MKTG 311 - EXAM 1 STUDY GUIDE

Definition of marketing

the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return

Marketing intermediaries

firms that help the company to promote, sell, and distribute its goods to final buyers; example includes advertising agency

Evolution of Marketing

1. Simple Trade Era (pre-Industrial revolution)

2. Production Era (1860s-1920s)

3. Sales Era (1920s-1940s)

4. Marketing Dept Era (1940s-1960s)

5. Marketing Company Era (1960s-1990s)

6. Relationship Marketing Era (1990s-2010)

7. Social Marketing Era (2010-present)

Marketing Management

the art and science of choosing target markets and building profitable relationships with them

Value proposition

the set of benefits or values it promises to deliver to consumers to satisfy their needs

What are the 5 Marketing Management Orientations?

1. Product Concept

2. Societal Concept

3. Marketing Concept

4. Production Concept

5. Selling Concept

Production Concept Marketing

assumes that customers want affordable products, so focuses on availability and cheapness

- Fits well with mass production

- Does not consider customer needs/wants

Product Concept Marketing

assumes customers want quality, not cheap

- Doesn't take customers' wants/needs into account

Sales Concept Marketing

aggressively taking existing products and pushing the customers to buy them

- Doesn't consider what the customer WANTS

Marketing Orientation Concept

learn what the target demographic wants and work to satisfy those wants better than the competition

- Focuses on marketing strategy

- Keeps customer in mind

Societal Orientation Concept

puts human welfare on top before profits and satisfying the wants

- emphasizes on social responsibilities and suggests that to sustain long term success, the company should develop a marketing strategy to provide value to the customers to maintain/improve both the customers and society's well being better than the competitors

What are the steps to the marketing process?

1. Marketing Strategy Formation

2. Marketing Planning

3. Programming, Allocating, and Budgeting

4. Implementation

5. Analysis and Research (done before the first four steps)

6. Monitoring and Auditing

Marketing strategy formation

- Long term goals (mission statement/corporate objects)

- approach to marketplace

- What customer groups? Define target audience and their wants

- Value creation

- Industry opportunities (5C analysis, SWOT analysis, PEST analysis)

Marketing PLanning

- time horizon

- how often to rework plan?

Programming, Allocating, and Budgeting

- Set measurable goals

- Detailed Plans

- Yearly time frame

- Resource allocation and develop budget

Implementation

Program execution

Analysis and Research

- Gather internal and external data to support the first four steps

- Prepare before the first four steps

- Ongoing

Monitoring and Auditing

- Evaluate results

- Develop corrective actions plans as needed

Strategic planning

the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities

Steps in Company Wide Strategic Planning

1. Corporate Level

1a. Define company mission

1b. Set company objective and goals

1c. Design the business portfolio

2. Business unit, product, and market level

2a. Plan marketing and other functional strategies

-Company-wide strategic planning guides marketing strategy and planning

Mission statement

organization's purpose; what it wants to accomplish in the larger environment

- What we do: Products & Services

- Who we do it for: Customers

- Why we do it: Purpose

Vision Statement

defines what your organization aspires to be

- ex. Toys R Us: Our vision is to put joy in kids' hearts and a smile on parent's faces

- Ultimate products and services

- Core competencies

- Ideal culture

- Desired workforce

Core values

values which tend to support an organization's vision, reflect its true values, and shape its culture

- ex. Quality, logic, honesty, confidence, passion

5C analysis

1. Customers

2. Competition

3. Company

4. Collaboration

5. Context/Climate

Porter's 5 Forces

1. Bargaining power of suppliers

- An assessment of how easy it is for suppliers to drive prices down

2. Bargaining power of customers

- An assessment of how easy it is for buyers to drive prices down

3. Threat of new entrants

- Profitable markets attract new entrants, which erodes profitability

4. Threat of substitute products

- Close substitutes in the market increases the likelihood of customers switching to alternatives

5. Competitive rivalry

- main driver is the number and capability of competitors in the market

SWOT Analysis

strengths, weaknesses, opportunities, threats

- Both external and internal

PESTLE analysis

Analysis of the external political, economic, social, technological, legal and environmental factors affecting a business

Decision Making Unit (DMU)

All the individuals who participate in, and influence, the consumer buying-decision process.

- Initiators

- Gatekeepers

- Deciders

- Influencers

- Purchasers

- Users

Marketing Mix (4Ps)

1. Product

2. Price

3. Place

4. Promotion

Sustainable Competitive Advantage

Customer value stems from:

1. Customer excellence (segmenting and targeting customer)

2. Operational excellence (suppliers/external)

3. Product excellence

4. Locational excellence (distribution channels; retail vs. online)

Concept Check: Which of the following is NOT a market-oriented business definition?

