Marketing 201 Chapters 1-4 Terms

Need

occurs when a person feels deprived of basic necessities such as food, clothing, and shelter

Want

a need that is shaped by a person's knowledge, culture, and personality

Marketing seeks to…

discover the needs and wants of customers and satisfy those needs and wants

Marketing (formal definition)

the activity for creating, communicating, delivering, and exchanging offerings that benefit its customers, the organization, its stakeholders, and society at large

Exchange

trade of things of (equal) value between a buyer and a seller so that each is better off after the trade

What are the 4 things required for marketing to occur?

Two (or more) parties with unsatisfied needs, a desire and ability to be satisfied, a way for the parties to communicate, something to exchange

A common goal of marketing is to….

Create Utility

Utility

consists of the benefits or customer value received by users of the product -> the want-satisfying power of a good or service (think value)

The 4 types of utility are…

Form, Time, Place, Ownership (possession)

Form utility

conversion of raw materials and components into finished goods and services

Time utility

Availability of goods and services when consumers want them

Place utility

Availability of goods and services at convenient locations

Ownership (possession) utility

Ability to transfer title to goods or services from marketer to buyer

Marketing Myopia

management's failure to recognize the scope of its business. The term was created by Theodore Levitt, and economics professor at the Harvard Business School. Focusing on customer need satisfaction can overcome myopia.

Target Market

the group of people toward whom the firm directs its marketing efforts. Diversity plays a critical role in identifying a target market

Product Strategy

deciding what goods or services the firm should offer to a group of consumers. Includes: customer service, package design, brand names, trademarks, lifecycle of a product, product positioning, new-product development

product

means more than a good, service, or idea - it refers to a broad concept that also encompasses the satisfaction of all consumer needs in relation to a good, service, or idea

Pricing Strategy

includes multiple methods for setting profitable and justifiable prices. These are subject to regulation and public scrutiny. Competition is a factor that also strongly influences this.

A good pricing strategy…

creates value for customers & builds and strengthens customer relationships with a firm and its products.

Distribution Strategy (Placement)

allows consumers to find products in the proper quantities at the right times and places. Involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels.

Promotion Strategy

the communication link between sellers and buyers. Marketers blend the various elements of promotion to communicate most effectively with their target markets. Companies use integrated marketing communications (IMC). Firms may communicate messages: directly through salespeople or indirectly through ads and promotions.

What are the 4 P's?

Product Strategy, Pricing Strategy, Place/Distribution Strategy, and Promotion Strategy

What are the 4 different orientations in American business?

Production era, sales era, marketing concept era, customer relationship era

Production Era

Attitude: "a good product will sell itself"

Stresses efficiency in producing a quality product. Characterized by production shortages, intense consumer demand, and production orientation. Problems: too much focus on the product and 80% of new products fail

Production orientation

a business philosophy stressing efficiency in producing a quality product

Sales Era

Attitude: "Consumers will resist purchasing nonessential items, so we have to push them" Marketing departments began to emerge from the shadows of production and engineering; creative advertising and personal selling are required to overcome consumer resistance and convince them to buy.

Problem: too much focus on the strategy

Sales orientation

a business philosophy assuming that consumers will resist purchasing nonessential goods and services

The Marketing Concept Era

Attitude: "the consumer has the power" There's a shift from a "seller's market" to a "buyer's market" Problem: customers were too narrowly defined.

marketing concept

the idea that an organization should strive to satisfy the needs of consumers while trying to achieve the organization's goals.

Market orientation

occurs when an organization focuses its efforts on continuously collecting information about customers' needs, sharing this information across departments, and using it to create customer value

seller's market

one in which there were more buyers for fewer goods and services

Buyer's Market

one in which there were more goods and services than people willing to buy them

The Relationship Era

Attitude: "Long-term relationships will benefit everyone" represents a major shift from the traditional concept of marketing as a simple exchange between buyer and seller

Relationship Marketing

involves developing long-term, value added relationships over time with customers and suppliers. The prevailing attitude is that long-term relationships with customers and partner will benefit everyone.

