marketing t1

8/3/2019 Marketing T1

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Marketing T1

Chapter 1

Marketing: is the activity, set of instructions, and processes for creating, communicating, delivering

and exchanging offerings that have value for customers, clients, partners and society at-large.Goals are:

1. Attract new customers by promising superior value.2. Keep and grow current customers by delivering satisfaction

Marketing process:

Needs: states of felt deprivation.Physical needs:

Food, clothing, shelter, safety

Social needs:

Belonging, affectionIndividual needs:

Learning, knowledge, selfexpression

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 combinations of products, services, information or experience offered to a

market to satisfy a need or want.Products:

Persons, places, organizations, information, ideas.

Services:

Activity or benefit offered for sale that is essentially intangible and does not result in ownership.

Brand experiences:

. . . dazzle their senses, touch their hearts, stimulate theirminds.

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.

They focus more on the wants and lose sight of the needs.

understandthe

marketplaceand customers

needs andwants

Design acustomer

drivenmarketingstrategy

construct anintergratedmarketing

program thatdelivers

superior value

buildprofitable

relationshipsand createcustomer

delight

capture valuefrom

customers tocreate profitsand customer

quality


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Customer value and satisfaction:

Care must be taken when setting expectations:

If performance is lower than expectations, satisfaction is low.

If performance is higher than expectations, satisfaction is high.

Exchange: The act of obtaining a desired object from someone by offering something in return.Relationships: Marketing actions build and maintain relationship with target audience involving an

idea, product, service or other object.

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

These people share a need or want that can be satisfied through exchange relationships.

Modern Marketing system:

Suppliers Company Marketing intermediaries Consumers

Competitors

Major environment forces can effect each element.

Marketing Management: The art and science of choosing target markets and building profitable

relationships with them.

- Requires that consumers and the marketplace be fully understood.- Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating

superior value.

Designing a winning marketing strategy requires answers to the following questions:

1. What customers will we serve?

What is our target market?

2. How can we best serve these customers?

What is our value proposition?

Market segmentation: dividing the market into segments of customers.

Target marketing: Selecting one or more segments to cultivate.

Demand management: Finding and increasing demand, also changing or reducing demand, as in

demarketing.

Demarketing: Temporarily or permanently reducing the number of customers or shifting their

demand.

Proposition:

The set of benefits or values a company promises to deliver to consumers to satisfy their needs.

Value propositions dictate how firms will differentiate and position their brands in the marketplace.


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Marketing management orientations:

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.Own operations become obsessions.

The product concept: The idea that consumers will favor products that offer the quality

performance, and features and that the organization should therefore devote its energy to making

continuous product improvement.

Ignores changing markets and environments.

Selling concept: The idea that consumers will not buy enough of the firms products unless it

undertakes a large-scale selling and promotion effort.

Emphasis is on transactions, not on relationships.

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

satisfaction better than competitors do.

The social marketing concept:The idea that a companys marketing decisions should consider:

- consumers wants- the companys requirements- consumers long-run interests- societys long-run interests


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The social marketing concept:

Marketing mix:

Product: need satisfying?

Price: how much?

Place: how made available?

Promoted: how communicated?

Customer relationship management: The overall process of building and maintaining profitable

customer relationships by delivering superior customer value and satisfaction.

- The company deals with all aspects of acquiring, keeping, and growing customers.- Customer value and satisfaction are key.

Customer relationship groups:

Society

(humanWelfare)

Consumers

(wantsatisfaction)

SocialMarketing

concept

Company(profits)


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Customer perceived value:The consumers evaluation of the difference between all the benefits and

all the costs of a marketing offer relative to those of competing offers.

- Perceptions may be subjective- Consumers often do not objectively judge values and costs.

Customer satisfaction: The extent to which a products perceived performance matches a buyersexpectations.

- Customer satisfaction often leads to consumer loyalty.- Some firms seek to DELIGHT customers by exceeding expectations.

Customers relationships:

Loyalty and retention programs build relationships and may feature:

- Financial Benefits

- E.g., frequency marketing programs

- Social Benefits

- E.g., club marketing programs

- Structural TiesFocus is on relating directlytoprofitable customers, for the long term.

