BASIC MARKET CONCPTS
BASIC MARKET CONCPTS MAR 3023
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This 15 page Class Notes was uploaded by Shanel Mertz on Thursday September 17, 2015. The Class Notes belongs to MAR 3023 at Florida State University taught by Michael Brady in Fall. Since its upload, it has received 67 views. For similar materials see /class/205381/mar-3023-florida-state-university in Marketing at Florida State University.
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Date Created: 09/17/15
MAR3023 Test 1 Notes Exam 1 is February 11 15 Remember to bring FSU ID to the testing center 1913 0 Peer marketing products 0 The goal of marketing is to make selling and advertising unnecessary 0 Make a good product 0 Pure invisible marketing is about developing good PRODUCTS that people want and need 0 If firms perform pure marketing correctly they don t need to advertise much or hire 0 If firms fail to objectively distinguish their products from competitors then impure marketing becomes very important Over time competitors imitate great ideas 0 Pure marketing v impure marketing 11413 0 Consumer Reports Ratings 0 Consumer Reports rates all of the products you saw as objectively the same as or better than the branded products 0 Brands and marketing are really powerful o EX Great value brand vs Ziploc 0 History of marketing 0 Simple trade era pre1860s I Products were made by hand grown or traded in small quantities I Ended in Industrial Revolution 0 Production era pre1920s I quotAs long as it s black 0 Inward focus 0 Technical development I Condition seller s market demand exceeded supply 0 Sales Era 1920s I quotChanging their minds I Focus on 0 Selling what we make 0 Aggressive promotion vacuum cleaners o Shortterm profit maximization o The Marketing Era 1940s1990s I The quotgreat awakening where customers became the central focus of the organization I Began with the development of marketing departments and then transferred to the rest of the firm I Focus on 0 Customer is the key quotdelightquot 0 Make what we sell 0 Relationship marketing era 1990s2010 I The focus is on longterm relationships and customer retention 0 A 5 increase in customer retention yields up to a 95 improvement in NPV delivered by customers 0 Repeat customers generate over twice as much revenue as new customers 0 Engaged customers generate 17 times more revenue than normal customers 0 Societal marketing era 1960spresent I quotGreen marketing I Focus on o Adds society s best interest to the mix 0 Corporate social responsibility 0 Firm now serves three entities Marketing orientation 0 1 Competitor orientation 0 2 Interfunctional orientation 0 3 Customer orientation Stakeholders o Constituents who have a quotstakequot or claim in some aspect of a company s prodcuts Clues to a market orientation 0 Customer centric marketing developing collaborative relationships with customers based on focusing on their individual needs and concerns 0 Relationship marketing establishing long term The Four PsMarketing Mix 0 1 Product 0 2 Place 0 3 Price 0 4 Promotion Distributionplace 0 Make products available in quantities desired 0 Minimize costs I Inventory I Transportation I Storage Promotion 0 Inform individuals or groups about the organization and its productsservices Advertising Public relations Personal selling Promotions Street team s guerilla marketing Viral marketing 0 Pricing 0 Decisions and actions associated with establishing pricing objectives and policies 0 Determining product prices 0 Determines the value of the exchange 0 Popular macromarketing strategies 0 Creating I Value I Relationships 0 Segmenting markets 0 Identifying opportunities 11613 0 Segmenting customers 0 Segmentation dividing up your market based on different factors I EX Coke diet coke coke with lime coke zero 0 Warren Buffet the oracle of Omaha the best investor 0 Third wealthiest person in the world I Worth 47 billiion o Pays himself 175000 a year and still lives in the same house he bough in 1958 worth 700K o Pledged 99 of his wealth to charity 0 Owns Berkshire Hathaway a conglomerate holding company with a diverse portfolio of businesses I Based in Omaha I Best known for insurance 0 He owns Geico I Started out as a teXtile company in Massachusetts that Buffett took over 0 Pepsi created by Caleb Bradham to be sold in his drug store in New Bern NC 0 Originally called quotBrad s Drink 0 Named after the digestive enzyme quotpepsinquot TOPIC 1 The Internal Environment 0 Market opportunity where circumstance and timing meet to create strategic windows 123 Core competencies 0 Core competencies things a firm does well Competitive advantage opportunity competency I EX Starbuck39s core competency is atmosphere SWOT analysis 0 Strength Weakness Opportunity Threat SBUs 0 Strategic business unit a division or unity within a largerparent company 0 FSU has 15 SBUsthe COB has 5 Origins of marketing strategy 0 ission statement 9 corporate strategy 9 businessunit strategy 9 marketing strategy 9 marketing mix elements product distribution promotion pricing Business unit strategy 0 To provide high quality innovative instruction that prepares challenges and inspires students to shape the future ofbusiness 30 rule EX Teacher rating NOT RateMyProfessoncom but Sussai com 13 Marketing strategies 0 Pro uct 0 Distribution Successful SBUs Market share the percentage ofa market that actuallybuys a