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| activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large |
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specifies marketing activities for a specific period of time
written document of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy in terms of four p's, action programs, projected financial statements
3 major phases:
1. planning - define mission/vision of business, evaluate situation by assessing how various players affect firm's potential for success
2. implementation - identify/evaluate different opportunities by engaging in segmentation, targeting and positioning and use four p's to implement the marketing mix
3. control - evaluate performance of marketing strategy using marketing metrics and taking corrective actions
Steps:
1. define business mission: mission statement describes firm's objectives and scope of activities is plans to undertake - what business are we? what do we need to do to accomplish our goals?
2. conduct situation analysis using SWOT:situation analysis that assess internal environment (strengths and weaknesses) and external environment (opportunities and threats)
3. STP
firm divides marketplace into subgroups or segments and determines which segment it should target and how to position products to meet needs of target
4. implement marketing mix
-product and value creation - products should be perceived as valuable enough to buy
-price -cost based pricing, competitor based pricing, value based pricing
-place and delivery - make product accessible when and where the customer wants it
-promotion - communicate value of offering to customers through media and internet
5. evaluate performance using metrics
-financial performance metrics - revenues, sales, profits
-portfolio analysis - evaluate firm's products and businesses and allocates resources according to which products are expected to be most profitable for firm in future - performed at strategic business unit/product line level of firm |
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marketing is about exchange - the trade of things of value between the buyer and seller so each is better off as a result
sellers -provide products/services and communicate & facilitate the delivery of their offering to consumers
buyers - complete exchange by giving money and info to seller |
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| four p's: product, price, place and promotion - controllable set of activities that the firm uses to respond to the wants of its target markets |
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create value by developing a variety of offerings to satisfy customer needs
example: water used to be a basic commodity but firms created a product with benefits that consumer find valuable
goods - items you can physically touch
services - intangible customer benefits produced by people or machines and cannot be separated from the producer
ideas - thoughts, opinions, and philosophies and intellectual concepts that can be marketed |
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| everything the buyer gives up in exchange for the product |
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all the activities (supply chain management) needed to get the product to the right customer when the customer wants it
supply chain management: the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores and other firms involved in the transactions into a value chain in which merchandise is produced/distributed in the right QUANTITIES, to right LOCATIONS, and at the right TIME while minimizing systemwide costs
strong and efficient supply chain system is important or merchandise isn't available when customers want it --> profits suffer |
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communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions and elicit a response
can enhance a product's value |
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B2C: business to consumer marketing - businesses sell to consumers
B2B: business to business selling
C2C: consumer to consumer (online) |
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to find the "best and brightest employees" - marketing research to understand what potential employees are seeking, as well as what they think about the firm and filling brand promise by ensuring the employee experience matches that with what was advertised
example: starbucks goes beyond pay and promotion opportunities - developed employment marketing program based on "love what you do" |
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| how marketing creates value |
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Definition
production oriented era - a good product will sell itself, not concerned with satisfying the needs of consumers
sales-oriented era: firms depend on heavy doses of personal selling and advertising
market-oriented era: customer is king - make purchasing decisions on basis of factors as quality, convenience, and price
value-based marketing era: attempt to discover customers' needs and wants and give value more than their competitors' do
value - relationship of benefits to cost, what you get for what you give
value co-creation: allow customers to act as collaborators in creating the product or service
example: nike allows customers to design their own sneakers |
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must understand what customers view as key benefits of a given product or service and how to improve them
how firms compete on value: marketers must keep vigilant eye on marketplace to adjust offerings to meet customer needs and keep ahead of competition
firms become value driven by:
1. share information about customers and competitors and integrate it across firm's various departments
2. balance benefits that customers perceive against cost of offerings
3. build relationships with customers
transactional orientation - buyer/seller relationship is a series of individual transactions so anything that happens before/after any transaction is of little importance
relational orientation - buyers/sellers should develop a long term relationship - lifetime profitability is what matters
CRM - business philosophy and strategies/programs/systems that focus on identifying and building loyalty among firm's most valued customers - collect info about customers' needs and use info to target their best customers with products/promotions that appear most important to them |
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| why is marketing important? |
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-expands firms' global presence: analyze new customers' needs and wants on a segment-by-segment, region-by-region bases
ex/ mcdonald's remodeled stores in Europe to create more relaxed, sophisticated atmosphere
-pervasive across the organization: mk department works with other functional areas of company to design, promote, price and distribute products
