Organizational Functions

Marketing is the...to the customers

Other org functions:

marketing is the face of the company and all that it stands for to the customers

Other org functions include management/ops --customers to the business AND finance/acct to and from the business to the investors

The 5 C's are: Company, Customers, Competition, Collaborators, and Context/Climate

We use the 5 C's to create a market assessment - it is an assessment of what already exists...the foundation for all the rest

Company:

Customers:

Competition:

Collaborators:

Context/Climate:

Company: core competencies - SWOT

Customers: what needs do we seek to satisfy

Competition: who they are, their mkt share/sales, budget

Collaborators:the companies that create value - distributors, suppliers

Context/Climate: what cult, tech, social and legal factors

Segmentation

Targeting

Posititioning

is the practice that seeks out peices of the total market that contain customers with identifiable characteristics like income, age, personal interests...

*breaking mass market into submarkets of customers with common needs with a similar marketing mix

we can:

1. create G&S that are better tailored to the needs of specific customers

2. focus mktg resources more efficiently

-can't be all things to everyone,

Demographics (age, gender, income, ethnicity)

Behavior/interests

Affliation/occupation

...other

can also segment other businesses

They must be:

Measureable

Substantial

Accessible

Differentiable

Actionable

Measureable

Substantial

Accessible

Differentiable

Actionable

Measureable - size, pref, puch pwr

Substantial - large enough to be profitable

Accessible - must be able to access

Differentiable - diff marketing mix

Actionable - must ba a practical and cost-effective way to attract and serve customers

1. # of customers in segment and spending potential

2. your ability to reach and the cost of reaching

3. intensity of competition

4. level of cust satisfaction with current comp

5. forecasted growth (current sit and trend)

6. potential profitability

7. barriers to entry

ADV: concentrate mktg resources and gives you opp to understand your customers

DISADV: limits the number of potential customers and if growth and pref decline in that segment...you could be screwed

What is Positioning?

and what is its goal?

it is the attempt to manage how potential customers perceive a PorS

GOAL: is to underscore one or two characteristics that make the PorS stand out in the minds of consumers

takes the form of a slogan that sticks in consumers minds

EX:

Just do it, the snack that smiles back, is it in you?

"when a competitor owns a word or position in the prospect's mind, it is futile to attempt to own the same word"

--only one brand can stand for one thing

Product, Price, Place, Promotion

Brand

It is the promise of quality and value - it is what sells your product

- it establishes trusts--conveys protection

has a more functional benefit

-- mainstream, higher volume

--less trendy

--consistent demand

EX: Gatorade - need the electrolytes, etc

--has a brand benefit to the customer

- exclusive

- higher end

- hip and upcoming

EX: Snapple, Ralph Lauren, etc

Product Benefits

Service Benefits

Brand Benefits

...Where these benefits exceed Price and Other costs

strategy is a source of long term sustainable competitive advantage

**only some core competencies are sources of competitive advantage

Broad Target/Lower cost --cost leadership

(Wal-Mart)

Narrow Target/Lower cost --Cost focus

(Dollar Stores)

Braod Target/Differentiation -- Differentiation

(Apple)

Narrow Target/Differentiation --Diff focus

(Whole Foods..Whole Wallet)

Selling Price/Unit - Variable Cost/Unit

(Rev-VC)

-- it is how much of your sale covers your fixed costs... directly effects your profitability

--the marginal profit per unit sale

Net Sales - COGS

or

Selling Price Unit-COGS Unit

Gross margin %age:

(revenue-COGS)/Revenue *100%

Break Even

Break Even dollars

Break Even units

to break even your costs both fixed and variable must equal your total revenue

BE$ = FC/CM

where CM is R-VC$

BEu = FC$/(SPu-VCu)

it is a skill that leads to a sustainable competitive advantage

-- it generates strategic assets that in turn generates products

EX: NetFlix core competency is content delievery to the home

Situation Analysis-->SWOT-->Strategic mkt plan-->

Mktg Mix Strategy-->Mktg budget-->mktg perform plan 

-->perform evaulation--> adjust mtkg plan as necessary

What is the decision making process?

