MARK Exam 1

law of leadership

it’s better to be first than it is to be better

value chain

A set of Primary and Support Activities that perform together to create economic value for the Enterprise

primary activities (value chain)

– Inbound Logistics

– Operations

– Outbound Logistics

– Marketing (including Sales)

– Service

support activities (value chain)

– Procurement

– Technology Development

– Human Resource Management

– Firm Infrastructure (Finance, Accounting, Legal – G&A)

marketing

a process by which companies create value for customers and build strong customer relationships to capture value from customers in return

marketing process

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needs

* states of deprivation
* physical - food, clothing, warmth, safety
* social - belonging and affection
* individual - knowledge and self-expression

wants

form that needs take as they are shaped by culture and individual personality

demands

wants backed by buying power

market offerings

some combination of products, services, information, or experiences offered to a market to satisfy a need or want

marketing myopia

focusing only on existing wants and losing sight of the underlying consumer needs

exchange (transaction)

the act of obtaining a desired object from someone by offering something in return.

Marketing actions try to create, maintain, and grow desirable exchange relationships

marketing mix

\-product

\-price

\-place (distribution)

\-promotion

product

The total package of benefits the customer obtains when making a purchase (itself, brand name, warranty, financing, etc)

planning product line

Some Specific Decisions:

 How broad or narrow should the product line be?

 Will it span a range of price points?

 What are the physical and performance characteristics (eg. Sensory)?

 Will it have a brand name? A master brand name?

product decisions are shaped by:

– Long-run Growth Potential

– Resource Commitments

– Competitive Positioning

– Company-Product/Market Fit

most important product decision base

a clear understanding of…. EXISTING & POTENTIAL CUSTOMER WANTS & DESIRES!

• Requires constant monitoring & adjusting

– PROACTIVE—NOT REACTIVE—ACTION

• First Mover Advantages

• Me-too Product Challenges

price

Determined by the Interplay between…..

– Supply/Demand Conditions

– Cost Factors – Competition

– Buyer Bargaining Power

– Product Value to Potential Customers

supply and demand

– Greater the Supply, Lower the Price

– Affecting Demand & Supply

cost factors

* fixed and variable costs

competition

Responses to Competitive Price Pressures:


1. Differentiating Products
2. Exercising Price Leadership

buyer bargaining power

Buyers Have Strength to the Extent They:

 Account for Significant % of Seller’s Sales

 Have Multiple Options for Meeting Procurement Needs

place

Elements of the Distribution System

– Direct Sales Reps

– Brokers/Manufacturer’s Reps

– Distributors

– Retail Outlets

 The “Glue” of the Distribution System – Technology and Information EDI – Electronic Data Interchange

successfully managed distribution channels

– Products are stocked & available

– Resellers actively display, advertise, & promote

– Resale prices and margins do not deteriorate

how suppliers gain strength in channel management

– Selective Rather Than Intensive Distribution

– Superior product Line Breadth & Quality

– High Degree of Supplier/Reseller Interdependency

– Supplier Sales Force Presence at Resale Level

communication channels (promotion)

 Print Media

 Television

 Direct Mail

 Telemarketing

 Point-of-Sale Displays

 Personal Sales forces

 Third-party Influencers

 Trade Shows

 Internet  Other Events

law of category

if you can’t be first in a category, set up a new category you can be first in

marketing management

the art and science of choosing target markets and building profitable relationships with them.

\-What customers will we serve (target market)?

\-How can we best serve these customers (value proposition)?

value proposition

the set of benefits or values it promises to deliver to customers to satisfy their needs.

societal marketing

The company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests

customer equity

Ultimate aim of Customer Relationship Management (CRM)

Customer Equity (per authors) =‘s the total combined customer lifetime values of all of the company’s current and potential customers (the future value of a company’s customer base)

customer relationship groups

changing marketing landscape

Digital Age

Changing Economic Environment

Growth of Not-for-Profit Marketing

Rapid Globalization

Sustainable Marketing

social media

provide exciting opportunities to extend customer engagement and get people talking about a brand

mobile marketing

Using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience

bid data and AI

Brands can use big data to gain deep customer insights, personalize marketing offers, and improve customer engagements and service.

not-for-profit marketing

growing, as sound marketing can help organizations attract membership, funds, and support

rapid globalization

Managers around the world are taking both local and global views of the company’s:

Industry

Competitors

Opportunities

sustainable marketing

Corporate ethics and social responsibility have become important for every business

strategic planning

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

strategic planning steps

mission statement

the organization’s purpose, what it wants to accomplish in the larger environment

market-oriented mission statement

defines the business in terms of satisfying basic customer needs

business objectives

build profitable customer relationships

invest in research

improve profits

marketing objectives

increase market share

create local partnerships

increase promotion

planning tools

Porter

BCG Growth-Share Matrix

GE

Product/Market Expansion Grid

Porter

structural analysis of industries

BCG Matrix

Enhances multidivisional firms’ efforts to formulate strategies

Autonomous divisions (or profit centers) constitute the business portfolio

Firm’s divisions may compete in different industries requiring separate strategy

Graphically portrays differences among divisions

Focuses on market share position and industry growth rate

Manage business portfolio through relative market share position and industry growth rate

stars

* Market Leaders
* Fast Growing
* Require Investment to Grow
STRATEGY
* Protect Share
* Reinvest earnings through price cuts,
Product Improvement, More Efficiency
* Obtain Large Share of New Users

question marks

Rapid Growth

* Poor Profit Margins
* Enormous Demand for Cash
STRATEGY
* Invest to Aggressively build share
* Buy existing shares by acquiring

cash cows

* Profitable Products
* Generate More Cash Than Needed
For Share Maintenance
* Slow Sales Growth
STRATEGY
* Maintain Market Dominance
* Invest in Process Technology Improvement and
Price Leadership, R&D in Other Product Markets

dogs

* Majority of Products fall in this category
* Cost disadvantage - few growth opportunities
at Reasonable Cost
* Markets not Growing
STRATEGY
* Harvest: Cut back all support to maintenance
* Divest (sell); Abandon (Delete from line)