-pervasive across supply chain: effectively managing supply chain relationships (provide value to customer) has a marked impact on firm's ability to satisfy consumer --> increased profitability
-makes life easier and provides employment opportunities: provides consumer w/ product choices and info about the choices to ensure their needs are being met
-enriches society: most firms encourage employees to participate in activities that benefit communities and invest in socially responsible activities and charities
-can be entrepreneurial: |
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| identifies a firm's target markets, related marketing mix (4ps), and bases upon which the firm plants to build a sustainable competitive advantage |
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| sustainable competitive advantage |
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advantage over the competition that is not easily copied and can be maintained over a long period of time
strategies that focus on developing sustainable competitive advantages: customer excellence, operational excellence, product excellence, locational excellence |
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achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service
retaining loyal customers - customers are reluctant to patronize competitive firms (choosing Dunkin donuts over Starbucks). can do this by developing clear positioning strategy
customer service - provided by employees and humans are less consistent than machines |
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through efficient operations, excellent supply chain management, strong relationships with suppliers and excellent human resource management
efficient operations: get customers merchandise they want, when they want it, in the quantities required, at a lower cost than that of their competitors
excellent supply chain management and supplier relations: develop sophisticated distribution and information systems and relationships with vendors. can gain exclusive rights to sell merchandise in a particular region, obtain special terms of purchase not available to competitors, or receive popular merchandise that is in short supply |
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| human resource management |
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| knowledgeable and skilled employees committed to firm's objectives are critical assets that support the success of the firm |
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way to achieve sustainable competitive advantage
having products with high perceived value and effective branding and positioning
can invest in brand itself, use clear brand image and reinforce that image through merchandise, service and promotion |
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way to achieve sustainable competitive advantage
location is important for retailers b/c ppl don't want to walk or drive too far when looking for a product
competitive advantage based on location because it's not easily duplicated |
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| - consumers who respond similarly to a firm's marketing efforts |
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| dividing market into groups of customers w/ different needs, wants and might appreciate products geared especially for them |
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| evaluate each segment's attractiveness and decides which to pursue |
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| defining market mix variables so target customers have a clear, desirable understanding of what the product does or represents in comparison with competing products |
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| - firm determines cost of producing and adds fixed amount above that to arrive at selling price |
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| firm prices below competitor's offerings |
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| firm determines perceived value of product from customer's point of view and prices accordingly - direct impact on profits but least understood |
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provides managers with product's relative strength compared to the largest firm in the industry
stars - upper left quadrant - high growth markets and high market share products
cash cows - lower left quadrant - low growth markets but high market share
question marks - upper right quadrant - high growth but low market share
dogs - lower right quadrant - low growth market and low market share - should be phased out |
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| focuses on existing customers to get more growth |
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| market development strategy |
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| uses existing market to reach new segments (international) |
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offers new product to firm's current target market
example: each real world is a new program to attract and retain new and existing viewers |
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| new product to new market - very risky |
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integrates info obtained as part of situation and opportunity analysis
1. assess strengths and weaknesses
strengths - size, low price, supply chain
weaknesses
2. assess opportunities and threats
3. identify different scenarios - assess risks, benefits, costs of the move
4. apply marketing mix to different scenarios
5. assess profitability of each scenario |
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| macroenvironmental factors |
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| operate in external environment - culture, demographics, social issues, technological advances, economic situation, political/regulatory environment |
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shared meanings, beliefts, morals, values and customs of a group of people
country culture - artifacts, behavior, dress, symbols, ceremonies, languages, foods |
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characteristics of human populations and segments
age, gender, race, income
generational cohort - group of people of same generation (gen x, y, baby boomer)
seniors - america's fastest growing group, loyal and willing to spend, quality conscious, hassle-free shopping, convenient locations |
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green consumers - environmentally friendly
marketing to children - high impressionable, new guidelines require advertisers to market food in proportioned sizes
privacy concerns - loss of privacy since creation of Internet
time poor society - leads to multitasking
technological advances - improved value of products/services |
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when inflation increases, consumers spend more on inexpensive items - grocery stores win but restaurants lose
retailers suffer when economy is down but discount stores do better |