Selective relationship management:

- Customer profitability analysis eliminates losing customers and selects profitable ones.- Relating more deeply and interactively via blogs, social network Web sites, email, and video

sharing. (Marketing by attraction vs. intrusion.)

- Increased amounts of consumer generated marketing.Marketing partners help create customer value and assist in building customer relationships.

Partners inside the firm:

- All employees customer focused- Teams coordinate efforts toward customers

Partners outside the firm:

- Supply chain management- Strategic alliances

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

lifetime of patronage.

Share of customer: The share a company gets of the customer purchasing in their product

categories.

Customer equity:The total combined customer lifetime values of all the companys customers.

- Classify customers by loyalty and potential profitability- Manage accordingly

The marketing landscape change because:

- The digital age- Rapid globalization- Call for more ethics and social responsibility- Growth of not-for-profit marketing


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Chapter 2

Strategic planning: The process of developing and maintaining a strategic fit between theorganizations goals and capability and its changing marketing opportunities.

The mission statement:A statement of the organizations purpose what it wants to accomplish.

It should answer the following questions:

- What is our business?- Who is our customer?- What do consumers value?- What should our business be?

The mission statement should be market oriented, not product oriented.


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The mission statement should be:

- Realistic- Specific- Fit the market environment- Based on distinctive competencies-

Motivating

The firm objectives and goals:

The mission should be translated into supporting objectives for each level of management.

Creates a hierarchy of objectives that are consistent with one another.

For example:

Business objective: Increase profits.

Marketing objective: Increase market share of domestic and international markets.

Business portfolio: the collection of businesses and products that make up the company.

The company must:

-

Analyze its current business portfolio or strategic business units (SBUs);- Decide which SBUs should receive more, less, or no investment; and- Develop strategies for growth and downsizing.

Strategic business unit (SBU):

- A unit of the company that has a separate mission and objectives and that can be plannedindependently from other company businesses.

- An SBU can be a company division, a product line within a division, or sometimes a singleproduct or brand.

Portfolio analysis: the process by which management evaluates the products and businesses making

up the company.

Resourches are directed towards more profitable business while weaker ones are phased out or

dropped.

The BCG (bosten consultansy group) portfolio analysis:


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Problems with matrix approaches:

- Can be difficult, time consuming, and costly to implement.- Difficult to define SBUs and measure market share and growth rate.- Focus is on current businesses; gives little help with future planning.

Product/market expansion grind:

Product/market expansion grid: A portfolio-planning tool for identifying company growth

opportunities through market penetration, market development, product development or

diversification.

Downsizing: reducing the business portfolio by eliminating products of business units that are not

profitable or that no longer fit the companys overall strategy.

Creating customer value:

Value chain: the series of departments that carry out value-creating activities to design, produce,

market, deliver, and support a firms products.

Partner relationship management:

- Working with partners internally within the company can create an effective value chain.- Working with external partners in the marketing system helps to form a superior value

delivery network.

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 profitable customer relationships.

To be succesful in Customer-driven marketing strategy, the firm must engage:

- Market segmentation- Market targeting- Differentiation- Positioning


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Market segmentation: dividing the market into distinct groups of buyers who have distinct needs,

characteristics, or behavior and who migh require separate products or marketing programs.

Market segment is a group of consumers who respond in a similar way to a given set of marketing

efforts.

Marketing targeting: the process of evalution each market segments atractiveness and selecting oneor 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.


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Marketing mix: the set of controllable tactical marketing tools (4P) that the firm blends to produce

the response it wants in the target market.

4Ps (sellers view) 4Cs (buyers view)

Product Customer solution

Price Customer cost

Place Convenience

Promotion Communication

Four marketing management functions:

1. Marketing analysiso SWOT analysis is key.

2. Marketing planningo Create brand marketing plan.

3. Marketing implementationo Determine who, where, when, and how.

4. Marketing controlo Evaluate results, take corrective action.

SWOT-analysis:Strengths: Capitalize

Weakness: shore up

Opportunities: invest

Threats: identify


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Contents of a marketing plan:

1. Executive summary2. Current situation3. Threats and opportunities4.

Objectives and issues5. Marketing strategy

6. Actions7. Budgets8. Controls

Marketing implementation: the process that turns marketing strategies and plans into marketing

actions in order to accomplish strategic marketing objectives.

