Marketing midterm

marketing

the activity, set of institutions, and process for creating, delivering, and exchanging offers that have value to customers, clients, partners, and society at large

what is the marketing department responsible for?

facilitating relationships, partnerships, and alliances with the org’s customers, shareholders, suppliers, and other orgs

what are the environmental forces that shape an org’s marketing actions?

• social

• economic

• technological

• competitive

• regulatory considerations

what is needed for marketing to occur?

1. Two or more parties (individuals or organizations) 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 to exchange

First objective in marketing?

Finding the needs of prospective customers

• ex. customer surveys, concept tests

target market

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

The Four P’S marketing mix factors 

• Product: a good, service, or idea to satisfy consumer’s needs

• Price: what is exchanged for the product

• Promotion: A means of communication between seller and buyer

• Place: A means of getting the product to the consumer

*CONTROLLABLE FACTORS- meaning they are controlled by the market organization*

marketing mix

a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers 

Marketing evolution stages

production era → early years of the US until 1920s and goods were very scarce

sales era → 1920-1960s where manufactuers found they could produce more goods than buyers could consume

marketing concept era → Late 1950s marketing becomes a motivating force

customer relationship era → 1980s til today where firms seek the high expectations of customers

Marketing concept

 idea that an organization should strive to meet consumer needs but also achieve the org’s goals 

market orientation

focuses efforts on collecting information about customer’s needs, sharing it across departments, and using it to create customer value

Societal marketing concept

 the idea that org’s should satisfy the needs of the consumers in a way that improves society’s well-being

• ex. Patagonia’s worn wear program → encourages customers to repair, trade, and recycle all of their products

product

good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfy customer needs and is received in exchange for money or something else of value

ultimate consumers

 people who use products and services purchased for a household

organizational buyers

 manufacturers, wholesalers, retailers who buy products/service for their own use or resale 

utility

the benefits or customer value received by users of the product

4 types of utility

form utility → the production of the product or service

place utility → having the offering available where consumers need it

time utility → having it available when needed

possession utility → the value of making an item easy to purchase through the provision of credit cards or financial arrangements

Steps of the purchase decision process

1. problem recognition

2. information search

3. alternative evaluation

4. purchase decision

5. Postpurchase behavior

extended problem solving

where in each of the 5 stages of the purchase decision process, extra time and effort are used for external research for alternatives

5 situation influences that affect purchase decision process

1. the nature of the purchase task

2. social surroundings

3. physical surroundings

4. temporal effects

5. antecedent states

High involvement purchase

the item to be purchased

• is expensive

• can have serious personal consequences

• could reflect social image

• engage in extensive information search

low-involvement purchase

item to be purchased

• is barely thought about

Consumer touchpoints

 a marketers’ product, service, or brand points of contact with a consumer from start to finish in the purchase decision process

• ex. a consumer sees a company’s offerings online, but also goes through independent reviewing services and has conversations with other consumers

Maslow Hierarchy of needs

idea that motivation comes from a need

From top to bottom:

• Self-actualization needs: self-fulfillment

• personal needs: status, respect, prestige

• social needs: friendship, belonging, love

motivation

the energizing force that stimulates behavior to satisfy a need

personality

a person’s consistent behaviors or responses to recurring situations

If the benefits outweigh the costs

there is a high customer perceived value

• benefits- cost = value

primary marketing research

provides results specifically about your company (collecting data for the first time from scratch)

• focus groups

• surveys

• interviews

Disadvantage → cost of research is expensive

secondary marketing research

using existing data

• usually free or low of cost

Disadvantage → results are not as specific to your business

• includes internal data and external data

• external data → accessing information from other websites

needs

anything humans require for survival

wants

anything people would like to have or desire

sociocultural influences

• cultural → ethnic and cultural backgrounds

• social → reference groups, social class, family

• personal → views, opinions, or behaviors of others

3 types of organizaitons

• for profit

• nonprofit

• government agencies

strategy

an organziation’s long term course of actions designed to deliver a unique customer experience while achieving its goals

3 organizational levels

• Board of directors

• Corporate level

• Strategic business unit level

levels of corporate strategy

• corporate level → here top management directs overall strategy for the entire organization

• Strategic business unit level → where managers set a strategic direction for their businesses to exploit value-creating opportunities

• functional level → where groups of specialists actually create value for the organization

strategic business unit (SBU)

a subsidary, division, or unit of an org that markets a set of related offerings to a clearly defined target market

visionary organization

has a clear expression of their purpose

• ex. Meta or Apple

key elements of visionary organizations

• organizational foundation (the why?)