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more companies engaging in socially responsible activities while keeping in mind their own mission/
strategy
inputs:
-consumer - react to shifts and trends in consumers and react quickly
-company - firm should think about overall strategy and partake in programs and causes that fit well with strategy and industry
-cause/issue - firms align image with that of the cause
output:
-consumer - increases consumer awareness of firm in short run -> better brand equity and sales in long run
-company - reduce unnecessary packaging, printing materials, energy-efficient buildings
-cause/issue - benefit cause and create better awareness of objectives in short run and more resources in long run |
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moral or ethical dilemmas that might arise in business settings
marketing ethics - ethical problems specific to marketing |
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| Framework for ethical decision making |
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Definition
1. idnetify issues
2. gather info and identify stakeholders
3. brainstorm alternatives - halt project, make responses anyonymous, ethic training
4. choose course of action - weigh alternatives and choose course of action that generates best solution for stakeholders using ethical practices |
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| consumer decision process |
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Definition
1. need recognition: consumers recognize they have an unsatisfied need and want to go to desired state. --functional need - perforamnce of product/service
-psychological need - personal gratification consumers associate w/ product/service
2.search for information: about various options that exist to satisfy need
-internal search - buyer examines memory/knowledge about product thru past experiences
-external search - seeks info from outside personal knowledge to help make buying decision
-factors that affect search process:
--perceived benefits vs. perceived costs of search (is it worth is to search for info?)
--locus of control: internal: have control over outcomes of actions so they'll search more, external: fate or external factors control outcomes so it doesnt matter how much they research
--actual or perceived risk: performance (danger in poorly performing product), financial (initial cost of purchase and cost of using it), psychological (way ppl will feel if product doesn't convey right image)
--type of product/service: specialty good/service (customer has strong prefernce so they search more), shopping good/service (spend fair mount of time comparing alternatives), convenience goods (not willing to spend time to evaluate, frequently purchased items)
3. evaluation of alternatives
-attribute sets: consumers' mind organizes alternatives to aid decision process
--universal set: all possible choices for product category
--retrieval set - brands redily remembered
--evoked set - alternative brands consumer would consider when purchasing - firm wants to get brand/store into this set b/c increased likelihood of purchase
4. purchase and consumption
5. postpurchase: 3 outcomes
-customer satisfaction
-postpurchase dissonance: expectation levels not met and customers are dissatisfied with product (buyers remorse)
-customer loyalty |
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product features important to buyer and competing brands differ
used to differentiate one brand from another |
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criteria consumers use to evaluate alternatives
-compensatory decision rule: assumes the consumer tardes off one characteristic aganst another so good characteristics compensate for bad characteristics
-noncompensatory rule: choose product on basis of one characteristic regardless of other attributes
-decision heuristics: mental shortcuts that help consumer narrow down choices: price, brand, product presentation |
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| need or want strong enough to cause person to seek satisfaction |
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| maslow's hierarchy of needs |
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Definition
-physiological: basic necessities like food, water, shelter
-safety: protection and physical wellbeing
-love: interaction with others
-esteem: satisfy inner desires
-self-actualization: feel satisfied with life |
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person's enduring evaluation of feelings about behavioral tendencies toward object/idea
-learned and longlasting
-3 components:
cognitive - what we believe to be true
affective - what we feel about the issue/like/dislike
behavioral - action we undertake with regard to the issue |
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| process we select, organize and interpret info to form meaningful picture of world |
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| change in person's thought process or behavior that arises from experience and takes place throughout consumer decision process |
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| persons whom an individual uses as a basis for comparison regarding beliefs, feelings, behaviors |
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| when customer perceives purchase decision entails a lot of risk |
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purchase decision that calls for a moderate amount of time and effort
-relies on past experience more than external info
-impulse buying: buy on the spot
-habitual decision making: consumers engage in little effot |
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| buying goods or services to be used in production of other goods and services |
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| link between consumers' demand for comapny's output and purchase of necessary inputs to manufacture or assemble that output |
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1. need recognition
2. product specification
3. RFP process - request for proposals - invite suppliers to bid on supplying their required components
4. proposal analysis, vendor negotiation, selection
5. order specification
6. vendor performance assessment using metrics |
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| undifferentiated segmentation strategy |
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Definition
| when everyone might be considered a potential user of product i.e. salt |
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| differentiated segmentation strategy |
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target several market segments with different offering for each
GAP: banana republic, old navy, gap
helps obtain bigger share of market
can be expensive |
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| concentrated segmentation strategy |
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| select single, primary target market and focuses all energies on providing a product to fit that market's needs |