specific product Apple has 81 of the market for digital music players I Red Bull has 1 ofthe global market share for soft drinks BCG grid Boston consulting group Relative Market Share High Czsthnomlmnl W O mamquot Marks Marks Gmwlh Rake Law 45m Us qnl High mem um I EX Dog VCR I EX Cash Cow Coca Cola I EX Stars Vitamin Coca Cola 0 Internal marketing 0 EX Southwest airlines 0 Key to internal marketing 0 Empowerment giving employees the power to act immediately decisively and without fear in order to attain satisfaction and delight I EX Nordstrom quotUse your good judgment That s the only rule 0 Best company to work for SAS 0 Result ofinternal marketing 0 2 BCG is tops in pay new consultants are able to earn up to 184000 first year Topic 2 The External Environment 0 Environmental forces 0 Competitive I Types of competitors 0 Brand competitors Coke vs Pepsi 0 Product competitors juice vs soda 0 Generic competitors great value vs Coke 0 Total budget competitors choosing bw a candy bar or a soda bc you don t have enough money 0 Political I Top corporate donors 0 UPS ATampT Pfizer o Technological I Cassette 9 CD player 9 iPod 9 o Sociocultural 0 Legal and regulatory I Pizza puffery debate Domino s vs Papa John s 0 Economic 0 Competitive structures 0 Monopoly when an organization has no competitors so that it is the sole source of supply I EX Microsoft 0 Oligopoly when a few sellers control supply I Usually due to entry barriers o EX Airlines cell phone companies 0 Monopolistic when firms in competitive industries attempt to differentiate a product I A quotnormalquot marketmost common 0 Pure competition eXists when there are a large number of sellers with similar products and low barriers to entry I EX Ebay 0 Economic forces 0 The business cycle 0 Prosperity 9 Recession 9 Depression 9 Recovery 0 Federal trade commission 0 Most heavily in uences marketing activities 0 Large portion ofits resources spent on curbing I False advertising 0 Duncan Hines vs Betty Crocker said they were quotmore chocolatey but in fact had less chocolate just moresmaller chips I Misleading pricing 0 Cultural values 0 American cultural values I There are a number of enduring American cultural values I Current environmental concerns also in uence or redefine American values I EX Forget vacation try a quotstaycationquot 0 Large scale commercial surveys I EX VALS 2 more later I Yankelovich monitor 0 Known for trend watching 0 Based on 90 minute interviews with 2500 respondents o Consumerism 0 Marketing critics think consumers are being exploited in the marketplace I Subliminal perception o In reality this only works in very controlled and hence unrealistic environments 0 Ralph Nader a well known consumer advocate quotthe father of consumerism o Fought for consumerism TEGRITY RECORDING CSR Business Ethics 0 Corporate social responsibility CSR 0 Communication processing 0 Central route you care a lot about what s being said 0 Peripheral route don t really care about what s being said decisions subject to biases 0 Category bias 0 Financial firms got slammed They do a lot but don t get credit for it 12813 0 What is Marketing Research 0 Marketing research process of designing gathering analyzing and reporting information that may be used to solve a marketing problem 0 EX product development pricing studies customer satisfaction assessments distribution analysis promotion effectiveness studies 0 Where did it come from 0 1980s TQM Total Quality Management I Movement Deming and Iuran I Customer orientation 0 Research to find customer reaction to product 0 Research to compare product to competitors 0 Research to find problems with product 0 Why is it important 0 It gives managers answers to important questions I If decrease customer defection by 5 you can increase profits by 25100 I One unhappy customer tells 912 others I Its five times as costly to attract new customers 0 It s the foundation for marketing strategy decisions 0 Cluster analysis statistical analysis technique that identifies customer segments I The researcher measures things like price sensitivity and importance of quality and ontime delivery I Cluster analysis identifies groups segments of customers that have similar characteristics Types of research 0 1 Applied research research designed to solve a specific problem usually for a specific company 0 2 Basic research research designed to eXtend knowledge of marketing phenomena I What percent ofpeople complain 43 0 I Service provider responsiveness 35 I Sacrifice 25 Ifyou re affiliated with a religion and have some sort of failure there will be forgiveness Marketing research process don t memorize o 1 Problem definition I Exploratory research qualitative research helps in problem solving as it allows the research to better define the problem by getting a look at it first hand 0 Most common form focus group o EX manager interviews expert interviews secondary data 0 2 Research design 0 539quot 13013 I Two types of data 0 1 Secondary data information that has been collected for a purpose other than the research at hand 0 Best brand Coke o 2 Primary data information that has been gathered specifically for the research objectives at hand 0 EX wwwSurveyMonkeycom I Exploratory describes less structured data collection methods I Focus group exible group discussion ofa product ad or concept Descriptive describes the caharacteristics of a population 0 Generally