MKT 337 Exam 1 Bundle Notes Midterm 1
MKT 337 Exam 1 Bundle Notes Midterm 1 MKT 337
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Exam 1 Personal Review 01/27/2016 1. What are we looking for? a. Mission Statement b. Source of Competitive Advantage c. Portfolio Analysis d. Environmental Scan e. Consumer Decision Processes f. Segmentation, Targeting, Positioning 2. The 4 P’s a. Product b. Place c. Promotion d. Price e. The Equation i. 3. Maslow’s Hierarchy of Needs (PSSPS) a. 4. BCG Portfolio Matrix a. 5. Ansoff’s Strategic Opportunity Matrix a. 6. SWOT Analysis a. i. Strengths are often related to the company’s core competencies; ii. Weaknesses are all the factors the customers dislike or in which competitors excel iii. Opportunities = Areas of market needs that the company can profitably operate in. 1. Should be sought in unmet customer needs, new markets, segments, niches iv. Threats = Challenges posed by an unfavorable trend 1. All the environmental factors which the company has no control over v. 7. Comparative Advantage a. Three Strategies i. Cost Leadership Strategy 1. Have the lowest cost and broadest reach a. Wal-Mart ii. Differentiation Strategy 1. Perceived to be better by everyone (broad) a. Target b. HEB iii. Focus Strategy 1. Perceived to be better by a certain group (narrow) a. Restoration Hardware b. Whole Food iv. All three strategies stress 1. Entry Barrier 2. Buyer Power 3. Supplier Power 4. Threat of Substitutes 5. Rivalry b. Sources of Sustainable Competitive Advantage i. 8. GINI Coefficient a. GINI = Distribution of wealth in a country i. Lower is better ii. US wealth distribution is disproportionate to the idea of freedom/equality 9. Preserving Competition a. Sherman Antitrust Act (1890) i. attempted to limit cartels & monopolies b. Clayton Antitrust Act (1914) i. addressed price discrimination, exclusive dealings, M&As c. Robinson-Patman Act (1936) i. Further addressed price discriminations d. Wheeler-Lea Act (1938) i. Control false advertisings 10. Purchase Decision Process (5 Steps) a. Recognize need i. Social or Marketing (External) and Physiological or Psychological (Internal) b. Information Search c. Evaluation of Alternatives i. Evoked Set 1. Group of brands, resulting from an information search, from which a buyer can choose d. Purchase One i. Where and When e. Post purchase behavior analysis i. Compare ACTUAL EXPERIENCE with EXPECTATIONS 11. NAICS a. i. A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes 1. Valuable tool for marketers in analyzing, segmenting, and targeting market 12. Business Buying Behavior Includes a. 13. 4 Criteria for Segmentation (SIAR) a. i. Sustainability 1. Do they have money? ii. Indefinability and Measurability 1. Can I identify them? iii. Accessibility 1. Can I reach them? iv. Responsiveness 1. Will they care? 14. Segmenting Customer Markets a. i. Psychographic Segmentation 1. Personality 2. Motives 3. Lifestyles 4. Geodemographics 15. Segmenting Business Markets a. Company Characteristics i. Geographic location ii. Type of company iii. Company size iv. Volume of purchase v. Product use 16. Organization Buyer Characteristics a. Satificers i. Business customers who place an order with the first familiar supplies to satisfy product and delivery requirements 1. Control information search b. Optimizers i. Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one 1. Control alternative evaluation 17. Targeting (Target Marketing Strategies) a. b. 18. Positioning a. Positioning: The place a product occupies in consumer’s minds, relative to competing products or brands… b. Position Statement i. For (target segment) (product) is (point of difference) among all (competition) because (simple most important support). c. Perceptual Map: Visual method of understanding your brand’s positioning, relative to competitors, along factors that are important to a particular customer segment 19. STP Summary a. ▯ 1. Tesla and UPS a. What are we looking for? i. Mission Statement ii. Source of Competitive Advantage (Price/Differ/Concentrate) iii. Portfolio Analysis (BCG) iv. Environmental Scan (SWOT) v. Consumer Decision Processes (Need/Info/Alts/Product/Review) vi. Segmentation, Targeting, Positioning 2. Tesla (B C) a. Mission Statement i. “Tesla’s Mission is to accelerate the world’s