MGKT 351 EXAM 1

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What is marketing?

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124 Terms

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What is marketing?

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

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What is the primary focus of marketing?

Satisfying customers' needs and wants

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Defining Marketing

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

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Marketing requires:

- A market (Set of actual and potential buyers)

- A market offering (Products, services, ideas, people...)

- An exchange between 2 willing parties

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Summarize the Overarching Marketing Process

In Summary:

■ What are the customer needs, wants, and demands

■ Who are we serving

■ Create marketing program (A product, price, place, promotion)

■ Include customer and partner relationship management

■ Create satisfied loyal customers

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Production Philosophy

Produce MOST for LOWEST cost. Works well when demand >

supply. (EX: think of energy plants)

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Product Philosophy

Focus on producing the highest quality goods; but that's not what

the customer may want. (EX: crazy fancy toilet paper)

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Sales Philosophy

Emphasizes push and hard selling

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Marketing Philosophy

Achieving long term goals for a company by best serving

customers' needs and wants.

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Societal Philosophy

Should be good for society too. (Triple Bottom Line = People,

Planet, Profit)

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Core Marketing Concept Philosophy

Companies exist to satisfy customer wants and needs, and aim to deliver desired satisfaction better than the competition in order to meet organizational objectives.

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What is value?

-The relationship of the benefits to costs. It's what the consumer gets for what he/she gives.

- (Value = Benefit/ Costs)

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What are the 4 P's?

Product

Creating Value

Goods, Services, Ideas

created for exchanging

(your marketing

offering!)

Price

Capturing Value

What price are you willing

to pay so that you are

satisfied with your

purchase AND what price

generates a reasonable

profit for the company?

Place

Delivering Value

Where & how products are made available, retailing decisions

Promotion

Communicating Value

How to communicate to the

right audience through the

right medium at the right

time the right benefits to

get attention, interest,

desire, and action

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Customer Satisfaction

is the customer's EVALUATION of the extent to which a product or a service has met their EXPECTATIONS

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Relationship Marketing

Develop and enhance long term relationship with customers

○ EX: regards programs & freebies for customers

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Benefits of relationship marketing

- Increase number of POSITIVE interactions with customers

- Very common in B2B, especially with personal selling

- In B2C, this can include rewards programs and freebies for loyal customers

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What is the role of marketing in business?

● Understand the organization, market and customers' needs and wants

● Act as intermediary between the organization and the market:

- Gather information

- Translate into organization & disseminate

- Respond to opportunities with 4P decisions

● Manage customer relationships in a way that:

○ creates a long-term competitive advantage, generates consumer loyalty and

retention, grows the share of customer, and builds customer equity

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Marketing Process in Practice

Marketing is a "messy" discipline -there's no right answer for a problem/opportunity, so

you essentially throw a dart at a dart board and hope for the best for your products and

company.

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T/F Marketing is NOT a static discipline

True

It requires change in response to external forces.

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Strategic Planning

is the process of creating and maintaining a fit between the

organization's objectives and resources and the changing market opportunities.

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Strategic Business Unit (SBU)

Independently operated divisions that make up a parent company

○ Many companies are "conglomerates" made up of several different business units

○ Companies need to decide which SBUs to invest in and which ones to cut

○ EX: Instagram & Facebook are SBU's of Meta!

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What are the strategic moves?

○ Low = Harvest/Divest;

○ Med = Cautiously invest;

○ High = Invest/Grow

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Marketing Plan for Strategic Planning

● Business Mission

● Situation or SWOT Analysis

● Business Objectives

● Marketing Strategy

● Implementation and Control

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Marketing Plan

Outlines the marketing strategy and tactics

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Strategic Plan

Long term with a broad focus

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Tactical Plan

Short term with a narrow focus

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Business Mission

What business is the company in?

○ Too narrow -> Won't survive market changes

○ Too broad -> Meaningless

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SWOT Analysis

identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)

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STP (SEGMENTING TARGETING & POSITIONING) and 4P's

● WHO will be your target customer? (S&T)

● HOW will you be different (and superior)? (P)

● WHAT will you offer and at WHAT price?

● WHERE will you offer your good/services?

● HOW will you communicate about your company/goods/services to your target customer?

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Business Objectives

Realistic, Measurable, Time specific, Benchmark Comparison

○ Increase Market Share

○ Increase Sales

○ Increase Site Visits/Social Media Engagement

○ Increase Target Market Awareness

○ Increase Foot Traffic in Stores

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Implementation and Control

How well did we do in achieving our goals?

○ Review the mission and objectives to assess marketing plan progress

○ Revise mission and objectives if the marketplace changes.

