AEM 1200

4Ps of Marketing

4Ps of Marketing

• Product: Basic design of the product/service • Price: How much the purchaser pays • Placement (or distribution): Where and how the productis available or sold • Promotion (or communications): Influencing consumerpurchase decisions through information, persuasion, and branding

10-K report

Required annual report filed with the SEC by publicly held firms

ALDI's Strategy

Limited selection (1400 vs 40,000 items) Private label (few name brands) Quarter-deposit carts No shelf-stocking Super-sized or multiple barcodes No bagging, no bags Small footprint (12,000 vs 145,000ft2) Cross-trained employees (3-5 at time, 15-20 overall)

Asset

A useful or valuable thing, person, or quality Both Tangible and Intangible Assets

BHAG

Big Hairy Audacious Goal "clear and compelling and serves as a unifying focalpoint of effort, often creating immense team spirit. It has a clear finish line, so the organization can know when it has achieved the goal .... A BHAG should not be a sure bet ... but the organization must believe 'we can do it anyway Example: Microsoft - A computer on every desk and in every home, all running our software Facebook - Connect the world

BHAG Siblings

• Strategic intent • Stretch goal • 10X goal • Moonshot • Aspirational goal • Aspirational OKR

Brand Definitions

The image your customers have of your business or product Your product 's identity/personality that sets it apart from the competition An intangible business/marketing concept that helps people identify a company or product

Brand Equity

A brand's value The power of a brand to make you choose that product or service A value premium a company generates from a product with a recognizable name when compared to a generic equivalent

Business Model Basics

Value Proposition - Why customers will buy from you Cost Structure - How you will make money

Business Products

Purchased to use either directly or indirectly in the production of other products• Installations and accessory equipment• Maintenance, repair, and operating products• Raw materials, processed materials, and businessservices

Capability

Ability to perform actions

Coca Cola's Globalization

•WWII and the Army's support was crucial•In Mexico: Deep distribution and millions of sales points was key.

Competitive Rivalry

Switching CostsIndustry Growth Rate

Convenience vs Shopping Goods

Convenience: Staple goods, impulse goods, or emergency goods Shopping: Goods purchased after comparing price, quality, and style

Core Competence

An activity that a company performs quite well & is central to its strategy & competitiveness

Corporate Governance

System of rules, practices, and processes by which a firm is directed and controlled. •Balance the interests of the company's stakeholders(Stakeholders, senior management, suppliers, customers, financiers, the government, community) •A company's board of directors is the primary force influencing corporate governance

Corporation

Definition: Legal entity separate from its owners Pros•Limited Liability•Permanence•Ease of transfer of ownership•Ability to raise capital•Can Use Specialized management Cons•Complexity of formation and operation•Double Taxation•Paperwork and Regulation•Conflicts of Interest (Mgmt & Stockholders)

CSR

Corporate Social Responsibility Managing Stakeholder's expectations EX: Shareholders (Owners) •Maximize Profits Employees •Maximize compensation, safety, tenure, stability Customers •Great Value, convenience, transparency, and value-alignment Public/Government •Be a "good citizen", pursue the "greater good"

Customer Relationship Management (CRM)

Ongoing process of acquiring, maintaining, and growing profitable customer relationships function and set of processes for: • Customer satisfaction: When customers perceivethat a good or service delivers value above andbeyond their expectations • Customer loyalty: When customers buy a productfrom the same supplier again and again

Customers Bargaining Power

Buyer ConcentrationUndifferentiated ProductsPrice Sensitivity

Defining your industry

Craft beer vs beer or alcoholic beverages

Your definition will determine who you consider competitors

Effectuation model

Process for the creation of artifacts (markets, firms, economies) Driven by an entrepreneur who does not commit his/her resources, but instead focuses primarily on what resources he/she can extract from others or the environment The entrepreneur is very flexible in terms of goals opportunity creation vs opportunity discovery

Fiduciary Responsibility

Acting on the behalf of a beneficiary

Hawthorne Studies Perspective on Business

The 1920s-30s Human relations •Organization as a system of interdependent humans

Important Ethical Frameworks

•Utilitarianism•Kant (Categorical Imperative)

Innovation vs. Reproduction

- Most entrepreneurs organize their activities in thesame way as their predecessors - Most entrepreneurs bring little or no new knowledgeto their industry - Innovators are likely to fail because new combinationsof resources are fatal or perceived as illegitimate - Continuum from reproducer to innovator is defined byoutcomes, not intentions

