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Date Created: 02/24/16
Chapter 1 Marketing- creating, capturing, communicating, delivering Value to customers Managing customer relationships to benefit the organization & stakeholders Key Elements of Marketing- creating (Product), communicating (Promotion), Delivering (Place), Capturing (Exchanging) (Price) Product- goods, services, ideas Price- Capturing value- everything a buyer gives up- money, time, and energy Place- activities necessary to get product to the right customer when they want it. deals more with retailing and marketing channel management/ supply chain management- set of approaches and techniques that firms employ to efficiently & effectively integrate suppliers, manufacturers, warehouses, stores, other firms involved in the transaction into a seamless value chain in which merchandise is produced and distributed in the right quantities, right locations, at right time Promotion- communication by marketers that informs, persuades, and reminds potential buyers about product Other definitions- to create customer value/ exchange between buyers and sellers or other parties/ has impact on the film, suppliers, customers, and others affected by the firm’s choices/ involves enduring relationships between buys, sellers, other parties. B2C- business to consumer marketing B2B- business to business marketing C2C- consumers sell to other customers marketing eg. Ebay Marketing helps create Value Production oriented era- 20 century –a good product would sell itself Sales-oriented era- 1920 to 1950- Great Depression and World War II- consumers consume less or manufactured items- planted victory gardens- manufacturers produced more than consumers wanted Market-oriented era- after War, shopping center appear, products plentiful, customers became king! More choices Value-base marketing era- value- relationship of benefits to costs, what the consumer gets for what he or she gives Value-cocreation- creative way to provide value- customers act as collaborators (Nike allows customers to custom design their products) How Marketing firms become more value Driven? Sharing info Balancing benefit with costs- use available customer data to find opportunities to satisfy needs, keep costs down, develop long term loyalties, Building relationships with customers- relational orientation- firms focus on lifetime profit. Not how much money made during each transaction. Uses a process called CMR (customer relationship management) – business philosophy/ set of strategies, programs, systems that focus on identifying and building loyalty among customers Why Marketing Important? Marketing expands firm’s global presence- also enhances global career opportunities for marketing professionals Marketing is pervasive across marketing channel members- marketing works through supply chains/ marketing channel – manufacturers buy raw materials from supplies, then sell to wholesalers, retailers, other businesses after turning materials into products. Marketing can be Entrepreneurial- numerous new ventures initiated by entrepreneurs- person who organizes, operates, and assumes risk of new business venture. Chapter 2 – Developing marketing strategies and a marketing plan Marketing strategy- identifies firms target markets, related marketing mix 4Ps, bases on which firm plans to build a sustainable competitive advantage- something firm can do better than others To create value and develop sustainable competitive advantage, there are 4 macro strategies 1.) Customer excellence- focus on retaining loyal customers & excellent customer service 2.) Operational excellence- achieved through efficient operations & excellent supply chain & HR management 3.) Product excellence- having products with perceived value and effective branding and positioning. 4.) Locational excellence – having a good physical location and internet presence. Marketing Plan- formal planning document, blueprint for implement the strategy -written document- analysis of current marketing situation, OP for firm, marketing objectives & strategy specified in terms of 4Ps, action programs, financial statements Marketing Plan stages (3) Marketing Strategies (5) 1. Planning phase – Step 1 Business Mission and Objectives Step2 Situation Analysis (SWOT) 2. Implementation phase- Step3- Identify opportunities (STP) Step4- Implement Marketing Mix (4Ps) 3. Control Phase- Step5- Evaluate Performance using marketing metrics Step1. Mission Statement- description of a firm’s objectives and scope of activities it plans to undertake. Step2. Conduct situation analysis- use SWOT analysis, also assess opportunities and uncertainties of marketplace due to changes in Cultural, Demographic, Social, and Technological. Economic, and Political forces (CDSTEP) Step3. Identify and evaluate opportunities using STP (Segmentation, targeting, positioning) Segmentation- various types of people/ dividing market into groups Targeting- evaluate each segment’s attractiveness and decides which to pursue Positioning- process of defining marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents Step4. Implement marketing mix Step5. Evaluate performance using marketing metrics. Metric- measuring system that quantifies a trend, dynamic, or