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Ethics VS Laws

Ethics:

○ The principles and values that govern conduct of an individual or group

○ Tend to vary from person to person

○ May not be written down

○ Can be influenced by membership in subgroups within a population

VS

Laws:

○ Rules which a particular country or community recognizes as regulating the

actions of its members and which it may enforce by the imposition of penalties

○ Apply to everybody in society

○ Written

○ Actions can be LEGAL but seen as UNETHICAL ̶...and vice-versa

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Preconventional Morality

Based on what will be punished or rewarded

Self-centered, calculating, selfish

More childlike

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Conventional Morality

Moves toward the expectations of society

Concerned over legality and the opinion of others

Middle mature

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What can Companies Do for Ethics?

Create a Company Code of Ethics

● Helps to align short-term goals of employees with long-term goals of the firm

● Helps identify acceptable business practices • Helps control behavior internally

● Avoids confusion in decision making

● Facilitates discussion about right and wrong

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What can you do for ethics?

● Publicity Test: Would I want to see this action that I'm about to take described on the front page of the local paper or in a national magazine?

● Moral Mentor Test: Would the person I admire the most engage in this activity?

● Admired Observer Test: Would I want the person I admire most to see me doing this?

● Transparency Test: Could I give a clear explanation for the action I'm

contemplating, including an honest and transparent account of all my motives, that would satisfy a fair and dispassionate moral judge?

● Person in the Mirror Test: Will I be able to look at myself in the mirror and respect the person I see there?

● Golden Rule Test: Would I like to be on the receiving end of this action and all its potential consequences?

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Sustainability

Practices that focus on the long-term effects rather than short-term

profits

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Corporate Social Responsibility (CSR)

-Business's concern for society's welfare

✚ Economic

✚ Legal

✚ Ethical

✚ Philanthropic

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Sustainable Marketing

Socially and environmentally responsible marketing that meets

the present needs of consumers and businesses while also preserving or enhancing the

ability of future generations to meet their needs

○ Communicating a businesses efforts at sustainable business practices

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Triple Bottom Line

● People

-The Social Equity Bottomline

● Planet

-May not be written down

-The Environmental Bottomline

● Profits

-The economic bottom line

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Cause Related Marketing vs Corporate Political Advocacy

● Cause Related Marketing

○ Involves a monetary or in kind donation to a cause

○ Less risky/controversial

○ Practiced for quite some time

● Corporate Political Advocacy

○ Involves publicly taking a standon a socially/ politically divisive issue

○ Does not require donation

○ Very risky

○ Newer phenomenon

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Green Marketing

Focuses on the environmental aspect of sustainable business practices.

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Green Washing

Deceptive marketing that makes products seem more environmentally friendly than they actually are

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Green Certifications

● LEED (Leadership in Energy & Environmental Design) ̶Certification for green buildings

● Energy Star

○ Certification For Consumer Electronics And Appliances

● USDA Organic

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Green Marketing Actions

● Reduce Packaging

● Increase recycled content

● Improve Logistics

● Improve durability longevity of products

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Marketing Environment

An environmental factor is anything that satisfies two conditions:

○ It has a significant impact on the company

○ The marketer has very little control over it

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Strategic planning and analysis

○ Used to learn about the current conditions of the marketing environment

○ Companies need to consistently "scan" environment

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Environmental Factors

1. Social Factors

✱ American values

✱ How social media have changed the way people communicate

2. Demographic Factors

✱ Population Growth

✱ Different Generations (also correlated to individual life cycle)

3. Growing Ethnic Markets

✱ Hispanics, African Americans, and Asian Americans

4. Economic Factors

✱ Income

✱ Purchasing Power

✱ Inflation

✱ Recession

5. Technological Factors

✱ Research and Stimulating Innovation

6. Political and Legal Factors

✱ Federal Legislation: regulates markets and protects consumers

✱ State Laws: vary from state to state

✱ Regulatory Agencies: FDA and FTC

7. Competitive Factors

✱ Competition for market share and profits

✱ Global competition

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American Values

● Key American Social Values:

○ Self-sufficiency

○ Upward Mobility

○ Strong Work Ethic

○ Equality (under the law)

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Social Media

● Consumers increasingly live online

● Changing behavior

○ Socialization

○ Purchasing

○ Interacting with Brands

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Baby Boomers (1946-64)

well-off, big consumers, and trying to stay young

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Generation X (1965-78)

cynical consumers; and pressed for time

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Generation Y (1979-1994)

impatient; opinionated; diverse; good time managers; street smart; and connected

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Demography

The study of vital statistics like:

■ Age

■ Gender

■ Household size

■ Income

■ Ethnicity

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Population Growth

○ Important implications for consumer market

○ Composition of consumer age groups

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Material Parenting

Rewarding children with products, and punishing them by taking them away

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Nag Factor

Child influencing purchase decisions by incessant bothering of parents

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Parental Yielding

"surrendering" to a child's request

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Strong attachment to media characters

