Principles of Marketing Study Guide- Chapter 1
Principles of Marketing Study Guide- Chapter 1 MKTG 3310 - 001
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This 5 page Study Guide was uploaded by Kelsey Bixler on Thursday January 21, 2016. The Study Guide belongs to MKTG 3310 - 001 at Auburn University taught by Jeremy Scott Wolter in Fall 2015. Since its upload, it has received 135 views. For similar materials see Principles of Marketing in Marketing at Auburn University.
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Date Created: 01/21/16
Principles of Marketing Chapter 1 Study Guide Eras of Orientation for American Business- Simple trade era (pre industry- black smiths and tradesmen Production era (1860-1920)- how fast you can make things is what makes you successful Sales era (1920-1950)- this is where you get your traditional depiction of sales men Marketing Eras Marketing department era (1950-1970)- began to focus on the customer Marketing company era (1970- 1990) focus on customer became the most important thing. Customer’s view becomes the view of the entire company. Relationship marketing- 1990- 2005 Companies began to think about building relationships so that they focus on customers buying things more than one time. One-to-one marketing era (2005- )- based on technologies- building relationships but on a larger scale Are all companies now in the marketing era? No- some companies have remained product oriented, which is associated with the Sales Era. This line of thinking occurs when a company becomes so proud of their product that they distance themselves from the customer. What marketing is- Marketing is the art and science of creating and managing value (innovation, communicating, delivering, servicing, procuring) AND business philosophy, discipline, distinct unit in an organization, and a set of business activities What is it not - selling more things to more people more often for more money, the devil, just advertising, or unnecessary The Marketing Concept- marketing concept, which includes three basic ideas 1- customer, satisfaction 2- total company effort 3- profit (not just sale) Marketing Orientation- Instead of trying to get the customer to buy what the firm has produced, a market oriented firm tries to offer customers what they need. This means carrying out the marketing concept. Production Orientation- making whatever products are easy to produce and then trying to sell them. This causes narrow thinking/lack of central focus in a business firm because they think of customers as existing to buy the firm’s output rather than the firm existing to serve the customer/needs of society. Value and how it is determined- Customer value- the difference between the benefits a customer sees from what the market is offering and the costs of obtaining those benefits- what you get/ what you give (time, effort, costs (for example how difficult it is to turn into a McDonalds) –Companies do not determine value- they offer value proposition Price can determine value but not always- price and coast of labor and resources can provide a rough estimate of value BUT if the good/service does not meet the customers needs it will result in low customer value even if the price is low. Unique contributions of marketing firms Accounting- Tracks revenue, cost flows, profit etc. and communicates these to managers and owners Manage- Organize resources to achieve goals efficiently and strategically Finance- Acquire cash flow from investors. Evaluate and manage the firms risk assets and shareholders Marketing- Acquire cash flow from customers- stimulate demands and evaluate and manage customer value Shareholder Orientation a companies main focus is to maximizing shareholder value. The idea here is that if you are taking care of the shareholders, you are taking care of the company. This differs from the marketing concept because it puts shareholder as the main focus rather than customer satisfaction. This causes companies to be very short term focused in order to make quarterly earnings. This makes the market volatile in the long run. The average stockholding period` has gotten significantly shorter Macro-marketing – a social process that directs an economies flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society Macro-micro dilemma- Bottled water example- sometimes what people purchase (micro level) could not be what is in the best interest on the macro level. Buying bottled water is convenient for an individual, but it could have negative effects such as increased pollution and wasted resources. Role of an economic system- the way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in a society. Demand economy vs. Market economy- Command Economy (North Korea) vs. Capitalist/Market Economy (the US)- command economies have less freedom, more corruption, and less incentive to be creative. Milton’s role of business- Milton Friedman- believed that business’ only concern should be profit Reason for business to engage in other causes besides seeking a profit- 1. Enhanced innovation and entrepreneurship 2. More loyal, productive and engaged employee relationships 3. Stronger external relationships up and down the value chain 4. Greater resilience to withstand shocks and crises Why may businesses be better suited than NGOs and GOs for taking on causes? Businesses have more resources than government agencies- 60 of the 150 most important economic entities in the world are companies not countries. Because of this companies are starting to take on issues What is an evitable result if businesses choose not to take on causes? The government will have to step in and gain more resources in order to get things done. This would result in a loss of power for businesses and gained power for GOs. Is marketing the same for NGOs (e.g., non- profits) as it is for for-profit organizations? Is the same theory in practice? NO- Non-profits spend money on advertising, which makes them look bad because the money could be going to their cause. So even if they bring in more money through advertising the consumer has to pay attention to the percent on the dollar that actually goes towards the cause. Caveat Emptor (buyer beware)- customers have a deficient information So this would not hold up in a court of law. Stakeholder responsibility- a firm’s obligation to improve its positive effect on the people who have a stake in the company. Stakeholder orientation is when the needs of the stakeholders come first Triple bottom line- measures an organization’s economic, social, and environmental outcomes as a measure of long-term success. Green Marketing- marketing efforts of produce promote and reclaim environmentally sensitive products. Cause related marketing- when charitable actions of a firm are tied directly to consumer revenue Self-interested reasons for businesses to engage in causes? YES people are more willing to support a company and pay more for the good/service if the company is involved in a cause. What factors determine whether firms are “rewarded” for engaging in CSR? of global consumers said they would be willing to reward companies that give back to society by paying more for their goods and services. Annual amount of money spent on cause-related marketing- $1.78 billion in 2013 but this is small compared to the world wide advertising spending in 2013 which was approximately $500 billion Why is cause-related marketing so hard to get right? People want companies to support a cause but not at the risk of being hypocritical. Example- The KFC Buckets of a Cure Campaign. KFC advertised pink buckets where part of the profit for every bucket sold would go to the Susan G. Komen foundation for breast cancer awareness. People found it hypocritical to use an unhealthy product to support a health campaign
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