual and potential buyers of a product or service.

Marketing management: The art and science of choosing target markets and building profitable relationships with them.

Production concept: The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency.

Product concept: The idea that consumers will favor products that offer the most quality, performance, and feature and that the organization should therefore devote its energy to making continuous product improvements.

Selling concept:The idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort.

Marketing concept: The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Social marketing concept: The idea that a company’s marketing decisions should consider customer’s wants the company’s requirements, the customers’ long run interests, and society’s long-run interests.

Customer relationship management: The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Customer-perceived value: The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

Customer satisfaction: The extent to which products perceived performance matches buyer’s expectations.

Customer generated marketing: Marketing message, ads, and other brand exchanges created by consumers themselves both invited and uninvited.                                                                                                                                                                                                                 Partner relationship management: working closed with partners in other company departments and outside the company to jointly bring greater value to customers.

Customer lifetime value: The value of the entire stream of purchases that the customer would make over a lifetime of patronage.

Share of customer: The proration of the customers purchasing that a company gets in its product categories.

Customer equity: The total combined customer lifetime value of all the company’s customer.

 Internet: A vast public web of computer networks that connects users of all types all around the world to each other and to an amazingly large information repository.

 Chapter-2

Company and Marketing Strategy

Strategic planning: The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.

Mission statement: A statement of the organizations purpose – what it wants to accomplish in the larger environment.

Business portfolio: The collections of business and product that make up the company.

Portfolio analysis: The process by which management evaluates the products and business that makes up the company.

Growth-share matrix: A portfolio- planning method that evaluates a company’s strategic business unit it terms of its market growth rate relative market share. SBU are classified as stars, cash cows, question marks, or dogs.

Product/market expansion grid: A portfolio – planning tool for identifying company growth opportunities through market penetrations, market development, product development, or diversification.

Market penetration: A strategy for company growth by increasing sales of current products to current market segments without changing the product.

Market development: A strategy for company growth by identifying and developing new market segments for current company products.

Product development: A strategy for company growth by offering modifier or new product to current market segments.

Diversification: A strategy for company growth through starting up or acquiring business outside the company’s current products and market.

Downsizing: Reducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy.

Value chain: The series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.

Value delivery network: The network made up of the company, suppliers, distributors, and ultimately, customers who “partner” with each other to improve the performance of the entire system.

Marketing strategy: The marketing logic by which the business unit hopes to create customer value and achieve customer relationships.

Market segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.

Market segment: A group of consumers who respond in a similar way to a given set of marketing efforts.

Market targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Differentiation: Actually differentiating the market offering to create superior customer value.

Marketing mix: The set of controllable tactical marketing tools – product, price, place and promotion- that the firm blends to produce the response in wants in the target market.

SWOT analysis: An overall evaluation of the company’s strength(S), weakness (W), opportunities (O), and threats (T)

Marketing implementation: The process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives.

Marketing control: The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved.

Return on marketing investment (Marketing ROI): The net return from a marketing investment divided by the cost of the marketing investment.

Chapter: 3

Analyzing the marketing Environment

Marketing environment: The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customer.

Microenvironment: The actors close to the company that affect is ability to serve its customers –the company, supplies , marketing , intermediaries , customer markets , competitors , and publics .

Macroenvironment: The larger societal forces that affect the microenvironment – demographic, economic, natural, technology, political and cultural forces.

Marketing intermediaries: Firms that help the company to promote, sell, and distribute its goods to final buyers.

Public: any group that has an actual or potential in or impact on an organizations ability to achieve its objectives.

Public: Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.

Demography: The study of human population in terms of size, density, location, age, gender race, occupation, and other statics.

Economy environment: Factors that affect consumer buying power and spending patterns.

Engel’s laws: Different noted over a century ago by Ernst Engel in how people ship their spending across food, housing, transportation, health care, and other goods and services categories as family income rises .

Natural environment: Natural resources that are needed as inputs by marketers or that the affected by marketing activities.

