Test 1 Study Guide
Test 1 Study Guide MKTG 3310-001
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This 8 page Class Notes was uploaded by Callisa Ruschmeyer on Tuesday August 30, 2016. The Class Notes belongs to MKTG 3310-001 at Auburn University taught by MICHAEL KINCAID in Fall 2016. Since its upload, it has received 5 views. For similar materials see PRINCIPLES OF MARKETING in Marketing at Auburn University.
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Date Created: 08/30/16
Test 1: Chapters 1 and 2 Test: Thursday, September 1st Half are definitions Half are applications Chapter 1 Mousetrap Fallacy Stems from people building new mouse trap designs but never evaluating what the market wants or needs o Inventors focus on invention AND at the expense of what the market actually wants Leads to large inventory Actual State and Desired State Think of as two parallel lines If the actual line deteriorates, it creates a need If the desired state moves a distance, it creates an opportunity o The number one firm that manipulates our conception of opportunities is Apple Co. Marketing Concept Firms make money and are successful when it knows what their markets want o Apple Co. has a strong research arm to measure what their target market wants When you know what your market wants, you add value to the product Steps o Segmentation- break market into different groups based on demographics, etc o Target Marketing- pick one or more segments to target o Differentiation- make something specific Do this by the marketing mix: product, place, price, promotion Production position = who the market is for and the benefits of the product for those people o When you reinforce the production position, you alienate yourself from segments that aren't in the target market Marketing Overview Marketing- the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return o Goals: attract new customers and keep/grow current customers Marketing process o Understand the marketplace and customer needs and wants o Design a customer-driven marketing strategy o Construct an integrated marketing program that delivers superior value o Build profitable relationships and create customer delight o Capture value from customers to create profits and customer equity Value is determined by how we satisfy needs If my offer meets your expectations- you are satisfied If it fall beneath your expectations- you are unsatisfied If it exceeds your expectations, you are delighted Marketers strategy- do not undersell because people may not buy; do not oversell because expectations will not be met --> basically be realistic and ensure you can deliver the benefits you advertise Needs- states of felt deprivation Test 1: Chapters 1 and 2 Physical- food and clothing Social- belonging and affection Individual- knowledge Marketing Myopia- mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products Exchanges and Relationships Exchange- the act of obtaining a desired object form someone by offering something in return Relationships- marketing actions build and maintain exchange relationships with target audiences involving an idea, product, service or other object Marketers build strong relationships by consistently delivering superior customer value Markets Top of mind awareness- you know the number one thing you would buy or do if capable Virtually consume- pretending; always thinking about it because you desire it Example- candy cigarettes Marketing Management The art and science of choosing target markets and building profitable relationships with them Market segmentation- dividing the market into segments of customers Target markets- selecting one or more segments to cultivate Choosing a value proposition- value proposition is a set of benefits or values a company promises to deliver to consumers to satisfy their needs Orientations Production concept- consumers will favor products that are available and highly affordable Product concept- consumers will favor products that offer the most quality, performance, and features Selling concept- consumers will not buy enough of the firm's products unless the firm undertakes a large-scale selling and promotion effort Marketing concept- we make money off of people's wants and needs and delivering the desired satisfactions better than competitors do Societal marketing concept- a company's marketing decisions should consider consumer's wants, the company's desires, consumers' long-run interests and society's long-run interests Marketing Mix Tools Product Price Place Promotion Customers Customer satisfaction- the extent to which the product's perceived performance matches a buyer's expectations Associations of brands Brand performance- does it perform the way we expect it to perform Test 1: Chapters 1 and 2 Brand imagery- if not equally, but more importantly, are the people using my brand the actual people using it; is my target market the ones actually buying my product Customer lifetime value- the value of the entire stream of purchases that the customer would make over a lifetime of patronage Share of customer- the portion of the customer's purchasing that a company gets in its product categories Take home income --> disposable income (foods, housing, medical) --> discretionary