Marketing Exam 1

Marketing Definition

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

• the process is strategies and activities to acquire and engage customers

The 4 P’s

• Price

  • How much should we ask customers to pay?

• Promotion

  • How will we communicate with the customers?

• Place

  • How will we get it to the customers?

• Product

  • What do potential customers need and want?

Marketing concept

• is outward in

Order:

• Starting point - market

• Focus - customer needs

• Means - Integrated marketing (4 P’s)

• Ends - Profits through customer satisfaction

How do marketers create value?

• physical objects

• people

• organizations

• places

• information

• ideas

Shaq x Carnival Commercial

• relates to creating value

• Value from the commercial = Carnival is the fun cruise line

• How are they demonstrating value through the products?

  • Different places in the ad look fun

  • Shaq is sued to represent fun (family man, a winner, in shows/movies)

Supply Chain of Customers

• suppliers

• company + competitors

• Marketing intermediaries

• Final consumers

• Back to company + competitors

Selling Concept

• is inward out

Order:

• Starting point - factory

• Focus - existing products

• Means - selling and promoting

• Ends - profits through sales volume

Marketing myopia

a business approach where a company focuses too heavily on its products and immediate sales rather than understanding and adapting to evolving customer needs and market trends

Societal Marketing Concept

• “purposeful brands”

• Society - human welfare

• Consumers - want satisfaction

• Company - profits

Ex: McDonald’s

• becoming more healthful

• cares about community/family

Superior customer value results in…

• customer loyalty + retention

  • Goals: “true friends” and “customer evangelists”

• Customer referrals

• More customers

• Customer equity

  • sum of all(customer lifetime value) = TR a customer generates for a company - customer acquisition cost - customer retention costs

• Higher profits

Customer relationship groups

1. Butterflies

2. Strangers

3. True friends

4. Barnacles

Butterflies

high profitability and low loyalty

Strangers

low profitability and low loyalty

True friends

high profitability and high loyalty

Barnacles

low profitability and high loyalty

Macro environment

bigger forces that impact your company - demographic changes

micro environment

customers, competitors, suppliers

Marketing environment

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

Studying the environment allows marketers to

• understand the constraints they operate under (what is competition doing?)

• learn of opportunities

• reveal threats to avoid or combat

Cereal Case Study

revenue of cereal dropped in 2013 b/c it was the start of food/drinks with protein, and easy, on the go

actor in microenvironment: the company

• “think consumer” - what they need and want

• cooperate inter-functionally to proud superior customer value and satisfaction

• finance- find money to carry out marketing plan

• accounting - measures revenues and costs, and keeps marketing on track with objectives

• Management - sets the mission and objectives

• operations - produces and distributes product

• purchasing - obtain supplies and materials

• R+D - designs the products

actor in microenvironment: suppliers and marketing intermediaries

• suppliers provide resources needed for production and innovation

• intermediaries help the company prompt, sell, and distribute the product to end users

Ex: Coca Cola produces Coke, Wendy’s distributes to end user

Ex: making celebrities promote the product

partnering with intermediaries:

• resellers - companies partner w fast food restaurants due to getting impressive data

• physical distribution firms

• marketing service agencies 

• financial intermediaries

actor in microenvironment: competitors

• Who may the customer choose instead?

  • provide reasonable substitutes to customers

  • Buzzwords

    • Competitive advantage

    • Point of difference

• Law of color = a brand should use a color that is opposite of major competitors

actor in microenvironment: Publics

• any group that has an interest in or impact on an organization’s ability to achieve its objectives

Types of Publics:

• financial

• media

• government

• citizen - action (a person taking an active stance and putting in effort for th org.)

• local

• general

• internal (anyone affected by the org.)

Khloe Kardashian + THON = general public

actor in microenvironment: customers

• who buys our products?

5 basic types of buyers:

• consumer

• business

• reseller

• government/non profit

• international markets

What are the actors in the microenvironment?

1. publics

2. customers

3. competitors

4. suppliers + marketing intermediaries

5. the company

macroenvironment forces: demographic

• marketers track measurable, Census - type data on consumer

  • household structure

  • age strictures

  • geographic population shifts

  • educational characteristics

  • population diversity

  • occupations

macroenvironment forces: economic

• consists of factors that affect consumer purchasing power and spending patterns

• Changes in buying behavior:

  • Market is well →overconsumption →value marketing

  • “Treasure hunter” tradeoffs - Selectively buying luxury goods, but then saving in other domains

• Changes in income distribution:

  • upper class

  • middle class

  • working class

  • underclass

macroenvironment forces: natural

• are natural resources that are needed as inputs by marketers or that are affected by marketing activities

• Factors include:

  • shortages of raw materials

  • increased pollution

  • increased government intervention

  • environmentally sustainable strategies

macroenvironment forces: technological

• factors that create new technologies, creating new product and market opportunities (while making other products obsolete)

  • Waymo: had to market that it is the same thing that is joyful

    • laughing/happy ppl

    • older ppl like it

    • different relationships in it

macroenvironment forces: political

• laws, regulations, and pressure groups that influence and limit carious organizations and individuals in a gvien society

• most marketing laws that have been passed are in order to protect the consumers

macroenvironment forces: cultural

• the forces that affect a society’s basic values, perceptions, preferences, and behavior

• Current cultural trends

Sherman Antitrust Act

prohibits monopolies, price fixing, predatory pricing

Robinson-Patman Act

amends Clayton Act, price discrimination is unlawful

Federal Food and Drug Act

created Food and Drug Administration (FDA), forbids manufacture or sale or adulterated or fraudulently labeled food and drugs

Hypertasking

multitasking in overdrive

egonomics

craving recognition of individuality

mass mingling

digital technologies affect offline mingling

cocooning

spending more time at home

down aging

comfort in familar pursuits and products from decades past

clanning

validating one’s own belief system by belonging to a group that shares common beliefs or ideals

LOHAS(Lifestyles of Health and Sustainability)

general concern for natural world

renewed spirituality

less materialism, greater meaning of life

What are the macroenvironment forces?

