INTRO TO MARKETING - EXAM 1

Marketing Defined

-Customers are the focus
-Marketing deals with products, price, distribution, and promotion
-Marketing builds satisfying exchange relationships
-Marketing occurs in a dynamic environment

The Importance of Marketing in Our Global Economy

-Marketing costs consume a sizable portion of buyers’ dollars
-Marketing is used in nonprofit organizations
-Marketing is important to businesses
-Marketing fuels our global economy
-Marketing knowledge enhances consumer awareness
-Marketing connects people through technology
-Socially responsible marketing can promote the welfare of customers and society
-Marketing offers many exciting career prospects

Stakeholders

Those constituents who have a “stake,” or claim, in some aspect of a company’s products, operations, markets, industry, and outcomes; these include customers, employees, investors and shareholders, suppliers, governments, communities, and others

Marketing

The process of creating, pricing, distributing,and promoting goods, services, and ideas to facilitate satisfying exchange relationships with customers and other stakeholders in a dynamic environment

Customers

The purchasers of an organization’s products; the focal point of all marketing activities

Target Market

-A specific group of customers on whom an organization focuses its marketing efforts
-Large or small customer groups
-Single or multiple product markets
-Single or multiple products
-Local to global markets

Customers

The purchasers of an organization’s products; the focal point of all marketing activities

Target Market

-A specific group of customers on whom an organization focuses its marketing efforts
-Large or small customer groups
-Single or multiple product markets
-Single or multiple products
-Local to global markets

The Marketing Mix

Four marketing activities—product, pricing, distribution, and promotion—that a firm can control to meet the needs of customers within its target market

Product

Goods, services, or ideas that satisfy customer needs

Pricing

Decisions and actions that establish pricing objectives and policies and set product prices

Distribution

The ready, convenient, and timely availability of products

Promotion

Activities that inform customers about the organization and its products

Exchange

The provision or transfer of goods, services, or ideas in return for something of value

Exchange Conditions

-Two or more participants have something of value that the other party desires.
-Exchange provides mutual benefit/satisfaction.
-Each party has confidence in the exchange value of the other party’s offering.
-Each party must meet the expectations of the exchange to become trusted by the other parties.

Marketing Environment

The competitive,
economic,
political,
legal and regulatory,
technological,
and sociocultural forces that surround the customer and affect the marketing mix

Marketing Concept

A philosophy that an organization should try to satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals

Customer satisfaction

-Analysis of customers’ current and long-term needs
-Analysis of competitors’ capabilities
-Integration of firm’s resources

Evolution of the Marketing Concept

-Production Orientation

-Sales Orientation

-Marketing Orientation

Implementing the Marketing Concept

-Becoming marketing oriented requires establishing an information system to discover customers’ needs and using the information to create satisfying products.

-coordinating all marketing activities by restructuring the organization.

-obtaining the support of all managerial and staff levels in the organization.

Relationship Marketing

-Establishing long-term, mutually satisfying buyer-seller relationships allowing for cooperation and mutual dependency

-Increased value of customer (loyalty) over time results in increased profitability.

Customer Relationship Management (CRM)

Using customer information to create marketing strategies that develop and sustain desirable relationships

-Identifying buying-behavior patterns

-Using behavioral information to focus on the most profitable customers

Value

A customer’s subjective assessment of benefits relative to the costs in determining the worth of a product

Customer value = customer benefits – customer costs

Customer Benefits

Anything desired by the customer that is received in an exchange

Customer Costs

Anything a customer gives up in an exchange for benefits

-Monetary price of the benefit
-Search costs (time and effort) to locate the product
-Risks associated with the exchange

Marketing Management

The process of planning, organizing, implementing, and controlling marketing activities to facilitate exchanges effectively and efficiently

Effectiveness

The degree to which an exchange helps an organization achieve its objectives

Efficiency

The process of minimizing the resources an organization must spend to achieve a specific level of desired exchanges

Planning

-Assessing opportunities and resources
-Determining marketing objectives
-Developing a marketing strategy and plans for implementation and control
-How, when and by whom are marketing activities performed?