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| one-to-one marketing - tailors product to suit individual customer's wants or needs |
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| identifiable, substantial (size), reachable, responsive (customers react positively), profitable |
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| marketing information system (MkIS) |
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| set of procedures and methods that apply to the regular, planned, collection, analysis, and presentation of info that may be used in marketing decisions |
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| uses statistical analysis tools to uncover previously unknown patterns in the data or relationships among variables |
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| marketing research process |
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Definition
1. define objectives and research needs
2. designing research project
3. data collection process
-exploratory research: understand the phenomenon of interest (secondary data, interviews, focus groups)
-conclusive research: provides info needed to confirm insights
4. analyze data
5. present results |
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| examine purchase and consumption behaviors through personal or video camera scrutiny |
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| trained researches ask questions, listen and record answers, ask additional questions to clarify on an issue |
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| small group comes together for discussion about particular subject |
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| subjects provided a scenario and asked to express thoughts/feelings about it |
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| pioneer/breakthrough product |
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| truly new to the world products that create new markets (iPod) - new movers: first to create product category and are recognizable to consumers |
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| process by which product spreads throughout a market group over time and over various categories of adoptors |
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| buyers who want to be the first on the block to have the new product or service, enjoy taking risks, well informed about product category |
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| don't like to take as much risk as innovators and purchase product after careful review |
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| 34% of population - product is only profitable when this group buys them, don't like to take as much risk and wait until the bugs are worked out |
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| last group of buyers to enter new product market - when they do, product reaches peak and sales level off |
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| avoid change and rely on traditional products until theyre no longer available |
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| new product idea generation |
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Definition
-internal R&D
-R&D consortia- groups of institutions that explore new ideas or get solutions for developing new products
-licensing-firms buy rights to use tech/ideas from other research intensive firms through licensing agreement
-brainstorming-group works together to generate ideas
-competitor's products-reverse engineering
-customer input: analyze lead users -product users who modify existing products according to their own ideas |
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| concept statement presented to potential buyers or users to obtain reactions |
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balance engineering, manufacturing, marketing and economic considerations to develop product's form and features
alpha testing: occurs in firms R&D dept
beta testing: using potential customers |
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premarket tests: before actually bringing product to market to determine how many customers will try and continue use or product according to a small sample group
test marketing: offering to a limited geographical area prior to national launch |
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| introductory price promotion |
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Definition
| limited duration lower-than-normal prices to provide retailers w/ incentive to try the product |
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Definition
stages that new products move through as they enter, get established in, and leave the marketplace
-introduction: when innovators start buying product
-growth stage: product gains acceptance, demand and sales increase, competitors emerge
-maturity: industry sales reach peak , firms add new features or reposition product
-decline: product exits market |
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Definition
-intangible: can't be touched - hard to convey benefits of services
-inseparable: produced and consumed at same time
-variable: human error/variability
-perishable: can't be stored for use in future |
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set of all products offered by firm
-consists of various product lines (groups of associated items) |
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| assortment of items the customer sees as substitutes for one another |
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| number of product lines offered by firm (horizontal) |
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| number of categories within product line (vertical) |
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| number of stock keeping units (SKU) within a category |
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names, terms, designs, symbols or features that identify sellers' good or service as distinct from those of other sellers
add value by:
-easily recognized by customers and signify certain quality level
-establish loyalty
-protect from competition and price competition: established brands have more loyal customer base so competitive pressures isn't as threatening
-reduce marketing costs-brand sells itself
-assets
-impact market value |
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Definition
set of assets and liabilities linked to a brand that add to or subtract from value provided by product or service
-awareness: measures how many consumers in market are familiar with brand and what it stands for
-perceived value: relationship between products benefits and costs
-brand associations: mental links that consumers make between brand and key product attributes
-brand loyalty: when consumer buys same brand's product repeatedly over time |
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marketing two or more brands together, on the same package or promotion
example: visa and airlines credit card |
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