transition to sustainable transport” 1. Specific but not constraining 2. Not too long 3. Thoughts on Tesla a. Quick and brief – gets essence of Tesla b. “Transportation” i. Tesla now has the power wall b. Source of Competitive Advantage i. 3 Sources 1. Cost Leadership 2. Concentration/Niche (Specific Group of People) a. People who care specifically about electric vehicles 3. Product Differentiation (Everyone) a. Anybody that wants a luxury performance vehicle 4. Which one is Tesla? a. Concentration/Niche or Product Differentiation c. Portfolio Analysis i. Primary Vehicle for Talking about Portfolio 1. BCG a. b. Star i. Tesla Car c. Battery i. Question Mark/Dog d. Take Away i. Can Tesla make the Tesla Car profitable (cash cows) ii. Can Tesla make the new products stars/cash cows d. Environmental Scan (SWOT) i. 1. What trends are effecting Tesla right now? a. Oil Prices i. Lower cost of ownership for Tesla goes down as oil prices go down b. Battery Technology i. Increasing to where making cars is actually possible e. Consumer Decision Processes (B C) i. 5 Steps of the Consumer Decision Making Process 1. Need a. People who want sustainable transport b. People who don’t want to buy a Pruis 2. Info Search a. Market Controlled Website/Advertising b. Non Marketing Controlled People talking about them 3. Evaluation of Alternative a. Performance included with technology b. Cost of ownership c. What are the criteria I want people to look at my cars based on? 4. Product a. Where i. Can only sell Tesla online – Where is a constraining factor for them b. When i. Discounts – Lease incentives 5. Post-Purchase a. Follow up with customer b. Trying to reduce cognitive dissonance i. Can auto update cars post-purchase 6. Where does tesla fall? a. Need/Info search f. Segmentation, Targeting, Positioning i. Segmentation 1. Income a. Demographic Criteria 2. Age a. Demographic Criteria 3. Geography a. The range on their car is limited 4. Lifestyle a. People who value sustainability ii. Targeting 1. 3 Ways you can Target a. Undifferentiated Targeting b. Concentrated Niche c. Multi-Segment 2. Which one is Tesla? a. Concentrated Niche i. Set of people who all behave the same way 1. Environmentally Conscious 2. Over 100k in income 3. Interested in high performance luxury vehicles b. Undifferentiated i. Anyone interested in the Lexus/BMW/Mercedes iii. Positioning 1. What does Tesla want to be? a. Highest performing vehicle in the market b. Technology and performance 3. UPS (B B) a. Mission Statement i. “We enable global commerce” 1. How do we enable global commerce? a. Enable could be the infrastructure that facilitates global commerce ii. Source of Competitive Advantage 1. Differentiation a. Fastest Service iii. Portfolio Analysis 1. 2. What do they do? a. Shipping b. UPS Stores with services i. Notarization ii. Printing c. 3PL i. UPS will take over moving anyone companies stuff 1. Store peoples inventory/ship it/handle returns a. Outsourcing logistics d. Supply Chain Consulting 3. Where do these markets fall? a. Shipping i. GROWING market 1. Star to Cash Cow b. UPS Stores with Services i. Dogs c. 3PL i. Growing Market 1. Upper star d. Supply Chain Consulting i. Growingish Market 1. Question Mark to Star a. Compete with Accenture 4. Analysis of UPS a. Retail Outlets i. Get out of retail outlets b. Consulting i. Make a decision on rather UPS can become a market leader in supply chain consulting 1. Go partner with other people if you want to get out c. 3PL i. Keep plowing money into this business. You are doing great 1. Fund Shipping then 3PL then Consulting then Stores iv. Environmental Scan 1. 2. Economic Trend of Increased E-Commerce a. Opportunity in SWOT that is positively effecting the business 3. Amazon a. Considering vertically integrating their business with drones v. Business Decision Making 1. 5 Categories (Of People in the decision process) a. Decision Makers i. VP of Supply Chain/COO/Manager b. User i. Warehouse and logistics or Sales c. Influences i. Transportation/Logistics/Supply Chain departments d. Gate Keepers i. Whoever they are e. Buyers i. Procurement Department ii. IT Department 2. 