Certified Marketing Management Specialist (CMMS) Comprehensive Study Notes

Principles of Marketing

Marketing is defined by CPACE (Center for Professional Advancement and Continuing Education) as having two distinct facets:

• First Facet: A philosophy, attitude, perspective, or management orientation that emphasizes customer satisfaction.

• Second Facet: An organizational function and a set of processes used to implement this philosophy.

Official Definition (American Marketing Association - AMA): 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.

Insights on the scope of Marketing:

• David Packard (Cofounder of Hewlett-Packard) famously stated, "Marketing is too important to be left only to the marketing department."

• Marketing focuses on delivering value and benefits to customers rather than simply selling goods, services, or ideas.

• It utilizes strategies in communication, distribution, and pricing to provide stakeholders with what they desire when and where they want it.

• It involves building long-term, mutually rewarding relationships with "partner" stakeholders such as employees, suppliers, stockholders, and distributors.

The Concept of Exchange: An exchange is the desired outcome where people give up something to receive something they would rather have. While money is the common medium, exchange can occur via barter (e.g., trading baseball cards or oil paintings).

Five Conditions for Exchange:

1. There must be at least two parties.

2. Each party has something that might be of value to the other.

3. Each party is capable of communication and delivery.

4. Each party is free to accept or reject the exchange offer.

5. Each party believes it is appropriate or desirable to deal with the other party.

Marketing Management Philosophies

Organizations generally follow one of four philosophies to guide their marketing efforts:

1. Production Orientation:

   • Focus: Internal capabilities of the firm (e.g., "What can our engineers design?").

   • Limitation: Often ignores the desires and needs of the marketplace. It focuses on what is easy to produce or where the firm’s talents lie.

   • Viability: Can succeed if competition is weak or demand exceeds supply, but risky in competitive markets.

2. Sales Orientation:

   • Focus: Aggressive sales techniques and the belief that high sales lead to high profits.

   • Limitation: Like production orientation, it lacks an understanding of market needs. Even a great sales force cannot convince people to buy what they do not want.

3. Market Orientation:

   • Focus: The satisfaction of customer wants and needs while meeting organizational objectives (The Marketing Concept).

   • Core tenets: Focus on customer wants to distinguish products from competitors; integrate all activities to satisfy these wants; achieve long-term goals legally and responsibly.

   • Principle: A sale depends on the customer's decision to purchase, not on aggressive selling.

4. Societal Marketing Orientation:

   • Focus: Acknowledges that some consumer wants may conflict with the long-term best interests of the individual or society.

   • Goal: Satisfy needs while preserving or enhancing individuals’ and society’s long-term best interests (e.g., sustainability, social responsibility).

Differences Between Sales and Market Orientation

1. Customer Value Customer value is the relationship between benefits and the sacrifice necessary to obtain them. It is not just about low price or high quality alone. Value spans four distinct categories:

• Functional: Products that save time, reduce risk/effort, or assist organization (e.g., The Container Store, TurboTax).

• Emotional: Attributes meeting needs for wellness, design, aesthetics, fun, and anxiety reduction (e.g., Apple design, Television providers).

• Life-Changing: Providing hope, motivation, and self-actualization (e.g., Fitbit’s health motivation; a $10,000$ Leica camera providing pride of ownership).

• Social Impact: Needs for giving back/self-transcendence (e.g., donating to United Way or cancer research).

2. Customer Satisfaction This is the customer's evaluation of whether a good or service met their needs and expectations. Failure to do so results in dissatisfaction.

3. Relationship Marketing A strategy focused on keeping and improving relationships with current customers, assuming they prefer an ongoing relationship over switching providers.

4. Customer-Oriented Personnel Building relationships requires every employee to be customer-oriented. To a customer, the employee they interact with is the firm.

5. Defining the Business Mission

• Sales-Oriented Firms: Define themselves by goods and services (e.g., Microsoft’s old mission: "A computer on every desk").

• Market-Oriented Firms: Define themselves by the benefits customers seek (e.g., Microsoft’s current mission: "To empower every person and every organization on the planet to achieve more").

  • Advantages: Encourages innovation, avoids preoccupation with internal needs, and maintains relevance to changing preferences.

Case Examples of Mission Statements:

• American Express: Focusing on being the world’s most respected service brand through teamwork.

