Marketing Claude Review

Marketing (definition)

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.

Product (4 P's)

Creating Value — the fundamental purpose of marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.

Price (4 P's)

Capturing Value — everything a buyer gives up (money, time, energy) in exchange for the product; must be set so customers see it as fair value while the firm can still profit.

Place (4 P's)

Delivering the Value Proposition — all the activities necessary to get the product to the right customer when that customer wants it (retailing and marketing channel/supply chain management).

Promotion (4 P's)

Communicating the Value Proposition — communication that informs, persuades, and reminds potential buyers about a product to influence their opinions and elicit a response (advertising, personal selling, PR, sponsorships, sales promotions).

How do the 4 P's relate to value?

Product = Creating Value, Price = Capturing Value, Place = Delivering the Value Proposition, Promotion = Communicating the Value Proposition.

Value

Reflects the relationship of benefits to costs — what a customer gets versus what they give up to get it.

Production Era

Philosophy: "produce what you can because the market is limitless" — firms focused on making products, assuming anything made would sell.

Selling Era

After mass production grew and supply outpaced demand, focus shifted from production to persuasion — firms had to actively sell what they made.

Marketing Concept (Focus) Era

After WWII, a consumer spending boom developed, so businesses had to become responsive to what consumers actually wanted.

Customer Relationship Era

Focus shifted to Customer Relationship Management (CRM) — learning as much as possible about customers and building long-term relationships.

Needs

Basic states of felt deprivation — the underlying problem or gap a customer is trying to solve.

Wants

The specific form a need takes, shaped by a person's personality, culture, and preferences.

Demands

Wants that are backed by the ability and willingness to pay.

Marketing Analytics

The use of sophisticated data analytics to define and refine marketing approaches to customers and markets (e.g., Starbucks, CVS, Kroger, Netflix, Amazon collecting data on how/when/why/where/what people buy).

SEO

Search Engine Optimization — strategies, techniques, and tactics used to increase website visitors by obtaining a high-ranking placement in a search engine results page (SERP); relies on keywords.

SEM

Search Engine Marketing — internet-based marketing focused on researching, submitting, and positioning a website within search engines to maximize visibility and paid/organic traffic; relies on bidding.

Strategy vs. Tactics

Strategy is "explicit, rigorous, formal planning" (the big-picture plan); tactics are "a set of flexible, goal-oriented actions" (the specific actions that execute the plan).

A company's strategy

The set of actions its managers take to outperform the company's competitors and achieve superior profitability.

Strategic Marketing Plan

Analysis of marketing opportunities, target marketing decisions, and the value proposition — the "plan" level.

Tactical Marketing Plan

Product features, promotion, merchandising, pricing, sales channels, and service — the "action" level.

Customer Excellence

Achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service (e.g., Disney).

Operational Excellence

Achieved through efficient operations, excellent supply chain management, and strong relationships with suppliers (e.g., Walmart).

Product Excellence

Occurs by providing products with high perceived value and effective branding and positioning (e.g., Coca-Cola, Apple, Nike).

Locational Excellence

A method of achieving excellence by having a strong physical location and/or Internet presence, not easily duplicated (e.g., Starbucks).

Mission Statement

A broad description of a firm's objectives and the scope of activities it plans to undertake; answers "What type of business are we?" and "What do we need to do to accomplish our goals?"

Characteristics of a good mission statement

Focus on a limited number of goals, stress major policies and values, define major competitive spheres, take a long-term view, and be short, memorable, meaningful.

BCG Matrix: Stars

High market growth rate, high relative market share — fast-growing, market-leading products that need heavy investment to keep fueling growth.

BCG Matrix: Cash Cows

Low market growth rate, high relative market share — established, high-share products that generate excess resources to spin off elsewhere.

BCG Matrix: Question Marks

High market growth rate, low relative market share — require significant resources to try to grow their share (or risk becoming a dog).

BCG Matrix: Dogs

Low market growth rate, low relative market share — should generally be phased out unless needed to support another product.

Market Penetration (growth strategy)

Employs the existing marketing mix and focuses the firm's efforts on existing customers (current market + current product). Lowest risk.