Environmental sustainability:  Developing strategies and practices that create a world economy that the planet can support indefinitely.

Technological environment: Forces that create new technologies, creating new product and market opportunities.

Political environment: Laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society.

Cultural environment: Institutions and other forces that affect society’s basic values, perceptions, preferences and behaviors.

Chapter-4

Managing Marketing Information to gain Customer Insight

 Customer insight: Fresh understanding of customers and the marketplace derived from marketing information that becomes the basis for creating customer value and relationships.

Marketing information system (MIS): People and procedures for assessing information needs, developing the needed information and helping decision markers to use the information, to generator and validate actionable customer and market insights.

International Database: Electronic collections of consumer and market information obtained from data sources within the company network.

Marketing Intelligence:The systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment.

Marketing Research: The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.

Explorer research:  Marketing research to gather preliminary information that will help define problems and suggest hypotheses.

Descriptive research: Marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers.

 Casual Research: Marketing research to test hypotheses about cause-and-effect relationships.

Secondary data: Information that already exists somewhere, having been collected for another purpose.

Prime data: Information collected for the specific purpose at hand.

Commercial online database: Computerized collection of information available from online commercial source or via the internet.

Observational research: Gathering primary data by observing relevant people, action, and situations.

Ethnographic Research: A form of observational research that involves sending trained observers to watch and interact with consumers in their ‘natural habitat’.

Survey research: Gathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior.

 Experimental research: Gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling reelected factor and checking for differences in group responses.

Focus group interviewing: Personal interviewing that involves inviting six to ten people to gather for a few hours with a trained interviewer to talk about a product, service, or organization. The interviewer “focuses” the group discussion on important issues.

Online marketing Research: Collecting primary data online through internet surveys, online focus groups, web-based experiments, or tracking consumers’ online behavior.

Online focus groups: Gathering a small group of people online with a trained moderator to chat about a product, service or organization and gain qualitative insights about consumer attitudes and behavior.

Sample: A segment of the population selected for marketing research to represent the population as a whole.

Customer Relationship Management (CRM): Managing detailed information about individual customers and carefully managing customer “touch points” in order to maximize customer loyalty.

Chapter-5

Consumer Markets and Consumer Buyer Behavior

Consumer buyer behavior: The buying behavior of final consumers-individuals and households that buy goods and services for personal consumption.

Consumer Market: All the individuals and households who buy or acquire goods and services for personal consumption.

Culture: The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions.

Social class: Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors.

Group: Two or more people who interact to accomplish individual or mutual goals.

Opinion leader: Person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others.

Online social networks: Online social communities- blogs, social networking websites, or even virtual worlds- where people socialize or exchange information and opinions.

Lifestyle: A person’s pattern of living as expressed his or her activities, interests, and opinions.

Personality: The unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment.

Brand personality: The specific mix of human traits that may be attributed to a particular brand.
Motive (drive): A need that is sufficiently pressing to direct the person to seek satisfaction of the need.

Perception: The process by which people select, organize, and interpret information to form a meaningful picture of the world.

Belief: A descriptive thought that a person holds about something.

Attitude: A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

Complex buying behavior: Consumer buying behavior in situations characterizes by high consumer involvement in purchase and significant perceived differences among brands.

Dissonancereducing buying behavior: Consumer buying behavior in situations characterizes by high consumer involvement but few perceived differences among brands.

Habitual buying behavior: Consumer buying behavior in situations characterizes by low consumer involvement and few significantly perceived brand differences.

Variety-seeking buying behavior: Consumer buying behavior in situations characterizes by low consumer involvement but significantly perceived brand differences.

Need recognition: The first stage of the buyer decision process, in which the consumer recognizes a problem or need.

Information search: The stage of the buyer decision process, in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into an active information search.

Alternative evaluation: The stage of the buyer decision process, in which the consumer use information to evaluate alternative brands in the choice set.

Purchase decision: The buyer’s decision about which brand to purchase.