Ask the questions:Who, where, when, how?

Marketing department organization:

Functional organization:

Each marketing activity is headed by a functional specialist.

- E.g., sales manager, advertising manager, marketing research manager, etc.Geographic organization:

Sales and marketing people are assigned to specific countries, regions, and districts.


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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.

Marketing audit: a comprehensive, systematic, independent and periodic examination of a

companys environment, objectives, strategies, and activities to determine problem areas and

opportunities and to recommend a plan of action to improve the companys marketing performance.

Return on marketing investments: the net return from a marketing investment divided by the costs

of the marketing investment.

Standard marketing performance measures:

- Brand awareness, sales, market shareCustomercentered measures:

- Customer acquisition, customer retention, customer lifetime value


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Chapter 3

Marketing environment: the actors and forces outside marketing that affect marketing

managements ability to build and maintain successful relationships with target customers.

- Studying the environment allows marketers to take advantage of opportunities as well as tocombat threats.- Marketing intelligence and research are used to collect information about the environment.

Microenvironment: The actors close to the company that affect its ability to serve its customers; The

company, suppliers, marketing, intermediaries, customer markets, competitors and publics.

Macro environment: The larger societal forces that affect the micro environment;

Demographic, economic, natural, technological, political and cultural forces.

The Microenvironment:

1. The company2. Suppliers3. Marketing intermediaries4. Customers5. Competitors6. Publics

The company:

- Areas/departments inside of a company.- Affects the marketing departments planning strategies.- All departments must think consumer and work together to provide superior customer

value and satisfaction.

Suppliers:

- Provide resources needed to produce goods and services.- Important link in the value delivery system.- Most marketers treat suppliers like partners.

Marketing Intermediaries:

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

- Resellers- Physical distribution firms- Marketing services agencies- Financial intermediaries

Customers:

The company needs to study five types of markets:

- Consumer market (individuals and households that buy goods for personal consumption)- Business market (buy goods for further processing or production)- Reseller market (buy goods to resell at a profit)- Government market (buy goods for public services)- International market (buyers in other countries)

Competitors:

- Those who serve a target market with products and services that are viewed by consumersas being reasonable substitutes for the firms products or services.

- Company must seek to gain strategic advantage against these organizations.


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Publics:

Any group that has an actual or potential interest in or impact on an organizations ability to achieve

its objects.

- Financial publics (bank, investment houses)- Media publics (newspapers, radio, television)-

Government publics- Citizen-action publics (environmental groups [Greenpeace])- Local publics (neighborhood residents)- General publics- Internal publics (works, managers, volunteers)

The Macro environment:

1. Demographic forces2. Economic forces3. Natural forces4.

Technological forces5. Political forces

6. Cultural forcesDemography:

The study of human populations in terms of size, density, location, age, gender, race, occupation and

other statistics.

Marketers track changing age and family structures, geographic population shifts, educational

characteristics, and population diversity at home and abroad.

Generational groups:

- Baby boomers- Generation X- Millennial

Baby Boomers:

- 78 million born between 1946 and 1964.- Nearly 30% of population.- Spend $2.3 trillion annually and hold of the nations financial assets.- Spend $30 billion annually on antiaging products and services; strong market for financial

services, new housing, travel, etc.

- Are likely to postpone retirement.Generation X:

- 49 million born between 1965 and 1976- Increased parental divorce rates and more employed mothers made Generation X the first of the

latchkey kids.

- Gen X developed a more cautious economic outlook due to recessions and downsizing that werecommon when they grew up.

- Cares about the environment.- Prizes experience, not acquisition.- Family comes first, career second.- Skeptical of marketing messages; researches purchases carefully, uses communities to share

information.

- Represents close to $1.4 trillion in annual purchasing power.