associated with surveys who buys 0 Mail telephone online personal interview surveys I Causal identifies cause and effect between variables 0 EX experiments Sampling I Population 0 Elements units or individuals ofinterest to researchers for a specific study I Sample 0 A limited number of units chosen to represent the total population I Sampling 0 Probability random sampling stratified sampling 0 Nonprobability quota Data gathering I 3 options 0 1 Human interviews focus group 0 2 Machine scanner data observation 0 3 Selfreport customer surveys Data analysis I Regression technique that is used to predict a dependent variable with one or more independent variables 0 Sales with advertising price service Report preparation 0 Market segmentation 0 Market segmentation is the process of diving up a market into smaller groups called segments I The groups are designed to have similar wants and needs I The idea is that firms can use their marketing mix to tailor products for the different groups 0 Targeting 0 Firms then develop new products or reposition old ones to target lucrative groups of consumers I EX who is Olive Garden s target market Families ampy0ung adults 0 Targeting strategies 0 Undifferentiated entire market is target market 1 marketing mix theoretical I Homogenous market similar needs 0 Differentiated two or more segments more than 1 marketing mix 0 Concentrated single market segment 1 marketing miX singles sites 0 Cluster analysis 0 The multivariate statistical analysis technique that identifies customer segments I Researcher measures things like price sensitivity and importance 0 Segmentation bases 0 Demographics I Describe characteristics ofa population 0 Gender age ethnicity education religion 0 EX IPhones 0 Geographic I Region city size urbanrural region 0 EX McDonald s 0 Down south they have the McRib in New England they have the McLobster sandwich in Germany they sell beer 0 Psychographics I Personality motives lifestyles o EX Mountain Dew extreme X games o Behavioristic I Usagevolume benefits loyalty price sensitivity 0 EX Airlines 0 Userelated segmentation 0 Usage rate I Heavy users medium users light users nonusers o EX Cigarettes 0 Awareness status 0 Brand loyalty I EX Loyalty points 0 Forecasting market demand 0 Sales forecast the amount ofa product a company expects to sell during a specific period at a specified level of marketing activities I Forecasting methods can be scientific or arbitrary and vary in complexity and expense I Depends on costs product market characteristics 0 Time series analysis 0 Using historical sales data to discover patterns in the firm s sales such as I Trend analysis I Cycle analysis I Seasonal analysis 0 Regression analysis 0 Predicting sales based on finding a relationship between past sales and one or more independent variables 0 Test market 0 Making a product available to buyers in one or more test areas and measuring purchases and consumer responses I Information about customers actual rather than intended purchase behavior I Effective at estimating sales ofnew products I Timeconsuming and expensive 0 Positioning 0 Product positioning I Process of developing and maintaining a product image in the minds of consumers o Highlow price quality luxuryeconomy I A product s position results from customers perceptions ofa product s attributes relative to those of competing products 0 Perceptual mapping I Done with multidimensional scaling MDS o Repositioning o EX I McDonalds no longer marketing to kids now McCafe I Harley Davidson now targeting women 2413 0 Involvement o Highinvolvement products I Purchased only after careful consideration I Tend to be visible to others risky andor expensive I EX car no one just goes to the dealership one day and buys a carit involves a lot of thought 0 Lowinvolvement products I Products that tend to be less expensive and have less associated risk 0 Leads to I Consumer irrationality o EX Planting a seed in consumers head 0 Problem solving 0 Consumer buying behaviors I Routinized response I Limited problem solving I Extended problem solving I Impulse buying 0 Buyer behavior 0 Routinizedhabitual decision making I Choices made with little to no conscious effort o How do brands help consumers 0 Limited problem solving I Requires a moderate amount of time for information gathering o Familiar with the product class but not the brand 0 Restaurants clothes 0 Extended problem solving I The consumer tries to gain as much information as possible from both internal and external sources I The decision is made by considering all of the attributes and considering how each brand rates on each attribute 0 Problem recognition I Occurs when a buyer becomes aware ofa difference between a desired state and an actual condition 0 Information search I Internal versus external search 0 Internal search scanning our own memory banks for information about product alternatives 0 Requires prior experience repeat purchase 0 External search obtaining product information from advertisements friends or observing others 0 EX Rate My Professors 0 Evaluation of alternatives I Identifying alternatives 0 Considerationevoked set products already in memory plus those prominent in the retail environment 0 Candy bars end caps o The evoked set changes by product and consumer 0 Product selection I Recall that most consumers are quotcognitive misers we don t like to think I Heuristics mental