DisneyBaby.com: "to get that mom thinking about her family's first park

experience before her baby is even born is a home run"

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Tweens

● Be-tween a child and a teen

○ Ages 9-12 (-ish)

● Creating separate identity from family

● Increasing brand consciousness

● Struggle with lack of autonomy/ agency

● Increased mobile usage

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Teenagers

Four basic conflicts are common among all teens:

● Autonomy vs. belonging (to stand out or fit in)

● Rebellion vs. conformity (standing out for the wrong reasons)

● Idealism vs. pragmatism (having to do the practical approach)

● Narcissism vs. intimacy

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Seniors

● Seniors are a more important market segment than many marketers realize.

● People older than 60: fastest growing age group on earth.

● Control more than 50% of discretionary income.

● Consumer identity renaissance: revived vs. emergent.

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Generation Categories:

○ The Silent Generation

○ The Baby Boom Generation -Generation X

○ Generation Y

○ Generation Z

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Gen Z

● Kids born in late 1997-2015 (-ish)

● Most diverse generation

● "Digital Natives"

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Gen Y

● "Echo Boomers"= "millennials"= Gen Y

● Born 1980-1996 (-ish)

● Make up one-third of U.S. population

● Spend $170 billion a year

● First to grow up with computers in their homes, in a 500-channel TV universe

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Factors Shaping Gen Y Experience

● "Impatient, opinionated, and well-connected"

○ Economy - overeducated, underemployed.

■ Graduated into Great Recession

■ Oh, and then COVID

○ Globalization - eager to experience other cultures.

■ 9/11 Occurred while in school

○ Social Media - constantly open to public observation because every new post

reveals something about themselves.

■ Exuberants - constantly post about their experiences

■ Collectors - passively absorb other's experiences

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Gen X

● 46 million Americans were born between 1965 and 1980.

● Both values-oriented and value- oriented

● Desire stable families, save portion of income, and view home as expression of

individuality

● Creators of many culture-changing products (Google, YouTube, Amazon)

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Baby Boomers

● Most economically powerful age segment.

● Highest disposable income

● Consumers born between 1946 and 1964

● "Baby boom" after WWII

● Active and physically fit

● Currently in peak earning years

○ Food, apparel, and retirement programs

○ "Midlife crisis" products

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"Big Three" American Ethnic Subcultures

1. African Americans

2. Hispanic Americans

3. Asian Americans

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Appealing to Growing Ethnic Consumer Base

● Increased use of multilingual signage and advertisements

● Increased diversity in media

● Products, services, and retailers targeting ethnic consumer segments

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Discretionary Income

The money that consumers have left over after paying for

necessary expenses such as taxes, housing, utilities, groceries, transportation, and debt

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Purchasing Power

○ Cost of living varies by location

○ Housing, groceries, healthcare, and education costs, etc.

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Inflation

○ Decreases purchasing power

○ A dollar just ain't worth what it used to be...

○ Target inflation is about 2%

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Types of research

● Basic

○ Discover new knowledge for humanity

○ Often conducted at universities with government funding through grants

● Applied

○ Develop practical uses for new technology Usually conducted by companies to make

new products

● Culture of Innovation

○ An environment that supports creative thinking and advances efforts to extract

economic and social value from knowledge, and, in doing so, generates new or

improved products, services or processes

○ Vital in competitive markets of advanced economies

■ Established companies often have to compete with new technologies.

Innovate or die.

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Political and Legal Factors

● Must be aware of laws and political environment

○ Breaking laws leads to fines or worse

○ Can Vary Drastically By Locality

● Laws and requirements are constantly being updated

○ Political environment could lead to changes in laws

○ Example: EPA fuel efficiency requirements

● Large Companies/ Industries can influence through lobbying

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Competitors

○ Companies keep close tabs on competitors

○ Competitor moves tend to have the most immediate effect on companies

■ Cutting price (do you match price drop? do you speak that your product

has better quality?)

■ Launch new product Enter market

■ Globalization

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Competition for customers and resources is global

○ Causes competition to become more intense & disruptive

○ Puts more pressure on industries, companies, and workers BUT increases value for consumers

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Global Marketing

● Use Global Marketing to understand, adapt, and serve markets in several countries

○ The phrase global marketing is fairly recent.

○ The post-WWII era brought unparalleled expansion by companies going outside

their home markets.

○ Today companies go global to survive as competitors will enter the home market

with lower costs, more experience and better products.