characteristic, used to explain why things happened and project the future Who is accountable for Performance? The business unit and manager- only for revenues, expenses, and profits Performance objective metrics-firm’s overall performance Financial performance metrics- revenues, sales, profits Portfolio Analysis- evaluates firm’s various products and businesses- its portfolio Used -SBU(Strategic business unit)- division of the firm itself- can be managed and operated somewhat independently from other divisions and have different mission or objectives -Product line/ can be also done at the brand or individual item level -BCG matrix (Boston consulting group- most popular portfolio analysis method)- used to analyze product portfolio and inform decision making about possible market strategies- links growth rate, market share and cash flow BCG portfolio analysis Stars- high growth rates, high or increasing share of market - Potential for high revenue growth e.g Apple iphone Cash Cows- low growth markets, high market share, low cost support, positive cash flows, eg. Firm may decide to use excess resources fund products in question mark quadrant Question marks- high-growth markets, low market shares, need money spent to develop them, produce negative cash flow, potential for future? Dogs- low- growth market, low market shares, negative cash flow, require large sums of money to support Growth Strategies 1. Market penetration –existing marketing mix-focus on existing customers – giving sales to make customers buy more 2. Market Development- existing market – new market segments (risky for international expansion) 3. Product Development- New product/ service - current target market 4. Diversification – new product – new market segment – opportunities may be related & none related Related diversification – existing vendors, same distribution system, and same management info system. Same advertising venue Unrelated- no common elements with the present business (risky) eg. Nike ventured into child day care service industry. Sustainable Competitive Advantage (SCA) – ideal strategic goal, develop advantage over the competition that is not easily copied, maintained over long period of time, Marketing activities- integral source or part of SCAs. SCA characteristic –Substantial- enough to make a difference / superiority may not be relevant Sustainable – long lasting, not easily copied Chapter 5 – Analyzing the Market Environment Consumers Immediate Environment (competition, corporate partners, company) Microenvironment (Economic, Technology, Social, Demographics, Culture, Political) Company capabilities – core competency (existing knowledge, facilities, patents, processes, assets) applied to new markets, new products, e.g. Pepsi used its core competency in the bottled water arena with its Aquafina brand (can use SWOT) Competitors- direct and indirect competitors – marketers should understand their strengths and weakness- proactive rather than reactive strategy Corporate partners- firms are part of alliances, align with suppliers, distributors, retailers, etc. to form a system. Macroenvironment –external environment that impact company’s business (not all factors matter though), CDSTEP – culture (county, region), demographic(x,y,z, general cohorts- group of people of same generation) , social issues, technology, economic situation, politic Social Trends – greater emphasis on thrift, health, wellness concerns, greener consumers, privacy concerns, time- poor societies. (5) 1. Thrift- economy impacts of recession makes people spend less, save more, lipstick effects- buying small luxuries 2. Health concerns- to children are critical, widespread. Food items must provide basic nutrients, no added sugars. Eg. Burger king no longer uses Spongebob to promote burgers and fries. Consumer spending on Yoga classes, mats, clothing became increased. 3. Greener consumers- green marketing – strategic effort by firms to supply customers with environmentally friendly merchandise, e.g. recycle soda bottles and newspaper. Greenwashing- using customer by disingenuously marketing products or services as environmentally friendly, with the goal of gaining public approval and sales. 4. Privacy concerns- people sense a loss of privacy- internet created an explosion of accessibility about consumer info. 5. Time-poor society- majority of families, both parents work, kids busier than ever. Consumers have more choices regarding leisure time but leisure time dropped from 26 to 19 hours. Younger consumers. Lack of leisure time by multitasking- so cannot pay much attention to Ads anymore. Eg. Office Depot have extended their hours of operation so customers can shop during hours of not working Chapter 4 – Marketing ethics and social responsibility Ethics – moral principles and values that govern the actions of an individual or group (not all issues can be regulated, a marketing action may be legal but not ethical, marketers must make decisions appropriately) Scope of marketing ethics Business Ethics – moral and ethical dilemmas arising in business setting Marketing ethics- ethical problems of marketing Ethical climate – set of values that guide decision making and behavior Values-establish, share, understand Rules- management commitment, employee