5 Steps (Speed, Complexity, and # of People are quicker) a. Needs b. Info Search c. Evaluate Alternative d. Purchase e. Post-Purchase vi. Segmentation, Targeting, Position 1. Segmentation a. Size b. Usage Rate (Volume) i. How many packages does that company ship? c. Company Type i. Solutions for different verticals 2. Targeting a. Multi-Segment i. Different solution sets for Large Healthcare companies vs. small non-healthcare companies 1. Different messages for each company 3. Position a. Fastest shipping and reliable shipping 4. Another exercise: Disney 5. Extra Review Questions a. Increasing market share vs. attracting new customers i. There is a set of total available customers of 100 1. Currently sell to 10 a. Increasing market share i. Now you sell to 15 out of 100 b. Attracting new customers i. Now there are 115 potential customers b. Questions i. Tesla does this, this, this 1. Tesla is most likely using what type of competitive strategy 2. Based on the scenario Tesla is using what type of competitive strategy ii. UPS does this, this, this 1. Shipping is most likely what in the BCG matrix 2. Please create a BCG matrix for UPS and tell me why 1. Steps in Segmenting Market a. Select a market or product category for study b. Choose a basis or bases for segmenting the market c. Select segmentation descriptors d. Profile and analyze the segments e. Select target markets f. Design, implement, and maintain appropriate marketing mixes 2. Target Marketing Strategies a. Graphic i. ii. 3. Reebok Market-Product Grid a. i. Primary Market 1. Each Red box is a marketing mix, a different marketing strategy ii. Secondary Market 1. Every blue box is people who are buying shoes that they are not being advertised to for 2. Why track secondary market? a. Each blue box is a potential new red box or primary market people can spend money 4. One-to-One Marketing a. Aka: Mass Customization i. An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer 5. Positioning a. Positioning: The place a product occupies in consumer’s minds, relative to competing products or brands… i. … with the goal of developing a specific marketing mix to influence potential customer’s overall perception of the brand, product line, or organization in general 1. Positioning Example ii. Position Statement 1. For (target segment) (product) is (point of difference) among all (competition) because (simple most important support) b. Perceptual Map: Visual method of understanding your brand’s positioning, relative to competitors, along factors that are important to a particular customer segment 6. “STP” on a page (Segmentation, Target, Positioning) a. Graphic i. b. Market Segmentation – division of market into distinct groups of potential buyers who have similar needs and wants i. Hit all four segments c. Marketing Targeting i. Choose which of the market segments you want d. Marketing Position i. Choose the marketing mix for what segment you want to target 7. New Trends in Segmentation a. 1. 4 P’s a. Price b. Product c. Place d. Promotion 2. Market Segmentation a. Some percentage of the population, or collection of individuals (Business to Consumer), or collection of organizations/companies (Business to Business) i. Require the same kinds of things due to similar needs 3. Why do companies segment their markets? a. First, what are segments? i. Groups of customer who have 1. Common needs and wants 2. Will respond similarly to a marketing action a. Where needs are defined broadly (relative to all of the 4 P’s) b. So, why segment? i. You really can not be everything to everyone ii. To address unique needs of unique segments (be relevant!) iii. To focus a company’s decision making and use of limited resources iv. To accomplish business objectives (financial and otherwise) 4. Criteria for Segmentation (TEST QUESTION!!!!) a. Sustainability i. Do they have money? b. Indefinability and Measurability i. Can I identify them? c. Accessibility i. Can I reach them? d. Responsiveness i. Will they care? 5. Dimensions for Segmenting Customer Markets a. 5 Criteria i. ii. Geography 1. Where can you use Uber? iii. Demographics iv. Psychographics v. Benefits 1. The process of grouping customers into market segments according to the benefits they seek from the product a. Benefit of status vi. Usage Rates b. Psychographic Segmentation i. Personality ii. Motives iii. Lifestyles 1. iv. Geodemographics 1. Segmenting potential customer into neighborhood lifestyle categories 2. Combines geographic, demographic, and lifestyle segmentation 3. Geography Demographic Lifestyle 6. Segmenting Business Markets a. Company Characteristics i. Geographic location ii. Type of company 1. Selling vertical iii. Company size iv. Volume of purchase v. Product use 1. Sell different to consumers, to companies to buy, to Hertz 7. Organization Buyer Characteristics a. Satificers i. Business customers who place an order with the first familiar supplies to satisfy product and delivery requirements 1. Control information search b. Optimizers i. Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one 1. Control alternative evaluation 8. Understanding Individual Organizational Buyer Characteristics a. Demographic Characteristics b. Decision style i. Driver 1. Statistics ii. Indirect 1. People who want to be slow talked with personality c. Tolerance for risk d. Confidence level e. Job responsibilities i. What people do really matters to how to communicate with them 1. Women vs. Men Buyer Behavior a. Women i. Need 1. Emotional ii. Info Search 1. Wants a personal connection iii. Alternative Evaluation 1. Make the decision slower as to how iv. Purchase 1. When -> slow 2. Where -> accessible v. Post-Purchase 1. Want to see long term plan b. Men i. Need 1. Logic and returns ii. Info Search 1. Who has the best data behind them iii. Alternative Evaluation 1. Want the best return, who makes the most money iv. Purchase 1. When -> now 2. Where -> anywhere v. Post-Purchase 1. Want to see immediate returns c. Conclusion i. You must market to two different markets ii. There may be tremendous opportunity to create a financial service that is more personable 2. Business to Business Marketing a. Business Products i. Are used to manufacture other products ii. Become part of another product iii. Aid the normal operations of an organization iv. Are acquired for resale without change in form 3. Categories of Business Customers a. Producers i. OEM b. Resellers i. Wholesalers 1. Target/Wal-Mart ii. Retailers c. Governments i. Federal ii. Municipal iii. Local d. Institutions i. Schools ii. Hospitals iii. Colleges iv. Churches v. Unions vi. Fraternal Groups vii. Civic Clubs viii. Foundations ix. None-Business Organizations 4. NAICS a. A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes b. Provides a common industry classification system c. Valuable tool for marketers in analyzing, segmenting, and targeting markets d. Data can be used to determine: i. Number, size, and geographic dispersion of firms ii. Market potential/market share estimates iii. Sales forecasts iv. New Customer identification 5. Business vs. Consumer Markets a. 6. Business Buying Behavior a. Aspects of buying behavior i. Buying Centers ii. Evaluative Criteria iii. Buying Situations iv. Business Ethics v. Customer Service b. The buying decision is more complex i. Businesses score other options for buying products 1. Make it into the evoked set of a marketing 2. Know the criteria that the company wants and the weight their assign to them 3. Research the company beliefs and influence the criteria c. And the decision includes many more people… i. People included in the buying decision often come from different functional groups and play different roles 1. a. Decider i. Person who makes the decision b. Influencers i. People who the decider trust 1. Influencers are not really the decision maker 2. Make sure you understand who the influencers are and who the deciders are c. User i. People who will ultimately end up using the product d. Buyers i. People who will write you the check ii. Procurement department e. Gatekeeper i. People who control access to everyone else 1. Don’t ignore the little people 2. Most people have a tendency to treat administrators like crap f. I Don’t Care i. There is also the “I don’t care about you group” that does not care at all g. Practical Decision Event i. Commitment from the CEO to spend 60 million dollars on your product for the next 10 years ii. Procurement is going to try and undercut you in order to get a higher bonus 1. Marketing must have a relationship with the buyer department d. And is much more involved in the decision i. 1. Marketing Priority a. Straight rebuy i. If you are currently the supplier you want this b. Modified rebuy i. If you are trying to get into a market you want the business to pop out and buy your product ii. How do you do this? 1. I can save you lots of money 2. I am way better 7. Exam 1 a. Typically the first exam is a bloodbath b. Structure of the Exam i. 4 scenarios 1. 