income (you can do whatever you want with it) Most discretionary income goes toward technology Customer equity- the total combined customer lifetime values of all the company's current and potential customers Customer Relationship Groups Y axis- potential profitability X axis- projected loyalty "True Friends"- brand loyal customers who are very profitable Creating brand loyal customers is expensive "Barnacle"- don't buy enough of your product; do not possess loyalty "Strangers" and "Butterflies"- price sensitive people; couponers; no loyalty The Changing Marketing Landscape Economic uncertainties Growth in digital technology Rapid globalization Sustainable marketing Growth of not-for-profit marketing Value How you measure it/can you quantify it Value- I am giving you something you don't have OR I am removing something you are concerned about Giving something- better fuel efficiency; better house; new golf clubs Removing something- we reduce perceived risk; many things we buy reduce the perception of risk Safety risks Time lost risk Financial risk Social risk Chapter 2 Strategic Planning The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities Steps o Defining the company mission (corporate level) o Setting company objectives and goals (corporate level) Test 1: Chapters 1 and 2 o Designing the business portfolio (corporate level) o Planning marketing and other functional strategies (at the unit, product, and market level) Mission Statement A statement of the organization's purpose- what it wants to accomplish in the larger environment Mission statements should be market-oriented, not product-oriented Questions it should answer 1.What is our business? 2.Who is our customer? 3.What do consumers value? 4.What should our business be? Mission statement is just from the corporate view Business Portfolio The collection of businesses and products that make up the company Designing the business portfolio- the company must… o Analyze its current business portfolio or strategic business units (SBUs) and decide which SBUs should receive more, less, or no investment o Develop strategies for growth and downsizing that will shape the future business portfolio o Example of a portfolio- ESPN's: TV, radio, digital media, publishing, event management Portfolio analysis o The process by which management evaluates the products and businesses that make up the company How attractive is the market? Is there growth? What is the relative market share? o Purpose: to direct resources toward more profitable businesses while phasing out or dropping weaker ones o Basis of Evaluation Attractiveness of SBU's market or industry Strength of SBU's position within that market or industry The BCG Growth- Share Matrix Star Question Mark? o Quadrant 2 o Quadrant 1 o High market growth and high relative o High market growth and low relative market market share share Earn and Protect (and partially Invest and Grow investing) o Takes a lot of money to hold their share, let o Need heavy investments to finance alone increase it their rapid growth because it is probably in a very competitive market o Margins are probably not great yet (but growing) o Example: a new Apple Co. product Test 1: Chapters 1 and 2 Cash Cow Dog o Quadrant 3 o Quadrat 4 o Low market growth and high relative o Low market growth and low relative market market share share Earn and Protect Harvest or Divest o Need less investment to hold their o Probably has been through the other market market share squares- do not promise to be large sources of o We want to milk the cow for all that it cash is worth o We want to harvest (just wait until all inventory o People are buying it, but not at a large is gone) or divest it (find another company who rate needs the products, so we sell it to them) o Spins off money to use for star products o Every company wants a cash cow, but not all have them o Example: Spam The Product/Market Expansion Grid Existing Products New Products Existing Market penetration- no new Product development- new product Markets product or segment New Markets Market development- new market Diversification- new product and new segment This framework helps to determine how to grow your business Risk- market development; brings new people into the market o Or finding a new target market Existing Market example: coke with Splenda- same product, but different market Riskiest form- diversification o Market research, target marketing, differentiation, etc o Example- if Nike came out with bottled water…Why? Downsizing Reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company's overall strategy Reasons for downsize o Rapid growth of the company o Lack of experience in a market o Change in market environment o Decline of a particular product Test 1: Chapters 1 and 2 Planning Marketing Marketing plays a key role in strategic planning by… o Providing a guiding philosophy for the company strategy o Providing inputs to strategic planners o Designing strategies to help individual business units reach their objectives Planning a market- rationalizing why we are making the product or spending more money on something Creating Customer Value Marketers must practice partner relationship management o Working with partners internally within