Marketing Notes MARK 20100
Popular in Principles of Marketing
verified elite notetaker
verified elite notetaker
verified elite notetaker
verified elite notetaker
verified elite notetaker
verified elite notetaker
Popular in Marketing
This 24 page Bundle was uploaded by Cindy Lee on Wednesday January 20, 2016. The Bundle belongs to MARK 20100 at University of Notre Dame taught by Deng Yiting in Spring 2016. Since its upload, it has received 46 views. For similar materials see Principles of Marketing in Marketing at University of Notre Dame.
Reviews for Marketing Notes
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 01/20/16
Chapter 1: Creating Customer Relationships and Value through Marketing Marketing: an organizational function and set of processes for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large Marketing stresses the need to deliver genuine benefits in the offerings of goods, services, and ideas marketed to customers Stakeholders affected: customers, employees, suppliers, and shareholders Marketing seeks to 1) discover the needs and wants of prospective customers and 2) to satisfy them o Achieving these goals involve the marketing mix factors largely controlled by the organization and the environmental forces that are generally outside its control Exchange: the trade of things of value between a buyer and a seller so that each is better off after the trade The marketing department is responsible for facilitating relationships, partnerships, and alliances with the organization’s customers, its shareholders, its suppliers, and other organizations 4 factors for marketing to occur: 1) two or more parties (individuals or organizations) with unsatisfied needs 2) a desire and ability on their part to have their needs satisfied 3) a way for the parties to communicate and 4) something to exchange A need occurs when a person feels deprived of basic necessities such as food, clothing, and shelter. A want is a need that is shaped by a person’s knowledge, culture, and personality. The first objective in marketing is discovering the needs and wants of consumers who are prospective buyers and customers. The second is satisfying the needs of targeted customers. The third is selecting its target market segment which are relatively homogeneous groups of prospective buyers that 1) have common needs 2) will respond similarly to marketing action. Finally, the organization develops a set of marketing actions in the form of a unique marketing program to reach them Market: people with both the desire and the ability to buy a specific offering Target Market: one or more specific groups of potential consumers toward which an organization directs its marketing program The Four P’s: Controllable Marketing Mix Factors o Product: a good, service, or idea to satisfy the consumer’s needs o Price: what is exchanged for the product o Promotion: a means of communication between the seller and the buyer o Place: a means of getting the product to the consumer Marketing Mix: controllable factors that can be used by the marketing manager to solve a marketing problem Customer Value Proposition: a cluster of benefits that an organization promises customers to satisfy their needs. ex: Walmart’s CVP can be described as “everyday low prices…” Environmental Forces: forces beyond the control of marketers consisting of social, economic, technological, and regulatory Customer Value: the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after- sale service at a specific price A firm achieves meaningful customer relationships by creating connections with its customers through careful coordination of the product, its price, the way its promoted, and how its placed Relationship Marketing: links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefit Marketing Program: a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers Market Segments: relatively homogeneous groups of prospective buyers that 1) have common needs 2) will respond similarly to a marketing action Customer needs trigger product concepts that are translated into actual products that stimulate further discovery of consumer needs To understand why marketing is the driving force in the modern global economy, we must look at 1) the evolution of the market orientation 2) ethics and social responsibility in marketing 3) the breadth and depth of marketing activities Marketing Concept: the idea that an organization should 1) strive to satisfy the needs of consumers while also 2) trying to achieve the organizations goals Marketing Orientation: focuses its efforts on 1) continuously collection information about customer’s needs 2) sharing this information across departments 3) using it to create customer value 4 distinct stages in the life of firms: production era, sales era, marketing concept era, customer relationship era 1. Production era: up to 1920s when buyers were willing to accept virtually any goods that were available 2. Sales era: up to 1960s where manufacturers could produce more goods than buyers could consumer and competition grew so the solution was to hire more salespeople and find new buyers 3. Marketing Concept era: around 1950s organizations adopted a strong market orientation and integrated marketing into each phase of their business 4. Customer relationship era: current where organizations continuously seek to satisfy the high expectations of customers Customer Relationship Management (CRM): the process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace Customer experience: the foundation of customer relationship management. It is the internal response that customer have to all aspects of an organization and its offering Providing sufficient value to gain loyal, long-term customers through 3 strategies: best price, best product, or best service Social Responsibility: the idea that organizations are accountable to a larger society Social Marketing Concept: the view that organizations should satisfy the needs of consumers in a way that provides for society’s well-being To understand how marketing today affects every person and organization we must analyze 1) who markets 2) what is marketed 3) who buys and uses what is marketed 4) who benefits from these marketing activities 5) how consumers benefit Goods: physical objects ex: toothpaste, cameras, computers Services: intangible items ex: airline trips, actions, causes Product: a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value Ultimate consumers: people who use the products and services purchased for a household Organizational Buyers: the manufacturers, wholesalers, retailers, and government agencies that buy products and services for their own use or for