Postpurchase behavior: The stage of the buyer decision process, in which the consumers take further action after purchase, based on their satisfaction or dissatisfaction.

Cognitive dissonance: Buyer discomfort caused by post purchase conflict.

New product: A good, service, or idea that is perceived by some potential customers as new.

Adoption process: The mental process through which an individual passes from first bearing about an innovation to final adoption.

Chapter 6

Business Market and Business Buyer Behavior

Business buyer behavior: The buying behavior of the organizations that buy goods and services for use in the production of other products and services or to resell or rent them to others at a profit.

Business buying process: The decision process by which business buyers determine which product and services their organizations need to purchase, and then find, evaluate, and chose among alternative suppliers and brands.

Derived demand: Business demand that ultimately comes from (derives from) the demand for consumer goods.

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.

Straight rebuy: A business buying situation in which the buyer routinely reorders something without any modifications.

Modified rebuy: A business buying situation in which the buyer wants to modify product specifications, prices, terms, and suppliers.

New task: A business buying situation in which the buyer purchases a product or service for the first time.

Systems selling (or solutions selling): Buying a packaged solution to a problem from a single-seller, thus avoiding all the separate decisions involved in a buying situation.

Buying centre: All the individuals and units that play a role in the purchase decision-making process.

Users: Members of the buying organization who will actually use the purchased product or services.

Influencers: People in an organization’s buying centre who affect the buying decision; the often help define specifications and also provide information for evaluating alternatives.

Buyers: The people in the organization’s buying centre who make an actual purchase.

Deciders: People in the organization’s buying centre who have formal or informal power to select or approve the final suppliers.

Gatekeepers: People in the organization’s buying centre who control the flow of information to others.

Problem recognition: The first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.

General need description: The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item.

Product specification: The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.

Supplier search: The stage of the business buying process in which the buyer tries to find the best vendors.

Proposal solicitation: The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.

Supplier selection: The stage of the business buying process in which the buyer reviews proposals and select a supplier or suppliers.

Order-routine specification: The stage of the business buying process in which 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.

Performance review: The stage of the business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement.

E-procurement: Purchasing through electronic connections between buyers and sellers- usually online.

Institutional market: Schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care.

Government market: Governmental units- federal, states, and local- that purchase or rent goods and services for carrying out the main functions of government.

Chapter- 7

Customer-driven Marketing Strategy

Market segmentation: Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.

Market targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Differentiation: Actually differentiating the market offering to create superior customer value.

Positioning: Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.

Geographic segmentation: Dividing a market into different geographical units such as nations, states, regions, countries, cities, or neighborhood.

Demographic segmentation: Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality.

Age and life-cycle segmentation: Dividing a market into different age and life cycle groups.

Gender segmentation: Dividing a market into different groups based on gender.

Income segmentation: Dividing a market into different income groups.

Psychographic segmentation: Dividing a market into different groups based on social class, lifestyle, or personality characteristics.

Behavioral segmentation: Dividing a market into different groups based on consumer knowledge, attitudes, uses, or responses to a product.

Occasion segmentation: Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Benefit segmentation: Dividing the market into groups according to the different benefits that consumers seek from the product.

Aftermarket segmentation: Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.

Target market: A set of buyers sharing common needs or characteristics that the company decides to serve.

Undifferentiated (mass) marketing: A market-coverage strategy in which a firm decides to ignore market segments and designs separate offers for each.

Differentiated (segmented) marketing: A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Concentrated (niche) marketing: A market-coverage strategy in which a firm goes after a large share of one or a few segments or niche.

Micromarketing: The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups- includes local marketing and individual marketing.

Local marketing: Tailoring brands and promotions to the needs and wants of local customer groups-cities, neighborhoods, and even specific stores.

Individual marketing: Tailoring products and marketing programs to the needs and preferences of individual customer-‘also labeled’’ one to one marketing, “and’’ ‘markets-of-one marketing’’.

Product position: The way the product is defined by consumers on important attributes- the place product occupies in consumers’ minds relative to competing products.

Competitive advantage: An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices.