Customer Experience

internal response that customers have to all aspects of an organization and its offerings.

3 kinds of Organizations

for-profit, nonprofit, government agency

Profit

money left after a for-profit organization subtracts its total expenses from its total revenues and is the reward for the risk it undertakes in marketing its offerings

organization

a legal entity of people who share a common mission (Develop offerings and create value)

Industry created by

organizations that develop similar offerings when grouped together

Strategy

an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals

The 3 levels of strategy in todays large organization

corporate, strategic business, functional

A visionary organization…

1.Specifies its foundation (why does it exist?).

2.Sets a direction (what will it do?).

3.Formulates strategies (how will it do it?).

The organizational foundation (why) consists of

core values, mission statement and organizational culture

Core Values

are the fundamental, passionate, and enduring principles of an organization that guide its conduct over time.

• Collective Heart & Soul of the Organization

• Motivates Stakeholders

• Timeless

• Guide Conduct

Organizational Culture

consists of the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization

Mission statement

is a statement of the organization's function in society that often identifies its customers, markets, products, and technologies.

The organizational direction (what) includes…

defining the clear, broad, underlying industry or market sector of an organization's offering. Asking "what do we do?" "What business are we really in?" and also establishing Goals/Objectives

Goals/Objectives

are the statements of an accomplishment of a task to be achieved, often by a specific time.

• Profit

• Sales ($ or #)

• Market Share

• Quality

• Customer Satisfaction

• Employee Welfare

• Social Responsibility

Goals or Objectives should be…

S.M.A.R.T. (must communicate intention and time)

• Specific

• Measurable

• Attainable

• Relevant

• Time-based

Organizational Strategies (how)

includes the marketing plan & SWOT analysis

marketing plan

•is a road map for the marketing actions of an organization for a specified future time period, such as one year or five years.

SWOT Analysis

•an important strategic tool because it helps companies make sound strategic decisions by looking at their controllable/internal environment as well as their external/uncontrollable environment.

•helps planners compare internal organizational strengths and weaknesses with external opportunities and threats.

•Internal -> What the company can control.

•External -> What the company cannot control.

SWOT stands for…

Strengths, Weaknesses, Opportunities, Threats

Growth Strategies…

Business Portfolio Analysis and Diversification Analysis

Business Portfolio Analysis (BCG Matrix)

A market share/market growth matrix that plots market share against market growth potential (includes Stars, Question Marks, Cash Cows, Dogs

Market Share

•Percentage of the market that a firm currently controls (or company sales divided by total market sales).

Market growth

Annual growth rate of the market

Question Marks (BCG Matrix Upper Right)

•A new product/brand that seems popular among consumers.

•They have potential to become stars or cash cows.

•Strategy: Either invest more funds for growth or consider divesting.

•Are SBUs with a low share of high-growth markets.

•Require large injections of cash to maintain or increase market share.

•Management chooses which of these SBUs to invest in and phase out.

Stars (BCG Matrix Upper Left)

•A firm's number one product/brand.

•They generate considerable income.

•Strategy: Invest more funds for future growth.

•Are SBUs with a high share of high-growth markets.

•Require extra cash to finance future growth.

•Are likely to become cash cows when their growth slows.

Cash Cows (BCG Matrix Lower Left)

•A product/brand that generates a lot of profit.

•They generate strong cash flow. This means that it's cheap to keep and it's bringing in the money.

•Milk profits to finance growth of stars and question marks. The idiom refers to the idea that it produces "milk" (profit) long after the cost of the investment has been recouped.

•Are SBUs that generate more cash than they can use.

•Have a dominant share of slow-growth markets.

•Provide cash to cover the organization's overhead and enable the organization to invest the excess cash in other SBUs.

Dogs (BCG Matrix Lower Right)

•A product/brand that is on its way out the door, but a few loyal consumers or laggards still use it.