resale Those who benefits include 1) consumers who buy 2) organizations that sell 3) society as a whole Utility: the benefits or customer value received by users of the product. There are 4 types 1) form 2) place 3) time 4) possession 1. Form Utility: the production of the product or services 2. Place Utility: having the offering available where consumers need it 3. Time Utility: having it available when needed 4. Possession Utility: the value of making an item easy to purchase through the provision of credit cards or financial arrangements Chapter 6: Understanding Organizations as Consumers The Nature and Size of Organizational Markets Business marketing: the marketing of goods and services to companies, governments, or not- for-profit organizations for use in the creation of goods and services that they can produce and market to others Organizational buyers: those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale o Include all buyers in a nation except ultimate consumers o Divided into 3 markets: Industrial: firms in the industrial or business market that reprocesses a product or service they buy before selling it again Reseller: wholesalers and retailers that buy physical products and resell them again without any reprocessing Government: federal, state, and local agencies that buy goods and services for the constituents they serve Measuring Domestic and Global Industrial, Reseller, and Government Markets North American Industry Classification System (NAICS): provides common industry definitions for Canada, Mexico, and the US which makes it easier to measure economic activity in the three member countries of the North American Free Trade Agreement (NAFTA). Characteristics of Organizational Buying Market Demand for industrial products and services is derived Characteristics Few customers typically exist, and their purchase orders are large Product or service Products or services are technical in nature and characteristics purchased on the basis of specifications Many of the goods purchased are raw and semifinished Heavy emphasis is placed on delivery time, technical assistance, and postsale service Buying process Technically qualified and professional buyers follow characteristics established purchasing policies and procedures Buying objectives and criteria are typically spelled out, as are procedures for evaluating sellers and their products or services There are multiple buying influences and multiple parties participate in purchase decisions Marketing mix Direct selling to organizational buyers is the rule, and characteristics distribution is very important Advertising and other forms of promotion are technical in nature Price is often negotiated, evaluated as part of broader seller and product/service qualities, and frequently affected by quantity discounts Derived demand: the demand for industrial products and services is driven by, or derived from, demand for consumer products and services o Ex: demand for Weyerhaeuser’s pulp and paper products is based on consumer demand for newspapers, FedEx packages, and disposable diapers Size of the order or purchase Number of potential buyers Organizational buying objectives Organizational buying criteria: objective attributes if the supplier’s products and services and the capabilities of the supplier itself o Criteria: price, ability to meet the quality specifications required, ability to meet required delivery schedules, technical capability, warranties and claim policies, etc. Buyer-Seller Relationships and supply partnerships The buying center: a cross-functional group: when several people in the organization participate in the buying process o People in the buying center o Roles in the buying center: users, influencers, buyers, deciders, gatekeepers o Buying situations and the buying center: new buy, straight rebuy, modified rebuy Charting the Organizational Buying Process Organizational buying behavior: the decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers Stage in the Consumer purchase: smartphone Organizational purchase: earbud headset for a buying for a student smartphone decision process Problem Student doesn’t like the Marketing research and sales departments recognition features of the observe that competitors are improving smartphone now owned the earbud headsets for their and desires a new one smartphones. The firm decided to improve the earbud headsets on its own new models, which will be purchases from an outside supplier Information Student uses personal Design and production engineers draft Search past experience and that specifications for earbud headsets. The of friends, ads, the purchasing department identifies suppliers internet, and Consumer of earbud headsets Reports to collect information and uncover alternatives Alternative Student uses personal Purchasing and engineering personnel evaluation past experience and that visit with suppliers and assess 1) facilities of friends, ads, the 2) capacity 3) quality control and 4) internet, and Consumer financial status. They drop any suppliers Reports to collect not satisfactory on these attributes information and uncover alternatives Purchase A specific brand of They use 1) quality 2) price 3) delivery decision smartphone is selected, and 4) technical capability as key buying the price is paid, and the criteria to select a supplier. They then student leaves the store negotiate terms and award a contract Postpurchase Student reevaluates the They evaluate suppliers using a formal behavior purchase decision and vendor rating system and notify a supplier may return the phone to if the earbud headsets do not meet their the store if it is quality standard. If the problem is not unsatisfactory corrected, they drop the firm as a future supplier. Online Buying in Organizational Markets E-marketplaces: brings together buyers and supplier organizations – known as B2B exchanges or e-hubs o Can be independent trading communities or private exchanges. Independent e- marketplaces act as a neutral third party and provide an Internet technology trading platform and a centralized market that enables exchanges between buyers and sellers. They charge a fee for their service and exist in settings that can have one of the features 1) thousands of geographically dispersed buyers and sellers 2) volatile prices caused by demand and supply fluctuations 3) time sensitivity due to perishable offerings and changing technologies and 4) easily comparable offerings between a variety of sellers Traditional auction: a seller puts an item up for sale and would be buyers are invited to bid in competition with each other Reverse auction: a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other. As