5 multiple choice questions per scenario (20 total) a. Each multiple choice is 3 points (60 points total) 2. 1 short answer per scenario (4 short answers, 1 page) a. Each short answer is 10 points ( 40 points total) 3. Longer scenario 4. Multiple choice questions are not trivial a. More than one correct answer, there is only one best answer i. Pay attention, every single word matters ii. Only the words written matter iii. Don’t overthink the answer ii. General Questions 1. Articles not on the test 2. No sample exams 3. Find items within the material that could be worth 10 points a. Where are the things he could formulate a question where you could write a page about it and it is worth 10 points i. Big story 4. If I talked about it, on the slides, and they are in the book a. 80% i. All questions that are short answer will be from presentation b. 20% i. Might just be in presentation ii. Might just be in the book iii. Acts from the books 1. Sherman Acts iii. Potential 10 point question 1. 5 boxes in business to business a. Tell me who is what role and why 1. Consumer Behavior a. How consumer make purchase decisions b. How consumer use and dispose of product 2. Purchase Decision Process (5 Steps) a. Recognize need b. Information Search c. Evaluation of Alternatives d. Purchase One e. Post purchase behavior analysis f. 5 Steps i. Need Recognition 1. Result of an imbalance between actual and desired needs a. Present Status and preferred state i. The different between these two is the need b. Social or Marketing (External) and Physiological or Psychological (Internal) ii. Information Search 1. Internal Information Search a. Recall information in memory 2. External Information Search a. Seek information in outside environment i. Non-marketing controlled ii. Marketing controlled 3. What are you trying to figure out? a. Criteria to consider b. Options to consider c. Value perceptions (performance along various criteria) iii. Evaluation of Alternative 1. Evoked Set a. Group of brands, resulting from an information search, from which a buyer can choose 2. Evaluation of Alternative a. Analyze product attributes b. Use cutoff criteria c. Rank attributes by importance iv. Final Purchase Decision 1. From whom to buy? a. Convenience i. How easy is it to get to the place I buy? b. Return Policy i. Can I return the product? c. Overall Experience 2. When to buy? a. Personal circumstances (e.g. finances) b. Marketing actions (e.g. promotions) i. 50% off sales to get buyers in the door now v. Post-Purchase Experience and Behavior 1. Compare ACTUAL EXPERIENCE with EXPECTATIONS a. Worse?: Unsatisfied b. Equal?: Satisfied c. Better?: Delighted i. Situations in which people go from unsatisfied to delighted are the situations people tell the most other people about 2. Expectations come from a. Personal experience and reasoning b. Social influences c. Marketing influences 3. Level of Satisfaction strongly affects repurchase and word-of-mouth (i.e. Loyalty) 3. Marketing Implications of Involvement a. High-involvement purchases require i. Extensive and informative promotion to target market b. Low-involvement purchases require i. In store promotion ii. Eye catching package, design, and good displays iii. Coupons, cents-off iv. 2-for-1 offers 4. Individuals Influences a. Gender b. Age Life Cycle c. Personality Self-Concept Lifestyle 5. Psychological Influences a. Perception i. We tend to follow things we already know b. Motivation c. Learning i. Conceptual 1. People who want to just do problems over and over to figure it out ii. Experimental 1. People who want to simply experience everything d. Beliefs and Attitudes i. Apple v Samsung on Big Screen 1. Apply initially tried to redefine why a big screen is bad, they said it is terrible to try and reach across the screen with your thumb a. Until Apple decided it was better to have one ii. This section deals with Evaluation of Alternatives e. Graphic i. 6. Social Influences a. Graphic i. ii. Reference Groups iii. Opinion Leaders 7. Some marketing tactics