SDSU BA 370 MARKETING STEVE GRAFFEN EXAM #1 CH: 1, 2, 5-7

Marketing

The 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.

Marketing Plan

A written document composed of an analysis of the current marketing situation, opportunities, and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected or pro-forma income (and other financial) statements.

Marketing Mix (Four P's)

1. Product

2. Price

3. Place

4. Promotion

The controllable set of activities that a firm uses to respond to the wants of its target markets.

Product:

creating value by developing a variety of offerings to satisfy customers' needs

*Firms attempt to develop products and services that customers perceive as valuable enough to buy.

Price

capturing value; everything the buyer gives up (example: money, time, and/or energy) in exchange for the product.

Place

delivering the value proposition; represents all the activities necessary to get the product to the right customer when that customer wants it

Ex: Dyson prominently sells its products on their website, but also make sure to place them on Amazon and Bed Bath and Beyond

Promotion

communicating the value proposition; informs, persuades, and reminds potential buyers about a product or service to influence their opinions and elicit a response.

Ex: Dyson not only offer promotions on their website, but also on promotion websites such as coupon.com and Groupon

Exchange

The trade of things of value between the buyer and the seller so that each is better off as a result

Goods

Items that you can physically touch.

Services

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed; Intangible customer benefits that are produced by people or machines and cannot be separated from the producer.

Ideas

Thoughts, opinions, and philosophies; intellectual concepts such as these that can be marketed.

Business-to-Consumer (B2C) Marketing

Business sells to consumers.

Business-to-Business (B2B) Marketing

Business sells to business

Consumer-to-Consumer (C2C) Marketing

Consumer sells to consumers.

Production-Oriented Era

The belief that a good product would sell itself.

Henry Ford- "Customers can have any color they want so long as it's black"

Sales-Oriented Era

Depended on heavy doses of personal selling and advertisement due to OVERPRODUCTION.

The way consumers buy merchandise and spend money.

Economic Situation

Value-Based Marketing Era

While providing what customers want and need, they have to focus on giving a greater value than their competitors.

Value

The relationship of benefits to costs

Value Cocreation

Customers can act as collaborators to create the product or service

Ex: when Nike allows customers to custom design their sneakers, they are cocreating

Relational Orientation

Marketers begin to think about their customers in terms or relationships rather than transaction.

Ex: Apple makes its innovations compatible with existing products to encourage consumers to maintain a long-term relationship with the company across all their electronic needs.

Customer Relationship Management (CRM)

A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers.

*Firms that employ CRM systematically collect info. about their customers' needs and then use that information to target their best costumers with the products, services, and special promotions that appear most important to them.

Supply Chain or Marketing Channel

A group of firms that make and deliver a given set of goods and services.

Entrepreneurs

People who organize, operate, and assume the risk of a business venture.

Marketing Strategy

Identifies:

1. a firm's target market(s)

2. a related marketing mix

3. the basis on which the firm plans to build a sustainable competitive advantage.

Sustainable Competitive Advantage

An advantage over the competition that is not easily copied and can be maintained over a long period of time.

*Acts like a wall that the firm has built around its position in a market.

Customer Excellence

Focuses on retaining loyal customers and excellent customer service.

*Is achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service.

Operational Excellence

Achieved through efficient operations, excellent supply chain, strong relationships with their suppliers, and human resource management.

Product Excellence

Having products with high perceived value and effective branding and positioning.

Locational Excellence

Having a good physical location and Internet presence

Planning Phase

Marketing executives define the mission and/or vision of the business.

Implementation Phase

Marketing managers identify and evaluate different opportunities by engaging in a process known as segmentation, targeting, and positioning (STP).

Control Phase

Entails evaluating the performance of the marketing strategy using marketing metrics and taking any necessary corrective actions.

What are the five steps in the Marketing Plan?

1. Define the Business Mission

2. Conduct a Situation Analysis

3. Identify and Evaluate Opportunities Using STP

4. Implement Marketing Mix and Allocate Resources

5. Evaluate Performance Using Marketing Metrics

Mission Statement

A broad description of a firm's objectives and the scope of activities it plans to undertake

Situation Analysis

Uses SWOT analysis to assess both the internal and external environment.

Internal: Strengths and Weaknesses

External: Opportunities and Threats

STP

Segmentation, Targeting, Positioning. The firm divides the marketplace into subgroups or segments, determines which segment should be pursued or targeted, and decides how it should position its products and services to best meet the needs of those chosen targets.

Market Segment

Consists of consumers who respond similarly to a firm's marketing efforts.

Market Segmentation

The process of dividing the market into groups of consumers based on different wants, needs, or characteristics.

Target Marketing

The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market.

Market Positioning

The process of defining the marketing mix variables so that target customers have a clear distinctive, desirable understanding what the product does or represent in comparison with competing products.

Integrated Marketing Communications (IMC)

Represents the promotion P of the 4 P's.

Encompasses a variety of communication disciplines in combination to provide clarity, consistency, and maximum communicative impact.

Metric

A measuring system that quantifies a trend, dynamic, or characteristic. Used to explain why things happened and also project the future and compare results.

Strategic Business Unit (SBU)

A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.

*Portfolio Analysis

Ex: Goodyear's SBUs are organized by geography: North America, Europe, Middle East, African; Latin America; and Asia Pacific

Product Line

A group of products that consumers may use together or perceive as similar in some way.

Market Share

The percentage of a market accounted for by a specific entity and is used to establish the product's strength in a particular market.

Relative Market Share

Provides managers with a product's relative strength, compared with that of the largest firm in the industry.

Market Growth Rate

Annual growth rate of the specific market in which t he product competes. Measures how attractive a particular market is.

STARS

High-growth rate markets

High-market share products

Often require a heavy resource investment in such things as promotions and new production facilities to fuel their rapid growth.