more would-be suppliers become involved, there is a downward pressure on bid prices for the buyer’s business Summary Industrial firms in some way reprocess a product or service they buy before selling it to the next buyer Resellers – wholesalers and retailers – buy physical products and resell them again without any reprocessing Government agencies, at the federal, state, and local levels, buy goods and services for the constituents they serve The North American Industry Classification System (NAICS) provides common industry definitions for Canada, Mexico, and the US, which facilitates the measurement of economic activity for these three organizational markets Seven major characteristics of organizational buying make it different from consumer buying: demand characteristics, the size of the order or purchase, the number of potential buyers, buying objectives, buying criteria, buyer-seller relationships and supply partnerships, and multiple buying influences within organizations The organizational buying process itself is more formalized, more individuals are involved, supplier capability is more important, and the postpurchase evaluation behavior often includes performance of the supplier and the item purchased A buying center consists of a group of individuals who share common goals, risks, and knowledge important to a purchase decision. A buyer or purchasing manager is almost always a member of a buying center but other individuals may affect organizational purchasing due to their unique roles in a purchase decision 5 specific roles that a person may play in a buying center include users, influencers, buyers, deciders, and gatekeepers. The specific buying situation will influence the number of people and the different roles playing in a buying center. For a routine reorder of an item – a straight rebuy situation – a purchasing manager or buyer will typically act alone in making a purchase decision. When an organization is a first-time purchaser of a product or service – a new buy situation – a buying center is enlarged and all 5 roles in a buying center often emerge Organizations dwarf consumers in terms of online transactions made and purchase volume. Online buying in organizational markets is population because: o 1) organizational buyers depend on timely supplier information that describes product availability, technical specifications, application uses, price, and delivery schedules. This information can be conveyed quickly via Internet technology o 2) this technology substantially reduces buyer order processing costs o 3) business marketers have found that Internet technology can reduce marketing costs, particularly sales and advertising expense, and broaden their customer base 2 developments in online buying have been the creation of e-marketplaces and online auctions o E markets provide a technology trading platform and a centralized market for buyer- seller transactions and make possible the real-time exchange of information, money, products, and services. These e marketplaces can be independent trading communities or private exchanges o With online traditional auctions, the highest-price bidder “wins”. Conversely the lowest- price bidder “wins” with reverse auctions Chapter 9: Market Segmentation, Targeting and Positioning Why Segment Markets? A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits. Not for profit organizations also segment the clients they serve to satisfy client needs more effectively while achieving the organization’s goals. Market segmentation: involves aggregating prospective buyers into groups that 1) have common needs and 2) will respond to similarly to a marketing action o aka relatively homogeneous groups of prospective buyers that result from the market segmentation process Product differentiation: a firm using different marketing mix actions, such as product features and advertising, to help consumers perceive the product as being different and better than competing products Market-product grid: a framework to relate the market segments of potential buyers to products offered or potential marketing actions One product and multiple market segments: o Avoids extra costs of developing and producing additional versions of the product o The incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution o Ex: Harry Potter Multiple Products and Multiple Market Segments o Ex: Ford’s different lines of cars, SUVs, and pickup trucks are each targeted at a different type of customer Segments of One: Mass Customization o Each customer has unique needs and wants and desires special tender loving care The Segmentation Trade-Off: Synergies versus Cannibalization o Ideal balance btwn satisfying a customer’s individual wants and achieving organizational synergy, the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently Increased customer value can take the form of more products, improved quality of existing products, lower prices, easier access to products through improved distribution, etc Customers should be better off as a result of the increased synergies o Cannibalization: when products or new chains are stealing customers and sales from the older, existing ones Steps in Segmenting and Targeting Markets Step 1: group potential buyers into segments o Develop market segments that meet 5 essential criteria: simplicity and cost- effectiveness of assigning potential buyers to segments, potential for increased profit, similarity of needs of potential buyers within a segment, difference of needs of buyers among segments, potential of a marketing action to reach a segment o Segmentation bases are: geographic segmentation, demographic segmentation, psychographic segmentation, and behavioral segmentation o Ways to segment organizational (business) markets: geographic segmentation (statistical area), demographic segmentation (NAICS code), demographic segmentation (# of employees), behavioral segmentation (usage rate) Step 2: group products to be sold into categories o Must be grouped in some way so the buyers can relate to them Step 3: develop a market-product grid and estimate the size of markets o Framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization Step 4: select target markets o Two kinds of criteria in the market segmentation process are those used to 1) divide the market into segments and 2) actually pick the target segments o 5 criteria to select the target segments: market size, expected growth, competitive position, cost of reaching the segment, and compatibility with the organization’s objectives and resources. Step 5: take marketing actions to reach target markets o Segmentation strategy, keeping