Notes Flashcards
Social responsibility
Conerns a firm’s obligation to improve its positive effects on society and reduce its negative effects
_______________ are the moral standards that guide marketing decisions and actions
Marketing ethics
Micro-macro dilema
What is good for some producers and consumers may not be good for society as a whole
What is marketing?
Marketing is much more than selling and advertising
Provides needed direction for production and helps make sure that the right goods and services are produced and find their way to consumers
Why is marketing important to you?
- Important to every consumer
- You pay for the cost of marketing - Marketing will be important to your job
- many opportunities, evey résumé is marketing - Marketing affects innovation and standard of living
- marketing encourages research and innovation
Production vs. Marketing
Marketing: Make sure right goods and services are produced
Production: Making goods, performing services
=> create customer satsifaction
Differences between micro and macro marketing
Micro-Marketing: view as a set of activities performed by an organization
- when people talk about marketing, they are talking about micro
Macro-marketing: A social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society
emphasis: how the marketing system works- looking at how marketing affects society and vice versa
- delivers goods and services that consumers want and need
- role: effectively match this heterogeneous supply and demand and at the same time accomplish society’s objectives
Universal functions of marketing
Buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information
They must be performed in all macro-marketing systems
How these functions are performed may differ among nations but they are needed
How has the marketing function changed over time?
- Simple trade era - a time when families traded or sold their “surplus” output to local distributors
-
Production era - a time when a company focuses on production of a few specific products - perhaps because few of these products are available in the market
- if we can make it, it will sell
- Eastern Europe continue to operate with this because of production shortages -
Sales era - A time when a company emphasizes selling becaused of increased competition
- continued to about 1950 - Marketing department era - a time when all marketing activities are brought under the control of one department to improve short-run policy planning and to try to integrate the firm’s activities
- Marketing company era - a time when in addition to short-run marketing planning, marketing people develop long-range plans and the whole company effort is guided by the marketing concept
What is meant by the marketing concept?
Means that an organization aims all its efforts at satisfying its customers—at a profit
Combines:
- Customer satisfaction
- Total Company effort
- Profit (or another measure of long-term success) as an objective
*Total Company effort
**says we are going to look at customer needs and match our product with that need to make a profit
What is the customer value equation?
Satisfied customer: Benefit - Cost = +
Dissatisfied customer: Benefit - Cost = -
Customer value: the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits
*when customer value is higher => consumer more satisified
How is customer satisfaction linked to profit?
Sometimes it may cost more to satisfy some needs than any customers are willing to pay
Profit is the bottom-line measure of the firm’s success and ability to survice
The balancing point that helps the firm determine what needs it will try to satisfy with its total effort
Strategic (management) planning
What is marketing strategy planning?
The managerial process of developing and managing a match between an organization’s resources and its market opportunities
Top-management job
Includes planning not only for marketing but also for production, finance, human resources, and other areas
Marketing strategy
Specifies a target market and a related marketing mix
It is a big picture of what a firm will do in some market
two parts are needed: a target market and a marketing mix
What is the relationship between a target market and a marketing mix?
Target market - a fairly homogeneous (similar) group of customers to whom a company wishes to appeal
Marketing mix - the controllable variables the company puts together to satisfy this target group
The customer is surrounded by the controllable variables that we call the marketing mix
*target market in middle of circle and marketing mix on the outside of the circle
What is the difference between mass marketing and a mass marketer?
Mass marketing - typical production-oriented approach
- vaguely aims at “everyone” with the same marketing mix
- everyone is the same => considers everyone to be a potential customer
“shotgun approach”
Mass marketers - are aiming at clearly defined target markets
- their target markets usually are large and spread out
ex. Kraft Foods and Wal-Mart
What are the components of each of the 4 “p’s”
Product - concerned with developing the right “product” for the target market
Place - concerned with all the decisions involved in getting the “right” product to the target market’s place
Promotion - concerned with telling the target market or others in the channel of distribution about the “right” product
- includes personal selling, mass selling, and sales promotion
Price - must consider the kind of competition in the target market and the cost of the whole marketing mix
Which of the 4 p’s is most important?
All 4 P’s are needed in a marketing mix
In fact, they should all be tied together
They all contribute to a whole, decisions about Ps should be made at the same time
Product examples
Physical good
Service
Features
Benefits
Quality level
Accessories
Installation
Instructions
Warranty
Product lines
Packaging
Branding
Place
Objectives
Channel type market exposure
Kinds of intermediaries
Kinds and locations of stores
How to handle transporting and storing
Service levels
Recruiting intermediaries
Managing channels
Promotion
Objectives
Promoiton blend
Sales people: kind, number, selection, training, motivation
Advertising: targets, kinds of ads, media type, copy thrust, prepared by whom
sales promotion
publicity
Price
Objectives
Flexibility
Level over product life cycle
Geographic terms
Discounts
Allowances
Marketing plan
A written statement of a marketing strategy and the time-relatd details for carrying out the strategy
Should spell out:
- What marketing mix will be offered, to whom, and for how long?
