UT Dallas Marketing Management (MKT 6301) Exam 1

Marketing

A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others

Exchange Process

Process by which one or more parties give something of value to each other to satisfy perceived needs

Needs

States of felt deprivation

Wants

The form taken by human needs as they are shaped by culture and individual personality

Demands

Human wants that are backed by buying power

Production Era

Orientation: "A good product will sell itself"

Time Period: Prior to the 1920s

Sales Era

Orientation: "Creative advertising and selling will convince them."

Time Period: Prior to the 1950s

Marketing Era

Orientation: "The consumer is king! Find a need and fill it."

Time Period: Last half of 20th century

Relationship Marketing Era

Orientation: "Long-Term relationships lead to success."

Time Period: Last decade of 20th century

Target Market

A group of persons for whom a firm creates and maintains a marketing mix that specifically fits that group's needs and preferences

Product

Anything that can be offered to a market for attention, acquisition, use, or consumption that may satisfy a want or need

Utility

Want satisfying power of a good/service

Form Utility

Transformation of raw materials and/or labor into a finished good and/or service that the consumer desires

Place Utility

Availability of a good and/or service where the consumer wants or needs it

Ownership Utility

Enabling ownership

Time Utility

Availability of a good and/or service when consumer wants/needs it

Relationship Marketing

The process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stake holders

The Marketing Concept

Company wide consumer orientation that creates, delivers, and communicates superior value to target markets

Marketing Myopia

Short-sightedness by business firms causing management to define their business too narrowly

Seller's Market

Marketplace characterized by a shortage of goods and/or services

Buyer's Market

Marketplace characterized by an abundance of goods and/or services

Marketing Management

-The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

- The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.

Marketing Strategy

Selecting and analyzing a target market and creating and maintaining a marketing mix that will satisfy that market.

Brand Competitors

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

Product Competitors

Compete in the same product class but market products with different features, benefits, and prices

Example: Different types of bikes-mountain bikes, tandem bikes, Olympic speed bike, etc.

Generic Competitors

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

Example: Car, bus pass, bike, skateboard, etc.

Budget Competitors

Compete for the limited financial resources of the same customers

Example: Customer has only $100 to spend on anything.

Pure Competition

Many firms selling the same basic products

Monopolistic Competition

A large number of sellers producing and selling products that are differentiated (i.e. think different brands of shampoo)

Oligopoly

A few firms controlling the majority of the industry's sales

Monopoly

One firm producing and selling a product to an entire market

Recovery (Economic Conditions Business Cycle)

- Declining unemployment

- Increased customer spending

- Increased business opportunity

Prosperity (Economic Conditions Business Cycle)

- Low unemployment

- High income

Recession (Economic Conditions Business Cycle)

- Increasing unemployment

- Reduced consumer spending

- Reduced business opportunity

Resource Availability

If resources available: Prices decrease and demand increases

If resources are not available: Prices increase and demand decreases

Economic Conditions

Economic factors that influence consumer buying power and marketing strategies:

- Business Cycles

- Inflation

- Resource Availability

- Income

Demographic Environment

- Changing Age Structure

- Changing American Family

- Geographic Shifts in Population

- Ethnic Diversity

- Better Educated/White Collar

Company's Macro-Environment

- Demographic

- Economic

- Natural

- Technological

- Political/Legal

- Cultural

Disposable Income

Income after taxes and used to spend on necessities

Discretionary Income

Money spent on non-necessary objects

Engel's Laws

As family income rises:

- % spent on food declines

- % spent on housing remains constant

- % spent on other categories increases

Natural Environment

- Raw Material Shortages

- Cost of Energy

- Pollution

- Governmental Intervention

Technological Environment

- Pace of Change

- R&D Budgets

- Minor Improvements

- Increased Regulation

Mono-chronic

Scheduling/orderly time is super important

Poly-chronic

People/situational-based is super important

Factual Knowledge

True facts (statistics)

Interpretive Knowledge

What does it mean to be a part of a group/culture

Strategic Planning

Managerial process of developing and maintaining a strategic fit between the organization's goals and capabilities, and its changing marketing opportunities

Mission Statement

- Answers "What business are we in?"

- Explains the organization's reason for existence

Vision Statement

- Answers "What do we want to become?"

- Represents where the organization is headed

Strategic Business Units (SBUs)

- Single business

- Distinct mission

- Own competitors

- Responsible management

- Controls resources

- Can be planned independently

Stars

High market growth rate and high relative market share-> Market leader in a market that's growing quickly

Question Marks/Problem Child

High market growth rate and low relative market share->Market sufferer in a market that's growing quickly

Dogs

Low market growth rate and low relative market share-> Market sufferer in a market that's growing slowly (Don't Invest)

Cash Cows

Low market growth rate and high relative market share-> Market leader in a market that's growing slowly