an eye on competition, and future strategies Positioning the Product Product positioning: the place a product occupies in consumers’ minds based on important attributes relative to competitive products Product repositioning: changing the place a product occupies in a consumer’s mind relative to competitive products Head-to-head positioning: competing directly with competitors on similar product attributes in the same target market Differentiation positioning: seeking ales-competitive, smaller market niche in which to locate a brand Writing a positioning statement Product positioning using perceptual maps o Identify the important attributes for a product or brand class o Discover how target customers rate competing products or brands with respect to these attributes o Discover where the company’s product or brans is on these attributes in the minds of potential customers o Reposition the company’s product or brand in the minds of potential customers o Perceptual map: a means of displaying in two dimensions the location or products or brands in the minds of consumer Summary Market segmentation involves aggregating prospective buyers into groups that 1) have common needs and b) will respond similarly to a marketing action 5 steps involved in segmenting and targeting markets o 1) group potential buyers into segments: buyers within a segment should have similar characteristics to each other and respond similarly to marketing actions like a new product or lowered price o 2) putting related products to be sold into meaningful groups o 3) organizations develop a market-product grid with estimated sizes of markets in each of the market product cells of the resulting table o 4) selecting the target market segments on which the organization should focus o 5) taking marketing mix actions – often in the form of a marketing program – to reach the target market segments Bases used to segment consumer markets include geographic, demographic, psychographic, and behavioral ones. Organizational markets use the same bases except for psychographic ones Organizations use 5 key criteria to segment markets, whose groupings appear in the rows of the market-product grid. Groups of related products appear in the columns. After estimating the size of the market in each cell in the grid, they select the target market segments on which to focus. They then identify marketing mix actions – often in a marketing program – to reach the target market most efficiently Marketing managers often locate competing products on two-dimensional perceptual maps to visualize the products in the minds of consumers. They then try to position new products or reposition existing products in this space to attain maximum sales and profits. Chapter 5: Understanding Consumer Behavior Consumer behavior: the actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions. Purchase decision process: the stages a buyer passes through in making choices about which products and services to buy (5 stages) 1. Problem Recognition (Perceiving a Need): perceiving a difference between a person’s ideal and actual situations big enough to trigger a decision a. Examples: finding an empty milk carton in the fried or realizing that your laptop isn’t working properly 2. Information Search (Seeking Value) a. Internal search: scanning your memory for previous experiences with products or brands. For frequently purchased products like shampoo and conditioner, this may be enough b. External search: needed when past experience or knowledge is insufficient, the risk of making a wrong purchase decision is high, and the cost of gathering information is low. Primary sources of external information are: i. Personal sources: relatives and friends ii. Public sources: various product-rating organizations such as Consumer Reports, government agencies, and TV consumer programs iii. Market-dominated sources: information from sellers including advertising, company websites, salespeople, and point-of-purchase displays in stores 3. Alternative Evaluation (Assessing Value) a. Clarifies the problem for the consumer by 1) suggesting criteria to use for the purchase 2) yielding brand names that might meet the criteria 3) developing consumer value perceptions b. Evaluative criteria: represents both the objective attributes of a brand (such as display) and the subjective ones (such as prestige) c. Consideration set: the group of brands a consumer would consider acceptable from among all the brands in the product class of which he or she is aware 4. Purchase Decision (Buying Value): for a smartphone this may be visiting retail stores, seeing different brands advertised on tv, and viewing a smartphone on a seller’s website. Two choices remain: a. 1) from whom to buy. The choice of which seller to buy from will depend on such consideration as the terms of the sale, your past experience buying from the seller, and the return policy b. 2) when to buy. Factors: if one of the preferred brands are on sale, the manufacturer offers a rebate, the store atmosphere, pleasantness or ease of the shopping experience, salesperson assistance, time pressure, and financial circumstances 5. Postpurchase behavior (Realizing Value): after buying a product, the consumer compares it with his/her expectations and is either satisfied or dissatisfied. a. Cognitive dissonance: feeling of postpurchase psychological tension or anxiety Involvement: the personal, social, and economic significance of the purchase to the consumer. High involvement purchases have at least one of three traits: 1) expensive 2) serious personal consequences 3) could reflect one’s social image 3 problem solving variations: extended problem solving, limited problem solving, routine problem solving If a company markets a low-involvement product and its brand is a market leader, attention is placed on 1) maintaining product quality, 2) avoiding stockout situations so that buyers don’t substitute a competing brand, and 3) repetitive advertising messages that reinforce a consumer’s knowledge or assure buyers they made the right choice. Market challengers must break buying habits by using free samples, coupons, and rebates to encourage trial of their brand. Marketers of high- involvement products know that their consumers constantly seek and process information about objective and subjective brans attributes, form evaluative criteria, rate product attributes, and combine these ratings for an overall brand evaluation. Market leaders ply consumers with product information through advertising and selling and market challengers capitalize on this behavior through comparative advertising that focuses on existing product attributes