1. cultural

2. political

3. technological

4. natural

5. economic

6. demographic

Internal Databases

• what information do we already have?

  • Domino’s rewards program - collect freebies along the way but the company is also getting your data on your activities with the company

Marketing intelligence

• what public information is available?

  • Gatorade - pay attention to what people are saying on social media about products and then respond to it

  • Ikea - joking about the Balenciaga bag and getting the same bag for cheaper

Marketing Research

• the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

• consumer insights

• Process

  • define the problem and research objectives

  • develop research plan for collecting info

  • implementing the research plan - collecting and analyzing data

  • interpreting and reporting the findings

exploratory research

gather preliminary information that will help define the problem and suggest hypotheses

descriptive research

describes things (ex: market potential for a product, demographics, attitudes)

casual research

test hypotheses about cause and effect relationships

primary data

• collect specific info

• directly applicable

• costly

secondary data

• rely on existing info

• often not as applicable

• less expensive

research approaches

• observation

• survey

• experiment

Contact methods: mail

Likely to give more honest answers, but speed of data collection is slow.

Contact methods: telephone

Gathers information fast, but quantity of data is often smaller than other methods

Contact methods: personal/face2face

The most flexible but subject to interviewer bias

Contact methods: online (web/chat)

Least expensive, but credibility of answers may be questionable

Sampling plan

• sampling unit

• sample size

• sampling procedure

  • simple random

  • convenience

  • judgment

research instruments

• questionnaire

• mechanical instruments

observational research

• the gathering of primary data by observing relevant people, actions, and situations

• ethnographic research: observation n a natural environment

  • Marriot - not a lot of tables, spread out, uncomfy seating

Mechanical observation

BIG DATA

• on device meters

• checkout scanners

• eye cameras - eye tracking: shape, color, area around objects

• Cereal companies like Kellog’s want boxes a little below eye level on shelves b/c customers are looking at phone, list, kids, etc

BIG DATA

used by Netflix

• What do you click on? What do you pause on?

• millions of versions of each show to fit each person

Survey research

• most widely used method for primary data collection

• best for gathering descriptive information

• can gather info about people’s knowledge, attitudes, preferences, or buying behavior

experimental research

best for casual info

Process:

• select matched groups of subjects

• give different treatments

• control for unrelated factors

• check differences in responses between groups

Buyology Unrelated factors video

• shelf being fully stocked

• demographic characteristics (same location, same store)

• time of day

• cold weather - influence desire for soup

Interpreting and reporting

What does data mean?

• transform into usable knowledge

Report to management:

• presentations

• written reports

Consumer Behavior

buying behavior of individuals and households who buy goods and services for personal consumption

Cultural factors

• culture is the most basic cause of a person’s wants and behavior

• subculture is the culture of group of people who share value systems based on common life experiences

• social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors

Budweiser commercial:

What gives American?

• rural and city landscape

• color scheme e- red, white and blue

• nostalgic looking hue on it 

• Song: Landslide by Fleetwood Mac

• Car: white pick up

Hispanic Americans

• Shopping is a family affair

• brand names sell well

• internet is primary source of information

African Americans

• Enjoy shopping more than other groups

• most fashion conscious, shop for fashion and every day goods

• have a lot of purchasing power

• forward thinking, innovative

Asian Americans

• Most brand conscious

• tech savvy

cultural shifts

marketers try to spot cultural shifts to determine what new products may be wanted

social factors

reference groups include groups that a person wants to idenitfy with (aspirational) or does not want to identify with (disassociative)

• Apple vs Samsung

• Skims

Family/Household:

• most important group for most consumer buying

Roles = expected activities

Status = esteem given to role by society

Personal factors

• Age and Life cycle stage: people change the goods they buy over their lifetimes

• Occupation: influences the purchase of goods

• Economic situation: some goods and services are especially income-sensitive

• Lifestyle (psychographics): pattern of acting and interacting in the world (AIO: activity, interested, and opinions)

VALS Survey (part of personal factors)

Innovators:

• high resources = high money or power

• High innovation = lots of great ideas, have confidence

Primary Motivations:

• ideals, achievement, and self-expression

  • Ideals: Thinkers → Believers

  • Achievement: Achievers → Strivers

  • Self - Expression: Experiencers → Makers

Survivors:

• low resources, low innovation struggles b/c they feel they didn’t have a say and do not have high money/power

By understanding a person's VALS™ type, marketers can tailor products and services to better appeal to their motivations and purchasing behavior.

Personality and Self conception:

• people’s possessions contribute to and reflect their identities

Psychological factors

• motivation: about the needs that drive people (moderate incongruity)

• perception: the process by which people select, organize, and interpret information

• Buyer decision process

  • need recognition (help recognize need suggest solution to need)

  • information search (provide information conveniently)

  • evaluation of alternatives(competitive advantage and illustrate consequences)

  • purchase decision(availability and added value)

  • Postpurcahse behavior (reduce cognitive dissonance)

moderate incongruity

can be described as AD’s that you do not expect, but you understand (and it’s also explained by the next question)

• message that’s just abstract enough to cause the viewer to think to decipher its full message without missing the point

selective attention

Choose what you pay attention to

Selective distortion

• Identify with certain values

• Distort information to match our biases

• Discount information that goes against prior beliefs

Selective retention

• Remember certain information that supports your views

• Discount information that goes against prior beliefs

Cognitive dissonance

discomfort after making a purchase