MGMA01 FlashCards FInal

What is marketing

A transaction between 2 parties to satisfy a human need

4 factors essential to marketing

1. Two or more parties with unsatisfied needs

2. Ability and desire on their part to be satisfied.

3. A way to communicate and transact btwn both parties

4. Something to exchange

lists give me comms ptsd..

3C-4P framework

3Cs (Strategy)

1. Customer

2. Competition

3. Company

4Ps (tactics)

1. Product

2. Pricing

3. Place

4. Promotion

Production orientation

• Business is centered around manufacturing

• Consumers want products widely available and affordable

• Business focuses on operational efficiencies and cost reduction rather than product quality

Product orientation

• Business is centered around product

• Consumers want the highest quality, highest performance, most innovative features with the product

• Business focuses on product quality and design

Selling orientation

• Business centered around volume of sales

• Focuses on sales typically for undesired goods, and they're driven by overcapacity (Produce more than what they can sell)

• Makes you believe you're getting the best deal

• Focuses on securing deals

Marketing orientation

• Business centered around the customer

• Assumes consumers have unmet needs/wants that businesses can satisfy by selling them products/services at a profit

• Focus is to provide value to customers

Selling Concept

Factory>Existing products> Selling/promoting>Profit from volume of sales

(This is under Starting point>Focus>Means>Ends)

Marketing concept

Market>Customer needs> Integrated marketing> Profit from customer satisfaction

(This is under Starting point>Focus>Means>Ends)

Consequences of outward(marketing)-orientation

Pricing: cost plus or value based

Marketing: Expenses or investment

Organization: By product/process or by customers

Customer value

• Net benefit from purchasing/consuming a product/service

• Offering products such that

1. Value of our product> value of not purchasing at all

2. Value of our product> Value of purchasing from competition

Value drivers

• Benefits and quality

• Costs

• Competitive offers

First fundamental principle of marketing

Customers don't value the product or its attributes, but the benefits derived from it. (Desirability)

Second fundamental principle of marketing

Can we offer something consumers value (feasibility)

Third fundamental principle of marketing

Is it better than what competitors offer? (Viability)

Three levels of strategy in an organization

1. Corporate strategy (Corporate goals)

2. Business unit strategy (Business goals)

3. Functional strategy (Finance, marketing, HR, manufacturing)

Corporate strategic planning

1. Corporate mission

2. Core competence

3. Portfolio analysis (e.g BCG matrix)

4. Development of corporate plan for growth

Marketing Myopia

• Sustained business growth depends on how broadly we define our business.

• Ask ourselves, are we being near sighted (Myopic) ?

• For example, photographic film and capturing memories. Kodak failed to realize how capturing memories would evolve over the years, and were tunnel visioning with their photographic film, therefore they failed to adapt to the market and dropped a dick load in relative market share

Corporate mission

Making money vs making meaning

• Making meaning: Increase quality of life, right a wrong, prevent the end of something good

Core Competence

• Describes the company's strengths and its competitive advantage over other companies.

• Collective learning in an organization (coordination, integration)

• Resource based view, Internal (own strengths), External (Competitive)

Ask questions like

• Are we hard to copy or scarce

Competitive advantage

Company name + What you're best at + why

BCG matrix

• Y axis= Growth and cash required to grow

• X axis= Relative market share (your market share over the market share of your biggest competitor)

• Star, problem child, dog, cash cow

• Under 1 (on x axis) means you're not a market leader and you're a skrub

Star

• Market leaders that are fast growing and needs to invest to keep up with the market.

• Profitable and high growth potential and large relative market share

Problem child

• In a rapidly growing market, poor profit margins, large demand for cash

• Have the potential to become a star, just keep investing in hope to capture more market share.

Dog

• In a ded, ungrowing market, not expected to be profitable

• Best to divest money or abandon alltogether for better and more profitable products

Cash cow

• Profitable products, slow market growth which usually means little investments for big returns

• You milk the cows for money and invest the cash into problem child

General framework for BCG

1. Divest or abandon dogs

2. Milk cows, use cash generated and invest in problem child

3. Problem child becomes star, if it becomes a dog just divest or abandon

4. Cash generated from stars should be reinvested into business

Monopoly

Only one firm provides product/service

Oligopoly

Small group of firms provide differentiated or identical product/service at comparable prices.

Monopolistic competition

Many competitors offering products. They try to target different segments and differentiate themselves from others.

Pure competition

Many competitors offering the same undifferentiated product at same prices.

Threat of New Entrants

Idea that in a rapidly growing market that is easy to enter, existing firms need to make their prices firm as there is a lot of potential for new entrants to be substitutes.

Internal Rivalry

A market with a lot of competition has less flexible prices as changes in price greatly shifts demand.

Bargaining power of buyers

The more substitutes there are, the more power the buyer has and vice versa.

Bargaining power of sellers

The more relative market share a firm has, the more flexible they can be with their prices.

Threat of substitutes

A market with many substitutes has less flexible prices ( since consumers have more options) than a market with a few substitutes.

Red Oceans Strategy

Fighting competitors for more market share, resulting in a bloodbath hence the ocean is red.

