Marketing Management Exam 1

What is Marketing?

•Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
•
Marketing identifies customer needs and delivers better solutions

What are some Marketing misconceptions?

• Marketing = just advertising or sales?

• Marketing = manipulation?

What is the 1st P of Marketing?

Product - The item or service that satisfies a need.

What is the 2nd P of Marketing?

Price - What the buyer gives up (money, time) in exchange.

What is the 3rd P of Marketing?

Place - How the product gets to the customer.

What is the 4th P of Marketing?

Promotion - How customers are informed and persuaded.

What is the Marketing Concpet?

A business should aim to satisfy customer needs while achieving organizational goals.

What are the 3 Key Components of the Marketing Concept? CCP

Customer satisfaction

Company-wide coordination

Profit through long-term relationships

What does marketing create?

Value

Value = 

Value = Benefits - Costs

What are the 3 ways marketing increases value? SSE

Solving problems

Saving time

Enhancing customer experiences

Examples: Amazon (convenience), Apple (innovation), Chick-fil-a (service)

What is strategic planning?

Strategic planning is the managerial process of creating and maintaining a fit between the organization’s objectives, resources, and evolving market opportunities.

What are strategic business units (SBUs)?

SBUs operate like mini-businesses under a larger corporate umbrella - like Nike having divisions for running, basketball, and lifestyle.

What are the 4 key characteristics of an SBU?

1. Independant Operation: SBUs have their own mission,
   objectives, and decision-making processes.

2. Specific Market Focus: They target a particular market or
   product line, allowing for specialized strategies.

3. Resource Management: SBUs manage their own resources,
   including budgets and personnel.

4. Profitability Focus: Each SBU is accountable for its own
   profitability and financial performance.

What is competitive advantage?

The factors or characteristics that permit one company to compete more effectively than its industry peers

What is cost leadership?

Strategy focusing on achieving the lowest production or operating costs in the industry.

What is differentiation?

This involves offering unique or superior products or services that customers value, beyond just price. This could be through superior quality, innovative features, strong branding, or exceptional customer service.

What is focus?

This strategy concentrates on serving a specific niche market or segment of the overall market with tailored products or services. This allows companies to develop deep expertise and strong relationships within the specific segment.

What does SWOT stand for?

Strengths

Weaknesses

Opportunities

Threats

What is a SWOT analysis?

A SWOT analysis is a strategic planning tool that helps businesses and organizations assess their strengths, weaknesses, opportunities, and threats. It’s a simple yet powerful method for understanding a company’s current position and potential for future success.

What does BCG stand for?

Boston Consulting Group Matrix

What is the “Dog” BCG matrix?

Low - market share

Low - Market growth

What is the “Cash Cow” BCG matrix?

High - Market share

Low - Market growth

What is the “Question Mark” BCG matrix?

Low - Market share

High - Market growth

What is the “Star” BCG matrix?

High - market share

High - market growth

What are the 6 steps to the marketing plan?

Business Mission Statement → Objectives → Situation or SWOT Analysis → Marketing Strategy (Target Market Strategy → Marketing Mix [Product, Distribution, Promotion, Price]) → Implementation Evaluation Control

What is the marketing plan?

A comprehensive document that outlines a company's marketing strategies and tactics to achieve specific business goals, such as increasing sales or brand awareness. It acts as a roadmap, detailing how a business will reach its target audience, promote its products or services, and measure the effectiveness of its marketing efforts.

What are the 5 Marketing Objectives - SMART

Specific, Measurable, Achievable, Relevant, Time-Bound

Segmentation:

Divide the market into distinct groups of customers (segments) using segmentation practices.

Targeting:

Determine which customer group (segment) to focus your marketing = efforts on.

Positioning Strategy

Create a product positioning and marketing mix that is most likely to appeal to the selected audience.

What are the 4 Key Market Segmentation Types?

1. Demographic Segmentation
2. Psychographic Segmentation
3. Geographic Segmentation
4. Behavioral Segmentation

What are demographics?