• Patagonia: Combining safe/high-quality products with philanthropic environmental solutions.

• IKEA: Aiming to "create a better everyday life for the many people" rather than just selling furniture.

Strategic Planning for Competitive Advantage

Strategic planning is the process of creating and maintaining a fit between organization objectives/resources and market opportunities. Goal: long-run growth and profitability.

Strategic Marketing Management Questions:

1. What is the organization’s main activity at a specified time?

2. How will it reach its goals?

Strategic Examples:

• West Elm: Moving into boutique hotels designed with their own furniture to sustain growth.

• Ford: Shifting to hybrids/SUVs and phased out passenger cars like the Fiesta and Taurus.

• Starbucks: Ended the "Evenings" beer/wine program after results failed to meet expectations, shifting focus to lunch items.

Strategic Business Units (SBUs): An SBU is a distinct business within a large company with its own mission, target market, resource control, competitors, and independent plans. Ideally, they have their own functional departments (accounting, marketing, etc.), though some resources may be shared.

Strategic Alternatives and Matrices

Ansoff’s Strategic Opportunity Matrix:

• Market Penetration: Increase market share among existing customers (e.g., JCPenney remodeling Salons by InStyle).

• Market Development: Attract new customers to existing products (e.g., McDonald's expanding into Russia, China, Italy).

• Product Development: Create new products for present markets (e.g., Danone adding milk-free and vegan Silk products).

• Diversification: New products for new markets (e.g., Lego partnering with Tencent for online games in China).

The Innovation Matrix:

• Core Innovation: Changes that use existing assets for convenience (e.g., Blue Apron selling kits in physical stores).

• Adjacent Innovation: Taking company strengths into new markets (e.g., Botox moving from intestinal/eye treatment to cosmetics).

• Transformational Innovation: Breakthroughs for brand-new markets (e.g., Apple iPhone, Uber, Airbnb).

The General Electric (GE) Model: Uses two axes: Business Position (how well positioned the firm is to take advantage of opportunities) and Market Attractiveness (profitability, growth, competition).

• Green Cells (High): Best candidates for investment (e.g., Airbus single-aisle jetliners).

• Yellow Cells (Medium): Selectively maintain.

• Red Cells (Low): Avoid, harvest, or divest.

The Marketing Plan

Marketing planning involves designing activities to reach objectives in a changing environment. This results in a written document acting as a guidebook.

Marketing Plan Elements:

1. Business Mission Statement.

2. Situation (SWOT) Analysis (Strengths, Weaknesses, Opportunities, Threats).

3. Objectives (What is to be accomplished).

4. Marketing Strategy:

   • Target Market Strategy.

   • Marketing Mix (The 4Ps: Product, Promotion, Place, Price).

5. Implementation, Evaluation, and Control.

Competitive Advantage

Competitive advantage refers to unique features perceived by the target market as significant/superior to the competition.

Types of Competitive Advantage:

1. Cost Competitive Advantage: Being the low-cost competitor through reengineering, efficient labor, government subsidies, or experience curves.

2. Product/Service Differentiation: Providing something unique and valuable beyond price (more durable strategy than cost).

3. Niche Competitive Advantage: Targeting a single, specific segment. Ideal for small companies with limited resources or segments with high growth potential but low interest to major competitors.

Target Market Strategy

Marketing strategy involves selecting one or more target markets and maintaining a marketing mix for mutually satisfying exchanges.

Market Segment: A group sharing characteristics and similar product needs. Market Opportunity Analysis (MOA): The description and estimation of the size and sales potential of segments and the assessment of key competitors. Selection Strategies:

• Appeal to the entire market with one mix.

• Concentrate on one segment.

• Appeal to multiple segments with multiple mixes (e.g., Diet Pepsi for calorie-conscious; Vogue for fashion-interested females $18$ to $25$).

Social Media and Digital Marketing

Social media is any tool/service using the Internet for conversation. It offers one-to-one interaction compared to the mass media methods of traditional marketing.

Key Statistics and Dynamics:

• Over $2.46$ billion users worldwide (forecasted through 2021).

• 81 \text{%} of US internet users are on social media. North America has the largest user base, but China and India have the largest growth.

• Content Control: Marketers must realize they do not control the content; consumers share experiences regardless of the brand's campaign.