Organizing

-Developing the internal structure of the marketing unit
-Functions, products, regions, customer types

Implementation

Coordinating marketing -activities
-Motivating marketing personnel
-Developing effective internal communications within the unit

Control

-Establishing performance standards
-Comparing actual performance to established standards
-Reducing the difference between desired and actual performance

Effective Marketing Control Process

-Provides for quick detection of differences in planned and actual performance
-Accurately monitors activities and is flexible enough to accommodate changes
-Incurs low process costs relative to the costs of a “no-control” situation
-Is understandable by both managers and subordinates

The Importance of Marketing in Our Global Economy

-Mktg costs consume a sizable portion of buyers’ dollars
-Mktg used in nonprofit organizations
-Important to business
-Mktg fuels global economy
-Mktg knowledge enhances consumer awareness
-Mktg connects people through technology
-Socially responsible marketing promotes welfare of customers and society
-Mktg offers many exciting career prospects

Strategic Planning

The process of establishing an organizational mission and formulating goals, corporate strategy, marketing objectives, marketing strategy, and a marketing plan

Marketing Strategy

A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market

Marketing Plan

A written document that specifies the activities to be performed to implement and control an organization’s marketing activities

Core Competencies

Things a firm does extremely well (strengths), which sometimes give it an advantage over its competition
-Financial and human resources
-Reputation, goodwill, and brand names

Market Opportunity

A combination of circumstances and timing that permits an organization to reach a target market

Strategic Windows

Temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a firm

Competitive Advantage

The result of a company’s matching a core competency (superior skill or resources) to opportunities in the marketplace
-Manufacturing skills
-Technical skills
-Marketing skills

SWOT Analysis

An assessment of the organization’s strengths, weaknesses, opportunities, and threats
-Strengths: competitive advantages or core competencies
-Weaknesses: limitations on competitive capability
-Opportunities: favorable conditions in the environment
-Threats: conditions or barriers to reaching objectives

Mission Statement

-A long-term view, or vision, of what the organization wants to become -The mission statement answers two questions:

1. Who are our customers?

2. What is our core competency?

Marketing Objective

A statement of what is to be accomplished through marketing activities to match strengths to opportunities, or to provide for the conversion of weaknesses to strengths
-Should be stated in clear, simple terms
-Should be accurately measurable
-Should specify a time frame for accomplishment
-Should be consistent with business-unit and corporate strategy

Corporate Strategy

Determines the means for utilizing resources in the various functional areas to reach the organization’s goals
-Determines the scope of the business
-Guides its resource deployment
-Identifies its competitive advantages
-Provides overall coordination of functional areas

Issues Influencing Corporate Strategy Development

-Corporate culture
Competition
-Differentiation
-Diversification
-Interrelationships among business units
-Environment concerns and social issues

Strategic Business Unit (SBU)

A division, product line, or other profit center within a parent company

Market

A group of individuals and/or organizations 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

Market-Growth/Market-Share Matrix

A strategic planning tool based on the philosophy that a product’s market growth rate and market share are important in determining marketing strategy

Factors determining SBU/product’s position within a matrix

1. Market growth rate
2. Relative market share

BCG Classification

- Star

• Cash Cow

• Dog

• Question Mark

Star

Star—high growth market, dominant market share
requires additional resources for continued growth

Cash cow

low growth, dominant market share -- generates surplus resources for allocation to other SBUs

Dog

low/declining market, subordinate market share --
has diminished prospects and represents a drain on the portfolio

Question mark

high growth market, low market share -- represents a high-risk/cost opportunity requiring a large commitment of resources to build market share

Defining/understanding the target market

-focusing on specific profitable customer groups/market segments.
-recognizing changes occurring in the market.