You can use demographic segmentation to split your audience and create customer personas based on objective information, such as:
• Age
• Gender
• Income
• Level of education
• Religion
• Profession/role in a company

Psychographics:

Psychographic segmentation is the process of grouping people together based on similar personal values, political opinions, aspirations, and psychological characteristics.
• For example, you can group customers according to their:
• Personality
• Hobbies
• Social status
• Opinions
• Life goals
• Values and beliefs
• Lifestyle

Geographic segmentation

The process of grouping customers based on where they live and where they shop. People who live in the same city, state or zip code typically have similar needs, mindsets and cultural preferences.
• The real advantage of geographic segmentation
is it provides an insight into what your
customers' location says about a number of
geo-specific variables, such as their:
• Climate
• Culture
• Language
• Population density - (urban vs rural)

Behavioral Segmentation

The process of grouping customers based on common behaviors they exhibit when they interact with your brand.
• For this type of segmentation, you can group your
audience based on their:
• Spending habits
• Purchasing habits
• Browsing habits
• Interactions with your brand
• Loyalty to your brand
• Product feedback

Ethics:

The moral principles or values that govern the conduct of an individual or a group

Marketing ethics

The moral guidelines and principles that govern marketing practices, such as honesty in advertising, fair pricing, and respecting consumer rights.

3 Ethical Theories in Business

Deontology: Follow rules no matter the outcome

Utilitarianism: Choose the action that benefits the most people

Casuistry: Compare the outcomes of similar past cases

A code of ethics promotes - 5

1. Transparency
2. Fair competition
3. Consumer trust
4. Prevention of deceptive marketing
5.

Ethics vs. Law

Ethics = What is right

Law = What is legal

The pyramid of corporate social responsibility - 4

1. Philanthropic Responsibility (Be a good corporate citizen)
2. Ethical Responsibility (Be ethical)
3. Legal Responsibility (Obey the law)
4. Economic Responsibility (Be profitable)

The external marketing environment - 6

- Social
- Demographic
- Economic
- Technological
- Political/Legal
- Competitive

All surrounds the Consumer

Social Environment

Influence vales, attitudes, lifestyles

Social Environment Key Trends

Key trends: health consciousness, sustainability, instant gratification

Demographic factors

Age

Race

Gender

Location

Income

Demographic FActors Growing Segments

Gen Z

Hispanic Market

Aging Baby Boomers

Economic Factors

- Consumer income, inflation, unemployment, recession
- Impact buying power and demand

Example: Dollar Tree raising
prices from $1 to $1.25 due
to inflation

Political and Legal Factors

- Laws, regulations, FTC, FDA, FCC oversight
- Companies must comply to avoid fines and maintain ethical practices

Example: TikTok under scrutiny
for user privacy/data protection
laws

Competitive Factors

- Who are your rivals? Direct vs. indirect competitors


Example: Starbucks competes
with Dunkin' and convenience
stores like 7-Eleven

Environmental scanning

Ongoing process of collecting and analyzing external info

Helps firms respond proactively, not reactively

Global company

- A global company truly operates in various countries providing goods/services both in the native country as well as moving goods/services between countries.
- A fully functioning global company has a culture and perspective that transcends the locale where it is registered or where its stock is listed.

Globalization

The growth in international exchange of goods, services, and capital, and the increasing levels of integration that characterize economic activity

Benefits of Globalization

- Expands Economic Freedom
- Drives Competition
- Raises the productivity and living standards of people in the countries that open themselves to the global marketplace
- Advanced Technologies
- Reduces Poverty
- Promotes higher labor and environmental standards

Absolute Advantage

When a country can produce and sell a product or service at a lower cost than any other country, or when it is the only country that can provide that product or service.

Outsourcing

A business practice in which companies use external providers to carry out business pr

Outsourcing sometimes involves

Transferring employees and assets from one firm to another

Global Marketing

Marketing that targets markets throughout the world

2 things US marketing managers must develop

1. recognize and react to international marketing opportunities

2. Remain competitive at home

External environment - international focus - 5

- Culture
- Economic Development and Global Economy
- Political Structure/Actions
- Demographics
- Natural Resources

What is the first thing that can affect trade?

Tariffs: a tax levied on the goods entering a country.

What is the second thing that can affect trade?

Quota: a limit on the amount of a specific product that can enter a country.

What is the third thing that can affect trade?

Boycott: The exclusion of all products from certain countries

What is the fourth thing that can affect trade?

Trade agreements: an agreement to stimulate international trade

Perceived Value

- The customer's evaluation of the benefits of a product or service compared to its costs (what they give up—money, time, effort).
- It's subjective, meaning it depends on the individual's perception, not just the actual price or features.