Market growth rate

Is considered high if its greater than 10%

Building Market Share for Question Marks

- Reduce pricing

- Increase advertising

- Concentrate on market segments

- Sales incentives

- Increase distribution

- Improve delivery and customer service

Holding Market Share for Cash Cows and Stars

- Investment in technology leadership

- Price leadership

- Strong distribution network

- Quality image building through advertising and promotion

Harvesting Strategies for Dogs

- Cost cutting in advertising, sales promotion, selling, and/or product quality (which may hurt the brand)

- Sell or Liquidate

Growth Strategies

- Market Penetration

- Market Development

- Product Development

- Diversification

Market Penetration

Selling current products with current markets (current customers)

Market Development

Selling current products to new markets

Product Development

Selling new products to current markets

Diversification

Selling a new product to a new market

First Mover Advantage

- Ability to achieve long-term competitive advantage by being first to offer a product in the marketplace

- Market is free of competition

- Helps establish customer brand loyalty

- Confidentiality is protected by patents

First Mover Risks

- High outlays associated with creating a new product, such as market research, product development and production, marketing or buyer education costs

- Early sales growth may not be as predicted

- Risk of product failure and/or not meeting consumers' expectations or needs

Late Mover Advantage

- Ability to achieve long-term competitive advantages by not being the first to offer a certain product in a market

- Opportunity to learn from the first mover's mistakes

- Lower initial investment costs than the first mover

- More data availability and certainty about the success of the market for the products

Late Mover Risks

- First mover may have patents on its technology and/or trade secrets that prevent the late mover to reverse engineer its product or producing a product that is too similar

- Difficult to gain market share

- Face strong competition

Components of a Marketing Plan

1. Executive Summery

2. Current Marketing Situation

3. SWOT Analysis

4. Objectives

5. Marketing Strategies

6. Action Programs

7. Budgets

8. Controls

Executive Summary

1-2 page synopsis of the entire marketing plan. Stresses key points and include 1-3 key points that make the company unique

Environmental Analysis/Current Marketing Situation

Information about the company's current situation with respect to the marketing environment. Assesses marketing environment factors, target markets, and current marketing objectives and performance

SWOT Analysis

- Build on a Strength

- Correct a Weakness

- Exploit an Opportunity

- Avoid a Threat (Disaster)

Marketing Objectives

Specification of the company's marketing objectives using both quantitative and qualitative measures

Marketing Strategies

Outline of how the company will achieve its objectives using target markets and marketing mix

Marketing Implementation/Action Plan

Outline of how the company will implement its marketing strategies.

Performance Evaluation

Explanation of how the company will evaluate the performance of the implemented plan

Market Opportunity

Right combination of circumstances and timing that permits an organization to reach a particular target marks

Core Competencies

Things a company does extremely well, giving it an advantage over competition

Strategic Windows

Temporary periods of optimal fit between key requirements of a market and particular capabilities of a company competing in that market

Competitive advantage

Matching a core competency to opportunities available in the market place

Marketing objectives should be...

Specific and measurable

Market Product Focus

- Market Segmentation

- Targeting

- Positioning

The 4 P's of Marketing Program

- Product strategy

- Price strategy

- Promotion strategy

- Place (distribution) strategy

Market Segmentation

Process of dividing a large market into smaller target markets, or customer groups with similar needs/desires

Criteria for Effective Segmentation

- Segment must match the firm's marketing capabilities

- Segment must be sufficiently large enough for profit potential

- Marketers must be able to effectively promote to and serve the segment

- Segment must present measurable purchasing power and size

Demographic Segmentation

- Income Level

- Family Life Cycle

- Education

- Ethnicity

Geographic Segmentation

When an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions

Psychographic Segmentation

Dividing a population into groups that have similar psychological characteristics, values, and lifestyles

Lifestyle

People's decisions about how to live their daily lives, including family, job, social, and customer activities

AIO Statements

Statments in a psychographic survey, choices reflect a respondent's activities, interests, and opinions

Benefits-Sought Segmentation

Markets can be segmented on the benefits that consumers desire from using a specific product

Situation Segmentation

Purchase situation or occasion:

- Physical surroundings

- Social surroundings

- Temporal perspective

- Task definition

- Pre-purchase attitude

- How much time to make a purchase?

Behavior/Usage Segmentation

Markets can be segmented by how often or how heavily consumers use a specific product

80/20 Principle

80% of revenue generated by 20% of customers

Segmentation Data: Internal Sources

- In-house customer and marketing databases.

- Data mine to explore patterns and relationships in collected data

Segmentation Data: External Sources

- List of catalog/magazine subscribers

- U.S. Census information

- Mediamark, CACI Marketing Systems, etc

Segmenting Business Markets

- Demographics (business size, industry, growth potential, etc)

- Operating Characteristics (technology, brand-user status)

- Purchasing Approaches (purchasing policies, size of orders)

- Product Use/Usage Situation

- Situational factors (Urgency, specific product uses)

- Buyer's Personal Characteristics

Product Use/Usage Situation

The way the product will be used and customer service levels required

Segmenting International Markets

- Economic

- Political/Legal

- Cultural

Segments that transcend national borders

- Rich around the world

- Older and comfortable

- Indulged kids

- Emerging middle class

- Women employed outside the house