Value proposition: The full positioning of a brand – the full mix of benefits upon which it is positioned.

Positioning statement: A statement that summarizes company of brand positioning-it takes this from to (target segment and need) our (brand) is (concept) that (point-of-difference).

 Chapter -8

Products, Services, Brand

Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Service: any activity or benefits that one party can offer to another that is essential intangible and does not result in the ownership of anything.

Consumer product: A product bought by final consumer for personal consumption.

Convenience product: A consumer product that customer usually buy frequently, immediately, and with a minimum of comparison and buying effort.

Shopping product: A consumer product that the customer, in the process of selection and porches, usually compares, on such bases as suitability, quality, prices, and style.

Specially products: A consumer product with unique characteristics or brand identification fort which a significant group of buyers is willing to make a special purchase effort.

Unsought product: A consumer product that the consumer either does not know about or knows about but does not normally think of buying.

Industrial product: A product bought by individuals and organizations for further processing or for use in conducting a business.

Social marketing: The use of commercial marketing concepts and tools in programs designed to influences individuals behavior to improve their well-being and that of society.

Product quality: The characteristics of product of service that of bear on its ability to satisfy started or implied customer needs.

Brand: A name, term, sing, symbol, design, or a combination of theses that identifies the products or services of one seller or group of seller and differentiates them from those of competitors.

Packing: The activities of designing and product the container or wrapper for a product.

Product line: A group of products that are closely related reason they function in a similar manner are sold to the same customer groups, are marketed through the same types of outlets. Or fall within given price ranges.

Product mix (or product portfolio): The set of all product lines and items that a particular seller offers for sale.

Brand equity: The differential effect that knowing the brand name has on customer responses to the product or its marketing.

Store brand (or private brand): A brand created and owned by a reseller of a product or service.

 Co branding: the practice of using the established brand names of two different companies on the same product.

Line extension: Extending on existing brand names to new forms, colors, sizes, ingredients, or flavors’ of an existing product category.

 Brand extension; Extending on existing brand name to new product categories.

Service intangibility: A major characteristic of services-they cannot be seen, tested, felt, heard, or smelled before they are bought.

Service Inseparability: A major characteristic of services-they are produced and consumed at the same time and cannot the separated from their providers.

 Service variability: A major characteristic of services-their quality may very gravely, depending on who provides them and when, where, and how.

Service perishes ability: A major characteristic of services-they cannot be stored for later sale or use.

Service-profit chain: The chain that links services firm profits with employee and customer satisfaction.

International marketing: Orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction.

Interactive marketing: Training service employs in the fine art of interacting with customers to satisfy their needs.

 Chapter-9

New-product Development and product Life-Cycle Strategies

 New-product development: The de3velopment of original products, product improvements, and new brands through the firm’s own product-development efforts.

Idea generation: The systematic search for new-products ideas.

Idea screening: Screening new-product ideas and drop poor ones as soon as possible.

Product concept: A detailed version of the new product idea stated in meaningful consumer terms.

Concept testing: Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.

Marketing strategy development: Designing an initial marketing strategy for a new product concept.

Business analysis: A review of the sales, costs, and profit projection for a new product to find out whatever these factors satisfy the company’s objectives.

Product development: Developing the product concept into a physical product in order to ensure that the product idea can be turned into workable market offering.

Test marketing: The stage of new- product development in which the product and marketing program are tested in realistic market setting.

Commercialization: Introducing a new product into the market.

Customer-centered new-product development: New product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences.

Team-based new-product development: An approach to developing new products in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness.

Product life cycle: The course of a products sales and profits over its lifetime. It involves five distinct stages product development, introduction, growth, maturity, and decline.

Style: A basic and distinctive mode of expression.

Fad: A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.

Introduction stage: Thee product life-cycle stage in which the product is first distributed and made available for purchase.

Growth stage: The product life-cycle stage in which a product’s sales start climbing quickly.

Maturity stage: The product life-cycle stage in which sales growth slows or levies off.