dedication Controls – reward, punishment American Marketing Association Code of Ethics – generally accepted code in marketing, ranges from general norms to specific values, subareas have their own code of ethics AMA basic ethical values marketers should aspire – Honesty, responsibility, fairness, respect, openness, citizenship Corporate Social responsibility – actions taken by company to address ethical, social, environment impacts of its business operations and concerns of its stakeholders Key stakeholders – employees, customers, marketplace, society Link between ethics and corporate social responsibility Unethical/socially responsible – questionable form practices, yet donates to the community Ethical/socially irresponsible- ethical firm not involved with larger community Why people act unethically? Influence of personal Ethics- genetics, family, religion, values Short term goals must be align with long term goals. Ethical Decision Making Framework Identify issues Gather info and identity stakeholders Brainstorm and evaluate alternatives choose course of action Integrating ethics into marketing strategy Planning phase Implementation phase Control Phase Chapter 6 –consumer behavior Consumer decision process- (NIAPP) 1. Need Recognition- customers have unsatisfied need. Functional needs- performance of a product of service Psychological needs- personal gratification with a product or service After consumer recognizes the need, they search for information about things that will satisfy their need 2. Search for information Internal search for info – form memory, knowledge about product or service, past experiences External search for info- seeks info outside personal knowledge, taking with friends, family, salesperson, commercial, internet, Factors Affecting Consumers’ Search Process – Perceived benefits Vs. Perceived Costs – Is it worth the time and effort to search for information about a product or service? Lotus of control – (internal) think they have control over outcomes of their actions, tend to do more search activities -(external) fate or external outcomes control all outcomes. Do don’t much research Actual or Perceived Risk- 5 types of delay or discourage a purchase. They are 1. Performance risk, 2.financial risk, 3.social risk, 4.psychological risk, 5.physciological risk Performance risk- danger or poorly performing product of service Financial risk- monetary outlay, initial cost +cost of using the item or service Psychological risk – fears of worrying others might not like what they bought, or not right image Physiological risk- harm from dysfunction of product 3. Evaluation of Alternatives Tied to information search (may occur during info search) Attribute Sets- mind can group, organize and categorize alternatives to aid evaluation. There are 3 sets. 1. Universal set- all possible choices 2. Retrieval set- readily brought forth from memory, available set 3. Evoked set- they meet some basic criteria of the consumer Evaluate Criteria vs. Determinant Attributes Difference: ability to difference between alternatives Evaluate criteria – characteristics we will use to evaluate things Determinant Attributes- product or service features that are important to buyer and on which competing brands or stores are perceived to differ (health and nutritional claims) Consumer Decision Rules (compensatory, noncompensatory vs. heuristics) Compensatory- good for more complex purchase -trades off one characteristic against another, good characteristics compensate for bad ones. Uses multi-attribute model- customers see a product as a collection of attributes or characteristics. Non compensatory- consumers choose product or service on a basis of one characteristic or one set. Don’t care about other attributes Heuristics- mental shortcuts- also called recency- customer buy something they bought recently(routine) Customers can be looking for brand image, or familiarity 4. Purchase and Consumption- both actual purchase and use of product 5. Postpurchase- Customer Satisfaction/ dissatisfaction Postpurchase Dissonance- an uncomfortable purchase state of mind. “Did I make the right decision?” Firms attempt to reduce dissonance by positively reinforcing the decision and send thank you letters, quality rates. Factors Influencing consumer decision process 1. Marketing mix 2. Psychological factors (motives, attitudes, perception, learning, and lifestyle) Motives- need or want strong enough to cause someone to seek satisfaction According to Maslow’s Hierarchy of needs: physiological needs (basic biological needs, food, drink, rest); Safety needs(protection and physical well-being); love needs (interaction with others, want to look more attractive); esteem needs ( to satisfy inner desires- yoga, meditation, health clubs); self-actualization ( feeling completely satisfied with life and not caring what others think) Attitude- enduring, long lasting evaluation, develop after long period of time. It has 3 components -Cognitive component-what we believe to be true about something -Affective component-what we feel about something, like or dislike -Behavioral component-actions we take with regard to the issue at hand Perception- how we select, organize, and interpret information. Culture, tradition, and overall