A) We empower customers to realize their dreams

B) We make high quality consumer food products

C) We sell success and status

D) We create the Hilton experience

B) We make high quality consumer food products

Concept Check: Henry Ford's philosophy was to perfect the Model T so that its cost could be reduced further for increased consumer affordability. This reflects the _______ concepts

A) product

B) production

C) selling

D) marketing

E) societal marketing

B) production

Concept Check: Orion Inc. operates in many industries, including pharmaceuticals, and food products. The company's goal is to create abundant and affordable food for all and a healthy environment. This represents Orion's______________.

A) marketing plan

B) product mix

C) business portfolio

D) marketing mix

E) mission statement

E) Mission statement

Concept Check: Which one of the following is NOT a ley area involved in 5C analysis?

A) Consumer

B) Climate

C) Cost

D) Company

E) Context

C) Cost

Business portfolio

the collection of businesses and products that make up the company

Portfolio analysis

a major activity in strategic planning whereby management evaluates the products and businesses that make up the company

SBU (strategic business unit)

a division, product line, single product, brand, or other profit center within the parent company

Steps to Designing the Business Portfolio

1) Identify SBUs

2) Assess the attractiveness of its various SBUs

3) Decide how much support each SBU deserves

BCG Growth-Share Matrix

The Boston Consulting Group planning tool that evaluates business units in terms of their growth potential and market share.

Stars

products with high market share and high market growth

- Often need heavy investment to sustain growth

- Eventually will slow and will become Cash cows

- ex. AI and Tesla

Cash cow

products with high market share but low market growth

- Mature and successful products with relatively little need for investment

- ex. iPhone

Question marks

products with high growth but low market share

- Has potential but may need substantial investment to grow market share at the expense of larger competitors

- ex. Instacart, fashion face masks from COVID, Zoom

Dogs

products with low market share and low growth markets

- Rarely every worth investing in

- Usually sold or closed

ex. Coca Cola Vanilla Zero

Problems with BCG Matrix

- Difficulty in defining SBUs and measuring market share and growth

- Time consuming

-Expensive

- Focus on current businesses, not future planning

-BCG matrix is good for CURRENT SBU's

Product/market expansion grid

a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification

Market penetration

Existing products/ Existing Market

Products Development

New products/ Existing Market

Market Development

New Market/ Existing Products

Diverisification

New Market/ New Products

Value chain

series of departments that carry out value creating activities to design, produce, market, deliver, and support a firm's products

Value delivery network

made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system

Market Planning

- Executive Summary

- Marketing situation

- 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

- Addresses who, where, when and how

Marketing ROI

measurement of the profits generated by investments in marketing activities

Marketing environment

includes the actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with customers

- BOTH INTERNAL AND EXTERNAL

Microenvironment

the actors close to the company that affect its ability to serve its customers - the company, suppliers, marketing intermediaries, customer markets, competitors, and publics

Macroenvironment

consists of the larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political, and cultural forces

- PESTLE ANALYSIS

Microenvironment: The company

- Top management

- Finance

- R&D

- Purchasing

- Operations

- Accounting

Microenvironment: suppliers

- Provide the resources to produce goods and services

- Treat as partners to provide customer value

Microenvironment: Marketing intermediaries

firms that help the company to promote, sell, and distribute its goods to final buyers

- ex. Resellers, physical distribution firms, marketing service agencies, financial intermediaries

Microenvironment: competitors

Firms must gain strategic advantage by positioning their offerings strongly against competitors' offerings in the minds of consumers.

Microenvironment: publics

any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives

- ex. Financial publics, media publics, govt publics, citizen-action publics, local publics

Microenvironment: Customers

- Consumer markets

- Business markets

- Reseller markets

- Government markets

- International markets

Macroenvironment: Demographic Environment

involves people and demography is the study of human populations - size, density, age, gender, race, and occupation, and other statistics

Generational Marketing

marketing to members of a generation, who tend to share the same outlook and priorities

- Baby Boomers: wealthiest generation and are less sensitive to price

- Generation X

- Millennials: the first generation to grow up with computers and social media

- Generation Z: spend a lot of money and represent tomorrow's market

Changes in American Family

1. Couples not having as many kids

2. Women are entering the workforce more often

3. Career is being prioritized

Changes in the workforce

1. More emphasis on diversity

2. Work from home format

3. More educated workers

Geographic shifts in population

- Growth in US west and south, decline in midwest and northeast

- Change in where people work

- Telecommuting and home office

Macroenvironment: Economic Environment

economic factors that affect commercial and consumer behavior

Macroenvironment: Technological Environment

- Most dramatic force in changing the workplace

- New products, opportunities

- Concern for the safety of new products

Macroenvironment: Cultural Environment

consists of institutions and other forces that affect a society's basic values, perceptions and behaviors