Decline stage: The product life-cycle stage in which a products sales decline.

Chapter 10

Understanding and Capturing Customer Value

 Price : The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service

Customer value-based pricing :Setting price based on buyers’ perceptions of value rather than on the seller’s cost.

Good-value pricing :Offering the right combination of quality and good service at a fair price.

Value-added pricing :Attaching value-added features and services to differentiate a company’s offers and charging higher prices.

Cost-based pricing :Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Fixed costs (overhead) : Costs that do not vary with production or sales level.

Variable costs :Costs that vary directly with the level of production.

Total costs :The sum of the fixed and variable costs for any given level of production.

Experience curve (learning curve) :The drop in the average per-unit production cost that comes with accumulated production experience

Cost-plus pricing (markup pricing) Adding a standard markup to the cost of the product.

unit cost = variable cost + fixed costs/unit sales

markup price = unit cost /(1- desire return on sale)

Break-even pricing (target return pricing) :Setting price to break even on the costs of making and marketing a product or setting price to make a target return.

Competition-based pricing :Setting prices based on competitors’ strategies, prices, costs, and market offerings.

Target costing :Pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met.

Demand curve :A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged.

Price elasticity :A measure of the sensitivity of demand to changes in price.

 Chapter 11

Pricing Strategies

 Market-skimming pricing (price skimming): Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

Market-penetration pricing :Setting a low price for a new product to attract a large number of buyers and a large market share.

Product line pricing :Setting the price steps 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 :The pricing of optional or accessory products along with a main product.

Captive product pricing : Setting a price for products that must be used along with a main product, such as blades for a razor and games for a videogame console.

By-product pricing :Setting a price for by-products to make the main product’s price more competitive.

Product bundle pricing :Combining several products and offering the bundle at a reduced price.

Discount :A straight reduction in price on purchases during a stated period of time or of larger quantities.

Allowance: Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.

Segmented pricing :Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.

Psychological pricing : Pricing that considers the psychology of prices, not simply the economics; the price says something about the product.

Reference prices : Prices that buyers carry in their minds and refer to when they look at a given product.

Promotional pricing :Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.

Geographical pricing :Setting prices for customers located in different parts of the country or world.

FOB-origin pricing : A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.

Uniform-delivered pricing: A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.

Zone pricing: A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.

Basing-point pricing: A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer.

Freight-absorption pricing: A geographical pricing strategy in which the seller absorbs all or part of the freight charges to get the desired business.

Dynamic pricing: Adjusting prices continually to meet the characteristics and needs of individual customers and situations.

 

Chapter 12

Marketing Channels Delivering Customer Value

Value delivery network: A network composed of the company, suppliers, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system in delivering customer value.

Marketing channel (or distribution channel): A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

Channel level: A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

Direct marketing channel: A marketing channel that has no intermediary levels.

Indirect marketing channel : Channel containing one or more intermediary levels.

Channel conflict :Disagreement among marketing channel members on goals, roles, and rewards— who should do what and for what rewards.

Conventional distribution channel: A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the system as a whole.

Vertical marketing system (VMS): A distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.

Corporate VMS :A vertical marketing system that combines successive stages of production and distribution under single ownership— channel leadership is established through common ownership.

Contractual VMS :A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts.

Franchise organization :A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.

Administered VMS: A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties.

Horizontal marketing system :A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.

Multichannel distribution system :A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.

Disintermediation:The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.

Marketing channel design: Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.

Intensive distribution: Stocking the product in as many outlets as possible.

Exclusive distribution: Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories.

Selective distribution: The use of more than one but fewer than all the intermediaries who are willing to carry the company’s products.

Marketing channel management: Selecting, managing, and motivating individual channel members and evaluating their performance over time.

Marketing logistics (or physical distribution): Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.

Supply chain management: Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.

Distribution center: A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.

Intermodal transportation: Combining two or more modes of transportation.

Integrated logistics management: The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system.

Third-party logistics (3PL) provider :An independent logistics provider that performs any or all of the functions required to get a client’s product to market.

