Marketing test 1

Jay Barfield marketing test one ch 1,2,3,4,5

Marketing

The activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers clients, partners, and society at large

Two facets of marketing

1. Philosophy ( customer satisfaction orientation)

2. Organizational function (process that implements it)

exchange

When someone gives up something to receive something else, they would rather have

5 conditions for exchange to exist

1. must be at least 2 parties

2. each party has something that might be of value to the other party

3. each party is capable of communication and delivery

4. each party is free to accept or reject the exchange offer

5. Each party believes it is appropriate or desirable to deal with the other party

4 philosophies of marketing management

1. Product orientation

2. sales orientation

3. market orientation

4. societal marketing orientation

Product orientation

A philosophy that focuses on the firms internal capabilities rather than on the desires and needs of the marketplace firm's

• what can we do best

sales orientation

The belief that people will buy more goods and services if aggressive sales techniques are used, and that high sales result in high profits

Market orientation (Marketing concept)

The idea that the social and economic justification for an organizations existence is the satisfaction of customers wants and needs while meeting organizational objectives.

societal marketing orientation

the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals and society’s long term best interests

Customer value

the relationship between benefits and the sacrifice necessary to obtain those benefits

(benefits - the goods you provide, sacrifice - the things the customer gives)

Customer satisfaction

customers evaluation of a good or service in terms of whether it has met their needs and expectations

Relationship marketing

A strategy that focuses on keeping and improving relationships with current customers

Empowerement

delegation of authority to solve customers problems quickly, usually by the first person the customer notifies regarding a problem

Teamwork

collaborative efforts of people to accomplish common objectives

customer relationship management (CRM)

a company wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups

Big data

the discovery, interpretation and communication of meaningful patterns in data

on demand marketing

delivering relevant experiences, integrates across both physical and virtual environments, through the consumers decisions and buying process.

Sales firms

• Focus on internal needs

• deliver Products

• target everyone

• focus on volume

• emphasize promotion

Marketing-oriented firms

• focus on customer needs

• seek to satisfy customers

• target segments of the market

• focus on relationships

• emphasize coordinated strategy

Reasons to study marketing (4)

1. Impacts economy and standard of living

2. helps understand business

3. career opportunities

4. makes you an informed customer

strategic planning

managerial process of creating and maintaining a fit between objectives/ resources and evolving opportunities

Goals of strategic planning:

• long run profits

• Growth

Two questions to answer when planning strategically

1. What is the organizations main activity

2. how will it achieve its goals

the 2 questions strategic marketing answers

• What is the organizations main activity at any particular time

• How will it reach its goals

Strategic Business Unit (SBU)

A subgroup of a single business or collection of related businesses within the larger organization

(body armor is a SBU of coca- cola)

SBU characteristics

When properly created and SBU has:

1. A distinct mission and a specific target market

2. Control over its resources

3. its own competitors

4. A single business or a collection of closely related businesses

5. plans independent of the other SBU’s in the total organization

3 most used tools for strategic planning

• Ansoff’s strategic opportunity matrix

• the Boston consulting group model

• the general electric model

The choice depends on whether the firm expects profits now vs after market share growth

Ansoff’s Strategic opportunity matrix (4 growth strategies)

1. Market Penetration - Increase market share among existing customers

   • ex: CVS extra care card

2. Market development - attract new customers to existing products

   • ex: CVS opening stores in new areas

3. product development - the creation of new products for present markets

   • ex: CVS minute clinic or its new delivery service

4. Diversification - introducing new products into the market

   • ex: CVS bough Signify health (in home clinician visits)

Boston consulting group/ Portfolio matrix

Portfolio matrix = a tool for allocating resources among products or SBUs on the basis of relative market share and market growth rate

relative market share is the ratio of a company's share to the share of the largest competitor; there is an assumption that market share and profitability are linlked

BCG Model (4 categories)

1. star- fast-growing market leader

   1. profitable but need cash, protect buy reincesting in it (product improvement, distribution, promotion, efficiency)

2. Cash Cow - generates more cash than needed to maintain share

   1. low growth, dominant share; just maintain dominance, resist over extending line unless demand rises dramatically; move excess cash to growth areas

3. Problem Child (question mark) -rapid growth but poor profit margins

   1. needs lots of cash; becomes a dog without. Invest heavily/ acquire/reposition or drop

4. Dog - Low growth potential + small market share

   1. Often exit market, tough competition + low Growth + low market share

After BCG classification 4 strategies

1. Build - Feed it; often for problem child you think can become a star

2. Hold - Protect cash cow market share

3. Harvest - Maximize short term cash, usually not done to stars.

4. Divest- dump low-share/low-growth; problem children/dogs

GE model (GE / McKinney)

Dimensions: Market attractiveness + company strength. These are richer and more complex, but harder to quantify

Low attractiveness: Avoid/harvest/Divest

Medium attractiveness: Maintain, withdraw if it slips

High - high attractiveness - (Thriving market + strong position) - Invest

The marketing plan overview

separated into:

• Planning

• Marketing planning

• marketing plan

Planning

The process of anticipating future events and determining strategies to achieve organizational objectives in the future

Marketing planning

designing activities relating to marketing objectives and the changing marketing environment

Marketing Plan

A written document that acts as a guidebook for marketing activities for the marketing manager

Why write a marketing plan

• A marketing plan forces you to examine the environmental + internal business reality

• clarifies activities and aligns employees toward shared goals

• becomes a reference point for future success

• helps you enter,arlet aware of problems and opportunities

Oral plans alone are not enough because plans are complex. Plans can include budgets, timetables, needed research, and advanced planning elements

Mission statement

A statement of the firm’s business based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions

• mission statement answers - “what business are we in“ and shapes resource allocation/profitability/ survival. should focus on markets served, not just the product offered (avoids tech making you obsolete), resource

Market myopia

myopia = too narrow, term literally means market too narrow

defining a business in terms of goods and services rather than in terms of the benefits customers seek

• Mission can be to narrow (myopia) or too broad (meaningless)

Situation analysis (SWOT)

SWOT analysis = identifying internal Strengths (S) and weaknesses (W). While also examining external Opportunities (O) and Threats (T)

Environmental scanning

collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan

Competitive advantage (3 types)

a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition.

1. Cost

2. product/service differentiation

3. Niche

Cost competitive advantage

Being the low-cost competitor in an industry while maintaining satisfactory profit margins

HOW to reduce cost: Experience curves, efficient labor, govt subsidies, etc

Experience Curves

curves that show costs declining at a predictable rate as experience with a product increases

these curves include manufacturing/marketing/admin costs, reflect learning by doing, tech advances, and economies of scale

Product/ Service differentiation competitive advantage

The provision of something that is unique and valuable to buyers, beyond simply offering a lower price than that of the competition

• tends to last longer than cost advantages; Ex: Brand name recognition, dealer network, reliability, company image, service

Niche competitive advantage

The advantage achieved when a firm seeks to target and effectively serve a small segment of the market

• niche can be the only viable advantage for small firms; pick segments with growth potential, but not crucial to giant competitors

Sustainable competitive advantage

An advantage that cannot be copied by the competition

• This advantage is almost never perpetual, its usually limited in time so you must keep innovating to stay in the game.

source of this adv might be: Assets (patents, copyrights, locations, equipment) + skills(customer service, promotion)

Marketing objectives

A statement of what is to be accomplished through marketing activities

Marketing objectives should be

• time specific

• realistic

• measurable

• compared to a benchmark

Marketing Strategy

The activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets

Target market

group the organization designs/implements/maintains a marketing mix for

Marketing Opportunity analysis (MOA)

The description and estimation of the size and sales potential of market segments of interest, and the assessment of key competitors

Three target selection strategies:

1. Appeal to the entire market with one marketing mix (Shotgun approach)

2. Concentrating on one segment of the market (Rifle)

3. By appealing to multiple market segments using multiple marketing mixes

THE MARKETING MIX (FOUR P’s)

A unique blend of Product, Place, Promotion, and Pricing Strategies designed to produce mutually satisfying exchanges with a target market

• Product is usually the starting point; the product includes package/warranty/service/brand/image/value. Any mix is only as good as its weakest component

MUST KNOW 4 P’s for like all of marketing

1. PRODUCT

2. PLACE

3. PROMOTION

4. PRICING

Implementation

turning plan into action assignments

Requires: delegating authority, timeline resources organizational acceptance

evaluation

Gauging the extent to which the marketing objectives have been achieved during the specified time period

4 reasons objectives fail

1. unrealistic marketing objectives

2. inappropriate marketing strategies in the plan

3. poor implementation

4. changes in the environment after the objective was specified and he strategy was implemented

Control

mechanisms to evaluate results and correct actions within budget

marketing audit

A thorough systematic, periodic evaluation of the objectives, strategies structure, and performance of the marketing organization

4 characteristics

1. Independent

2. comprehensive

3. periodic

4. systematic

Post audit tasks: Verify accuracy, assign accountability, prioritize recommendations

Social control

Any means used to maintain behavioral norms and regulate conflict

Behavioral norms

standards of Propper or acceptable behavior. Several models of social control are important to marketing

Modes of social control important to marketing

ETHICS, Laws, formal and informal groups, self-regulation, the media, and an active civil society

Note: Laws often codify ethical rules, but laws usually reflect the lowest form of acceptable behavior. Legal DOES NOT mean ethical

Ethics

The MORAL PRINCIPLES OR VALUES that generally govern the conduct of an individual or a group

Unwritten rules governing interactions

Ex: cutting in a line is not illegal but people see it as unfair in turn unethical.

Deontological theory

Duty/ Obligation-based theory. Follow duties and promises, follow the law

Utilitarian ethical theory

Consequences based theory. Greatest benefit to most people, that choice is the ethically correct one

casuist ethical theory

Compare to similar cases and outcomes. Use past extremes to form compromise

moral relativism

Time and place ethics; No absolute rules. Choose the “lesser of evils” Depending on context

virtue

Character trait that is valued as good; Aristotle/Plato taught: Virtue “training” helps you solve dilemmas

Morals

The rules people develop as a result of cultural values and norms

• Morals are foundation of ethical behavior.