Perceived Value Formula

Perceived Value = Perceived Benefits - Perceived Costs

Customer Value Hierarchy

- Explains how products and services provide value to customers at different levels.
- This hierarchy shows how businesses can meet needs, exceed expectations, and innovate for future growth.
- Understanding these layers helps marketers differentiate their offerings and build customer loyalty.

Hierarchy of Values - 5

- Core Benefit: The fundamental need or want satisfied by the product. Example: A smartphone provides communication
- Basic Product: The actual, tangible product or service.
Example: The smartphone device with a screen, battery, and body
- Expected Product: The standard features customers normally expect.
Example: Texting, internet access, and a camera.
- Augmented Product: Extra features or services that go beyond expectations.
Example: iCloud, FaceTime, or Starbucks Rewards.
- Potential Product: Future enhancements or innovations.
Example: AI integration, holographic calls, or foldable devices.

Consumer behavior

Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use

To create a proper marketing mix, marketers must understand

Customers’ preferences are constantly changing!

How customers make purchase decisions

Factors influencing consumer decisions - 4

1. Cultural (values, social class, subculture)
2. Social (family, opinion leaders, reference groups)
3. Individual (age, gender, lifestyle)
4. Psychological (motivation, perception/beliefs, attitudes)

1st Type of Purchase

Planned purchase - typically made after the consumer has collected a large amount of information (home, car)

2nd type of purchase

Partially planned purchase - typically made when the consumer knows the product category but waits until shopping to choose a specific style or brand (clothing, furniture)

3rd type of purchase

Impulse or unplanned purchase - often low-priced items or items on sale or purchased with a coupon, sometimes triggered by a nudge (food or snack item). Can also be emergency situations i.e. washer and dryer breaks down!

The new buyers funnel

1. Awareness
a. Your action: Focus on Problem
2. Interest
a. Your action: Focus on Solution
3. Consideration
a. Your action: Show what it's like to work with you
4. Purchase
a. Your action: Validate their decision
5. Post-Purchase
a. Your action: Continues Learning
5. Re-Purchase
a. Your action: Stay in touch

Consumer behavior is

complex but predictable

Marketers must

Map the decision process, understand influences, and adapt strategies

B2B Marketing (business to business)

The process of one business informing another business about a product or service. The goal of B2B marketing is for a seller to communicate with decision-makers at an organization, rather than the end consumer.

When crafting a B2B marketing plan

- You need to start by understanding the value that your product or services bring to your customers
- and how you differentiate your offerings from those of competitors.

Brand positioning

Brand positioning is a process of getting your brand out there and establishing it as something worth thinking about

By determining your brand positioning

You can define your target market or consumer, your product or service category, and the benefit of that product or service

The most popular channels for B2B advertising

Email marketing

Social media advertising

Lead generation through paid media

Market

People or organizations with needs or wants and the ability and willingness to buy.

If anyone of these four characteristics is lacking, it is not a market

Market segment

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs

Market segmentation

The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups

The importance of market segmentation

- Plays a key role in the marketing strategy of almost all successful organizations
- Helps marketers define customer needs and wants more precisely
- Leads to a deeper understanding of customer lifestyles, values, jobs to be done, need states, and buying occasions
- Helps decision makers more accurately define marketing objectives and better allocate resources

1st Criteria for succssful segmentation

Substantiality - a segment must be large enough to develop and maintain

2nd criteria for successful segmentation

Identifiability and measurability - must be able to identify a market and it has to be measureable

3rd criteria for successful segmentation

Accessibility - must be able to reach
members of the target market with
customized marketing mixes

4th criteria for successful segmentation

Responsiveness: Markets can be
segmented using any criteria, the
seem logical

Why segment?

Markets are heterogeneous → need segmentation

STP Flow

Segment → Target → Position

Effective segments

1. Geographic
2. Demographic
3. Psychographic
4. Behavioral

Steps in segmenting a market

Select a market or product category for study → Choose a basis or bases for segmenting the market: market knowledge → Select segmentation descriptiors → Profile and analyze segments →Select markets → Design, implement, and maintain appropriate marketing mixes.

How to develop an effective positioning statement

1. Identify Target Market
2. Define Frame of Reference
3. Point of Difference
4. Reason to Believe