to Influence Consumer Behavior a. Suggest or trigger a need b. Provide information to i. Gain inclusion in consideration set ii. Changing attitudes and/or suggest a decision strategy 1. Change beliefs about a product’s attributes, change importance of attributes and new attributes c. Make it easy to purchase i. Make product easily available ii. Trigger purchase with promotion d. Deliver! i. Understand and satisfy needs ii. Meet or exceed expectations 8. BMW Article a. Older BMW Market was sophisticated performance car and they moved to innovative, entrepreneurial, independent thinkers i. In order to do this they 1. Designed Different 2. Marketed Different 3. Sponsored a. F1 b. PGA i. Trying to create an impression that BMW is associated with upper style events 1. NO NOTES TAKEN 2. 3. Preserving Competition a. Sherman Antitrust Act (1890) i. attempted to limit cartels & monopolies b. Clayton Antitrust Act (1914) i. addressed price discrimination, exclusive dealings, M&As c. Robinson-Patman Act (1936) i. Further addressed price discriminations d. Wheeler-Lea Act (1938) i. Control false advertising 4. SWOT a. Strengths are often related to the company’s core competencies; b. Weaknesses are all the factors the customers dislike or in which competitors excel c. Opportunities = Areas of market needs that the company can profitably operate in. i. Should be sought in unmet customer needs, new markets, segments, niches d. Threats = Challenges posed by an unfavorable trend i. All the environmental factors which the company has no control over 1. Social Factors a. American Values i. Self-sufficiency, upward mobility, work ethic, conformity b. Growth of Component Lifestyles i. Less conformance to traditional stereotypes 1. People all have their own generations lifestyles a. Some care about organic food, some care about social issues c. Changing Roles of Families and Working Women 2. What does an environmental scan entail? a. Analyze likely impact of trends i. For your company 1. Threats 2. Opportunities ii. To your customers iii. To your supplies 3. Demographics a. Population Size b. Age c. Gender d. Ethnicity e. Income f. Occupation g. Generally, hard/cold facts h. Easy to capture and chart i. Be careful about subsequent assumptions To your competitors 4. Comparing the Cohorts a. You can characterize each cohort (Baby Boomers, Generation X, Generation Y) i. Baby Boomers 1. 78 million 2. Diversity as a cause 3. Mass movement 4. Conform to rules 5. Killer Job 6. TV 7. Became institutions 8. Task-Focused ii. Generation X 1. 43 million 2. Accept diversity 3. Self-reliant 4. Reject rules 5. Killer life 6. Political Correct 7. Mistrust institutions 8. Multi-task iii. Generation Y 1. 73 million 2. Are diverse 3. Self-inventive 4. Ignore rules 5. Killer lifestyle 6. Internet 7. Don’t believe in Institutions 8. Irrelevant 9. Hyper multi-task 5. Racial and Ethnic Diversity in America a. By 2025: i. Hispanic population will grow to 20% of population ii. African American population will grow to 13% of population iii. Asian American population will double to 7% of population b. Marketing to Hispanic Americans i. Diverse 1. The population’s diversity creates challenges for targeting this group 2. Hispanics tend to be brand loyal, but are not aware of many U.S. brands 3. Nearly half of adult U.S. Hispanics have home Internet access c. Marketing to African Americans i. Uniform 1. Many firms are creating products for African American market 2. Promotional dollars and media choices directed toward African Americans continue to increase d. Marketing to Asian-Americans i. Rich and diverse 1. Younger, better educated than average, and have highest average income of all groups 2. Many products have been developed for Asian American market 3. Cultural diversity within the Asian American market complicates promotional efforts 6. GINI Coefficient a. GINI = Distribution of wealth in a country i. Lower is better ii. US wealth distribution is disproportionate to the idea of freedom/equality 7. US Microeconomics a. Typical median gross household income (2008): $49,000 i. Disposable (after taxes how much do I have to spend in total) 1. Spent on a. Food b. Housing c. Clothing d. Transportation, health care, insurance ii. Discretionary (“optional”) income 1. Spent on