• business ethics is a subset of life values learned via family, education, religion.

Code of Ethics

A guideline to help marketing managers and other employees make better decisions

• Identifies acceptable practices , Internal control > external regulation (Laws), Reduces confusion in determining if decision is ethical, encourages discussion about right and wrong.

• ethical training is common and reduces misconduct rates

Ethics across countries (FCPA)

Federal Corrupt Practices Act (FCPA) - Prohibits U.S. corporations from making illegal payments to foreign public officials to obtain/ enhance business dealings

• ethics varies culture to culture; Bribery may be more accepted in some places than others

Corporate social responsibility (CSR)

A businesses concern for societies welfare.

Stakeholder Theory

Social responsibility means paying attention to the interests of every affected stakeholder in every aspect of operations

pyramid of corporate social responsibility

CSR includes economic, legal, ethical, philanthropic responsibilities. Economic performance is the base of the pyramid that supports the structure

Sustainability

Socially responsible companies outperform peers by focusing or world problems as profit opportunities and “help the world simultaneously”

Green Marketing

Develop/market products minimizing negative environmental effects or improving environment

Greenwashing

Add minimal green attributes to market as green

Cause related marketing

The cooperative efforts between a for-profit firm and a non-profit organization.

• Differs from philanthropy (tax-deductible donation).

• Cause marketing is an ongoing relationship, not a straight donation

External marketing environment + marketing mix

marketing manegers key decisions relate to creation of the marketing mix. The marketing mis is within forms control but the external environment Forces your to adapt

Environmental Scanning

The continual collection and evaluation of environmental information to identify market opportunities and threats

• firms scan population shifts, age/income distribution, industry trends, current/ potential customers, and competitors and their actions

• Sucessful Firms realize that creating Value for customers is the key to large profits and market share

80/20 rule

Often 20% of the customers produce 80% of the revenue. Firms must understand loyalty drivers and protect them

• Ex: Airline loyalty points

Social Factors in marketing

Social change is the hardest to forecast/influence. Social factors include attitudes, values, lifestyles.

Values formed via family/friends/ influencers. values affect what people buy, prices paid, promotion effectiveness and where/when they shop

Demography/ Demographics

The study of peoples vital statistics such as, age, race, gender, and location

Demographics are the basis for any market of people

How social media has changes behaviors

social media made online review increasingly important. social media changed the way we communicate, browse for products, make purchases, keep track of others.

• Social dilemma - the more you are online the more your privacy is stripped away and there is possibility for manipulation through fyps and other things

pop culture

The products and forms of expression and identity that are frequently encountered or widely accepted, commonly liked, or approved, and characteristic of a particular society at a given time

• Pop culture marketing increases emotional connection, attention, loyalty. Brands can develop a “Personality“ and feel approachable.and

Purchasing power

a comparison of income versus the relative cost of a standard set of goods and services in different geographic areas

• Basically income - cost of living. High purchasing power means more discretionary income (spending on what you want vs what you need)

inflation

A measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year

• firms respond to inflation with private brands, limiting services, discount retailing

Recession

A period of economic activity characterized by negative growth, which reduces demand for goods and services

• When GDP falls for two consecutive quarters, it is defined a recession`

Basic research

Pure research that aims to confirm an existing theory or to learn more about a concept or phenomenon

• confirm theory/ learn about phenomenon

Applied research

Research that attempts to develop new or improved products

• actually develop the product

Sherman Antitrust act (1890)

makes monopolies/restraint of trade illegal

Clayton act (1914)

Prohibits practices that lessen competition

• Price discrimination, exclusive dealing, tying agreements

Federal Trade Commission Act (1914)

Creates the FTC.

Prohibits unfair methods of competition

Robinson Patman Act (1936)

Prohibits price discrimination between different purchasers

Consumer credit protection act (1968)

requires that lenders fully disclose the true interest rates and all other charges to credit customers for loans and installment purchases

public health cigarette smoking act (1971)

Prohibits tobacco ads on radio and tv

Consumer product safety act (1972)

Created the consumer product safety comission, which has authority to specify safety standards for most products

Child protection Act (1990)

Regulates the number of minutes of advertising on children’s tv.

Childrens online privacy protection act (1998)

Empowers the FTC to set rules regarding how and when marketers must obtain parental permission before asking children marketing research questions

Do not call law (2003)

protects consumers against unwanted telemarketing calls

CAN-SPAM Act (2003)

Protects consumers against unwanted email, or spam

Restoring American financial stability act (2010)

Created the Consumer Financial protection Bureau to protect consumers against unfair, abusive, and deceptive financial practices

Patient protection and affordable care act (2010)

Overhauled the U.S. Health system. Mandated and subsidized health ins for individuals (questionable success)

Consumer product safety commission (CPSC )

federal agency established to protect health and safety of consumers in and around homes

Food and Drug administration

Enforces regulations against adulterated / Misbranded / Hazardous food and drug products