- What company resources will be needed at what rate
- What results are expected
Marketing program
Blends all of the firm’s marketing plans into one “big” plan
This program, is the responsibilty of the whole company
Typically, the whole marketing program is an integrated part of the whole-company strategic plan
Firm’s marketing program =
Marketing plan (marketing strategy + time related details and control procedures) + other marketing plans
Breakthrough opportunities
Opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time
It is hard to provide superior value to target customers if competitors can easily copy your marketing mix
4 basic types of opportunities
Present prodcuts vs. present markets: market penetration
new products vs. present markets: product development
present products vs. new markets: market development
new products vs. new markets: diversification
SWOT analysis
Identifies and lists the firm’s strengths and weaknesses and its opportunities and threats
Helps managers focus on a strategy that takes advantage of the firm’s strengths and opportunities while avoiding its weaknesses and threats to its success
A useful aid for identifying relevant screening criteria and for zoning in on a feasible strategy
4 types of market opportunities
- Market penetration
- Market development
- Product development
- Diversification
Market development
Trying to increase sales by selling present products in new markets
*could involve searching for new uses for a product
Firms may also try advertising in different media to reach new target customers
ex. Dunkin Donuts now sells its popular coffee at grocey stores and not just at its own outlets
Prodcut development
Means offering new or improved products for present markets
Firms seek new ways to satisfy customers
ex. Campbell’s came out with a new line of soups
ex. . ski resports have develpped trails for hiking and biking for the summer
Diversification
Means moving into totally different lines of business - perhaps entirely unfamilar products, markets, or even levels in the production-marketing system
ex. Mcdonald’s opening hotels in switzerland
Market penetration
Means trying to increase sales of a firm’s present products in its present markets - probably through a more aggressive marketing mix
Try to strengthen its relationship with customers to increase their rate of use or repeat purchases, or try to attract competitors customers or current nonusers
ex. Coleman increased its sale of outdoor equipment by promtoinal displays at outdoor events
well defined business and marketing objectives must be:
Specific
Measurable
Attainable
Relevant to the target
Timely
Direct/internal marketing environment
Company
Competition
Customers
Know the market situation: competitive environment
Monopoly
Monopolistic competition
Oligopoly
Pure competition
External marketing assessment
Legal
Economic
Technological
Cultural
Marketing mix is used to _________________________
address the target market
Good market plan:
Specific, measurable, attainable to the target and timely
Strategies (broad)
Tactics (specific)
Breakthrough opportunities are difficult without _________________
planning
Planning helps define:
competitive advantage
Hit or miss marketing
Not planning, just reacting to the market
Gross Domestic Product (GDP) =
Gross National Income (GNI)
+ Income earned by foreginers who own resources in the nation
Total income
- taxes
- necessities
=
Discretionary income
Big Three American Subcultures
Hispanic population is now the largest ethnic subculture (12.5%)
African American subculture is at 12.3%
Asian Americans fastest growing racial group 3.6%
Characteristics of the Hispanic Market
Looking for spirituality, stronger family ties, more color in lives
Spend more on groceries
shopping is afamily affair
clothing children well as a matter of pride
conveince not importan
Key Trends in the U.S. Consumer Market
Graying of America
Generation X - fewer in number
Generation Y - tech savy
Gray Market
Traditionally neglected by marketers
People are now living longer/healthier lives
Zoomers = active, intieresed in life, enthusiastic consumers with buying power - fasterst growing group of internet users
Strategy for Strategy
Exploit your strengths and opportunities
Mitigate your weaknesses and threats
Go with your strenths
Attack your competitor’s weaknesses
4 major areas of the external marketing environment:
- Economic environment
- Technological environment
- Political and legal environment
- Cultural and social environment
Mission statement
Sets out the organization’s basic purpose for being - should focus on a few key goals rather than embracing everyything
Company objectives - provides bguidance in screening possible opportunities
- guide managers as they search and evaluate opportunities
marketing objectives - should be set within the framework of larger company objectives
3 main categories of company resources:
- Financial strength
- Producing capability and flexibilty
- Marketing strengths
4 types of classifications of the competitive enviornment:
- Pure competition - most products head toward pure competition. Customers see the different available products as close substitutes, managers just compete with lower and loweer prices, and profit margins shrink, sometimes they cut prices too quickly
- Oligopoly - very similar to pure competition
- Monopolistic competition - A number of different firms offer marketing mixes that at least some customers see as different. Each competitor tries to get control in its own target market but competition exists
ex. clorox bleach uses same chemicals but marketing managers help seperate it by using improved poourg spout - Monopoly - firm completely controls a broad product market, are rare in market-directed economies.