Chapter 13

Retailing and Wholesaling

 Retailing :All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use.

Retailer :A business whose sales come primarily from retailing

Shopper marketing: Using in-store promotions and advertising to extend brand equity to “the last mile” and encourage favorable in-store purchase decisions.

Specialty store:A retail store that carries a narrow product line with a deep assortment within that line.

Department store :A retail organization that carries a wide variety of product lines—each line is operated as a separate department managed by specialist buyers or merchandisers.

Supermarket:A large, low-cost, low-margin, high volume, self-service store that carries a wide variety of grocery and household products.

Convenience store: A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high turnover convenience goods.

Superstore: A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services.

Category killer: A giant specialty store that carries a very deep assortment of a particular line and is staffed by knowledgeable employees.

Service retailer: A retailer whose product line is actually a service, including hotels, airlines, banks, colleges, and many others.

Discount store: A retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume.

Off-price retailer: A retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs.

Independent off-price retailer: An off-price retailer that is either independently owned and run or is a division of a larger retail corporation.

Factory outlet :An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer’s surplus, discontinued, or irregular goods.

Warehouse club: An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees.

Chain stores :Two or more outlets that are commonly owned and controlled.

Franchise:A contractual association between a manufacturer, wholesaler, or service organization (a franchisor) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system.

Shopping center: A group of retail businesses built on a site that is planned, developed, owned, and managed as a unit.

Wheel-of-retailing concept: A concept that states that new types of retailers usually begin as low-margin, low price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced.

Wholesaling: All the activities involved in selling goods and services to those buying for resale or business use.

Wholesaler: A firm engaged primarily in wholesaling activities.

Merchant wholesaler: An independently owned wholesale business that takes title to the merchandise it handles.

Broker: A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation.

Agent: A wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does  not take title to goods.

Manufacturers’ sales branches and offices: Wholesaling by sellers or buyers themselves rather than through independent wholesalers.

Chapter 14

Communicating (Customer Value Integrated Marketing Communications Strategy)    

 Promotion mix (or marketing communications mix):The specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.

Personal selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

Public relations (PR): Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

Direct marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

Integrated marketing communications (IMC): Carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.

Buyer-readiness stages :The stages consumers normally pass through on their way to a purchase, including awareness, knowledge, liking, preference, conviction, and, finally, the actual purchase.

Personal communication channels: Channels through which two or more people communicate directly with each other, including face to face, on the phone, via mail or e-mail, or even through an Internet “chat.”

Word-of-mouth influence: Personal communications about a product between target buyers and neighbors, friends, family members, and associates.

Buzz marketing :Cultivating opinion leaders and getting them to spread information about a product or service to others in their communities.

Non personal communication channels :Media that carry messages without personal contact or feedback, including major media, atmospheres, and events.

Affordable method :Setting the promotion budget at the level management thinks the company can afford.

Percentage-of-sales method: Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.

Competitive-parity method :Setting the promotion budget to match competitors’ outlays.

Objective-and-task method :Developing the promotion budget by (1) defining specific promotion objectives,(2) determining the tasks needed to achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

Push strategy:A promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers.

Pull strategy :A promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that “pulls” the product through the channel.

 

Chapter : 15

Advertising and Public Relations

Advertising :Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor.

Advertising objective:A specific communication task to be accomplished with a specific target  audience during a specific period of time.

Possible Advertising Objectives

Informative Advertising

  • Communicating customer value
  • Suggesting new uses for a product
  • Building a brand and company image
  • Informing the market of a price change
  • Telling the market about a new product
  • Describing available services and support
  • Explaining how a product works
  • Correcting false impressions

Persuasive Advertising

  • Building brand preference
  • Persuading customers to purchase now
  • Encouraging switching to a brand
  • Persuading customers to receive a sales call
  • Changing customer perceptions of product value
  • Convincing customers to tell others about the brand

Reminder Advertising

  • Maintaining customer relationships
  • Reminding consumers where to buy the product
  • Reminding consumers that the product may be needed in
  • the near future
  • Keeping the brand in a customer’s mind during off-seasons

Advertising budget

The dollars and other resources allocated to a product or a company advertising program.

