MARK 3336 Exam 1 (University of Houston

Marketing

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

Marketing Steps 1-4

Used to create value for the customer

Marketing Step 5

When the value is captured back from customers

Marketing Process Step 1

Understand the marketplace and customer needs/wants

Marketing Process Step 2

Design a customer value-driven marketing strategy

Marketing Process Step 3

Construct an integrated marketing program that delivers superior value

Marketing Process Step 4

Build profitable relationships and create customer delight

Marketing Process Step 5

Capture value from customers to create profits and customer equity

Needs

States of Deprivation

Example of a Need

food

Want

Form that a need takes

Example of a Want

Burger

Demands

wants backed by buying power

Example of a Demand

McDonalds Big Mac

Market Offerings

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

Four parts of market offerings

1. Product

2. Service

3. Information

4. Experiences

Market Myopia

When the focus is only on the existing wants and needs, causing the business to lose sight of underlying wants/needs, or even future wants/needs

Examples of Market Myopia

Block Buster and Kodak

Market Management

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

Questions around Market Managements

What customers will we serve?

How can we best serve these customers?

Market Segmentation

Refers to dividing the markets into segments of customers

Target Marketing

Refers to which segments to go after

Value Proposition

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

5 Types of Business Orientation

1. Production Concept

2. Product Concept

3. Selling Concept

4. Marketing Concept

5. Societal Marketing Concept

Production Concept

consumers will favor products that are available and highly affordable

Product Concept

consumers favor products that offer the most quality, performance, and features. Focus is on continuous product improvements

Selling Concept

Consumers will not buy enough of the firm's products unless the firm undertakes large-scale selling and promotion effort

Marketing Concept

Know the needs and wants of the target markets and deliver the desired satisfactions better than competitors

Societal Marketing Concept

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

Selling Concept

Starts in the factory, existing products, selling/promoting, and profits through sales volume

Marketing Concept

Starts in the market, customer needs, integrated marketing, and profits through customer satisfaction

Customer Lifetime Value

the value of the entire stream of purchases that the customer would make over a lifetime of patronage

Share of Customer

portion of the customer's purchasing that a company gets in its product categories

Customer Equity

the total combined lifetime values of all the company's customers

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 Step 1

Define the company mission

Strategic Planning Step 2

Set the company objectives and goals

Strategic Planning Step 3

Designing the business portfolio

Strategic Planning Step 4

Planning marketing and other functional strategies

Mission Statements

The organizations purpose; what it wants to accomplish in the larger environment

Questions around Mission Statements

What is our business

Who is the customer

What do customers value

What should our business be

Product Oriented Mission Statements

Focused on what the business does or produces

Market Oriented Mission Statements

Focused on what value, want, or need the business is catering too

Product Oriented vs Market Oriented

Business Portfolio

The collection of businesses and products that make up the company

Portfolio Analysis

A major activity in strategic planning whereby management evaluates the products and businesses that make up the company

3 Ways Business Units can be Organized

1. Company Division

2. Product line in a division

3. Single Product or Brand

Strategic Business Units

SBU's

Steps to analyze current business portfolios

1. Identify Current SBU's

2. Assess the attractiveness of various SBU's

3. Decide how much support each SBU should get

Growth Share Matrix

portfolio-planning method that evaluates a company's SBUs in terms of market growth rate and relative market share

Boston Consulting Group Matrix

a framework that classifies each product or product line within a firm's portfolio

BCG Sections

1. Star

2. Question Mark

3. Cash Cow

4. Dog

BCG x-axis

Relative market share

BCG y-axis

Market Growth Rate

BCG Matrix Chart

Stars

high growth and share, profit potential, may need heavy investments to grow.

Question Marks

high growth/low share, build into stars or phase out, requires cash to hold market share

Cash Cows

low growth/high share, established and successful SBUs, produces cash

Dogs

low growth and share, low profit potential, most likely need to get rid of them

Ansoff's Product-Market Expansion Grid

Looks at new products, existing products, new markets, and existing markets to seek out company growth opportunities

Ansoff's Grid (Picture)

Red Ocean Strategy

business competes in existing marketplace, lots of substitutes, established products/services

Blue Ocean Strategy

business enters a brand new marketplace, unique/new products, almost no competition

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

Actors in the Microenvironment

1. Company

2. Suppliers

3. Marketing

4. intermediaries

5. Competitors

6. Publics

7. Customers

Macroenvironment

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

Actors in the Macro-environment

1. Demographic

2. Economic

3. Natural

4. Technological

5. Political

6. Cultural

SECTR Factors

1. Social

2. Economic

3. Competitive

4. Technology

5. Regulatory

SECTR Definition

uncontrollable factors that affect a marketing decision

Trends in Marketing

1. Demographic

2. Economic

3. Environmental

4. Technology

5. Political/Social

Demographic Trends

changing age and family structures, geographic population shifts, educational characteristics, and population diversity

Economic Trends

-Changes in consumer spending

-Value Marketing

Value Marketing

involves offering financially cautious buyers greater value; the right combination of quality and service at a fair price

Environmental Trends

-sustainability

-cautious consumers

-involves developing strategies and practices that create a world economy that the planet can support indefinitely

Technology Trends

-most dramatic force in the marketplace

-new products/opportunities

-concern for safety

Political/Social Trends

-increased emphasis on ethics

-socially responsible behavior

-Cause related marketing

Double Bottom Line

seeks to extend the conventional bottom line, that measures fiscal performance— financial profit or loss— by adding a second bottom line to measure their performance in terms of positive social impact

Customer Insights

Fresh marketing information-based understandings of customers and the marketplace that become the basis for creating customer value, engagement, and relationships (needs and wants)

Why Customer Insights are difficult to obtain

-not obvious all the time

-usually the customer cant tell you why

Marketing Information System

-Provides information to the company's marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies

-Helps us gain access to customer insights

Marketing Information System (MIS)

3 Sources of Marketing Information

1. Internal Data

2. Marketing Intelligence

3. Marketing Research

Internal Data

-Collections of consumer and market information obtained from data sources within the company network

-Quicker and cheaper than other sources

-Challenges: making sense of it and keeping it current

Sources of Internal Data

sales transactions, website visits, service records, POS data

Marketing Intelligence

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

Sources of Marketing Intelligence

-people inside the company

-suppliers, resellers, key customers

-company website

-internet searching

Marketing Research

Systematic design, collection, analysis, an reporting of data relevant to a specific marketing situation facing an organization

Sources of Marketing Research

-formal studies

-surveys

-focus groups

Marketing Research Step 1

Define the problem and research objectives

Marketing Research Step 2

Develop the research plan for collecting information

Marketing Research Step 3

Implement the research plan; collect and analyze

Marketing Research Step 4

Interpret and report the findings

3 Types of Research

1. exploratory

2. descriptive

3. causal

Primary Data

information collected for the specific purpose at hand

Types of Primary Data

1. Observational Research

2. Survey Research

3. Experimental Research

4. Focus Group

Focus Group

seven to ten people who participate in a group discussion led by a moderator

Challenges for Focus Group

-expensive

-difficult to generalize from small group

-people not always open/honest

Secondary Data

information that already exists somewhere, having been collected for the specific purpose at hand