upbringing influence this. Learning- a change in one person’s thought process or behavior that arises from experience and takes place throughout the consumer decision process. I want a nylon dress but after doing more research I want a cotton dress. Lifestyle- way consumer spend their time and money to live. 3. Social Factors- Family, Reference Groups, culture Family Reference Groups- family, friends, coworkers, and famous people. They influence behaviors by rewarding behavior that meets their approval or punishing the ones that don’t. Smokers are often frowned upon. Consumers who want to be seen as health cautious would order water instead of coke Culture- shared meanings, beliefs, morals, values, and customs of groups of people 4. Situational Factors- Purchase, Temporal, Shopping Purchase situation- are we buying it for ourselves or for someone else? Temporal situation- mood swings can alter consumer behavior. How much time you have to buy something? Shopping situation- (store atmosphere, salespeople, crowding, in-store demonstrations, promotions (buy 1 get 1 free), Packaging Involvement and Consumer Buying Decisions Involvement- consumer’s degree of interest, personal relevance High involvement- consumer willing to put mental, emotional, physical, time and energy. Can develop strong attitudes Low involvement- low motivation, use of decision making shortcuts. They have peripheral processing- generate weaker attitude, can be switched more easily, easily convinced, temporary sales Types of buying decisions 1. Extended problem solving- occurs when a buyer gives considerable time and effort to analyze alternatives 2. Limited problem solving- a moderate amount of effort and time. Consumers engage in this process when they had prior experience with product or service and perceive risk is moderate 3. Habitual decision making- consumers engage in little conscious effort. Engage in little conscious effort. Buy what they see! Less thought than Impulse buying 4. Impulse buying- buying decision made on the spot when they see the merchandise. Recognize the need and purchase without spending anytime searching for additional information Chapter 7- Business to business Marketing B2B- sales of products, services for consumption by the buying organization (i.e end user) and for resale by wholesalers and retailers. Manufacturers selling to wholesalers that, in turn, sell products as retailers. Unique element of B2B markets- Derived demand- link between consumer demand and business demand. That means customer’s demand for company’s output and company’s purchase of necessary inputs to manufacture that output. B2B Markets – Resellers (wholesalers, distributors), manufactures, institutions (hospitals, educational organizations, prisons), government (U.S federal government) B2B Buying Process Need recognition Product specification REP process Proposal analysis and supplier selection Order specification Vender/ performance assessment using metrics B2B buying process parallels the B2C buying process. But informational search and alternative evaluation steps are more formal and structured in B2B process. More people involved. REP- request for proposals- process through which buying organizations invite alternative suppliers to bid on supplying their required components The Buying Center – group of people responsible for the buying decisions in large organizations Initiator- person who first suggests buying the product or service (e.g. your doctor) Influencer- person whose views influence others in making final decision (e.g. medical device supplier, pharmacy) Decider- ultimately determines any part of or the entire buying decision (e.g. the hospital) Buyer- handles the paperwork of the actual purchase (hospital materials manager buying screw, charged with buying and maintaining inventory for the hospital for cost effective manner) User- person who consumes or uses the product or service (the patient) Gatekeeper- controls information or access, or both to decision makers and influencers (the insurance company) Different types of Organization Cultures (autocratic, democratic, consultative, consensus) Organization culture- set of values, traditions and customs that guide firm’s employees’ behavior Autocratic buying center- buying center in which only one person makes decision, though there may be multiple participants. Democratic buying center- the majority rules in making decisions Consultative buying centers- one person makes decision but he asks input from others before doing so. Consensus buying center- all members of team must reach a collective agreement that they can support a particular purchase. The Buying Situation 1. New buy- purchasing for 1 time, therefore buying decision is likely to be quite involved. Buying center will use all six steps in the buying process 2. Straight rebuy- buying additional units or products that have been previously purchased. Most B2B purchases fall into this category. Buyer is often the only member of the buying center involved in the process. 3. Modified rebuy- purchased similar product but changing specifications such as desired price, quality level, customer service level, options, etc. Less complex than new buys.
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