Advertising strategy

The strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media.

Creative concept

The compelling “big idea” that will bring the advertising message strategy to life in a distinctive and memorable way.

Execution style

The approach, style, tone, words, and format used for executing an advertising message.

Advertising media :The vehicles through which advertising messages are delivered to their intended audiences.

Return on advertising investment:The net return on advertising investment divided by the costs of the advertising investment.

Advertising agency :marketing services firm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs.

Public relations (PR): Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

 Chapter 16

Personal Selling and Sales Promotion

Personal selling :Personal presentations by the firm’s sales force for the purpose of making sales and building customer relationships.

Salesperson: An individual representing a company to customers by performing one or more of the following activities: prospecting, communicating, selling, servicing, information gathering, and relationship building.

Sales force management :Analyzing, planning, implementing, and controlling sales force activities

Territorial sales force structure: A sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company’s full line.

Product sales force structure: A sales force organization in which salespeople specialize in selling only a portion of the company’s products or lines.

Customer (or market) sales force structure: A sales force organization in which salespeople specialize in selling only to certain customers or industries.

Outside sales force (or field sales force) :Salespeople who travel to call on customers in the field.

Inside sales force :Salespeople who conduct business from their offices via telephone, the Internet, or visits from prospective buyers.

Team selling :Using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts.

Sales quota:A standard that states the amount a salesperson should sell and how sales should be divided among the company’s products.

Selling process: The steps that salespeople follow when selling, which include prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up.

Prospecting: A salesperson or company identifies qualified potential customers.

Preapproach :A salesperson learns as much as possible about a prospective customer before making a sales call.

Approach :A salesperson meets the customer for the first time.

Presentation: A salesperson tells the “value story” to the buyer, showing how the company’s offer solves the customer’s problems.

Handling objections :A salesperson seeks out, clarifies, and overcomes any customer objections to buying.

Closing: A salesperson asks the customer for an order.

Follow-up :A salesperson follows up after the sale to ensure customer satisfaction and repeat business.

Sales promotion: Short-term incentives to encourage the purchase or sale of a product or a service.

Consumer promotions :Sales promotion tools used to boost short-term customer buying and involvement or enhance long-term customer relationships.

Event marketing (or event sponsorships) :Creating a brand-marketing event or serving as a sole or participating sponsor of events created by others.

Trade promotions :Sales promotion tools used to persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers.

Business promotions: Sales promotion tools used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

Chapter 17

Direct and Online Marketing

 Direct marketing :Connecting directly with carefully targeted segments or individual consumers, often on a one-to-one, interactive basis.

Customer database :An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data.

Direct-mail marketing :Direct marketing by sending an offer, announcement, reminder, or other item to a person at a particular physical or virtual address.

Catalog marketing :Direct marketing through print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online.

Telephone marketing :Using the telephone to sell directly to customers.

Direct-response television (DRTV) marketing :Direct marketing via television, including direct-response television advertising (or infomercials) and home shopping channels.

Online marketing :Efforts to market products and services and build customer relationships over the Internet.

Internet :A vast public web of computer networks that connects users of all types around the world to each other and an amazingly large information repository.

Click-only companies :The so-called dot-coms, which operate online only and have no brick-and-mortar market presence.

Click-and-mortar companies :Traditional brick-and-mortar companies that have added online marketing to their operations.

Business-to-consumer (B-to-C) online marketing

Businesses selling goods and services online to final consumers.

Business-to-business (B-to-B) online marketing

Businesses using online marketing to reach new business customers, serve current customers more effectively, and obtain buying efficiencies and better prices.

Consumer-to-consumer (C-to-C) online marketing

Online exchanges of goods and information between final consumers.

Consumer-to-business (C-to-B) online marketing :Online exchanges in which consumers search out sellers, learn about their offers, and initiate purchases, sometimes even driving transaction terms.