and introduces novel evaluative criteria for judging competing brands Situational influences: the purchase task, social surroundings, physical surroundings, temporal effects, antecedent states The purchase task: reason for engaging in the decision – gift? Personal use? Social surroundings: includes other people present when purchase decision is made (ex being accompanied by children) Physical surroundings: décor, music, crowding in retail stores, etc. Temporal effects: time of day, how much time available may affect lunch decisions Antecedent states: mood or the amount of cash on hand (those paying with credit cards buy more than with cash or debit cards Motivation: the energizing force that stimulates behavior to satisfy a need Personality: a person’s consistent behavior or response to recurring situations Key traits: enduring characteristics within a person or in his or her relationships with others Self-concept: the way people see themselves and the way they believe others see them Actual self-concept: how people actually see themselves Ideal self-concept: how people would like to see themselves Perception: the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world Selective perception: a filtering of exposure, comprehension, and retention Selective exposure: when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent with them (occurs in the postpurchase stage of the consumer decision process when consumers read ads for a brand they just bought. It also occurs when a needs exists) Selective comprehension: interpreting information so that it is consistent with your attitudes and beliefs Selective retention: consumers do not remember all the information they see, read, or hear even minutes after exposure to it Subliminal perception: you see or hear messages without being aware of them Some Definitions: Perceived risk: represents the anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences Learning: those behaviors that result from 1) repeated experience and 2) reasoning Behavioral learning: the process of developing automatic responses to a situation built up through repeated exposure to it. Drive: a need that moves an individual to action Cue: a stimulus or symbol perceived by consumers Response: the action taken by a consumer to satisfy the drive Reinforcement: the reward Ex. Being hungry (drive) a consumer sees a cue (a billboard) takes action (buys a sandwich) and receives a reward (it tastes great!) Stimulus generalization: when a response elicited by one stimulus (cue) is generalized to another stimulus Stimulus discrimination: a person’s ability to perceive differences in stimuli Cognitive learning: involves making connections between two or more ideas or simply observing the outcomes of others’ behaviors and adjusting your own accordingly Brand loyalty: a favorable attitude toward and consistent purchase of a single brand over time Attitude: a learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way Beliefs: a consumer’s subjective perception of how a product or brands performs on different attributes 3 approaches to try to change consumer attitudes toward products and brands: changing beliefs about the extent to which a brand has certain attributes, changing the perceived importance of attributes, and adding new attributes to the product. Lifestyle: a mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them Psychographics: provides insights into consumer needs and wants VALS system seeks to explain why and how consumers make purchase decisions: Ideals-motivated groups, achievement-motivated groups, self-expression motivated groups, and high and low resource groups Sociocultural influences: evolves from a consumer’s formal and informal relationships with other people, and exert a significant impact on consumer behavior. These involve personal influence, reference groups, family influences, social class, culture, and subculture Opinion leaders: individuals who exert direct or indirect social influence over others Word of mouth: influencing of people during conversations Reference groups: people to whom an individual looks as a basis for self-appraisal or as a source of personal standards Brand community: a specialized group of consumers with a structured set of relationships involving a particular brand, fellow customers of that brand, and the product in use Family influences come from 3 sources: consumer socialization (people acquiring the skills, knowledge, and attitude necessary to function as consumers), passage through the family life cycle (distinct phases that a family progresses through from formation to retirement), and decision making within the family or household (spouse dominant or joint decision making) Social class: relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be grouped Subculture: subgroups within the larger or national culture with unique ideas, values, and attitudes Summary The consumer purchase decision process consists of 5 stages: problem recognition (perceiving a difference btwn a person’s ideal and actual situation to trigger a decision), information search (remembering previous purchase experiences and external search behavior such as seeking informatio), alternative evaluation (clarifies the problem by a) suggesting the eval criteria b) yielding brand names that might meet the criteria c) developing consumer value perceptions), purchase decision (the choice of an alternative, including from whom to buy and when to buy), and postpurchase behavior (comparison of the chosen alternative with expectations) 3 variations of the consumer purchase decision process: routine, limited, and extended problem solving o Consumers don’t always engage in the 5 stage purchase decision process. They skip or minimize depending on the level of involvement – the personal, social, and economic significance of the purchase o Low involvement purchases occasions – consumers engage in routine problem solving o High involvement purchase occasions – each of the 5 stages of the consumer purchase decision process is used and considerable time and effort is devoted to the search for external information and the identification and evaluation of alternatives Psychological concepts such as motivation and personality, perception, learning, values, beliefs and attitudes, and lifestyle are useful for interpreting buying processes o Motivation is the energizing force that stimulates behavior to satisfy a need, personality can refer to a person’s consistent behaviors or responses to recurring situations, perception is the process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world. Consumers filter information through selective exposure, comprehension, and