Identifying Competitors

• Levels (Form, generic, budget, category)

• Substitutability

• Consumer judgement (opportunity cost, comparing products)

• Purchase records (switching, cross-elasticity)

Targeting competitors

Consider:

1. Own and competitors strategies and resources

2. Customer segments

3. Time horizon

4. Rate of technology change

Assessing competitors

1. On strategies

2. On objectives

3. On strengths

4. On weaknesses

• Share of market (volume, value)

• Share of mind (awareness)

• Share of heart (Preference)

Gain in share of mind and heart eventually leads to a gain in share of market.

How to find out about competitors

1. What they say about themselves

2. What others say about them

3. What we can observe

Anticipating competitive response

• PRISONERS DILEMMA

• Number, concentration, size distribution

• Watch for strategies consistent with market share

• Understand nature of buying decisions

• Study competitors revenue and cost strategies

Reaction patterns

1. Laid back competitor- Those slow to respond

2. Selective competitor- Responds only to specific attacks

3. Tiger competitor- Reacts swiftly and strongly to new entrants

4. Stochastic competitor- No predictable pattern

To remain as market leaders, market leaders must..

1. Expand market- Finding new users, uses, usage

2. Protect own market share- Build on strengths, plug any holes, innovate

3. Expand market share

Market challengers

• Aim to increase market share

• Frontal attack: Directly attacking competitors, risky if competitor is bigger.

• Flank: Finding a weakness

-Encircle: Taking over competitors segment

-Guerilla: No structure, harass or demoralize competitor

Market followers

• Follow market leaders rather than challenging them

• Adapter: Take's market leader product and adapts or improves them

• Cloner: Copies market leader product and makes slight variations

Market Nicher

• Avoid competing with large firms by targeting small markets

• Have large market share in small markets

• Key idea is specialization: customers, product, or in others

Blue Oceans Strategy

• Expanding the market (increasing size of the pie)

• Expanding into unexploited opportunities

• Thinking outside the box: Focus on needs rather than technology, new ways of satisfying a need, blending multiple needs.

Model of consumer behaviour

Marketing stimuli(4 Ps) > consumer's mind > Buyer's response

Aggregate (Macro) consumer analysis

• Demographic trends: Rate of population growth, age distribution, roles of gender at workplace, income distribution, geographic centers of population

• Consumer buying trends: Focus: Self, family, world Consumption values: Price, value, quality Scarce resources: Money, time, people

Micro consumer analysis

• Personal characteristics: Age, income, gender, self- concept, personality

Consumer decision making process

Need recognition> Information search> evaluation of alternatives> Product choice> Post purchase

Rational consumer

• Clearly knows their problem

• Knows all alternatives

• Knows all criteria, compares criteria to alternatives and makes the best choice

• ie, we're utility maximizing consumers

Real consumer

• Emotional, but also rational

• In truth, we're lazy, we take shortcuts, and we forget

• ie, we're boundedly rational

Utlitarian- decision modes

Driven by functionality, price, and performance

Know > Feel > Do

Mundane- decision modes

Habitual purchases driven by availability

Do > know > feel

Self- Expressive- decision modes

• Emotional and driven by relevance to self. We buy the product cause it represents who we are and we're emotionally connected to it

Feel > Do > know

Manifest motives

Obvious values of the product

Latent motives

Underlying values of the product like status

Understanding consumer needs

Motivation:

• Physiological, safety, social, esteem and self-actualization (Maslows Hierachy of Needs)

Value Laddering

Bottom Up - Information acquisition

Trying to make sense of new information

Top down - Information acquisition

Using existing information

Perception - Information acquisition

Select, organize, interpret information

Pertinence

• Situational factors: Occasion, time, pressure

• Individual differences: Level of involvement

• Product factors: Cost/investment

Evaluation of alternatives

• Idea that consumers value brands based on the delivery and importance of benefits

• Value to the customers is the importance of benefit multiplied by delivery of benefits. If product has multiple benefits, use the sum of all of them.

Linear Model

Decision based on attributes given equal weight

Lexicographic model

Decision based on most important attribute, if tied go onto the next most important

Conjunctive model

Decision based off on cutoff points, if brand does not meet ANY cutoff level, then that brand is out

Elimination by aspects model

Decision based on going from most important attribute, eliminating brands that don't satisfy cutoff level.

Post purchase behaviour

• Based on consumer expectations and perceived product performance, consumers are either satisfied, dissatisfied or experience cognitive dissonance

• Is it a relationship or purely only transactional, is it a long term partnership or not (Customer loyalty)

Business markets: An overview

Compared to consumers, business markets have:

• Fewer numbers but more volume

• Geographical concentration

• More complex decision making

Business decision process

Users: Actual users of the product Influencers: Experts and opinion leaders Buyers: Negotiate with vendors then place order Deciders: Power to select vendors

Reasons why role of marketer is complex

• Many ppl need to be managed

• Different roles

• Final selection based on prices

• There needs to be justification behind a purchase

How can a marketer be more effective

• Building relationships

• Providing superior service

• Offering strong brand

• Manage all involved in decision-making.