shortcuts 0 Mental rulesofthumb that lead to a speedy decision 0 Higher price higher quality 0 Country of Origin COO I EX you should get wine in France get a sports car in Germany 0 Postpurchase I Dissatisfaction an emotional reaction to the purchase decision I Cognitive dissonance a buyer s doubts shortly after a purchase about whether the decision was the right one o In uences on decisions I Situational mood o EX lighting in a restaurant the color blue is calming I Psychological motives o EX Maslow s Hierarchy 0 Physiological needs 9 safety needs 9 social needs 9 esteem needs 9 selfactualization needs I Social in uences opinion leaders 0 EX buying a computer not a tech savvy person so you talk to someone who knows a lot about computers 2613 Presenter o I The Nature of Global Marketing Strategy 0 The process of diving the firm s total customer base into homogenous clusters that allows management to formulate unique marketing strategies for each group 0 Within each market segment customers eXhibit similar characteristics regarding income level lifestyle demographic profile or desired product benefits 0 Internationally common market segment variables include income level culture legal system etc I EX Makeup in China they want their skin super white as opposed to America where we like to look tan 0 Global market segmentation I A group of customers that share common characteristics across many national markets I Firms target these buyers with relatively univorm marketing programs regarding product pricing communications and distribution I Such segments often follow global media II Environmental forces in international markets 0 O O Sociocultural forces I Languageinterpretation difficulties Economic forces I BRICS are forcing many market changes Political legal and regulatory forces I Tariffs embargos quotas trade etc Ethical and social responsibility forces I Situational ethics corruption bribes market entry Competitive forces I Global competition is increasing Technological forces I Use of Internet advertising mobile technology etc The 4 risks ofinternational business I Crosscultural risk 0 Cultural differences 0 Negotiation patterns 0 Decisionmaking styles 0 Ethical practices I Country risk 0 Harmful or unstable political system 0 Laws and regulations unfavorable to foregin firms 0 Inadequate or underdeveloped legal system 0 Bureaucracy and red tape I Currency financial risk 0 Currency exposure 0 Asset valuation 0 Foreign taxation 0 In ationary and transfer pricing I Commercial risk 0 Weak partner 0 Operational problems 0 Timing of entry 0 Competitive intensity 0 Poor execution of strategy Adaptation modifying elements of the marketing program to accommodate specific customer requirements in individual foreign markets o Standardization efforts to make marketing program elements uniform so as to target entire regions of countries or even the global marketplace with a similar product or service However targeting the same product everywhere is not usually feasible Regional trade alliances V Modes of market entry Importing and exporting Trading companies Licensing and franchising Contract manufacturing Ioint venturesstrategic alliances Direct ownership foreign direct investment V Global organizational structures 0 Export departments 0 International divisions o Internationally integrated structures VI Marketing mix internationally 0 Global firms have attempted to globalize their marketing mixes as much as possible by employing standardized products I Nike and Adidas are standardized worldwide Standardization and adaptation a balancing act 0 Adaptation is costly May require substantial changes to the marketing mix especially when many national markets are involved H OOOOOO General Overview of the Exam 1 Content What is Marketing 0 Product development to satisfy unmet consumer needs 0 Pureshortterm marketing versus impurelongterm marketing 0 The Power of Marketing Marketing s core strategies 0 Creating value and relationships 0 Segmenting Markets 0 Identifying opportunities Know the history of Marketing 0 Production Era 7 rms produced what they could make 0 Sales Era 7 firms pushed products using aggressive sales tactics 0 Marketing Era focus on customer orientation 0 Societal Era 7 firms now serve three entities 4 PS 0 Product 0 PlaceDistribution 0 Promotion 0 Price Core Competencies Market Opportunities Competitive Advantages Levels of Strategic Planning SWOT analysis 0 Strengths weaknesses opportunities threats 0 Matching strengths to opportunities 0 Converting weaknesses to strengths 0 Converting threats to opportunities Strategic Business Unit 7 division of a parent company 0 Internal Marketing Company 7 employee 0 EXtemal Marketing Company 7 customer BCG s matrix 7 Star Cash cows Question marks Dogs Environmental Forces 0 Competitive 7 Brand Generic Product Total Budget Sociocultural 7 demographicdiversity cultural values consumerism Technological Economic 7 Business cycle Legalregulatory 7 Regulatory agencies FTC 0 Political 7 Corporate donations Marketing Research 7 process of designing gathering analyzing and reporting information that may be used to solve a marketing problem 0 Gives managers answers to important questions 0 Types of research Two types of Data 0 Secondary Data information that has been collected for a purpose other than the research at hand 0 O O O
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