• Amplified Word of Mouth: Impact is massive (e.g., influencers like Cristiano Ronaldo or brands like Chanel on Instagram).

• Listening: Tools like Google Alerts and Radian6 allow brands to monitor sentiment (e.g., Uber monitoring responses and adjusting during a travel ban).

Types of Media Channels:

• Owned Media: Brand-controlled (e.g., websites, blogs, Facebook pages).

• Earned Media: Word of mouth/buzz (e.g., viral videos, retweets, ratings).

• Paid Media: Advertising purchased by the brand (e.g., display ads, PPC).

Crowdsourcing: Using the input of many people to make decisions (e.g., Ellie Goulding’s Talenthouse photo contest for a prize of $\pounds 1,000$).

Social Commerce

A subset of e-commerce involving interaction/user contribution to assist buying. Nearly half of all online sales come through social media sites.

Seven Types of Social Commerce:

1. Peer-to-peer sales (eBay, Etsy).

2. Group buying (Groupon).

3. User-curated shopping (The Fancy).

4. Social shopping sites (Motilo).

5. Sales-driven networking (Pinterest).

6. Peer recommendation (Yelp).

7. Participatory commerce (Kickstarter).

Evaluation and Measurement of Social Media

Most marketers (70\text{%}) are unsatisfied with social media measurement. Only 15\text{%} can quantitatively prove impact.

5 Steps to Gauge Effectiveness:

1. Identify Key Performance Indicators (KPIs).

2. Align goals with business objectives.

3. Track conversions with Google Analytics.

4. Assign values to KPIs (Lifetime value or average sales).

5. Benchmark against competitors.

Types of Social Media Users (Forrester/Charlene Li):

1. Creators: Produce/share content (Fastest growing).

2. Conversationalists: Create content for communication/status updates.

3. Critics: Post comments and reviews.

4. Collectors: Use RSS and vote for sites.

5. Joiners: Maintain profiles.

6. Spectators: Consume content (Largest group).

7. Inactives: Smallest group.

Consumer Decision-Making

The Five-Stage Process:

1. Need Recognition: Triggered by internal (hunger) or external (ads) stimuli.

2. Information Search:

   • Internal: Personal experience.

   • External: Online reviews, ads, salespeople.

3. Evaluation of Alternatives: Comparing based on price, quality, reputation, and features.

4. Purchase Decision: Influenced by promotions, store environment, and last-minute persuasion.

5. Post-Purchase Behavior: Assessment of satisfaction. Cognitive Dissonance occurs when a consumer feels regret or uncertainty.

Types of Decisions:

• Routine Response Behavior: Frequent, low-cost, minimal thought.

• Limited Decision Making: Moderate time and effort.

• Extensive Decision Making: High-involvement, high-cost (cars/homes).

Influencing Factors:

• Psychological: Motivation (Maslow's hierarchy), Perception, Learning, Attitudes.

• Social: Family, Reference Groups, Status/Culture.

• Personal: Demographics (age, income), Lifestyle, Economic situation.

• Situational: Physical environment, Time, Purchase task, Antecedent states (mood).

Business Marketing (B2B)

Marketing to other businesses/organizations for raw materials, machinery, or operations support.

Differences from B2C:

• Target: Businesses/organizations vs. individuals.

• Decision Making: Rational/Multiple people vs. Emotional/Individual.

• Cycle: Longer and complex vs. Shorter.

• Pricing: Negotiated vs. Fixed.

B2B Buying Center Roles:

• Initiators: Recognize the need.

• Influencers: Provide expert advice.

• Deciders: Make final choice.

• Buyers: Handle negotiations.

• Users: Utilize the product.

Marketing Research

Objectives: Identifying opportunities, understanding behavior, evaluating strategies, predicting trends, and minimizing risk.

Types of Research:

• Descriptive: Describes "what is" happening (Surveys, observations).

• Causal: Determines cause-and-effect (e.g., testing if price reduction increases sales).

The Process:

1. Define problem/objectives.

2. Develop plan (design, data sources, sampling).

3. Collect data (Primary vs. Secondary).

4. Analyze data (Quantitative/Qualitative).

5. Reporting/Presenting findings.

Data Collection Methods:

• Surveys: Online, telephone, face-to-face.

• Focus Groups: Small group moderated discussions.