GE Multifactor Portfolio Model

SWOT Analysis

parts of a marketing plan

Executive Summary - Marketing Situation - Threats/Opportunity

Objective/Issues - Marketing Strategy - Action Programming

- Budgets

marketing implementation

 Turns marketing plans into marketing actions to accomplish strategic marketing objectives

 Addresses who, where, when, how

marketing department organization

functional

geographic

product management

market or customer

marketing control

Controlling

 evaluating of results

 taking of corrective action to achieve objectives

 Operating control

 Strategic control

return on marketing investment

 is net return from a marketing investment divided by the costs of the marketing investment

 provides a measurement of the profits generated by investments in marketing activities.

law of unpredictability

unless you write your competitors’ planes, you can’t predict the future

marketing environment

the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers

microenvironment

consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics

macroenvironment

consists of the larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political and cultural forces

the company

Top management

Finance

R&D

Purchasing

Operations

Accounting

suppliers

Provide the resources to produce goods and services

Treat as partners to provide customer value

marketing intermediaries

help the company to promote, sell, and distribute its products to final buyers

competitors

firms must gain strategic advantage by positioning their offerings vis-a-vis competitors’ offerings

publics

Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives

Financial publics

Media publics

Government publics

Citizen-action publics

Local publics

General public

Internal publics

customers

Consumer markets

Business markets

Reseller markets

Government markets

International markets

demography

the study of human populations-- size, density, location, age, gender, race, occupation, and other statistics

demographic environment

involves people, and people make up markets

demographic trends

shifts in age, family structure, geographic population, educational characteristics, and population diversity

changing american family (demographic environment)

More people are:

Divorcing or separating

Choosing not to marry

Choosing to marry later

Marrying without intending to have children

Increasing number of working women

Increasing number of stay-at-home dads

geographic shifts in population

Growth in U.S. West and South and decline in Midwest and Northeast

Change in where people work:

\-Telecommuting

\-Home office

economic environment

consists of factors that affect consumer purchasing power and spending patterns

\-Industrial economies are richer markets

\-Subsistence economies consume most of their own agriculture and industrial output

natural environment

natural resources that are needed as inputs by marketers or that are affected by marketing activities

Trends:

* Increased shortages of raw materials


* Increased pollution
* Increased government intervention
* Increased environmentally sustainable strategies

technological environment

Most dramatic force in changing the marketplace

New products, opportunities

Concern for the safety of new products

political and social environment

Legislation regulating business:

* Increased legislation
* Changing government agency enforcement

Increased emphasis on ethics:

* Socially responsible behavior
* Cause-related marketing

cultural environment

consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors

law of division

over time, a product category will divide and become 2 or more categories

customer insights

Fresh and deep insights into customers needs and wants

Difficult to obtain

* Not obvious
* Customers are unsure of their behavior

Better information and more effective use of existing information

marketing information system

**provides** information to the company’s marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies

\-consists of people and procedures for:

* Assessing the information needs
* Developing needed information
* Helping decision makers use the information for customer

characteristics of a good MIS

Balancing what the information users would like to have against what they need and what is feasible to offer

internal databases

electronic collections of consumer and market information obtained from data sources within the company network

competitive marketing intelligence

Is the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketplace

marketing research

the systematic design, collection, analysis, and reporting of data

relevant to a specific marketing situation facing an organization

developing research plan

secondary data

information that already exists somewhere, having been collected for another purpose.

primary data

information collected for the specific purpose at hand

**Research Approaches**

* **Observational research**
* **Ethnographic research**
* **Survey research**
* **Experimental research**

observational research

involves gathering primary data by observing relevant people, actions, and situations.

ethnographic research

involves sending trained observers to watch and interact with consumers in their “natural environments.

survey research

involves gathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior

experimental research

gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses

focus group

Six to 10 people

Trained moderator

Challenges

* Expensive
* Difficult to generalize from small group
* Consumers not always open and honest

sampling plan

A **sample** is a segment of the population selected for marketing research to represent the population as a whole.

Who is to be studied?

How many people should be studied?

How should the people be chosen?

questionnaires

Most common

In person, by phone, or online

Flexible

Researchers must be careful with wording and ordering of questions

* Closed-ended
* Open-ended

Useful in exploratory research

law of perception

marketing is not a battle of products; it’s a battle of perceptions

consumer buyer behavior

the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption

consumer market

all of the personal consumption of final consumers

culture

the learned values, perceptions, wants, and behavior from family and other important institutions and is the most basic cause of a person’s wants and behavior