retention o Much consumer behavior is learned. Learning refers to those behaviors that result from a) repeated experience and b) reasoning – brand loyalty results from learning as well as values, beliefs, and attitudes o Lifestyle: combines psychology and demographics and focuses on how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them Sociocultural influences, which evolve from a consumer’s formal and informal relationships with other people, also affect consumer behavior. This involves personal influence, reference groups, the family, social class, culture, and subculture. o Opinion leadership and word-of-mouth behavior are two major sources of personal influence on consumer behavior. o Reference groups are people to look as a basis for self-approval or source of personal standards o Family influences: consumer socialization, passage through family cycle, and decision making within the family o People within social classes tend to exhibit common values, attitudes, beliefs, lifestyles, and buying behaviors Chapter 2: Developing Successful Organizational and Marketing Strategies Today’s Organizations Recognize 1) the kinds of organizations that exist 2) what strategy is and 3) how this strategy relates to the three levels of structure found in many large organizations Organization: a legal entity that consists of people who share a common mission. This motivates them to develop offerings (goods, services, ideas) that create value for both the organization and its customers by satisfying their needs and wants. Today’s organizations are of three types 1) for-profit organizations 2) nonprofit organizations and 3) government agencies Profit: the money left after a for-profit organization subtracts its total expenses from its total revenues and is the reward for the risk it undertakes in marketing its offerings Strategy: an organization’s long-term course of action designed to deliver a unique customer experience while achieving its goals Corporate level: where top management directs overall strategy for the entire organization o CEO: highest ranking officer in the organization and is usually a member of its board of directors o CMO: the head of marketing Strategic Business Unit: subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined target market Managers set a more specific strategic direction for their businesses to exploit value-creating opportunities Functional level: groups of specialists actually create value for the organization o Department: these specialized function such as marketing and finance o Cross-functioning teams: a small number of people from different departments who are mutually accountable to accomplish a task or a common set of performance goals Strategy in Visionary Organization Core Values: fundamental, passionate, and enduring principles that guide its conduct over time Mission: a statement of the organization’s function in society that often identifies its customers, markets, products, and technologies Organizational culture: the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization Business: the clear, broad, underlying industry or market sector of an organization’s offering Business model: the strategies an organization develops to provide value to the customers it serves Goals or Objectives: statements of an accomplishment of a task to be achieved, often by a specific time o Ex: profit, sales, market share (the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself), quality, customer satisfaction, employee welfare, social responsibility Organizational strategies vary depending on 1) a strategy’s level in the organization and 2) the offerings an organization provides to its customers Marketing plan: a road map for the marketing actions of an organization for a specified future time period Marketing dashboard: the visual computer display of the essential information related to achieving a marketing objective Marketing metric: measure of the quantitative value or trend of a marketing action or result Data visualization: presents information about an organizations marketing metrics graphically so marketers can quickly 1) spot deviations from plans during the evaluation phase and 2) take corrective actions Setting Strategic Directions Where are we now? Where do we want to go? Competencies: special capabilities – the skills, technologies, and resources – that distinguish it from other organizations and provide customer value Competitive advantage – a unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation Business portfolio analysis: technique that managers use to quantify performance measures and growth targets to analyze their firm’s SBU o Purpose is to determine which SBU or offering generates cash and which one requires cash to fund the organizations growth opportunities o Cash cows: SBUs that generate large amounts of cash, far more than they can use. They have dominant shares of slow-growth markets and provide cash to cover the organization’s overhead and to invest in other SBUs o Stars: SBUs with a high share of high-growth markets that may need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows o Question marks: SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, must less increase it. The name implies management’s dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest o Dogs: SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they may not become real winners for the organization. Dropping SBUs that are dogs may be required if they consume more cash than they generate, except when relationships with other SBUs, competitive consideration, or potential strategic alliances exist Diversification analysis: technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. o Market penetration: marketing strategy to increase sales of current products in current markets (such as selling more Ben&Jerry’s Bonnaroo Buzz Fair Ice Cream). There is no change in either the basic product line or the markets served. Increased sales are generated by selling either more ice cream or the same amount of ice cream at a higher price o Market development: marketing strategy to sell current products to new markets (such as Ben&Jerry’s Brazil) o Product Development: selling new products to current markets (such as Ben&Jerry’s clothing) o Diversification: developing new products and selling them in new markets (Ben&Jerry’s clothing in Brazil) The Strategic Marketing Process Strategic marketing process: an organization allocates its marketing mix resources to reach its target markets (3 steps – planning, implementation, evaluation) Planning o 1) situation (SWOT) analysis Situation analysis: taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization’s marketing plans and the external forces and trends affecting it Strengths and Weaknesses and its external Opportunities and Threats: an effective summary of a situational analysis based on an exhaustive study of four areas that form the foundation upon which the firm builds its marketing program 1) identify trends in the organization’s industry 2) analyze the organization’s competitors 3) assess the organization itself 4) research the organization’s present and prospective customers o 2) market-product focus and goal setting Market segmentation: aggregating prospective buyers into groups, or segments, that 1) have common needs and 2) will respond similarly to a marketing action Points of difference: those characteristics of a product that make it superior to competitive substitutes o 3) the marketing program Which customers to target and which customer needs the firm’s product offerings can satisfy – the who and what aspects of the strategic marketing process Implementation o Carrying out the marketing plan that emerges from the planning phase o 1) Obtaining resources: finding adequate human and financial resources to execute that marketing program o 2) Designing the marketing organization: a marketing program needs a marketing organization to implement it o 3) Defining precise tasks, responsibilities and deadlines: action item list consisting of the task, the person responsible for completing that task, the date to finish the task and what is to be delivered o 4) actually executing the marketing program designed in the planning phase Marketing strategy: the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it Marketing tactics: detailed day-to-day operational marketing actions for each element of the marketing mix that contribute to the overall success of marketing strategies Evaluation: seeks to keep the marketing program moving in the direction set for it o Requires the marketing manager to 1) compare the results of the marketing program with the goals in the written plans to identify deviations and 2) act on these deviations – exploiting positive deviations and correcting negative ones Summary An organization is a legal entity that consists of people who share a common mission. It develops offerings (goods and services) that create value for both the organization and its customers by satisfying their needs and wants o For profit organizations: serves its customers to earn a profit so it can survive o Nonprofit organizations: nongovernmental organization that serves it customers but does not have profit as an organizational goal (rather, operational efficiency or client satisfaction for instance) o Government agencies: federal, state, county, or city unit that provides a specific service to its constituents o Most large for-profit and nonprofit organizations are divided into 3 levels of strategy 1) the corporate level, where top managers direct overall strategy 2) the strategic business unit level, where managers set a more specific strategic direction for their businesses to exploit value-creating opportunities 3) the function level, where groups of specialists actually create value for the organization Organizations exist to accomplish something for someone. To give organizations direction and focus, they continuously asses their core values, mission, and organizational culture, business, and goals o Core values: organization’s fundamental, passionate, and enduring principles that guide its conduct over time o Mission: a statement of its function in society, often identifying its customers, markets, products, and technologies o Organization culture: set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization o An organization must define its “business” – the clear, broad, underlying industry category or market sector if its offering o Goals (objectives); statements of an accomplishment of a task to be achieved, often by a specific time Marketing managers use marketing dashboards to visually display on a single computer screen the essential information required to make a decision to take an action or further analyze a problem o Information consists of key performance measures of a product category, such as sales or market share, and is known as a marketing metric, which is a measure of the quantitative value or trend or a marketing activity or result Managers of an organization ask two key questions to set a strategic decision: o “Where are we now?” Requires an organization to a) reevaluate its competencies to ensure that its special capabilities still provide a competitive advantage and b) assess its present and prospective customers to ensure they have a satisfying customer experience – the central goal of marketing today and c) analyze its current and potential competitors from a global perspective to determine whether it needs to redefine its business o “where do we want to go?”: requires an organization to set a specific direction and allocate resources to move it in that direction. Business portfolio and diversification analyses help an organization do this Managers use business portfolio analysis to assess the organization’s SBUs, product lines, or individual products as though they were a collection of separate investments (cash cows, stars, question marks, dogs) to determine the amount of cash each should receive Diversification analysis is a tool that helps managers use one or a combination of four strategies to increase revenues: market penetration, market development, product development, and diversification An organization uses the strategic marketing process to allocate its marketing mix resources to reach its target markets. The process is divided into 3 phases: planning, implementation, and evaluation Planning: o Situation (SWOT) analysis: taking stock of where the firm or product has been recently, where it is now, and where it is headed and focusing on the organization’s internal factors (strengths and weaknesses) and the external forces and trends affecting it (opportunities and threats) o A market-product focus through market segmentation (grouping buyers into segments with common needs and similar responses to marketing programs) and goal setting, which in part requires creating points of difference (those characteristics of a product that make it superior to competitive substitutes) o A marketing program that specifies the budget and actions (marketing strategies and tactics) for each marketing mix element Implementation: carries out the marketing plan that emerges from the planning phase o Obtaining resources o Designing the marketing organization to perform product management, marketing research, sales, and