a. Luxuries b. Savings b. What does recovery look like? i. The corporations are benefiting from the recovery because the world are buying more of the US items 1. Exports are increasing a lot 2. The future markets are not in the US 8. Discussion P&G (Proctor and Gamble) a. P&G is the middleclass i. Middleclass marketing ii. The future for P&G 1. Looking to market to the different income cohorts a. Lower class and upper class i. Lower Class 1. Price matching (Lowest price) ii. Upper Class 1. Discretionary spending (Opulence) 2. P&G have to change to market to this new spread of income a. Data shows P&G can expect new better results Notes MKT 337 1/27/16 ▯ Strategic Planning ▯ ▯ BCG Portfolio Matrix o Stars (High Relative Market Share and High Market Growth Rate) Profit potential is high Attracts competition because it is successful May need heavy investment to stay ahead o Question Marks or Problem Children (High Market Growth Rate and Low Relative Market Share) Build into stars or phase out Spend a ton of money to become a star or get out of the market Requires cash to build market share o Cash Cows (Low Market Growth Rate and High Relative Market Share) Established, successful SBU’s Beaten competitors in the STAR area and now you can make lots of money Competition weakened No serious investments Spend enough money to make sure that your natural flow continues Produce cash Cash cows are what make you money o Dogs (Low Market Growth Rate and Low Relative Market Share) Low profit potential Dogs strategy should almost always be get out Usually discontinued o What do you want? You want cash cows to give you capital so you can fund your future stars so you don’t be a dog over time o Apple vs. Microsoft in BCG Apple has a bunch of dogs and a total butt load of question marks Microsoft has several cash cows Apple and Microsoft has tons of cash to invest in whatever and whenever they want ▯ Ansoff’s Strategic Opportunity Matrix TERMS o Market Penetration Increase market share among existing customers Marketing amazon o Market Development Attract new customers to existing product Marketing amazon to new countries o Product Development Create new products for present markets Marketing Amazon the first time o Diversification Introduce new products into new markets Amazon Cloud ▯ Mission Statements Coca-Cola o “Everything we do is inspired by our enduring mission” o To refresh the world: in body, mind, and spirit ▯ SWOT Analysis ▯ Competitive Advantage Three Strategies o Cost Leadership Strategy Have the lowest cost and broadest reach Wal-Mart o Differentiation Strategy Perceived to be better by everyone (broad) Target HEB o Focus Strategy Perceived to be better by a certain group (narrow) Restoration Hardware Whole Food Analysis how to achieve these strategies o Price leader makes a cost leader Heaviest involvement in R/D, efficient labor o Product/Service Differentiation Competitive Advantage Strong brand, specific store experience, the image you portray, the feelings of owning the products, the service experience o Niche Competitive Advantage Used by small companies with limited resources May be used in a limited geographic market Product line may be focused on a specific product category Sources of Sustainable Competitive Advantage o People are an amazing source of competitive advantage ▯ Porter’s Five Forces Products, Buyers, Substitutes, Sellers(Suppliers), Business o Each one of these are barriers to entry in a market You want a product with high entry barriers, high brand loyalty, supplies power low, no threat of substitutes, and no rivalry ▯ Why write a marketing plan? Business mission statement o What am I trying to do? SWOT Analysis Objective o What am I trying to accomplish? ▯ Criteria for Good Marketing Objectives Marketing Mix: The Four Ps Product o Includes Physical Unit Package Warranty Service Brand Image Value o Products can be Tangible goods Ideas Services Place o Product availability where and when customers want them o All activities from raw materials to finished products o Ensure products arrive in usable condition at designated places when needed Promotion o Role is to bring about exchanges with target markets by Informing Educating Persuading Reminding Price o Price is what a buyer must give up to obtain a product THE