Module 4: Marketing

Marketing

the entire process of creating relationships with customers by offering goods, services and experiences that they value

Production Orientation

a past era in marketing that placed emphasis on the increased output and production efficiency

take orders

mass produce

distribute goods

Customer Orientation

the current era in marketing where an organization first determines what customers need and then develop products to fill those needs

determine and satisfy customer needs

use feedback to refine and improve

Sales Orientation

increasing advertising

focus on product benefits

intensify sales techniques

The "Right" Principle

getting the right goods and services to the right people at the right place, time and price using the right promotion techniques

The Marketing Concept Involves

focusing on customer wants to distinguish from competitor's

achieving long-term goals by focusing on customers

Five Value Drivers

idea: what does it do

benefit

target: segment? how can you reach them?

perception: how do you want to look to customers, public and stakeholders

outcome (reward): net results?

Total Product Offer

everything that the consumer evaluates when deciding to buy

value package

Customer Satisfaction

the customer's feeling that a product has met or exceeded expectations

Customer Value

ratio benefits to the sacrifices necessary to obtain those benefits as determined by the customer

Building Relationships

a strategy the focuses on forgoing long-term partnerships with customers by offering value and providing customer satisfaction

Four Objectives of Reward Programs

to attract new customers

boost sales

encourage repeat business

reward employees

80/20 Rule

80% of your business is from 20% of your customers

Four Steps for Creating a Marketing Strategy

understanding the external environment

defining the target market

creating a competitive advantage

developing a marketing mix

External Environment

social forces

demographic forces

economic forces

political and legal forces

technological forces

competitive forces

Target Marketing

the specific group of consumers toward which a company directs its marketing efforts

Variables of a Target Market

size and growth segment

reachability

is it profitable?

the nature of the market and company

Competitive Advantage

a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition

Cost Competitive Advantage

a firm's ability to produce a product or service at a lower cost than its competitors

Differential Competitive Advantage

a firm's ability to provide a unique product of service that offers something of value besides a lower price

Niche Competitive Advantage

a firm's ability to target and effectively serve a single segment of the market within a limited geographic area

Marketing Mix

the combination of marketing activities that deliver value to customers

product

price

place

promotion

Consumer Decision Process

recognize problem/opportunity

search information

evaluate alternatives

purchase

evaluate after purchase

Individual Influences on Consumer Decisions

personality

self-concept

self-image (real and ideal)

Psychological Influences on Consumer Decisions

perception

selective exposure

attitudes

beliefs

motivation

Socio-Cultural Influences on Consumer Deisions

reference groups

family

social class

socialization process

opinion leaders

Situational Influences on Consumer Decisions

type of purchase

social surroundings

physical surroundings

previous experience

Demographic Segmentation

uses categories such as age, education, gender, income and household size to differentiate among markets

Geographic Segmentation

segmenting markets by region of the country, city or country size, market density or climate

Psychographic Segmentation

market segmentation by personality of lifestyle

Benefit Segmentation

based on what the product will do rater than on consumer characteristics

Usage-Rate Segementation

based on the amount of the product purchased or consumed

Goals of Social Marketing

effect social change

further social causes

evaluate relationship between marketing and society

Business to Business Market

small number of large customers

geographically concentrated

complex products and customization

high degree of service

trained buyers

formal negotiation

objective

relationships

multiple sources

Consumer Market

many smaller customers

geographically dispersed

less technical products

less customization

service

no training

standard items

emotional

impersonal

rarely multiple sources

Primary Data

observations

surveys

personal interviews

focus groups

Secondary Data

collected by other people and published in journals or online

Marketing Research Process

define research goal

gather information

interpret information

make marketing decisions

Customer Benefits

customer service

reliability and equity

ease of doing business

uniqueness and customization

co-creation of value

social impact

experiences

authenticity

Customer Costs

time

convenience

complexity of use

restricted application

disposal

health and safety

social perception

negative post purchase feelings

Product

goods, services, accessories and packaging

goods or services along with its perceived attributes and beliefs that creates value for the customer

Price

list price

discounts

flexibility

Promotion

advertising, PR, WOM, personal selling

the attempt by marketers to inform, persuade or remind consumers and industrial users to engage in the exchange process

Place

channel

distribution

market coverage

Product Line

a group of similar products or products intended for a similar market

Product Mix

the combination of product lines offered by a manufacturer

Brand

name

design

symbol

slogan

creates a perception

Trademark

legal protection for name and image

Brand Loyalty

commitment to a brand

Brand Awareness

how quickly a brand comes to mind

A Good Brand Name

reflects benefits

easy to say, recognize and remember

translates well

can be legally protected

is distinctive

reflects values

Product Differentiation

the attempt by the manufacturer to create real or perceived differences in the minds of consumers of the superiority of one product over others