• Observations: Watching behavior in natural settings.

• Experiments: Manipulating variables to see effects.

Product Concepts and Development

Total Product Concept:

1. Core Product: The fundamental benefit (e.g., communication for a phone).

2. Actual Product: Tangible aspects (design, brand, packaging).

3. Augmented Product: Additional services (warranties, updates, support).

Product Life Cycle (PLC):

1. Introduction: Low sales, high costs, heavy education needed.

2. Growth: Rapid sales increase, intensifying competition.

3. Maturity: Peak sales, market saturation, price pressure.

4. Decline: Sales drop due to changes in tech or preference.

New Product Development (NPD) Stages:

1. Idea Generation.

2. Idea Screening.

3. Concept Development and Testing.

4. Business Analysis (Financial/Market viability).

5. Product Development (Prototyping).

6. Market Testing (Limited launch).

7. Commercialization (Full launch).

8. Post-Launch Evaluation.

Portfolio Analysis (BCG Matrix):

• Stars: High share, high growth (Require investment).

• Cash Cows: High share, low growth (Maintain/harvest for funds).

• Question Marks: Low share, high growth (Requires decision).

• Dogs: Low share, low growth (Phase out).

Pricing Concepts

Pricing Strategies:

• Cost-Plus: Production cost + fixed percentage.

• Competitive: Based on rivals' prices.

• Penetration: Low starting price to gain market share.

• Price Skimming: High initial price for new tech, then lowering.

• Value-Based: Based on perceived customer worth.

• Dynamic: Real-time adjustments (Surge pricing).

• Premium: High prices for luxury/exclusivity.

Key Formulas and Terms:

• Break-even Analysis: Determining volume where total revenue = total cost.

• Profit: $\text{Profit} = \text{Revenue} - \text{Expenses}$

• Revenue: $\text{Revenue} = \text{Price} \times \text{Units Sold}$

• ROI: $\text{Return on Investment (ROI)} = \frac{\text{Net profit after taxes}}{\text{Total assets}}$

Price Elasticity of Demand (PED):

• Elastic: Demand changes significantly with price (luxuries).

• Inelastic: Demand stays stable despite price changes (necessities like gas/medicine).

• Unitary: Demand changes in line with price.

Integrated Marketing Communications (IMC)

Ensures a consistent brand message across all channels (Advertising, PR, Sales Promotion, Direct Marketing, Personal Selling).

AIDA Model for Persuasion:

• Attention: Capture audience visuals/headlines.

• Interest: Maintain with valuable content.

• Desire: Create emotional connection via benefits.

• Action: Prompt to purchase/sign-up.

Communication Types:

• Emotional Appeals: Joy, fear, sympathy (used for jewelry, baby items).

• Rational Appeals: Logic, facts (used for tech gadgets, appliances).

Services and Nonprofit Marketing

Service Characteristics:

• Intangibility: Cannot be touched/stored.

• Inseparability: Produced and consumed simultaneously.

• Variability: Quality depends on provider/time.

• Perishability: Cannot be stored for later use.

The 7Ps of Service Marketing:

1. Product (focus on benefits).

2. Price (signals quality).

3. Place (access).

4. Promotion.

5. People (staff training).

6. Process (delivery flow).

7. Physical Evidence (ambient environment/branding).

Questions & Discussion

Business Marketing:

1. How can digital transformation (AI, big data) improve B2B marketing strategies?

2. In what ways does the long sales cycle in B2B marketing differ from consumer marketing?

3. How important is CRM in B2B, and what strategies enhance customer relationships?

Targeting & Segmentation:

1. How can companies use psychographic segmentation to differentiate products?

2. What are the risks of using an undifferentiated strategy in today's fragmented market?

3. How do companies decide between differentiated vs. concentrated targeting?

Advertising & PR:

1. How do advertising, PR, and sales promotion work together in a marketing plan?

2. Why is PR a long-term approach compared to advertising?

3. How can sales promotions help clear excess inventory?

Digital Marketing:

1. How can businesses ensure digital strategies align with broader objectives?

2. Why is digital marketing becoming increasingly important?

3. How can website traffic data help assess strategy success?

Social Media Marketing:

1. What metrics evaluate success (engagement, reach, conversion)?

2. How do algorithm updates impact visibility?

3. How does social media contribute to lead generation?