Final for Principles of Marketing -- part 1

Marketing

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

four factors of marketing

two or more parties with unsatisfied needs; a desire and ability on their part to have their needs satisfied; a way for parties to communicate; something to exchange

needs

states of felt deprivation

physical needs

food, clothing, warmth, safety

Social needs

belonging, affection

individual needs

knowledge, self-expression

wants

the form human needs take as they are shaped by culture and individual personality

demand

the form wants take when they are backed by buying power

market offerings

what needs and wants are satisfied by products, services, or experiences

marketing myopia

the mistake of focusing on the product itself rather than the benefits and experiences it provides

two key questions of the marketing strategy

who are our potential customers; how do we satisfy their needs and wants

marketing mix

an array of tools available to build a tangible marketing program

4Ps of the marketing mix

product, price, place, promotion

customer relationship marketing

building and maintaining profitable long-term customer relationships by delivering superior customer value and satisfaction

customer value

the unique combination of benefits received by target customers that include quality, convenience, on-time delivery, and before sale/after sale service at a specific price

customer lifetime value

the value of the entire stream of purchases that a customer makes over a lifetime of patronage

strategic planning

the process of developing and maintaining a strategic fit between the organisation’s goals and capabilities, and its changing market opportunities

corporate strategic management

where top management directs overall strategy for the entire organisation

SBU strategic management

managers set more specific strategies for their businesses to exploit value-creating opportunities

functional strategic management

groups of specialists define more focused strategic direction

mission statement

a statement of the organisation’s purpose; what it wants to accomplish in the larger environment

strategy development

1. define company mission

2. set company objectives or goals

3. setting strategic direction for the organisation

objectives/goals

statements of an accomplishment of a task to be achieved within a defined time period

examples of goals

profit, sales, market share, new products/innovations, quality, customer satisfaction, employee welfare, social responsibility

Core Competencies

special capabilities that set our company apart and provide customer value

the 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

Two-step process of SBU planning

analyse the current business portfolio to determine the right level of investment for each business; shape the future portfolio by developing strategies for growth and downsizing

market

a group of individuals and/or organisations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products

market share

the percentage of a market that actually buys a specific product from a particular company

classification criteria to determine attractiveness

the rate at which the market occupied by SBU is growing; a measure of an SBU’s strength in its market

stars

a dominant share of the market and good prospects for growth but use more cash than they generate to finance growth, add capacity, and increase market share

cash cow

a dominant share of the market but low prospects for growth, typically generate more cash than is required to maintain market share

question marks

a small share of a growing market and generally require a large amount of cash to build market share

dogs

a subordinate share of the market and low prospects for growth

market penetration

more sales of current products in existing markets

market development

new markets for existing products

product development

modified or new products in current markets

diversification

starting up or buying businesses outside the current product line/markets

strategic marketing process

the allocation of an organisation’s marketing mix resources to reach the company’s target market and achieve a competitive advantage

underlying principles

1. customers are different

2. customers change

3. competitors changes and react

4. organisational resources are limited

planning phase

1. situational analysis

2. develop a market-product focus, customer value proposition, and goals

3. design a marketing program

Strengths

internal capabilities that may help a company reach its objectives

weaknesses

internal limitations that may interfere with a company’s ability to achieve its objectives

opportunities

external factors that the company may be able to exploit to its advantage

threats

current and emerging external factors that may challenge the company’s performances

economic rule

allocate the firm’s marketing, production, and financial resources to the markets and products where the excess of incremental revenues over incremental costs is greatest

functional organisation

organisation by activities

geographic organisation

organisation by location

product management organisation

organisation by brands or product lines

market or customer management organisation

organisation by type of customers, reflecting different needs, preferences

evaluation and control of strategy

assess the results and take corrective actions to ensure that objectives are attained

objective of measurement

measuring and managing the effectiveness and efficiency of the marketing plan

effectiveness

did the plan generate the intended impact

efficiency

did the results justify the cost —> marketing ROI

Marketing ROI

a way of measuring the return on investment from the amount of money a company spends on marketing

marketing environment

actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with its target customers

PESTLE

political, environmental, social, technology, legal, economic

demography

the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics

cultural environment

institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors

core beliefs and values

have a high degree of persistence, passed on through the family, schools, religious institutions

secondary beliefs and values

are more open to change

fluctuations in general economic conditions

have an impact on income, buying power, willingness to spend, consumer expenditure levels

willingness to spend

inclination to buy because of an expected satisfaction from a product; function of a consumer’s ability to buy

technology

the application of knowledge and tools to solve problems and perform tasks more efficiently

competitors

other organisations that provide/sell products that are similar to or can be substituted for a marketer’s products

brand competitors

firms that market products with similar features and benefits to the same customers at similar prices

product competitors

firms that compete in the same product class but market products with different features, benefits, and prices

generic competitors

firms that provide very different products that solve the same problem or satisfy the same basic customer need

total budget competitors

firms that compete for limited financial resources of the same customers

sherman antitrust act

prohibits monopolising, conspiracies to restrain trade

robinson-patman act

prohibits price discrimination that reduced competition among retailers

lanham act

protection for brand names

fair packaging & labeling act

prohibits unfair or deceptive packaging

nutrition labeling & education act

prohibits exaggerated health claims

telephone consumer protection act

procedures to avoid unwanted solicitations

dodd-frank wall street reform & consumer protection act

promotes accountability and transparency in the financial industry

lobbyists

individuals who take part in an organised attempt to influence legislators, multi-billion dollar business

wild card

an unknown or unpredictable factor

proactive

environmental forces can be shaped; seek opportunities or extract benefits relative to costs from existing opportunities

passive

environmental forces are uncontrollable; adjust current marketing strategies to environmental changes