• organizational direction (the goals)

• organizational strategies (the how)

organizational purpose

describes why an organziation exists, what problem it wishes to solve, and who it wants to be to everyone it touches through its work

businesses pursue different types of goals including

• profit

• sales

• market share

• quality

• customer satisfaction

• employee welfare

• social responsbility

marketing plan

a road map for the marketing actions of an org for a specified future time period, such as one or five years

marketing dashboard

visual display of the essential information related to achieving a marketing objective

Goal of a business portfolio analysis

to see which SBU’s generate the cash to fund the org’s growth opportunities

BCG 4 Quadrants

1. Question marks → low share, high growth market (Companies should invest or discard these based on their chances of becoming stars)

2. Stars → high share, high growth market (Companies should significally invest in these as they have high future potential)

3. cash cows → high share, low growth (Generate cash to support the rest of the company/reinvest)

4. Dogs → low share, low growth (Liquidate or sell )

4 Quadrants of the Ansoff Matrix

1. market penetration → Sell more of current products to current customer/markets (Selling more Ben and Jerry’s ice cream to Americans") LOWEST RISK

2. market development → take current products to new markets (expand Ben and Jerry’s to Argentina)

3. product development → create new products for current customers (selling childrens clothes under Ben and Jerrys)

4. diversification → create new products and sell them to new markets (sell branded Ben and Jerry’s clothing in Argentina) HIGHEST RISK

strategic marketing process

involves the allocation of an organization’s marketing mix resources to reach its target markets and achieve a competitive advantage

principles for understanding the strategic marketing process

• customers are different

• Customers change

• competitors change and react

• organizational resources are limited

phases of the strategic marketing process

1. Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)

2. Develop a market-product focus, customer value proposition, and goals (puts potential buyers into segments, specifies the marketing goals, make the product superior to competitors)

3. Design the marketing program ( how to achieve marketing this, using the 4 P’s)

value proposition

cluster of benefits that an org promises customers to satsify their needs

who is the leading importer and exporter

China → exporter

US → importer

countertrade

 the process of using barter rather than money for global sales

• very popular within Eastern European and Latin America

trade feedback effect

when market trading activities loop back to influence their original source

• ie. exports affect imports and imports affect exports

gross domestic product

 the monetary value of all products and services produced in a country during one year 

• the US has been the continuous leader of GDP

balance of trade

exports - imports

→ when exports exceed imports - causes a surplus

→ when imports exceed exports - causes a shortage

globailization

 the focus on creating economic, cultural, political, and technological interdependence among individual national institutions and economies

protectionism

the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas

• Limits outsourcing of jobs 

• Protects a nation’s political security

• Discourages economic dependency on other countries 

• Promotes development of domestic injuries and employment 

tariff

taxes on products or services entering a country

quota

restriction on amount allowed to enter/ leave country

European Union

Consists of 27 membering countries that have eliminated most barriers to the free flow of products, services, capital, and labor across their borders 

Global competition

exists when firms originate, produce, and market their products and services worldwide.

• ex. automobiles, pharmaceutical, apparel, electronics, aerospace, and telecommunication fields

cross-cultural analysis

involves the study of similarities and differences among consumers in two or more nations or societies

values

 represent personally or socially preferable modes of conduct or states of existence that tend to persist over time

Customs

what is considered normal and expected about the way people do things in a specific country

Foreign Corrupt Practices Act 1977

makes it a crime for corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country

cultural symbols

things that represent ideas and concepts in a specific culture

• ex. thumbs up is a positive sign in US, but a sign of hatred in Poland and Russia

currency exchange rate

 the price of one’s country’s currency expressed in terms of another country’s currency, such as the US dollar in euros

political-regulatory climate

determines how long a favorable or unfavorable climate will last 

global market entry strategies

1. exporting → producing products in one country and selling them in another

2. licensing → where a company offers the right to trademark, patent, in return for a fee