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Millennial:

- 83 millions born 1977 and 2000- Children of the baby boomers- Includes tweens, teens, and young adults.- Ethnically diverse.- Fluent with computer and digital technology.- Personalization and product customization are key to marketing success.

Economic

Factors that affect consumer buying power and spending patterns.

Changes in income Changes in consumer spending patterns:

1990s consumption frenzy record debt Upper class: getting wealthier

2000s squeezed consumer Middle class: shrinking in size

Marketers focus on offering greater value Working class

Under class: remain poor

NaturalInvolves natural resources that are needed as inputs by marketers or that are affected by marketing

activities.

Factors include:

- Shortages of raw materials- Increased pollution- Increased government intervention- Environmentally sustainable strategies

Technological:

Forces that create new technologies, creating new products and market opportunities.

-

Most dramatic force shaping our destiny.- Changes rapidly, creating new markets and opportunities and/or danger of productsbecoming obsolete.

- Challenge is to make practical, affordable new products.- Safety regulations result in higher research costs and longer time between product

conceptualization and introduction.

Political:

Laws, government agencies and pressure groups that influence and limit various organizations and

individuals in a given society.

Areas of concern:

-

Increasing legislation.- Changing government agency enforcement.- Increased emphasis on ethics and socially responsible behavior.

Cultural:

Institutions and other forces that affect societys basic values, perceptions, preferences, and

behaviors.

- Core beliefs and values are passed on from parents to children and are reinforced by schools,churches, business, and government.

- Secondary beliefs and values are more open to change.- Marketers may be able to change secondary beliefs, but NOT core beliefs.


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Societys major cultural views are expressed in peoples views of:

- Themselves- Others- Organizations- Society-

Nature- The universeResponding to the marketing environment

Reactive responses:

-Many firms simply react to changes in the marketing environment.

Proactive responses:

-Some firms attempt to manage the marketing environment via aggressive actions designed to affect

the publics and forces in the marketing environment.

Examples of proactive responses:

-

Hiring lobbyists- Running advertorials- Pressing law suits- Filing complaints- Forming agreements to control channels

Chapter 5

Consumer buyer behavior: the buying behavior of final consumers individuals and household who

buy goods and services for personal consumption.

Consumer market: All the individuals and households who buy or acquire goods and services for

personal consumptions.

Buying behavior:

Marketing mix factors and other external stimuli are inputs into the buyers black box.

- Stimuli are evaluated in light of the buyer decision process and the buyers characteristics.- Buyer responses influence attitudes and choice of the product, brand, vendor, as well as the

timing and amount of purchase.


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Culture: the set of basic values, perceptions, wants and behaviors learned by a member of society

from family and other important institutions.Culture is learned from family, church, school, peers, colleagues.

Culture reflects basic values, perceptions, wants, and behaviors.

Cultural shifts create opportunities for new products or may otherwise influence consumer behavior.

Subculture: A group of people with shared value systems based on common life experiences and

situations.

Major subculture groups:

- Hispanic consumers- AfricanAmerican consumers- AsianAmerican consumers- Mature consumers

Social class:

Societys relatively permanent and ordered divisions whose members share similar values, interests,

and behaviors.

Measured by a combination of occupation, income, education, wealth, and other variables.

USA:Upper Class (3%) social elite, high income

Middle Class

Upper middle (12%) Professionals, corporate managers

Middle Class (32%)Averagepay white and blue collar workers

Working Class (38%)Lower Class (16%) working/not working poor

Social factors:

Groups and social networks:

- Membership, reference, and aspiration groups.- Marketers attempt to reach opinion leaders.- Online social networks (MySpace, YouTube, Second Life).

Family:

- Most important consumer buying organization.- Roles and status (differ in work or social circumstances):- Role = Expected activities to perform according to people.- Status = Esteem given to role by society.


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Personal factors:

Age and lifecycle stage:

- People change the goods they buy over their lifetimes.Occupation:

- Occupation influences the purchase of clothing and other goods.Economic situation:- Some goods and services are especially incomesensitive.People within the same subculture, social class, and occupation may have different lifestyles.

