Marketing 1

Marketing

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

Four Prerequisites for Marketing

(1) Two or more parties with unsatisfied needs; (2) A desire and ability on their part to have their needs satisfied; (3) A way for the parties to communicate; (4) Something of value to exchange.

Exchange

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

Consumer Need

A state of felt deprivation of basic physical necessities (food, clothing, shelter) or psychological well-being; marketing uncovers needs rather than creating them.

Consumer Want

A felt need that is shaped by a person's knowledge, culture, and individual personality; marketing activities channel and shape consumer wants.

Target Market

One or more specific groups of potential consumers toward which an organization directs its marketing program.

What are the Four Ps of Marketing?

The controllable operational factors managed by the marketing department: Product, Price, Promotion, and Place.

Product (Four Ps)

A good, service, or idea engineered to satisfy consumer needs, including features, brand name, packaging, warranty, and service design.

Price (Four Ps)

The monetary or non-monetary consideration exchanged for an offering, including list prices, discounts, allowances, and payment terms.

Place (Four Ps)

The distribution architecture and physical logistics delivering offerings to buyers where and when they want them.

Promotion (Four Ps)

The integrated communication mix deployed to inform, persuade, and remind buyers, including advertising, personal selling, PR, sales promotions, and direct/social media.

What are the Four Is of Service?

The four unique elements that distinguish services from physical goods: Intangibility, Inconsistency, Inseparability, and Inventory.

Intangibility (Four Is)

The quality that services cannot be held, touched, or seen before the purchase decision; marketers must make service benefits tangible through physical cues and brand imagery.

Inconsistency (Four Is)

The reality that service quality is often variable and depends on the individuals who provide it and their day-to-day performance; reduced through standard operating procedures, training, and automation.

Inseparability (Four Is)

The consumer cannot separate the delivery of the service from the service provider itself; interaction between employee and customer forms the core customer experience.

Inventory (Four Is)

Service inventory is directly tied to idle production capacity; when the service provider is available but there is no demand, inventory cost is the cost of paying the employee.

Customer Value

The unique combination of benefits received by targeted buyers, including quality, convenience, on-time delivery, and service at a specific price; structured via best price, best product, or best service.

Relationship Marketing

Linking an organization to its individual customers, employees, suppliers, and other partners for long-term mutual benefit; prioritizes customer lifetime value over one-time sales.

Marketing Program

A plan that integrates the marketing mix (Four Ps) to provide a good, service, or idea to prospective buyers.

Societal Marketing Concept

The view that organizations should satisfy consumer needs in ways that provide for society's well-being, ethical standards, and long-term sustainability.

Four Economic Utilities of Marketing

Form Utility (physical production of goods), Place Utility (convenient location), Time Utility (available when needed), Possession Utility (easy to purchase/finance).

What are the Three Types of Organizations?

(1) For-Profit Organization (Business Firm); (2) Nonprofit Organization; (3) Government Agency.

For-Profit Organization (Business Firm)

A privately owned entity that serves its customers in order to earn a financial profit for its owners/shareholders.

Nonprofit Organization

A nongovernmental organization that serves its clients where operational goals center on operational efficiency and client satisfaction rather than monetary profit.

Government Agency

A federal, state, county, or city unit that provides specific public services to its constituents without a profit motive.

Organizational Structure Tiers

Board of Directors -> Corporate Level (enterprise strategy) -> Strategic Business Unit (SBU) Level (divisional strategy) -> Functional Level (tactical execution in marketing, finance, R&D).

Marketing Positioning

The mental perception, image, and identity consumers hold of a company or brand relative to its competitors.

Mission Statement

A formal statement of the organization's scope and function in society, defining who we are, what we do, and why we exist.

Core Values

The timeless, enduring principles that guide an organization's internal conduct and ethical boundaries.

Organizational Goals (Objectives)

Quantitative performance targets specified within defined horizons: Sales Revenue (Price x Quantity), Profit, Market Share, Quality, Customer Satisfaction, Social Responsibility.

Sales Revenue Formula

Sales Revenue = Price x Quantity of units sold.

Market Share

The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.

Marketing Dashboard vs. Metric

A marketing dashboard is the visual display of real-time performance indicators; a marketing metric is the quantitative measure of the performance trend (e.g., CLV, CDI, BDI).

Business Portfolio Analysis (BCG Matrix)

A framework evaluating strategic business units (SBUs) along two axes: Market Growth Rate (vertical) and Relative Market Share (horizontal).

