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Marketing
Activity, set of institutions and processes for creating, communicating, and exchanging offerings that have value to customers.
Exchange process
Activity in which two or more parties exchange some of value to satisfy their perceived needs.
Utility
Ability for a good or service to satisfy a customer's needs
4 Ps of marketing
Product
- Development of a product
- What problem does the product solve?
Price
- Pricing the product
Place
- Distribution of the product to the customers' places
Promotion
- Advertising the product
Types of utility
(FPOT)
Form utility
Place utility
Ownership utility
Time utility
Marketing utility
(POT)
Place utility
Ownership utility
Time utility
Place utility
Making a product available for purchase at a convenient location
Ownership utility
The easy transfer of the product to the customer
Time utility
Making good or service available when the customers want to purchase it
80/20 rule
A concept that suggests 80 percent of a firm's sales are obtained from 20 percent of its customers
Lifetime value of a customer
The tangible value of a customer (Total money they spent on the brand) + the intangible value of a customer (word of mouth)
Intangible value
Provides value but cannot be quantified with a monetary price.
ie. word of mouth
Marketing Concept
Company-wide philosophy of tailoring their products and promotions to consumer's needs
Nontraditional marketing
PEPCO
Person marketing
Event marketing
Place marketing
Cause marketing
Organization marketing
Person marketing
Use of marketing to attract interest to a particular person
OR
Using the status of a person to promote an organization
Place marketing
Use of marketing to attract interest to a particular place, such as a city or a nation
Event marketing
Marketing or sponsoring of short-term events
Cause marketing
Marketing that promotes a certain social issue
Organization marketing
Marketing that influences consumers to accept the goals of, receive the services of, or contribute in some way to an organization
Environmental scanning (marketing)
Analyzing external factors that may impact business and marketing decisions
Marketing mix
Blending of 4 marketing strategies (4 Ps of marketing)
Product, Price, Place, Promotion
Standardization (Marketing)
Not adapting marketing mix to international business.
Works best for B2B products/services, since they often require little sensitivity to a nation's culture
Adaptation (Marketing)
Making new marketing mix that adapts to international business
Mass customization
Mass producing products that have customized features tailored to individual or small groups of orders.
Marketing research
Collecting and evaluating information to make effective marketing decisions
Big data
Information collected in massive quantities from both traditional and digital sources that is used for marketing
Internal data
Data collected by the company
Ex. Financial records, consumer transactions, etc.
External data
Data collected by outside organizations
Ex. Trade organizations, advertising agencies, etc.
Secondary data
Information that was previously collected and published. Usually inexpensive to obtain.
Primary data
Information collected firsthand by the company.
Usually expensive to obtain.
Primary data may be obtained from a focus group.
Focus group
8 - 12 people gathered in a room or over the Internet to discuss a particular topic. Lets companies identify flaws in and possible improvements for their products/services.
Business intelligence
Field of research focused on gathering, storing, and analyzing data to help companies make better competitive decisions
Data mining
Part of business intelligence. Using computer-based technologies to analyze data.
Ex. Target using purchasing decisions to predict pregnancies
Data warehouse
Customers databases that allow analysts to combine data from disparate sources to identify trends.
Market segmentation
Division of a large homogeneous market into several relatively homogeneous groups. Attempts to distinguish certain groups of customers by grouping customers by certain traits.
Criteria for market segmentation
(MASU)
Measurable - The number of customers in the segment is measurable
Accessible - The segment is reachable by the company — the company should be able to distribute to them
Sizeable or substantial - The market segment should be able to offer enough sales and profits
Unique or differentiable needs - Differences between market segments should be clearly identified
Geographical segmentation
Dividing a market into groups based on their location
Demographic segmentation
Dividing a market into groups based on demographic or socioeconomic factors
Psychographic segmentation
Dividing a market into groups based on psychological characteristics, values, and lifestyles
Ex. Lifestyle, opinions, behaviour patterns, personality
Product-related segmentation
Dividing a market into groups based on customer's relationship to a good or service
Ex. Benefits sought by the customers, product usage rates, brand loyalty
End-use segmentation
B2B segmentation by the precise way businesses will use the product
Ex. Springs are used differently in bikes, watches, and cars
Consumer behavior
Actions of consumers involved in purchasing, using, and disposing of products/services and the decisions that precede and follow these actions.
Interpersonal determinants of consumer behaviour
Cultural influences
Family influences
Social influences
Personal determinants of consumer behaviour
Needs and motives
Perceptions/Attitudes
Learning
Self-concept
Self-concept
Idea about yourself constructed from your own beliefs and the responses of others
Steps in the Consumer Behavior Process
Consumer...
Has a need
Searches for solutions
Evaluates alternatives to a company's product
Purchases the company's product
Evaluates the purchasing decision
Relationship marketing
Developing and maintaining long-term, cost-effective, relationships with customers
Frequency marketing
Marketing initiative that rewards frequent purchases with cash, rebates, merchandise, and other premiums.
Affinity programs
Marketing effort sponsored by another organization which attracts individuals interested in that organization.