Product Development (growth strategy)

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

Market Development (growth strategy)

Employs the existing marketing offering to reach new market segments, domestic or international (new market + current product).

Diversification (growth strategy)

Introduces a new product or service to a market segment that currently is not served (new market + new product). Riskiest and most expensive.

Macroenvironment

Broad external forces largely outside the firm's control: Culture, Demographics, Political/Legal, Social, Economic, and Technology.

Immediate (Micro) Environment

Includes the firm and its immediate influences: Company, Competition, Corporate Partners, and Consumers.

Exchange (marketing)

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

Is marketing more customer-facing today than 100 years ago?

True — marketing evolved from the Production and Selling Eras through the Marketing Concept Era to today's Customer Relationship Era, built around CRM, data analytics, and social/mobile marketing.

Exporting (global entry strategy)

Producing goods in your home country and shipping them to be sold in a different country. Lowest risk. Example: Red Bull.

Licensing (global entry strategy)

A company gives a foreign company the right to use its intellectual property (patents, trademarks, designs) for a fee or royalty. Example: Disney.

Franchising (global entry strategy)

A specialized form of licensing where a local operator runs a business using the parent company's proven brand name and business model. Example: McDonald's.

Joint Venture (global entry strategy)

Two companies (a global brand and a local firm) join forces to create a new, jointly-owned company to help navigate local laws and culture. Example: Hulu (Disney, Fox, NBC).

Direct Foreign Investment / Ownership (global entry strategy)

A company buys or builds its own facilities in a foreign country, giving 100% control but also 100% of the risk. Example: BMW plants in South Carolina.

SWOT

Strengths, Weaknesses, Opportunities, and Threats.

Internal (SWOT)

Factors within the firm's control — Strengths and Weaknesses; tied to the immediate/micro environment.

External (SWOT)

Factors outside the firm's control — Opportunities and Threats; tied to the macroenvironment, competitors, and corporate partners.

Three Phases of a Strategic Plan

Planning, Implementing, and Controlling.

Planning Phase

Define the business mission and objectives, and conduct a situation analysis (SWOT).

Implementing Phase

Identify and evaluate opportunities using STP, then implement the marketing mix (product, price, place, promotion) and allocate resources.

Controlling Phase

Evaluate performance using marketing metrics and adjust as market needs change.

Five Steps of a Marketing Plan

1) Define the Business Mission, 2) Conduct a Situation Analysis (SWOT), 3) Identify/Evaluate Opportunities using STP, 4) Implement the Marketing Mix and Allocate Resources, 5) Evaluate Performance Using Marketing Metrics.

STP

Segmentation, Targeting, and Positioning — used to identify and evaluate opportunities for increasing sales and profits.

Metric

A measuring system that quantifies a trend, dynamic, or characteristic; used to explain why things happened and project the future.

Culture (macro element)

The shared meanings, beliefs, morals, values, and customs of a group of people; includes country culture vs. regional culture.

Demographics (macro element)

The characteristics of human populations and segments (age, gender, income, education, ethnicity) used to identify consumer markets.

Technology (macro element)

Advances that create new products, new forms of communication, and new retail channels; affects nearly every part of marketing.

Political/Legal (macro element)

Government regulation and legislation affecting how firms can market and compete.

Social (macro element)

Broader social trends, such as health/wellness concerns or "greener" consumers.

Economic (macro element)

Factors like inflation, interest rates, and currency fluctuations that affect a firm's ability to market goods and services.

Company (micro element)

The firm's own internal capabilities, including its core competencies (existing knowledge, facilities, patents, etc.) — the part of the environment the firm controls most directly.

Competition (micro element)

Other firms competing for the same customers; marketers must understand competitors' strengths, weaknesses, and likely reactions to win share of market, mind, and heart.

Corporate Partners (micro element)

Other firms/organizations a company allies with, such as suppliers and marketing intermediaries, affecting availability, price, and quality of product.

Consumers (micro element)

The individuals or businesses a firm is trying to serve, profiled by who they are, what they like/dislike, what they can afford, and what influences their purchases.