BCG Matrix: Question Marks

SBUs with low relative market share in high-growth markets; net consumers of corporate cash requiring heavy capital injection to build into Stars, or candidates for divestment.

BCG Matrix: Stars

SBUs with high relative market share in high-growth markets; rapid growth requiring sustained investment to fund expansion and protect leadership.

BCG Matrix: Cash Cows

SBUs with high relative market share in low-growth markets; generate substantial cash surpluses used to fund corporate operations and invest in Stars/Question Marks.

BCG Matrix: Dogs

SBUs with low relative market share in low-growth markets; generate low margins, consume executive time, and are prime candidates for harvesting or divestment.

BCG Product Life Cycle Progression

The typical life cycle movement: Question Marks (Introduction) -> Stars (Growth) -> Cash Cows (Maturity) -> Dogs (Decline).

Diversification Analysis (Ansoff Matrix)

A framework for evaluating forward growth opportunities across combinations of present and new markets versus present and new products.

Market Penetration

Increasing sales of existing products within existing markets through aggressive pricing, advertising, or retail distribution density.

Product Development

Selling newly engineered or modified products to the company's existing customer base.

Market Development

Introducing an existing product line into a new geographic territory or unserved demographic market segment.

Diversification Strategy

Developing an entirely new product and marketing it to an entirely new, unserved market; represents the highest operational and financial risk.

Four Strategic Marketing Realities

(1) Customers are different; (2) Customers change; (3) Competitors change and react; (4) Organizational resources are limited.

What is the Strategic Marketing Process?

The approach whereby an organization allocates its marketing mix resources to reach its target markets, divided into Planning, Implementation, and Evaluation phases.

Three Phases of Strategic Marketing Process

(1) Planning Phase; (2) Implementation Phase; (3) Evaluation Phase.

Strategic Marketing Process: Phase 1 (Planning)

Step 1: Situation (SWOT) Analysis; appraising internal Strengths and Weaknesses alongside external Opportunities and Threats.

Strategic Marketing Process: Phase 2 (Planning)

Step 2: Market-Product Focus and Goal Setting; segmenting the market, identifying points of difference, framing customer value propositions, and setting quantifiable goals.

Strategic Marketing Process: Phase 3 (Planning)

Step 3: Marketing Program Design; developing the operational Four Ps (Product, Price, Promotion, Place) and formalizing budgetary resources.

Points of Difference

Those characteristics of a product that make it superior to, and distinct from, competitive substitutes; essential for market positioning.

Strategic Marketing Process: Implementation Phase

The execution phase where the marketing plan is put into operational action to achieve corporate objectives.

Four Components of Implementation Phase

(1) Obtaining financial and human resources; (2) Designing the marketing organization; (3) Developing execution schedules and deadlines (Gantt charts); (4) Executing the marketing program.

Strategic Marketing Process: Evaluation Phase

Tracking actual performance results against planning goals, exploiting positive deviations, and taking corrective actions on negative performance gaps.

SWOT Analysis

Appraisal of internal Strengths and Weaknesses against external Opportunities and Threats.

Internal vs. External Factors in SWOT

Strengths and Weaknesses are internal factors within organizational control; Opportunities and Threats are external macroenvironmental factors outside organizational control.

Four Strategic Actions of SWOT Analysis

Build on strengths, Correct internal weaknesses, Exploit external opportunities, and Avoid external threats.

Environmental Scanning

The process of continuously acquiring information on events occurring outside the organization to identify and interpret potential trends.

What are the Five Environmental Forces?

Social, Economic, Technological, Competitive, and Regulatory forces (uncontrollable macroenvironmental factors).

Social Forces

Macroenvironmental force encompassing demographic characteristics of the population and evolving cultural values.

Demographics

Objective population statistics including age distributions, gender ratios, household structures, income, and ethnic compositions.

Baby Boomers

Demographic cohort born between 1946 and 1964; hold substantial accumulated wealth; prioritize health, retirement living, and financial preservation.

Generation X

Demographic cohort born between 1965 and 1980; self-reliant, pragmatic, highly educated; prioritize work-life balance and practical technology.

Generation Y (Millennials)

Demographic cohort born between 1981 and 1996; first digital natives; prioritize personal experiences, brand authenticity, and environmental sustainability.

Generation Z

Demographic cohort born between 1997 and 2010; digital integrators; prioritize diversity, social justice, algorithmic personalization, and fiscal pragmatism.

Multicultural Marketing

Marketing programs that reflect the unique aspects of different target cultures, ethnic traditions, and languages.