- governments regulate monopolies
Competitive barrier
The conditions that may make it difficult, or even impossible, for a firm to compete in a market
Such barriers may limit your plans or, alternatively, block competitors responses to an innovative strategy
Sherman Act 1890
Monopoly or conspiracy in restraint of trade
- Monopoly or conspiracy to control a product
- Monopoly or conspiracy to control distribution channels
- monopoly or conspiracy to fix or control prices
Clayton Act 1914
Substantially lessens competition
- Forcing sale of some products with others - tying contracts
Exclusive dealing contracts (limiting buyers’ sources of supply)
Price discrimination by manufacturers
Anti trust
Federal Trade Commission Act 1914
Unfair methods of competition
- Unfair policies
- Deceptive ads or selling practices
- Deceptive pricing
*if you put ads out, they have to review them
Robinson-Patman Act 1936
Tends to injure competition
Prohibits “fake” advertising allowances or discrimination in help offered
Prohibits price discrimination on goods of “like grade and quality” without cost justification, and limits quanity discounts
*price discrimination legal if you meet basic criteria
Wheeler-Lea Amendment 1938
Unfair or deceptive practices
Deceptive packaging or branding
Deceptive ads or selling claims
Deceptive pricing
Antimerger Act 1950
Lessens competion
Buying competitors
Buying producers or distributors
MAguson-Moss Act
Unreasonable practices
Product warranties
Consumer Products Safety Commission
Recall products
Food and Drug Administration
Deal with labeling laws
If you make health claims, better justify them or FDA gets involved
*FDA has not improved vitamins or cosmetics
Changing social and cultural environment:
Role of women
More people live in urban areas
Difference between GDP and GNI
GDP - total market value of all goods and services provided in a country’s economy in a year by both residents and nonresidents of that country
GNI - Does not include income earned by foreigners who own resources
Population trends by region
Greatest growth: western states like Nevada, arizona, idaho, and utah, sun belt
Texas, georgia, north carolina and virgina arre also growing rapidly
Senior Citizen group is increasing quickly
What are three key criteria to be used when determining which opportunities to pursue?
Growth potential
competitive superiority
Fit with company resources
4 components of a product market
What: Product type (type of good and type of service)
To meet what: Customer (user) needs
For whom: Customer types
Where: Geographic area
How does a product market different from a generic market?
Generic market - a market with broadly similar needs - and sellers offering various, often diverse, ways of satsifying those needs
Product market - a market with very similar needs and sellers offering various close substitute ways of satisfying those needs
Segmenting
Marketing-oriented managers think of segmenting as an aggregating process - clustering people with similar needs into a “market segment”
market segment - a relatively homogeneous group of customers who will respond to a marketing mix in a similar way
4 key features of a good segment:
- Homogeneous (similar) within - the customers in a market segment should be as similar as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions
- Heterogeneous (different) between - the customers in different segments should be as different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions
- Substantial - the segment should be big enough to be profitable
- Operational - the segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables
3 key market oriented strategies with respect to segmentation:
- single target market approach - segmenting the market and picking one of the homogeneous segments as the firm’s target market
- multiple target market approach - segmenting the market and choosing two or more segments, and then treating each as a seperate target market needing a different marketing mix
- combined target market approach - combining two or more submarkets into one larger target market as a basis for one strategy
Combined tarket market approach
MAy help achieve some economies of scale and require less investment than developing different marketing mixes for different segments
Cons: makes it harder to develop marketing mixes that best satisfy potential customers
Segmenters pros and cons
Pros: usually fine tune their marketing mixes for each target market - perhaps making basic changes in the product itself - because they want to satisfy each segment very well
Cons: may not be effective for a smaller firm with more limited resources
*they would use single target market approach
Why is it important to segment?
Hoping to increase sales by getting a much larger share of the business in the markets they target
They can provide superior value and satisfy their customers better
Provides greater profit potential for the firm
How does a product market differ from a generic market?
Generic market does not include the product type
Potential Target Market Dimensions
Behavioral needs, attitudes and how present and how potential good/services fit into customers consumption patterns
Urgency: to get need satisfied and desire and wilingness to seek information, compare, and shop
Geographic location: and other demographic characteristics of potential customers
WHy is it important to segment?