advertising and promotion activities o Developing schedules to identify the tasks that need to be done, the time that is allocated to each one, the people responsible for each task, and the deadlines for each task – often with an action items list and Gantt chart o Executing the marketing strategies, which are the means by which marketing goals are to be achieved, and their associated marketing tactics, which are the detailed day-to- day marketing actions for each element of the marketing mix that contribute to the overall success of a firm’s marketing strategies Evaluation: seeks to keep the marketing program moving in the direction that was established in the marketing plan o Identify deviation or planning gaps o Take corrective actions to exploit positive deviations or correct negative ones Chapter 3: Scanning the Marketing Environment Environmental Scanning: the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends Social Consumers are increasingly switching media (up to 27 times per hour) as they search for short, engaging messages High unemployment and reduced income are increasing demand at discount retailers for lower-cost and smaller-sized products Crowdfunding, online concept testing, and preordering are becoming important ways for consumers to participate in brand and product development Economic During the recession, the consumer savings rate rose to 8.3%; the rate has since declined to 3.7% indicating more spending The clean energy sector of the global economy is growing as countries begin to meet their Kyoto Protocol commitments The US, Japan, China, and EU countries will increase investments in sustainable living infrastructure Technologic Robots are becoming viable techniques for housework, surgery, and al many forms of labor 3D printing and on-demand capabilities are creating a resurgence in domestic manufacturing There is a growing availability of new smartphone tools such as mobile advertising, mobile barcode scanning, and mobile payment apps Competitive Customer-generated context (feedback, reviews, etc.) is growing as a competitive advantage Microbusiness impact will increase through peer-to-peer websites Partnerships, collaboration, and co-creation of value are becoming important dimensions of competition Regulatory Online privacy protection advocacy and regulation is increasing There is increasing regulatory guidance regarding green and environmental marketing claims Health care, gun-control, and marijuana regulation debates are receiving more attention 5 Sources: social, economic, technological, competitive, and regulatory Social Forces: includes the demographic characteristics of the population and its culture. Changes in these forces can have a dramatic impact on marketing strategy 1. 1 Social Force: demographics: describing a population according to selected characteristics such as age, gender, ethnicity, income and occupation Trends include a larger, older, and more diverse population Baby boomers: generation of children born between 1946 and 1964 Generation X: 50 million people born between 1965 and 1976 (baby bust) o Self-reliant, supportive of racial and ethnic diversity, and better education Generation Y: 72 million Americans born between 1997 and 1994 (echo-boom/baby boomlet) Blended family: one formed by merging two previously separated units into a single household Regional shifts towards Southern and Western states Population shifts from rural areas to cities Metropolitan statistical area: at least one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration Micropolitan statistical area: at least one urban cluster of at least 10,000 but less than 50,000 people and adjacent territory that has a high degree of social and economic integration Multicultural marketing program: combinations of the marketing mix that reflects the unique attitudes, ancestry, communication preferences, and lifestyles of different races nd 2 Social Force: Culture: incorporates the set of values, ideas, attitudes that are learned and shared among the members of a group Feminism: Generation Y experienced feminism through their career mothers, participation in organized sports, Internet. Changing values from achievement, work, efficiency, and material comfort to personal control, continuous change, equality, and individualism Value Consciousness: concern for obtaining the best quality, features, and performance of a product or service for a given price Economic Forces: pertains to the income, expenditures, and resources that affect the cost of running a business and household Macroeconomic View Concern: the performance of the economy based on indicators such as GDP, unemployment, and price changes (inflation, deflation) Inflationary economy: the cost to produce and buy products and services escalates as prices increase. If prices rise farther than consumer incomes, the number of items consumers can buy decreases Consumer expectations about the economy are an important element of environmental scanning Microeconomic View A consumer’s ability to buy is related to income, which consists of gross, disposable, and discretionary components Gross income: the total amount of money made in one year by a person, household, or family unit Disposable income: the money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation Discretionary income: the money that remains after paying taxes and necessities used for luxury items such as a cruise Technological Forces: refers to inventions or innovation from applied science or engineering research Marketspace: an information and communication based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings Electronic commerce: any activity that uses some form of electronic communication in the inventory, exchange, adverstisement, distribution, and payment Competitive Forces: refers to the alternative firms that could provide a product to satisfy a specific market’s needs Pure competition: many sellers and they each have a similar product (agribusiness such as wheat, rice, grain) Monopolistic competition: many sellers compete with substitutable products within a price range (if coffee prices rise too much people will switch to tea) Oligopoly: few companies control the majority of industry sales (the wireless telephone industry such as Verizon, AT&T, Sprint, etc.) Pure monopoly: only one firm sells the product (for products essential to a community: water, electricity, cable) Barriers to entry: business practices or conditions that make it difficult for new firms to enter the market (can be in the form of capital requirements, advertising expenditures, product iden
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'