FORMULA o ▯ Organizations are like big ships Corporate level strategic direction includes o Business and Mission Can change quick on paper but slow in reality o Culture Always slow to change o Goals (objectives) ▯ Can change relatively quickly ▯ Notes MKT 337 1/25/16 ▯ Introduction to Marketing ▯ ▯ What is Marketing? Discover customer’s needs Satisfy customer’s needs ▯ Kotler on Marketing Shortage of customers leads to hyper-competition which leads to price wars Marketing is the way to compete on other issues than price ▯ The 4 P’s Product Place Promotion Price ▯ Creating Value Perceived Value = F((What you get)/(What you pay)) o F ((Product)(Place)(Promotion)/(Price)) We create value for our customers so that we can bring value to the organization (more revenue) Promote product, place, and promotion so that you don’t have to worry so much about price ▯ Different Orientation’s Production Orientation o What can we make or do best? Oil, Henry Ford Sales Orientation o How can we sell more aggressively? Life insurance Market Orientation o What do customers want and need? Find the right customers, build relationships with them, extract more value from them, promote the right product experience Societal Marketing Orientation o What do customers want/need, and how can we benefit society? Make people believe that what ‘we’ are doing is good for them. Make them believe our company stands for ‘good’ ▯ Overview of the Marketing Process This slide is the guidelines for the semester o ▯ What motivates a customer to take action? Unsatisfied Needs and Wants o Needs Underlying state of felt deprivation for basic items such as food and clothing and psychological needs such as belonging o Wants Form that a human need takes as shaped by culture and individual personality ▯ Maslow’s Hierarchy of Needs Each individual need must be satisfied at the lower levels before they progress to the higher, more complex levels Slot your product in the hierarchy where you would expect them to slot ▯ What will satisfy needs? Products o Anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want iPod, toothpaste Services o Activities or benefits offered for sales that are essentially intangible and does not result in the ownership of anything Banking, airlines, haircuts, and hotels ▯ The Breadth and Depth of Marketing Who markets? o Companies o Political Organizations o Governments o Individuals What is marketed? o Products o Services o Ideas To whom? o Industrial buyers People who buy stuff for business to consume ‘B to B’ o Consumers ‘B to C’ Ultimate users o People who use the service/product but don’t buy them Children o Apple marketed to the user instead of the industrial buyer ▯ Why is Marketing so important By virtue of who and what is involved o Everyone is involved somehow, at multiple levels o Enormous levels of resources are at stake o Competition is fierce Balancing needs of various stakeholders o Customers o Investors/shareholders o Employees “What have you done for me lately” generation How do you stop your employees from switching jobs o Community o Society ▯ Cuties Most of the time fruit simply competes on price However, cuties made people think about fruit with more value than the price o Cuties got people to think about the product, place, and promotion but failed to retain people trying the fruit Initial Promotion Marketing o Parents Safe, easy to peel o Kids Make them cute for kids to eat Initial Place Marketing o Where can you buy cuties? EVERYWHERE. Highly unusual. Fruit doesn’t respond well to being moved. Sell the product everywhere Initial Product Marketing o Created a new type of fruit Being successful with product, place, and promotion allows you to raise the price and still be profitable INCREIBLY successful o This means people began to compete with Cuties Cuties Problems o Overspent on promotion. Try to keep your numerator value (Product, Place, Promotion) increasing Other options Diversify using extra money from high profits before competition Cuties vs. Commodities o This problem of crowding out/competition extends across all industries o How do I maintain my status? If I don’t feel like I can maintain that status how do I figure out what is next? ▯ Strategic Portfolio Management
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