Lifestyle:

- Pattern of living as expressed in psychographics.- Activities (work, hobbies, shopping, sports)- Interests (food family, recreation..)- Opinions (about themselves, social issues)

Personality:

-

Refers to the unique psychological characteristics that lead to relatively consistent andlasting responses to ones own environment.

- Generally defined in terms of traits.- Selfconcept theory suggests that peoples possessions contribute to and reflect their

identities.

Psychological factors:

A persons buying choices are further influenced by four major psychological factors:

- Motivation- Perception- Learning- Beliefs and attitudes

Motivation:

A need that is sufficiently pressing to direct the person to seek satisfaction of the need.

Maslows hierarchy of needs implies that lower level needs must be satisfied prior to

higher level needs.

- Physiological needs- Safety needs- Social needs- Esteem needs- Selfactualization

Perception:

Process by which people select, organize, and interpret information to form a meaningful picture of

the world.

Perception can be influenced by:

- Selective attention (screen out information)- Selective distortion (supporting what they already believe)- Selective retention (selective memory)


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Learning:

Changes in an individuals behavior arising from experience.

Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement.

Is strongly influenced by the consequences of an individuals behavior.

- Behaviors with satisfying results tend to be repeated.-

Behaviors with unsatisfying results tend notto be repeated.

Belief:

A description thought that a person holds about something

Attitude:

A persons consistently favorable or unfavorable evaluations, feelings and tendencies toward an

object or idea.

Need recognition can be triggered by internal or external stimuli.

Several sources of information may used during information search:

- Personal sources- Commercial sources- Public sources- Experiential sources

Evaluation process is dependent upon the specific buying situation and the individual consumers.

Two factors that may interfere with realization of purchase intentions:

- Attitudes of others-

Unexpected situational factors


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Consumer satisfaction is a function of consumer expectations and perceived product performance.

Performance < Expectations Disappointment

Performance = Expectations Satisfaction

Performance > Expectations Delight

Cognitive dissonance:A buyers doubts shortly after a purchase about whether it was the right decision.

The adoption curve:

1. Awareness: Consumer becomes aware of the new product, but lacks information about it.

2. Interest: Consumer seeks information about new product.

3. Evaluation: Consumer considers whether trying the new product makes sense.

4. Trial: Consumer tries new product on a small scale to improve his or her estimate of its value.

5. Adoption: Consumer decides to make full and regular use of the new product.

Product Characteristics That Influence the Rate of Adoption

Relative advantage:

- Is the innovation superior to existing products?Compatibility:

- Does the innovation fit the values and experience of the target market?Complexity:

- Is the innovation difficult to understand or use?Divisibility:

- Can the innovation be used on a limited basis?Communicability:

- Can results be easily observed or described to others?Business Markets and Business Buyer Behavior

The business market is vast and involves far more dollars and items than do consumer markets.

Business buyer behavior:

Refers to the buying behavior of the organizations that buy goods and services for use in the

production of other products and services or for the purpose of reselling, or renting them to others

for a profit.


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Market structure and demand:

Contains far fewer but larger buyers.

Buyers are more geographically concentrated.

Business demand is derived from consumer demand.

Nature of the buying unit:Business purchases involve more decision participants.

Business buying involves a more professional purchasing effort.

Key differences exist between business and consumer buying situations:

Business buyers usually face more complex buying decisions.

The business buying process tends to be more formalized.

Buyers and sellers are much more dependent on each other in business markets.

Types of Buying Situations

Straight rebuy:

Buyer routinely reorders something without any modifications.Modified rebuy:

Buyer wants to modify product specifications, prices, terms, or suppliers.

New task:

Buyer purchases a product or service for the first time.

Systems (solution) selling is becoming more common.

A buying y g center is all the individuals and units that participate in the business buyingdecision

process.

This is not a fixed or formally identified unit.

Membership will vary for different products and different tasks.

Major Influences on Business Buyers

Environmental factors:

- Economic environment, shortages, culture and customs.Organizational factors

Interpersonal factors

Individual factors

The Business Buying Process

1. Problem recognition

2. General need description

3. Product specification

4. Supplier search

5. Proposal solicitation

6. Supplier selection

7. Orderroutine specification

8. Performance review

marketing t1

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