Macroenvironment: Political and Social Environment

protect consumers and the interest of society and companies from each other

- Focus on regulation, ethics, socially responsible behavior

- Also called cause related marketing

Macroenvironment: Natural Environment

the physical environment and the natural resources that are needed as inputs by marketers

- Current shortage in raw materials

- Increase in pollution

- Increase in govt intervention

- Environmental sustainability

Consumer buyer behavior

the buying behavior of final consumers - individuals and households that buy goods and services for personal consumption

Model of Buyer Behavior

Environment:

1. Marketing stimuli - price, product, place, promotion

2. Economic

3. Social

4. Technological

5. Cultural

Buyer's Black Box:

1. Buyer's characteristics

2. Buyer's decision process

Buyer's Response:

1. Buying attitudes and preferences

2. Purchase behavior: what the buyer buys, when they buy, where the buyer buys, and how much the buyer buys

3. Brand and company relationship behavior

Consumer Decision Making Process

Steps:

1. need recognition

2. information search

3. evaluation of alternatives

4. purchase

5. post purchase behavior

internal stimuli

cues from within an animal for survival; (hunger, thirst, sleepiness)

external stimuli

everything we see, hear, and respond to

functional needs

the need for a specific core task or function to be performed

psychological needs

pertain to the personal gratification consumers associate with a product or service

Internal search

An information search in which buyers search their memories for information about products that might solve their problem

Brand recall

consumers' ability to retrieve the brand from memory when given the product category

ex. You need toothpaste, you think Colgate

Brand Recognition

consumers ability to confirm prior exposure to the brand when given the brand as a cue

ex. You see Colgate, you know its toothpaste

High involvement product vs. Low involvement product

High involvement product

- More attention

- Advanced understanding of needs

- Higher post-consumption evaluation

- Slow decision

Low involvement product

- Less attention

- Basic understanding of needs

- Low post consumption evaluation

- Fast decision

Evaluation of Alternatives

- product attributes

- degree of importance

- brand beliefs

- total product satisfaction

- evaluation procedures

Purchase decision

desire to buy the most preferred brand

- Attitude of others + Unexpected situation factors = Purchase decision

Postpurchase Behavior

The stage of the buyer decision process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction

Cognitive dissonance

regretting your buying decision

- HAPPENS WITH BOTH SATISFIED AND DISSATISFIED CUSTOMERS

Characteristics that affect consumer behavior

1. Personal

2. Cultural

3. Social

4. Psychological

Characteristics that affect consumer behavior: Culture

- Subcultures (ex. subcultures based off ethnicity, nationality, age, rural vs. urban locations, religion, geographical distribution)

- Social class (ex. occupation, income, education, wealth)

Characteristics that affect consumer behavior: Social

- Roles and Status

- Family

- Groups/Membership/Reference

- Online social networks

- Buzz marketing

- Social media sites

- Virtual worlds

- Word of mouth

- Opinion leaders

Characteristics that affect consumer behavior: personal

Personal Influences

- Age and family life cycle stage

- Occupation

- Economic situation

- Personality/self concept

Lifestyle Identification

- Activities

- Interests

- Opinions

Characteristics that affect consumer behavior: psychological

1. Motivation - an activated state within a person that leads to goal directed behavior

2. Beliefs and attitudes - describes a person's evaluations, feelings, and tendencies towards an object or idea

3. Perception - selecting, organizing, and interpreting info in a way to produce a meaningful experience of the world

4. Learning - involves changes in an individual's behavior arising out of experience

3 Different Perceptual Processes

1. Selective Exposure - consumer pays attention to certain stimuli and ignores others

2. Selective Comprehension - consumer interprets info so that is consistent with his beliefs

3. Selective retention - average consumer only remembers 30% of information heard

What are the types of Buying Decision Behavior

1. Complex buying behavior

2. Dissonance-reducing buying behavior

3. Habitual buying behavior

4. Variety-seeking buying behavior

Types of Buying Decision Behavior: Complex Buying Behavior

- High consumer involvement

- Significant perceived difference between brands

- Products that are risky, expensive, and/or purchased infrequently

- ex. iPhone and technology

Types of Buying Decision Behavior: Dissonance Reducing Buying Behavior

- High consumer involvement

- Little perceived difference between brands

- Products that are expensive, risky, purchased INFREQUENTLY

- ex. Quality name brand carpets

Types of Buying Decision Behavior: Habitual Decision Behavior

- Low consumer involvement

- Little significant difference between brands

- Purchase out of habit, not loyalty

- Product is low cost, purchased FREQUENTLY

- ex. Table salt

Types of Buying Decision Behavior: Variety seeking buying behavior

- Low consumer involvement

- Significant difference between brands

- Switching done out of variety need, not dissatisfaction

- ex. Cookies

Decision making unit

information gatherer, influencer, decision maker, purchaser, user