Intended VS Realized Strategies

because business environment is far from predictable ... Intended strategy -organizational decisions are determined only by analysis -rarely survives in its original form Realized Strategy - organizational decisions are determined by both analysis (deliberate) & unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent) - final realized strategy = combination of deliberate & emergent strategies intended strategy ---deliberate strategy---> realized strategy intended strategy -------->unrealized strategy emergent strategy -------> realized strategy

Intrapreneurship

manager within a company who promotes innovative product development and marketing change initiatives taken within a going concern by the people working in that organization act of behaving like an entrepreneur while working within a large organization

Kant (Categorical Imperative)

One ought to act such that the principle of one's act could become a universal law of human action in a world in which one would hope to live. (do onto others as you would have them to onto you...Golden Rule) One ought to treat others as having intrinsic values in themselves and not merely as a means to reach one's ends.

Kim & Mauborgne meet Porter

Broad Target & Low Cost - Red Ocean Strategy - KIABroad Target & Differentiation - Blue Ocean Strategy - IPADNarrow Target & Low Cost - King of the Pond StrategyNarrow Target & Differentiation - Deep Sea Strategy - Rolls Royce

Limited Liability Corporation (LLC)

Definition: Mix between corporation and partnership Pros•Limited Liability•Tax pass-through•Flexible Ownership•Ease of formation Cons•Complexity of formation•Annual franchise tax•Different State Laws (foreign status in other states)•Not all firms can be LLCs

Main point of strategy according to Porter

Making trade-offs Choosing what NOT to do or offer Avoid straddling Achieving fit among activities Consistency, reinforcement & optimization

Fit locks out competitors by creating a chain that is as strong as its strongest link

Summary of presentation example: Way of gaining a competitive advantage Advantage flows from establishing a unique position You establish a unique position by doing things differentlyand Choosing which trade-offs to make

Market Segmentation

Dividing potential customers into groups of similar people, or segments

Marketing

Organizational function and set of processes for: • Creating, communicating, and delivering value tocustomers • Managing customer relationships in ways thatbenefit the organization and its stakeholders Planning and executing the development, pricing, promotion and distribution of ideas, goods, and services

Marketing Functions

• Sales/selling • Pricing • Customer service • Advertising • PR (public relations)• Merchandising • Distribution • Customer financing • Market research

Marshmallow Activity Takeaways

Iteration vs planning-execution approach • Importance of frequent feedback Managing the process • Value of an able facilitator Teamwork is more important than "a plan" • Multiple contributions lead to unpredictable but potentially better solutions

Merchandising

Promoting the sale of goods by their presentation in retail outlets

Mission Statement

• Who we are, what we do, and why we are here • Often describes current business- Products- Markets- Identity

Most Profitable Industries since 1980s

PharmaceuticalsToiletries/CosmeticsSoft Drinks

Nascent Entrepreneur

someone who starts serious activities intended to culminate in a viable business startup - Does not follow a fixed sequence of activities• Does not have a plan - 15 months between initial "serious thought" and first real attempt• Has to gather courage - Some conduct activities before giving serious thought• Stumbles upon a business - Start with little capital, no employees• It's me, myself, and I

Opportunities and Threats

Result from a change in the environment- Evolving consumer tastes - Changes in laws - New competitors entering a market Focus on the change- "Intense competition" is not a threat unless it's growingmore intense

Organizational Emergence

- Almost half of adults are "entrepreneurs" (or self-employed) at some point in their lives - 4-6% of adult population actively trying to start newventures - Only half of entrepreneurs manage to launch anorganization - Fewer than one in ten new ventures grow - Most foundings imitate existing organizational forms

Partnership

Definition: Agreement between co-owners of for-profit business Pros•Can pool financial resources•Share responsibilities•Complimentary skills opportunity•Ease of formation Cons•Unlimited liability•Potential for disagreements•Difficulty in withdrawing•Loss of Control

Pattern

Consistency in behavior- What is consistent about Apple's decision-making throughout its history?

Perceptions of Business Over Time

• Managerial view (up to 1960s)Focus on production • Shareholder view (1960-1980s)Focus on financial performance • Stakeholder view (Since-1990s)Focus on serving multiple constituencies Truth of this is debated

Perspective

Ingrained way of perceiving the world- If Google were an undergraduate student, what would its major be?