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What are the forces affecting Global Integration and Global Marketing

● Multilateral trade agreements

○ (ex: out of country businesses contracts)

● Transportation and communication improvements

○ (ex: shipping containers) (ex: Zoom, Skype, Facetime)

● Converging market needs and wants and the information revolution

○ (ex: content is EVERYWHERE)

● Product development costs

○ (pharmaceuticals are expensive)

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The Importance of Global Vision

● Improve efficiency

● Access larger markets

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Environmental Factors in Global Markets

✱ Cultural (significant variations)

✱ Economic (and currency exchange rates)

✱ Political (can be unstable) and Legal (tariffs and quotas); and trade agreements (NAFTA; EU)

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Cultural Factors for Global Market

● Each country has its own culture

○ This include commonly shared traditions, values, and preferences

○ Some have many subcultures

● Language is a major part of culture

○ Proper translation is vital

● Religion impacts consumption

○ Islam: No pork, no alcohol

○ Hinduism: No beef

● Brands often tied to country of origin

○ Manufacturing outside of COO can dilute the brand

○ Harley Davidson (VERY american, you wouldn't manufacture outside of U.S)

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Economic Factors for Global Market

● Exchange rates

○ Fluctuation expose companies to "currency risk" or "foreign exchange risk"

○ Companies use hedging to minimize this risk

● Purchasing power

○ Most people in the world have lower purchasing power than in the United States

○ Marketers need to be sensitive to differences in purchasing power in global

markets

○ Willing to purchase value priced products

○ To reduce pricing, manufacturers can

■ Reduce package size

■ Eliminate features

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Political and Legal Factors for Global Market

● Preferential Trade Agreements

○ Free Trade Agreement

○ Customs Union

○ Common Market

○ Economic Union

● Tariffs

○ "Taxes" on imports

○ Makes domestic products more competitive by comparison

○ EX: California Avocados vs. Mexican Avocados

● Boycotts

○ Complete prohibition of certain types of products from certain countries

○ Can be retaliatory or based on quality/ safety concerns

● Quotas

○ Specify total quantity of a product that can be imported from a country or region

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Entering Global Markets cause increases in what?

INCREASED RISKS & RETURNS:

✱ Exporting

✱ Licensing (and Franchising)

✱ Joint Venture

✱ Direct Investment

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Exporting

● Selling goods produced in one country in another country

○ Lowest risk option to go global

○ Limited opportunity for consumer feedback

○ Expenses and barriers such as shipping and tariffs

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Licensing

● A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other

form of compensation

○ Patent

○ Trade Secret

○ Brand Name

○ Product Formulations

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Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.

● Special form of licensing

● "Buying a franchise"

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Joint Ventures

● Entry strategy for a single target country in which the partners share ownership of a

newly-created business entity

○ Shared investments and rewards

● Builds upon each partner's strengths

○ Especially important if local expertise needed

● Required in China

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Promotion Adaptation

● Products may serve the same or different needs in different markets

○ No product changes reduce manufacturing expenses

○ Costs in market research advertising,sales promotion, point-of-sale material

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Product Adaptation

● Adapt the product to local use but the message stays the same

● Technically a "new product" that requires changes in manufacturing for individual

markets

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Product Invention

● Dual Adaptation

○ Both may need to change for legal, cultural or other environmental reasons

○ Regional managers may simply act independently

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Global Place

● Shoppers in other parts of the world prefer different types of shops

○ Tradition

○ Transportation

○ Supplier relationships

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Consumer Decision Making Process

1. need recognition

2. information search

3. evaluation of alternatives

4. purchase and post purchase behavior

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Need vs Want

● Need: Something you must have to live or achieve a goal.

○ A gap between a desired state and the actual state

● Want: Specific manifestation of a need that personal and cultural factors determine

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Need (or Want) Recognition

● Internal Stimulus: Your stomach growls and you realize you need to eat

● External Stimulus: You smell In N Out and now you want a Double-Double Animal style

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Information Sources

○ Internal: Personal experience, preferences, and tastes

○ External: Websites, friends, advertisements

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Evoked Set

○ What brands come to mind immediately when thinking of a category or how to

solve a problem

○ EX: Think of a phone company → verizon, sprint, t-mobile

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Consideration Set

○ Set of options considered for purchase

○ Can be expanded from evoked set through information search

○ Inclusion in evoked set does not necessarily mean it will be in the consideration set

○ Well known but disliked brand

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Evaluating Alternatives

● Fischbein Model

○ Multi-attribute model of consumer attitude towards brands

○ Weights importance of attributes and belief of level the brand has that attribute

○ EX: wanting to buy a car with good fuel efficiency

● Disjunctive Model

○ Focus on just a few important attributes

○ Eliminating options than don't meet specs

○ EX: filtering out cars that do not have Apple Carplay

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