Packaging

makes the product more attractive to both customers and retailers

visibility

usefulness

attractiveness

Services

can be packaged such as spa offering, haircuts, pedicures and massages for one inclusive price

Product Life Cycle

introduction

growth

maturity

decline

refers to entire product category

Introduction Stage

little competition

frequent modifications

limited distribution

heavy promotion

high failure rate

increased production and marketing costs

less sales volume

small or negative profits

Growth Stage

sales growth at increasing rate

heavy profits with a peak as prices fall due to competition and economies of scale

many competitors

large companies acquire smaller ones

aggressive marketing

increased distribution

priority to increase or retain market share

Maturity Stage

sales growth but at a decreasing rate

saturated markets

product line extensions by product variations

global introduction of products

Decline Stage

sales and profits decline

trade allowances eliminated

most ads and sales promotions eliminated

rate of decline: change in tastes and new product introductions

Innovation

any product improvement that customers value over existing choices

includes new products and improvements to existing products

Products Become Obsolete When

more competitors offer similar products and introduce innovations

customers need change

technology changes

Benefits of Innovation

improving function and quality

lower costs of production

offering customers new experiences not previously available

Direct Distribution

producer sells directly to consumer with no marketing intermediaries in between

Producer to Retailer to Customer

producer sells to a retail store which then sells to customers

Producer to Wholesaler to Retailer to Customers

goods are sold to wholesalers then retailers

two-step

Producer to Agent to Wholesaler to Retailer

similar to two-step with the addition of sales agents who help connect buyers and sellers

Distribution

efficiently managing the acquisition of raw materials to the factory and the movement of products from the producer to industrial users and consumers

Distribution Channel

the path taken by goods from the producer to consumer

decrease the number of transactions

ease of flow

perform needed functions

Intermediaries

organizations that assist in moving goods and services from producers to end users

agents and brokers

industrial distributors

wholesalers

retaiers

5 Major Modes of Transportation

railroads (moderate cost and average speed)

trucks (high cost and fast speed)

pipelines (low cost and slow speed)

waterways (very low cost and very low speed)

airplanes (very high cost and very fast speed)

Disintermediation

collapse of the supply chain

decrease cost to consumer

increase profit to business

Ways to Do Disintermediation

private labelling

.com - amazon

purchasing power - walmart

Exclusive Market Coverage

one or two dealers in an area

Selective Market Coverage

limited number of dealers in an area (more than 2)

Intensive Market Coverage

manufacturer tries to sell its products wherever there are potential customers

Responsibilities of Supply Chain Management

managing logistical components

sourcing and procurement

production scheduling

warehouse selection

material handling system

making transportation decisions

Pricing Objectives

profit maximization

achieving targets

value pricing

building traffic

achieving greater market share

creating an image

furthering social objectives

Price Skimming

initial high price - lower over time

Penetration Pricing

initial lower price - secure market

Leader Pricing

initial below normal markup

Bundling

grouping two or more products as a singe product

Odd-Even Pricing

odd - bargain

even - quality

Prestige Pricing

increase price perceived as higher quality

Cost-Based Pricing (Markup Price)

estimated cost of product + profit margin = Price

Demand-Based Pricing

estimated selling price - profit margin = target cost

Competition-Based Pricing

same at or below competitors

Fixed Costs

do not vary with different levels of output

Variable Costs

change with different levels of output

Breakeven Point

total fixed costs / price - variable costs

in units

Components of Promotion Mix

advertising

personal selling

sales promotion

public relations

Integrated Promotional Mix

the careful co-ordination of all promotional activities to produce a consistent, unified message that is customer focused

Advertising

any paid form of non-personal presentation by an identified sponsor

Personal Selling

a face-to-face sales presentation to a prospective customer

Sales Promotion

marketing events or sales efforts that stimulate buying

Public Relations

any communication or activity designed to win good will to prestige for a company or person

Six Promotional Goals

creating awareness

encourage trying new products

providing information

keeping loyal customers

increase amount and frequency of use

identifying target customers

Four Factors that Affect Promotional Mix

nature of the product

market characteristics

available funds

push and pull strategies

Push Strategy

a marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or a retailer to carry and sell particular merchandise

Pull Strategy

a marketing strategy that stimulates consumer demand to obtain product distribution

Advantages of Advertising

offers scale

targeting

choice

accessibility