Comarketing
Cooperative arrangement in which two businesses jointly market each other's products
Cobranding
Cooperative arrangement in which two businesses team up and closely link their brands on a single product
Customer relationship management (CRM) software
Software that helps businesses gather, sort, and interpret data about customers
Advertisement
Promotion paid by the company
What did Chobani do to gain good publicity?
Chobani gave employees stock options
What did Levi's do to expand the number of distributors?
Levis partnered with Target, Walmart, Dicks Sporting Goods, and Tractor Supply Company.
Product
Bundle of physical, service, and symbolic characteristics that satisfy customer wants.
Convenience products
- Products that consumers purchase often and immediately with little effort
- Low price
Ex. Coffee, newspapers, eggs, milk
Shopping products
- Products purchased after a consumer has compared it with competitors.
- Medium price.
Ex. Sofas, clothing, electronics, appliances
Specialty products
- One of a kind products that consumers are familiar with and which have no other reasonable substitute
- High price
- Oftentimes specialty products are not compared with each other.
Ex. Lamborghinis, wedding dresses, handbags
Unsought products
- Products/services that consumers do not know or think about until the need for them arises
- Price varies
Ex. Funeral services, home security systems
Capital items
Products bought by businesses that last and are in use for a long time. Oftentimes expensive.
Ex. Copying machines, manufacturing machines
Expense items
Less costly products that are consumed by a business within a year.
Ex. Subscription licenses to programs
Categories of B2B products
Installations
Accessory equipment
Raw materials
Component parts and materials
Supplies
Installations
Major capital items that often require planning and approval from many individuals before a purchase.
Ex. Factories, heavy machinery, custom-made machinery
Accessory equipment
Smaller equipment that is shorter-lived compared to installations and requires fewer procedures to approve the purchase
Ex. Hand tools, printers
Raw materials
Mostly unprocessed materials used to make a product
Ex. Wood, steel, milk, soybeans
Component parts and materials
Premanufactured materials used to make a product
Ex.Hard drives used to build a laptop.
Supplies
Products that are used by the company but do not appear in the final product
Ex. Lighting for the factories
Properties of services
- Services fall into the same categories that products go under
- Services are often more difficult to evaluate prior to purchase because they are intangible
- Services are difficult to standardize because they are oftentimes tailored made for the customer's needs
Product line
A group of related products owned by a company that are marked by similar characteristics or intended for a similar market
Product mix
The assortment of product lines and individual goods and services that a company offers.
Product life cycle
Introduction
Growth
Maturity
Decline
Introduction stage
- Company attempts to promote demand for their product, by giving free trials and explaining how the product benefits the customer
- This is a costly stage, therefore some companies try to create the lowest budget product first
- Limited to no competition
Growth stage
- Sales increase as new customers join the existing customer base, who may now be repurchasing the product
- Word-of-mouth referrals and continued advertising attract new customers
- The company that created the product now earns profits
- Competition in the product's field increases as more companies start producing similar products
Maturity stage
- Sales begin to plateau as the market gets saturated with the product
- Competition is fierce
- Aggressive marketing to capture market share
Decline stage
- Sales drop
- Companies start to exit the industry
How do you extend the life cycle of a product?
- Add new users
- Increase customers' frequency of use
- Find new uses for the product
Test marketing
Introduces a new product supported by a marketing campaign into a selected city or geographical area
Brand
Name, term, sign, or symbol, or some combination that identifies the products of one company and differentiates them from competitors' offerings
Brand name
Part of a brand consisting of words or letters
Trademark
Brand that has been given legal protection
National/manufacturer's brand
Brand offered and promoted by a manufacturer
Private/store brand
Brand linked to a wholesaler
Family brand
Using a single brand name for a "family" of related products. Helps promote a product by leveraging customers' familiarity with the brand
Individual branding
Giving each product a unique name
Ex. Proctor & Gamble naming their cleaning products Tide, Cheer, and Gain.
Stages of brand loyalty
Brand recognition, brand preference, brand insistence
Brand recognition
Customers are aware of a brand but hold no preference to it
Brand preference
Customers choose one brand over another
Brand insistence
Customers go out of their way to purchase from the brand
Brand equity
Added value that a successful and respected name gives to a product. High brand equity lets companies command a larger market share
Brand awareness
The product is the first one that comes to mind when a product category is mentioned
Category advisor
Vendor assigned by a business that is in charge of dealing with other vendors for the business's project
Distribution strategy
Deals with the marketing activities and institutions involved in getting the right good or service to the company's customers
Distribution channel
Paths that products take to get from producer to consumer
Physical distribution
Physical movement that gets the product from producer to consumer
Ex. Customer service, transportation, inventory control
Direct distribution
Company is in charge of distributing their own products directly to consumers
Marketing intermediary
Company that moves goods between producers and consumers.
Marketing intermediaries provide utility for the consumers by making buying the product easy.
Ex.Retailer, wholesaler
Wholesaler
Distribution channel member that primarily sells to retailers, other wholesalers, or to businesses.
Manufacturer-Owned Wholesaling Intermediary
Manufacturers may want to control the distribution of their own products, so they may set up their own wholesaling operation
Sales branch
Stocks products and fill orders from their inventories
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