→ franchising is a part of licensing

1. joint venture → when a foreign country and local firm invest together to create a local business

2. direct investment → when a domestic firm invests and owns a foreign subsidary

three ways a product can be sold globally

• product extension → selling virtually the same product in other countries

• product adaptation → changing a product in some way to make it more appropriate for consumer preferences or a country’s climate

• product invention → inventing a totally new product to satisfy common needs around countries

indirect exporting

when a firm sells its domestically produced products to a foreign country through an intermediary

• least risk and least likely amount of profit

distribution strategy

where and how companies can get and buy a product

dumping

when a firm sells a product in a foreign country below its domestic price or actual cost

• done to build a company’s share of the market by pricing it at a competitive level

complimentary economic flow

as exports of a country increase, national output and income rise too

purchasing power parity

The rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country

• gets an idea of the cost of living

5 understandings for when to operate globally

1. economic integration of countries

2. global competition among global companies for global consumers

3. economic protectionism by individual countries

4. presence of networked marketspace

5. prevalence of economic espionage

benefits and risks of economic integration

benefits:

• ease of trade

• improved supply chain

• speed to market

• sometimes no exchange rates

risks:

• higher barrier for market entry

• slower speed to market

• higher administrative efforts (more time, more people)

• more labor intensive

before going global, remmeber these factors

• cultural and social norms (values, customs, symbolism, language)

• economic considerations (infastructure, exchange rates)

• political-regulatory climate (political stability, tariffs and quotas)

global economic considerations

• political instabilities and safety concerns

• weaker currency and economy

• underdeveloped infrastructure

• limited free speech and advertising restrictions

marketing research

the process of defining a marketing problem and opportunity, systematically analyzing and collecting information, and recommending actions

5 steps for marketing research

1. Define the problem

2. Develop the research plan

3. collect relevant information

4. develop market findings

5. Take marketing actions

know bullet points underneath steps CLASS 5 slides

two types of research

exploratory research → provides ideas about a vague problem or question

conclusive research → involves trying to find the frequency with which something occurs or the extent of a relationship between two factors ( a specific question)

• includes casual and descriptive research

• casual → cause, effect, correlations (ex. looking at change in numbers or trying to conduct an experiment)

• descriptive → market size, target audience, purchase frequency, price sensitivity, satisfaction score (ex. just looking at numbers)

measure of success

criteria or standards used in evaluating proposed solutions to the problem

• leads to clear marketing action

constraints

 the restrictions placed on potential solutions to a problem

• (ex. Limitations on time and money)

Steps to developing the plan

• identify constraints

• identify the data

• determine how to collect the data

new-product concept

 picture or verbal description of a product that the firm might offer for sale

concepts

ideas about products or services

methods

approaches that can be used to collect data to solve all or part of a problem

two types of data

primary data → facts and figrues that are newly recorded for the project

secondary data → facts and figures that have already been recorded prior to the project (internal/ external data ex. US Census Bureau reports) Advantages: low cost and time saving, may be out of date

rule for marketing researchers

obtain secondary data first, then primary data second

panel

sample of customers or stores from which researchers take a series of measurements

• disadvantage: marketing research firm has to recruit new members to replace those who drop out

experiment

involves obtaining data by manipulating factors under tightly controlled conditions to test cause and effect

→ involves marketing drivers (product’s features, price, or promotion)

test markets

 offering a product for sale in a small geographical area to help evaluate potential marketing actions

big data

large amounts of data collected from a variety of sources and analyzed with an increasingly sophisticated set of technologies

information technology

 all the computing sources that collect, store, and analyze the data

data visualization

presentation of the results of the analysis

artificial intelligence

undertake reasoning and common sense to allow computers to behave intelligently

data mining

extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions

• ex. diapers and beer close to each other in the grocery store

sales forecast

 the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts 

lost-horse forecast

starting with the last known value of the item being forecast, listing the factors that could affect the forecast, assessing whether they have a positive or negative impact, and making the final forecast