Placement

Distribution and Product Placement

Plan

Consciously intended course of action; guideline to deal with a situation- Made in advance- Developed consciously & purposefully

Ploy

Maneuver intended to outwit a competitor- What could Gimme Coffee have done to discourage Starbucks from entering the Ithaca market?

Porter's Definition of Strategy

Strategy is about achieving a competitive advantage What gives a firm an advantage? Strategy is about creating a unique position Which is the most profitable restaurant on the Commons? Strategy is about doing things differently Why do most small restaurants fail? Strategy is about outcompeting or having nocompetitors

Porter's Five Forces

Threat of entryThreat of substituteSupplier powerBuyer powerCompetitive rivalry

Position

Niche, location in the environment

Price

Value pricing - Set prices according to what customers think our product is worth Competitive pricing - Set prices according to what competition is charging Cost-plus pricing - Add a certain percentage to production cost Penetration pricing - Set prices below the competition to gain market share Dynamic pricing - Constantly change your prices to match demand

Product

Anything an organization offers to satisfy customers' needs and wants: • Pure goods: Products that do not include any service • Pure services: Products that do not include anygoods • Consumer products: Purchased for personal use- Convenience & shopping goods- Specialty & unsought products

Product Line

A group of related products all marketed under a single brand

Product Mix

The total number of product lines and individual products or services offered by a company

Promotion (communication)

Advertising - Marketing communication using an openly sponsored, non-personal message to sell a product Personal selling - Face-to-face interactions in which a salesperson tries to convince a customer to buy a product Public relations (PR) - Non-product communications for raising awareness and improving the reputation of an organization Direct marketing- Marketing communication presented to target customer without using an advertising middleman Sales promotions - Temporary efforts to drive sales (contests, coupons, prizes, free samples, rebates, influencer posts, etc.)

Pros and Cons of Free Trade

Pros•Comparative Advantage/Ricardian Theory - Everyone benefits, we all get richer Cons•Race to the bottom, exploitation, homgenization (loss of identity)

Purpose of a business

To create a customer

Quasi-Entrepreneur

Wheeler-dealer (or bricoleur)Architect of temporary arrangements Accidental entrepreneurA deal becomes a company Small business ownerControls/manages all aspects of firm

Quibi Example

Short-form streaming platform for mobiles devices- Raised $1.75b- Launched April 2020, got about 500,00 subscribers- Shut down on October 2020 (6 months)- In 2021, Roku acquired Quibi for less than $100m

Resource-based View (RBV)

RBV thinks of the firm as a "bundle of resources"

Review Coffee Industry Stuff on Class 4 Slide 30s

Ricardian Theory

a country exports that commodity in which it has a comparative labor productivity advantage

Scope of Marketing

PlaceEventsIdeas

Social-Network Context

Social network context Our network determines our "opportunity structure" Rich network positions =more opportunities Diversity vs tie strength Strong ties (trust, predictability, voice) Weak ties (opportunism, uncertainty, exit) Half of startups are solo efforts, a third are of "family teams", the rest are of unrelated individuals

Sociology & entrepreneurship

What are organizations?- Goal-directed boundary-maintaining activity systems- Constructed by people to accomplish things they can't do on their own • Organizations as means to an end Most organizations are copycats

Sole Proprietorship

Definition: Single owner who manages the company Pros•Ease of Formation•Retention of Control•Pride of Ownership•Retention of Profits Cons•Limited Financial Resources•Unlimited liability•Limited ability to attract talent•Heavy Workload and Responsibility

Southwest Trade offs and fit

Short-haulNo baggage transferNo mealsPoint-to-point serviceProprietary reservation systemNo assigned seatsStandardized fleetFast turnarounds Little customer SegmentationLow fares

Specialty Goods

Purchased as unique products that require buyers to make a special purchasing effort

Stakeholder Tension with CSR

Finding the proper balance between CSR and profit

Strategic Intent

how a firm's energy and resources are channeled into a focused and unified overall goal. It is a statement of design for creating a desirable future.