Corporate (or brand) Web site

A Web site designed to build customer goodwill, collect customer feedback, and  supplement other sales channels rather than sell the company’s products directly.

Marketing Web site: A Web site that engages consumers in interactions that will move them closer to a direct purchase or other marketing outcome.

Online advertising :Advertising that appears while consumers are browsing the Web, including display ads, search-related ads, online classifieds, and other forms.

Viral marketing: The Internet version of word-of-mouth marketing: Web sites, videos, e-mail messages, or other marketing events that are so infectious that customers will want to pass them along to friends.

Online social networks :Online social communities—blogs, social networking Web sites, or even virtual worlds—where people socialize or exchange information and opinions.

Spam: Unsolicited, unwanted commercial e-mail messages.

Chapter 18

Creating Competitive Advantage

Competitive advantage :An advantage over competitors gained by offering consumers greater value than competitors do.

Competitor analysis

The process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid.

Competitive marketing strategies : Strategies that strongly position the company against competitors and give the company the strongest possible strategic advantage.

Benchmarking :The process of comparing the company’s products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance.

Customer value analysis: An analysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors’ offers

Market leader: The firm in an industry with the largest market share.

Market challenger :A runner-up firm that is fighting hard to increase its market share in an industry.

Market follower

A runner-up firm that wants to hold its share in an industry without rocking the boat.

Market nicher

A firm that serves small segments that the other firms in an industry overlook or ignore.

Competitor-centered company

A company whose moves are mainly based on competitors’ actions and reactions.

Customer-centered company:A company that focuses on customer developments in designing its marketing strategies and delivering superior value to its target customers.

Market-centered company :A company that pays balanced attention to both customers and competitors in designing its marketing strategie

Strategies for Market Leaders, Challengers, Followers, and Nichers

Chapter 19

The Global Marketplace

 Global firm :A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Economic community :A group of nations organized to work toward common goals in the regulation of international trade

Joint venturing :Entering foreign markets by joining with foreign companies to produce or market a product or service.

Licensing: A method of entering a foreign market in which the company enters into an agreement with a licensee in the foreign market.

Contract manufacturing :A joint venture in which a company contracts with manufacturers in a foreign market to produce the product or provide its service.

Management contracting :A joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.

Joint ownership :A joint venture in which a company joins investors in a foreign market to create a local business in which the company shares joint ownership and control.

Direct investment

Entering a foreign market by developing foreign-based assembly or manufacturing facilities.

Standardized global marketing: An international marketing strategy that basically uses the same marketing strategy and mix in all of the company’s international markets.

Adapted global marketing: An international marketing strategy that adjusts the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return

Straight product extension :Marketing a product in a foreign market without any change.

Product adaptation: Adapting a product to meet local conditions or wants in foreign markets.

Product invention :Creating new products or services for foreign markets.

Communication adaptation : A global communication strategy of fully adapting advertising messages to local markets.

Whole-channel view: Designing international channels that take into account the entire global supply chain and marketing channel, forging an effective global value delivery network.

 

Chapter 20

Sustainable marketing :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.

Consumerism :An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers.

Environmental sustainability : A management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Customer-value marketing :A principle of sustainable marketing that holds a company should put most of its resources into customer-value-building marketing investments.

Innovative marketing :A principle of sustainable marketing that requires a company seek real product and marketing improvements.

Sense-of-mission marketing: A principle of sustainable marketing that holds a company should define its mission in broad social terms rather than narrow product terms.

Societal marketing A principle of sustainable marketing that holds a company should make marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests.

Deficient products :Products that have neither immediate appeal nor long-run benefits.

Pleasing products: Products that give high immediate satisfaction but may hurt consumers in the long run.

Salutary products:Products that have low appeal but may benefit consumers in the long run.

Desirable products: Products that give both high immediate satisfaction and high long-run benefits.

 

All credit goes to Philip Kotler, The father of marketing.

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