1. Problem Recognition - HInv vs LInv

2. Search - extensive v limited

3. Evaluate Alternatives - extended vs limited

4. Choice - complex vs simple

5. Post Purchase Evaluation

Awareness - aware, lacks info

Interest - seeks info

Evaluation - considers trying

Trial - tries new product on small scale

Adoption - decides to make regular use of product

number of sustitutes - increase subs = increase elasticity

product necessity - necessity increases = decreases elasticity

% disposable income increases = elasticity increases

Skimming - setting price high

 Assumptions:

Seeks high profit per unit

Inelastic market, few substitutes

Recover initial costs

Problems: Attracts competition

Penetration - setting price low

Direct Channel - straight to consumers

Mixed Channel - straight to customers and/or through an intermediaries

Indirect Channel - Channel intermediaries then to customers

Cultural - sub cult, social class

Social - family, status, ref groups

Personal - lifestyle, econ sit, job, age

Psychological - motivation, fear, perception, etc

What is a cold channel?

What is a warm channel?

cold- where you literally get it cold

--deli, convenient store

Warm- where you get it warm

--supermarkets

1. Raise the Price

or

2. Cut Variable costs

1. distributor to distributor

2. manufacturer to distributor

3. company sales force to distributor

1. Threat of new entrants

2. bargaining power of suppliers

3. threat of substitutes

4. Bargaining power of buyers

5. Industry/Rivalry

1. Create Awareness

2. Provide knowledge

3. Create favorable impression

4. attain a preferred brand position

5. create a purchase intention

6. make the sale

7. Increase consumption

8. retain customers

IMC = Integrated Marketing Communications

IMC develops and sustains brand equity and identity

Economical - a signal of unobserved quality, a form of commitment to quality

Psychological - nodes in memory, associative networks, vehicle of self expression, group association 

1. increase favorable associations

2. leverage exisiting brand attributes

3. avoid detractions

4. monitor changes

1. Advertising

2. Direct Mktg

3. Interactive mktg

4. personal selling

5. Publicity/PR

6. Sales Promotion

Pricing is  a critical marketing mix variable , because it is ...

- Indicator of value

- actually produces revenue

- shortest term marketing mix variable – change the fastest

- relates directly to microeconomics

- supply versus demand analysis

- breakeven analysis

- price elasticity

Inelastic demand -

Elastic demand -

Inelastic demand - an increase in price has little effect on demand

EX: gas

elastic Demand - an increase in price has a large effect of demand

EX: cereal

an increase in P-> decrease D

- 

Consumer taste for product/class Ÿ = Demand Ÿ

Price of substitutes Ÿ = Demand Ÿ

Availability of substitutes Ÿ = Demand  

Consumer income Ÿ = Demand Ÿ

(depends on product category & product)

ADV: increase demand for products and services 

DISADV: could reduce consumption

EX: colorado ski pass

- people like names of mothers, grandmothers, etc on menu 

• Customers respond favorably to the number 9

EX: wine - when told that it is a more expensive wine people really do think that it tastes nicer than a cheap one.

- price as an indication of quality and value. Feel better about buying a nicer bottle of wine.

What's free? - web software and services, some content

Free to whom: users of the basic version

EX: Avast free vs Avast Premium

**1% rule - 1% users support all the rest

Whats free? - content, services, software, and more

Free to Whom - everyone

--EX: pay per click --> based on principles that free offerings build audiences...that advertisers will pay to reach

whats free - any prtoduct that entices you to pay for something else

Free to? - everyone willing to pay eventually

--EX: appertivo - buy a glass of wine and have free appetizers

whats free? - things that can be distinguished without an appreciable cost to anyone

Free to whom: everyone

EX: Online music - where the product has become free bc of sheer econ gravity

EX: urban dictionary, wikipedia, yahoo answers,

google's 411

*Altruism

Market

Mission

Message

Media

Money

Measurement