Suppliers Bargaining Power

Supplier ConcentrationSwitching CostsForward Integration Threat

SWOT analysis

strengths, weaknesses, opportunities, threats S&W are INTERNALO&T are EXTERNAL Power of a SWOT analysis is in matching the internalstructure to external environment

Target of Market

Group of people who are most likely to buy a particular product/service:• Consumer marketers (B2C): Direct their effortstoward people who buy products for personalconsumption• Business marketers (B2B): Direct their efforts towardpeople who buy products to use directly or indirectlyto produce other products

Taylor's Perspective on Business

The 1910s Scientific management •Organization as a machine (bricklayers)

Textbook Definition of Strategy

A company's strategy consists of the competitive moves and business approaches that managers employ to attract and please customers, compete successfully, capitalize on opportunities, to grow the business, respond to changing market conditions, conduct operations, and achieve the targeted financial and market performance Summarized:•How to please customers •How to compete against rivals•How to seize opportunities•How to respond to changes in the market •How to meet performance targets

The academic entrepreneur: Osvel Hinojosa

Ph.D. in wildlife ecology Head of Pronatura Noroeste (an NGO) Created/managed research & conservation projects Poached by the Cornell Lab of Ornithology to lead its Coastal Solutions Fellows Program

The born entreprenuer: Tono Fernandez

Never worked for anyone else Never stopped trying different ideas/ businesses Eventually landed on a moneymaker; cannot avoid growing/diversifying Does not know how to delegate

The Five Ps of Strategy

PatternPlanPerspectivePloyPosition

The one-track entrepreneur: Hector Velasco

Great intra-preneur Accomplished business consultant Persisted on a single business idea for years Ultimately failed

The serial entrepreneur: Kevin McGovern

Co-founded over 25 companies Six have become category leadersDiverse industries Nutraceuticals, water purification, skin care productsTrained as a lawyer

Thompson's Perspective on Business

The 1960s Contingency theory•Organizational structure aligned to the environment

Threat of Entry

Economies of ScaleProduct DifferentiationCapital RequirementsAccess to Distribution Channels

Threat of Substitute

Switching CostsPrice/performance differentialsTech Trends

Types of BHAG's

Target orientedCompetitiveRole modelInternal Transformation

Types of Business Organization

•Sole Proprietorship•Partnership•Limited Liability Company (LLC)•Corporation

Types of Entrepreneur

Builder of organizations-Sociological approach (Aldrich) Innovator-Market disrupter (Schumpeter) Opportunity discoverer-Exploiter of market imperfections (Kirzner) Agent of social change-Social entrepreneurship, Ashoka model Broker, network entrepreneur -Bridger of structural holes Champion-Catalyzer of social movements

Utilitarianism

Produce the greatest good for the greatest number

Vision

• Describes an organization's particular direction • Distinctive & specific - Graphic - Directional ("where we are going") - Focused - Some flexibility - Feasible (can be "stretch") - Unique • Short, powerful, memorable

Vision vs. Mission

• Some distinguish them temporally - Future vs present • Many people don't make the same distinction - Visions & missions & BHAGs & strategic intents overlap Few firms are truly mission or vision-driven

VUCA Business Context

V•Volatility - Unpredictable ChangeU•Uncertainty - Don't know the significance of ChangeC•Complexity - Many Moving interconnected partsA•Ambiguity - Don't understand cause and effect relationship

VUCA Covid Example

Volatility - Changes in demand (Netflix, Zoom) VUCAUncertainty - Effects of changes in demand (will gyms die?)Complexity - Chips used in electronics, household goods, and carsAmbiguity - Car manufacturers cancel chip orders, leads to high car prices

Weber's Perspective on Business

The 1900s

Bureaucratic structure •Task/responsibility differentiation •Strict hierarchy •Standardized rules/procedures •Vertical separation of planning and execution

What is Learning

Changing the way you think. - Learn by doing

What isn't strategy according to Porter

Operational effectiveness Benchmarking, Lean Manufacturing, TQM,best practices, etc.

What makes a resource valuable?

Inimitability - Can someone copy it? Durability - How long does it last? Appropriability - Who gets the benefits? Substitutability - Can someone use a different resource for the same purpose? Competitive superiority - Is our resource better than our competitors?

When is a focused differentiation strategy attractive?

When the niche is large enough to be profitableWhen there is low competition - Industry leaders overlook it

When is a focused low-cost strategy attractive?

When your are toad!When you are stuck in a pond!Low cost capabilities usually favor large scales and highvolumes, then why stay in the pond?

When is a low cost strategy attractive

High price competitionLow switching costsIdentical productsCustomers don't care about differentiationHigh buyer power