Cash Cows

Low-growth rate markets

High-market share products

Because these products have already received heavy investments, they have excess resources that can be used for other products that need it.

Question Marks

High-growth rate markets

Low market share products

Whether or not this product should be infused with cash cows to turn into a star or should withdraw the resources and phase out the product.

Dogs

Low-growth rate markets

Low market share products

Not destined for stardom and should be phased out unless needed to complement or boost the sales of another product or for competition purposes.

BCG Matrix

Star, Cash Cow, Question Mark, Dog

Market Penetration Strategy

Employs the existing marketing mix and focuses the firm's efforts on existing customers.

*Achieved by attracting new consumers to the firm's current target market.

Requires greater marketing efforts such as increased advertising and additional sales and promotions

Market Development Strategy

Employs the existing marketing offering to reach new market segments, whether domestic or international.

Ex: the release of The Avengers: Age of Ultron grossed a half billion dollars in domestic market. When they included international appeal the success rose up to 1.4 billion

Product Development Strategy

Offers a new product or service to a firm's current target market.

Ex: Marvel launched several series on Netflix so that customers can connect with Marvel in a new and important way.

Diversification Strategy

Introduces a new product or service to a market segment that currently is not served.

Related Diversification

The current target market and/or marketing mix shares something in common with the new opportunity.

*Firms might be able to purchase from existing vendors, use the same distribution and management information system, advertise in the same newspapers to target markets similar to their current consumers.

Ex: Marvel's home decor collectibles and t-shirts, but also diversified its offering expanding to include lamp shades and pillows.

Unrelated Diversification

The new business lacks any common elements with the present business.

Ex: If Marvel ventured into the child day care service industry it would be very risky because its so different from its core business.

Macroenvironmental Factors

The culture, demographics, social trends, technological advances, economic situation, and political/regulatory environment (CDSTEP)

Culture

Shared meanings, beliefs, morals, values, and customs of a group of people.

Country Culture

Artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences.

Try finding a universal appeal within the specific identities of the country culture.

Regional Culture

The way they might refer to something ("soda" in one place and "pop" in another)

Demographics

Indicate the characteristics of human populations and segments, especially those used to identify consumer markets.

Generational Cohort

A group of people of the same generation

Tends to have similar purchase behaviors, because they have shared experiences and are in the same stage of life.

Generation Z

AKA Digital Natives (2001 to Present) Born into a world that already was full of electronic gadgets and digital technologies such as the Internet and social networks.

Generation Y

AKA Millennial's (1977 to 2000)

Largest cohort Ranging from teens to adults who already have their own family

Generation X

(1965 to 1976) Latchkey Children

(those who grew up in homes where both parents worked)

50% divorced parents

Baby Boomers

(1946 to 1964) After WWII, the birthrate in the US rose sharply.

Green Marketing

Involves a strategic effort by firms to supply customers with environmentally friendly merchandise.

Greenwashing

A type of exploitation of whether companies are actually making greener products or just holding a facade.

Economic Situation

Economic Situation

Inflation

Refers to the persistent increase in the prices of goods and services.

Foreign Currency Fluctuations

Can influence consumer spending.

Interest Rates

Represents the cost of borrowing money.

Political/Regulatory Environment

Comprises political parties, government organizations, and legislation and laws.

Need Recognition

Measured by the discrepancy between the needy state to the desired state.

Functional Needs

Pertains to the performance of a product or service.

Psychological Needs

Pertain to the personal gratification consumers associate with a product and/or service.

Internal Search for Information

The buyer examines his or her own memory and knowledge about the product or service, gathered through past experiences.

External Search for Information

The buyer seeks information outside his or her personal knowledge base to help make the buying decision.

Internal Locus of Control

The belief one has some control over the outcomes of their actions. Generally engage in more search activities

External Locus of Control

The belief that fate or other external factors control all outcomes. Does not feel it matters how much information they gather

Performance Risk

Involves the perceived danger inherent in a poorly performing product or service.

Example: Katie Smith is worried that her new interview outfit is prone to shrinking when dry cleaned.

Financial Risk

The risk associated with a monetary outlay and includes the initial cost of the purchase, as well as the costs of using the item or service.

Example: Katie Smith is worried about the dry cleaning cost that comes with buying her new interview clothes.

Social Risk

Involves the fears that consumers suffer when they worry others might not regard their purchases positively.

Example: Katie Smith is worried whether or not her friends would like her new interview clothes.

Physiological Risk (AKA Safety Risk)

Involves what might happen if a product does not perform as expected.

Example: What if the car's brakes do not work?

Psychological Risks

Those risks associated with the way people will feel if the product or service does not convey the right image.

Example: Katie Smith sought after fashion magazines, her friends, and the internet to look for the interview clothes that fit what she desires.

Universal Sets

Include all possible choices for a product category.

Retrieval Sets.

Those brands or stores that can be readily brought forth from memory.

Evoked Sets

Comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision.

Evaluative Criteria

Consists of salient, or important, attributes about a particular product.

Determinant Attributes

Product or service features that are important to the buyer and on which competing brands or stores are perceived to differ.

Consumer Decision Rules

Set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives.

Compensatory Decision Rule

Assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics.

Multi-Attribute Model

A model to demonstrate how Compensatory Decision Rule works.

Noncompensatory Decision Rule

Where they choose a product or service on the basis of one characteristic or one subset of a characteristic, regardless of the values of its other attributes.

Conversion Rate

To measure how well they have converted purchase intentions into purchases.

Postpurchase Cognitive Dissonance

An internal conflict that arises from an inconsistency between two beliefs or between beliefs and behavior.

Example: Buyer's Remorse

Negative Word of Mouth

Occurs when consumers spread negative information about a product, service, or store to others.