Economic Forces

Macroeconomic conditions (GDP, inflation, consumer sentiment) and microeconomic consumer income tiers.

Gross Income

The total amount of money earned by an individual, household, or family in a single calendar year before taxes.

Disposable Income

The money remaining after paying personal taxes, utilized for purchasing essential necessities such as food, shelter, and basic clothing.

Discretionary Income

The money remaining after paying personal taxes and satisfying all basic living necessities; used for luxury goods, vacations, entertainment, and savings.

Technological Forces

Inventions or innovations from applied science or engineering research that transform commerce, reduce costs, or accelerate product obsolescence.

What are the Four Forms of Competition?

Pure Competition, Monopolistic Competition, Oligopoly, and Pure Monopoly.

Pure Competition

Market structure with a large number of sellers distributing undifferentiated commodity products; price is determined purely by market supply and demand.

Monopolistic Competition

Market structure with many competitors selling substitutable products differentiated by features, brand identity, or perceived quality.

Oligopoly

Market structure where a few dominant corporate players control the vast majority of industry sales (e.g., airlines, telecom); avoids direct price wars.

Pure Monopoly

Market structure where a single commercial firm sells a unique product with no close substitutes; heavily regulated by government bodies.

Regulatory Forces

Federal, state, and local laws enacted to protect fair competition, consumers, and society.

Sherman Antitrust Act (1890)

Federal statute prohibiting contracts, combinations, or conspiracies in restraint of trade and forbidding monopolization.

Clayton Act (1914)

Federal statute forbidding specific corporate actions that lessen competition, including tying contracts and exclusive dealing.

Robinson-Patman Act (1936)

Federal statute outlawing price discrimination among commercial business buyers for goods of like grade and quality.

Consumer Behavior

The actions a person takes in purchasing and using products and services, including the mental, social, and emotional processes that precede and follow these actions.

Consumer Purchase Decision Process

The five stages a buyer passes through: (1) Problem recognition; (2) Information search; (3) Alternative evaluation; (4) Purchase decision; (5) Postpurchase behavior.

Consumer purchasing process, Problem Recognition (Step 1)

Perceiving a significant difference between your actual situation and your ideal situation big enough to trigger a decision.

Consumer purchasing process, Information Search (Step 2)

Seeking value through internal search (memory, past brand experiences) and external search (friends/relatives, public consumer reports, marketer ads).

Internal vs. External Information Search

Internal search is scanning personal memory; external search gathers data from personal sources, public reviews, and marketer-dominated advertising.

Consumer purchasing process, Alternative Evaluation (Step 3)

Assessing value by comparing brands against established evaluative criteria to yield the consideration set.

Evaluative Criteria

The objective product attributes and subjective factors a consumer uses to compare different products and competing brands.

Consideration Set

The shortlist of acceptable brands a consumer would consider purchasing from among all alternatives within a product class.

Consumer purchasing process, Purchase Decision (Step 4)

Buying value by deciding from whom to buy (retailer terms, price, return policy) and when to buy (promotions, store conditions).

Consumer purchasing process, Postpurchase Behavior (Step 5)

Realizing value by comparing product performance against expectations to assess satisfaction or dissatisfaction.

Cognitive Dissonance

Postpurchase psychological anxiety, doubt, or buyer's remorse regarding whether an alternative brand would have been a superior choice.

Cognitive Dissonance Strategies

Marketers mitigate dissonance through post-purchase confirmation calls, warranties, money-back guarantees, clear return policies, and reassurance ads.

Consumer Involvement

The personal, social, and economic significance of the purchase to the consumer; dictates whether problem solving is routine, limited, or extended.

Routine Problem Solving

Low-involvement purchasing for inexpensive, frequently bought items (e.g., milk); relies on habitual brand loyalty with minimal information search.

Limited Problem Solving

Moderate-involvement purchasing where consumers rely on moderate external search and evaluate several brands across a few evaluative criteria.

Extended Problem Solving

High-involvement purchasing for expensive, unfamiliar, or socially visible products (e.g., cars, homes); thoroughly engages all five decision stages.

What are the Five Situational Influences?

Purchase Task, Social Surroundings, Physical Surroundings, Temporal Effects, and Antecedent States.

Purchase Task (Situational)

The underlying reason for engaging in the purchase decision (e.g., buying for personal use versus purchasing a gift).

Social Surroundings (Situational)

The presence and influence of other individuals during the shopping and purchasing occasion.

Physical Surroundings (Situational)

The physical retail store environment, including decor, interior layout, lighting, music, and aromas.