the company can create an effective value chain A value chain is the series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products Inputs --> Firm (add value) --> Outputs --> Consumer The firm adds utility to product and where the price is set (possession utility) In-between firm and customer: place utility- when and where can you buy it; value added through transportation, bulk breaking o Working with external partners in the marketing system helps to form a superior value delivery network A value delivery network is made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system Market Strategy o The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships o Looking for brand loyalty (no habitual buying) o Habitual buying Starbucks vs. Brand loyal consumer of Starbucks Managing Marketing Strategies and the Marketing Mix Marketing strategy involves two key questions: 1.Which customers will we serve (segmentation and targeting) 2.How will we create value for them (differentiation and positing) o Then, the company designs a marketing program- the four Ps, that delivers the intended value to targeted customers Market segmentation- dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs Market segment- a group of consumers who respond in a similar way to given set of marketing efforts Market targeting- the process of evaluating each market segment's attractiveness and selecting one or more segments to enter Differentiation- actually differentiating the market offering to create superior customer value Positioning- arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers Marketing mix- the set of tactical marketing tools- product, price, place, and promotion- that the firm blends to produce the response it wants in the target market Test 1: Chapters 1 and 2 o 4 Ps- Seller's View 4 Cs- Buyer's View Product Customer Solution Price Customer Cost Place Convenience Promotion Communication SWOT Analysis Basically fitting resources and strengths into the market Internal and positive = strengths o Internal capabilities that may help a company reach its objectives o Examples: executive talent, different departments, market capitalization, brand equity Internal and negative = weaknesses o Internal limitations that may interfere with a company's ability to achieve its objectives o Examples: no brand equity, marketing department cannot communicate, accounting department is behind External and positive = opportunities o External factors that the company may be able to exploit to its advantage o Examples: growing market, fragmented market structure (not consolidated), high margins that are growing External and negative = threats o Current and emerging external factors that may challenge the company's performance o Examples: political, currency, competition Marketing Plan Contents Executive summary Current marketing situation Analysis of threats and opportunities Objectives and issues Marketing strategy Action programs Budgets Controls Marketing Implementation Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives Tuesday Class Review Know all of the key terms we have discussed in class and that are on the PowerPoints Apply terms/know examples Relate them to other concepts that we have discussed o Example- customer driven marketing strategy = marketing concept The marketing concept is different than the other concepts Test 1: Chapters 1 and 2 From the marketing concept, we go to the market, and then we segment the market based on needs and wants of consumers, then we pick the target market that matches what we can provide (as long as it is substantial enough) --> this is product differentiation- for that specific target market- which leads to the marketing mix- which leads to providing customer value- which leads to us having value: market share, customer equity, brand loyalty Product market growth matrix- define and know examples Overriding concepts- value creation, market share, all the elements that lead to these, customer value Sample Questions 1. Final step in the marketing process- understanding the marketplace 2. Customer equity the total combined customer lifetime values of all the company's current and potential customers 3. A highly profitable, short-term customer is a butterfly. 4. Greg Williams now has the buying power to purchase the computer system he has wanted for the last six months. Greg's want now has become a want. 5. Perfecting Model-T to reduce cost. This reflects product concept. o Production would have to deal with efficiency and about the building of the car. 6. Fast-food having an affordable price but contribute to a national obesity epidemic and environmental problems- societal marketing concept 7. Which of the following phrases reflects the marketing concept? This is what I want, won't you please make it? 8. What is our business? Customers? Value? Business be? Mission statement 9. Guidelines for mission statement except- a mission statement should focus on sales or profits 10. Not Market-oriented mission statement- we hold online auctions 11. Best known product portfolio planning method was developed by the Boston Consulting Group 12. Which is not accurate regarding the BCG matrix- it is difficult to define SBUs and measure market share and growth