Segmenting can help better meet the needs of the target
How do you know when to stop segmenting
Steop when profits are too low - less sales lower economies
Qualifying dimensions
Those relevant to including a customer type in a product market
Determining dimensions
Those that actual affect the purchase of a specific product or brand in the product market
Determining can vary over time
Steps of Market Segmentation
- Naming broad product markets
- Segmenting these head product markets in order to select target markets and develp marketing mixes
Positioning
How customers think about proposed brands
Without positioning it would be hard to differentiate
Negative Word of Mouth (WOM) and Power of Rumors
We weight negative WOM more heavily than we do positve comments
- Negative WOM is easy to spread, especially online
- determined detractors
- information/rumor distortion
Cutting-Edge WOM Influences
Social Networking
Crowd Power
Guerilla Marketing
Viral Marketing (pyramid scheme)
PSSP Hierarchy of Needs
Personal Needs
Social Needs
Safety Needs
Physiological Needs
Selective Exposure
We notice things via our senses: sight, sound, touch, smell, taste
Stimulus generalization:
tendency for stimuli similar to a conditioned stimulus to evoke similar, unconditioined responses
ex. family branding, pdouct line extensions, licensing, look alike packagin
There are more purchases to:
There are more purchase to businesses and organizationla customers
4 types of business customers
- Producers of goods and services
- Intermediaries
- Government units
- Non Profit Organizations
Driving motivation in the business purchases:
Focus on economic factors - less emotional
Look at total cost of ownership
Key roles in the business buying process
Users - people who use the product
Influences - people who write specifications R&D, and engineers
Buyers - purchasing managers
Deciders - people with approved - top management
Gatekeepers - control flow of info (secretary)
POQ
Purchase Order Request
Request for management to approve a buy
extensive, routinized, limited
3 types of business buying processes
New task buying - new needs and wants info
Straight rebuy - routine purchase made before
modified rebuy - the in-between
*opportunities with a new rask
Benefits of exclusive vendor relationship
Lower costs
Less likely to lose order/get cut
Disadvnatage of exclusive vendor relationships
Reduce flexibility
Joint Problems
Shared information
Role of E-Commerce in Business to Business
Search engines
Online forums
Competitive bids
Post requirements and invite bids
Case studies
Social networking
Firmagraphics of manufactuerers, services,govnt, retailers,and wholesalers?
Manufactuers - not many big ones, clustered in certain areas,
services - smaller and more fragmented
government - very big and a lot of GDP
retailers and wholesalers - buying committee, reorders are straight rebuys, inventory replenishment
FCPA
Foregin Corrupt Practice Act
1977
Prohibits U.S. firms from paying bribes to foreign officials
True or False: Marketing research provides “the answer”
False
Advantages/Disadvantages of in house vs. outside Market Research
In house - more control
Outside - costly - they know the info
True or False: Marketing Managers do not need to ve involved in the decision and scope of market research
False
Five-Step Approach to Marketing Research Process
- Defining the problem
- Analyzing the situation
- Getting problem-specific data
- Interpreting the data
- Solving the problem
*most important step is defining the goal/problem
Partnership
A good market researcher is a “consulting partner”
Can successfully translate the numbers into actionable results
Quantitative research
Research involving the use of structured questions in which response options have been predetermined and a large number of respondents involved
If properly structured, results are projectable to the total population
Open ended, covers more
Not projectable
Qualitative research
Research involving collecting, analyzing, and interpreting data by observing what people do and say
Results are not projectable
Structured, numbers, easier to analyze
Key to projectability
Random sample
Every respondent has an = chance to particpate in the survey
Therefore, your sample will accurately reflect teh population
Ken Concerns in Data Interpretation
Popuation
Validity
Sample
Confidence Intervals
Sampling error
Concerns how the sample was drawn and the size of the sample
Non-sampling error is everything else that can affect the results
Validity
Are you asking the right questions to measure what you want to measure?
Are you missing a critical question?
Are the questions worded propertly?
Is the question order appropriate?
- sensitive should be last
Are you asking the right people and the right number of people?
What determines methodology?
The nature of the problem
The time available to conduct the research
The budget available for the research
The risk of wrong information
Qualitative techniques
Focus group interview, telephone surveys, personal
Quantitative technique
surveys, questionaires
Difference between a population and a sample
Population - total group of interest
Sample - part of the population (less costly)
Validity
Concerns the extent to which data measure they were intended to measure
Confidence Interval
A range around a measurement that conveys how precise the measruement is
Often seen on the news when the results of polls are released