Creating the Marketing Mix

-Analyze customer needs, preferences, and behavior
-Have the skills and resources required for product design, pricing, distribution, and promotion
-Maintain strategic consistency and flexibility in marketing mix decisions

Marketing Planning

The process of assessing opportunities and resources, determining objectives, defining strategies, and establishing guidelines for implementation and control of the marketing program

Benefits of Planning

-Provides the basis for internal communication among employees
-Defines the assignment of responsibilities and tasks and sets the schedules for implementation
-Presents objectives and specifies resource allocations
-Helps in monitoring and evaluating the performance of the marketing strategy

Marketing Implementation

process of putting marketing strategies into action

Intended Strategy

strategy that the company decides on during the planning phase

Realized Strategy

strategy that actually takes place

Internal Marketing

-Coordinating internal exchanges between the firm and its employees to achieve successful external exchanges between the firm and its customers
-Helping employees understand and accept their roles in the marketing strategy

External customers

Individuals who patronize a business

Internal customers

A company’s employees

Total Quality Management (TQM)

philosophy that uniform commitment to quality in all areas of the organization will promote a culture that meets customers’ perceptions of quality

Benchmarking

Comparing the quality of the firm’s goods, services, or processes with that of the best-performing competitors

Empowerment

Giving customer-contact employees authority and responsibility to make marketing decisions on their own

Centralized Organization

A structure in which top management delegates little authority to levels below it

Decentralized Organization

A structure in which decision-making authority is delegated as far down the chain of command as possible

Marketing Control Process

Establishing performance standards and trying to match actual performance to those standards

Taking Corrective Action

-Improve actual performance
-Reduce or change the performance standards
-Do both

Problems in Controlling Marketing Activities

-Lack of information
-Uncontrollable influence of market environment changes on marketing activities
-Time lag that occurs between marketing campaigns and their results delays corrective actions

Environmental Scanning

The process of collecting information about forces in the marketing environment
-Observation
-Secondary sources
-Market research

Environmental Analysis

The process of assessing and interpreting the information gathered through environmental scanning
-Accuracy
-Consistency
-Significance

Reactive approach to Environmental Forces

-Passive view of environment as uncontrollable
-Current strategy is cautiously adjusted to accommodate environmental changes

Proactive approach to Environmental Forces

-Actively attempts to shape and influence environment
-Strategies are constructed to overcome market challenges and take advantage of opportunities

Monitoring Competition

-Helps determine competitors’ strategies and their effects on firm’s own strategies
-Guides development of competitive advantage and adjusting firm’s strategy
-Provides ongoing information about competitors
-Assists in maintaining a marketing orientation

Economic Forces

-Buying Power
-Willingness to Spend

Buying Power

-Resources, such as money, goods, and services, that can be traded in an exchange

Disposable income

after tax income

Discretionary income

disposable income available for spending and saving beyond the basic necessities of life

Willingness to Spend

An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces

Expectations influencing the willingness to spend

-Future employment
-Income levels
-Prices
-Family size
-General economic conditions (e.g., rising prices)

Stages in the Business Cycle

-Prosperity
-Recession
-Depression
-Recovery

Prosperity

Low unemployment and high total income create high buying power

Recession

Rising unemployment reduces total buying power; consumer and business spending decline

Depression

Unemployment extremely high, wages and total disposable income are very low, and there is a lack of consumer confidence

Recovery

Economy is moving out of recession or depression towards prosperity

Federal Trade Commission (FTC)

influences marketing activities most; can seek civil penalties and require corrective advertising

Self-Regulatory Forces

-Better Business Bureau
-National Advertising Review Board (NARB)

Food and Drug Administration (FDA)

Enforces laws and regulations to prevent distribution of adulterated or misbranded foods, drugs, medical devices, cosmetics, veterinary products, and potentially hazardous consumer products

Consumer Product Safety Commission (FCC)

Ensures compliance with the Consumer Product Safety Act; protects the public from unreasonable risk of injury from any consumer product not covered by other regulatory agencies

Federal Communications Commission (FCC)

Regulates communication by wire, radio, and television in interstate and foreign commerce

Environmental Protection Agency (EPA)

Develops and enforces environmental protection standards and conducts research into the adverse effects of pollution

Federal Power Commission (FPC)

Regulates rates and sales of natural gas producers, thereby affecting the supply and price of gas available to consumers; also regulates wholesale rates for electricity and gas, pipeline construction, and U.S. imports and exports of natural gas and electricity

Technology

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

Impact of Technology

-Dynamic means constant change
-Reach refers to how technology quickly moves through society.
-The self-sustaining nature of technology as the catalyst for even faster development

Sociocultural Forces

The influences in a society and its culture(s) that change people’s attitudes, beliefs, norms, customs, and lifestyles