Marketing
the art and science of finding, acquiring and satisfying customers in order to create a mutually acceptable exchange.
To serve buyers & sellers marketing seeks to
1)discover the needs and wants of prospective customers
2) satisfy them
exchange
trade of things of value between buyer and seller so that each is better off after the trade
4 things must occur for marketing to happen
1) 2 or more parties (indiv. or orgs.) with unsatisfied needs
2) a desire and ability on their part to be satisfied
3) a way for the parties to communicate
4) something to exchange
2 or more parties with unsatisfied needs
you, desiring techonology-related information, and your bookstore owner, needing someone to buy a copy of Wired magazine
desire & ability to satisfy these needs
both you & bookstore owner have desire to satisfy these unmet needs-- you have the money to buy the item and owner has ability to sell you Wired
way for parties to communicate
When you recieve a free sample in the mail or see the magazine on display in the bookstore, this communication barrier between you and your bookstore is overcome
something to exchange
you exchange your money for the bookstore's magazine
marketing occurs when
the transaction takes place and both the buyer and seller exchange something of value
Robert McMath said
1)focus on what the customer benefit is
2) learn from the past
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
market
people with both the desire and ability to buy a specific offering; all markets are people
target market
one or more specific groups of potential consumers
Product
good, service, or idea to satisfy the consumer's needs
Price
what is exchange for the product
Promotion
A means of communication between the seller and buyer
Place
a means of getting the product to the consumer
marketing mix
marketing manager's controllable factors-4P's- that can be used to solve a marketing problem
ex: when company puts product on sale, it's changing the price element of the marketing mix
environmental forces
beyond marketers control; in a marketing decision involves social, economic, technological, competitive, and regulatory forces
ex: what consumers want and need, changing tech, state of economy (expanding or contracting)
customer value
unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price
firms have chosen to deliver
outstanding customer value with best price, best product, or best service
relationship marketing
linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits
mutual long-term benefits
these are between the organization and its customers that require links to other vital stakeholders including suppliers, employees, and "partners" like wholesalers or manufacturer
marketing program
plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers; this process is continuous: consumer needs trigger product concepts that are translated into actual products that stimulate further discovery of consumer nee
American manufacturers have faced 4 distinct stages
1)production era (early years of US up to 20s goods were scarce & buyers accepted almost anything)
2)sales era (20s-60s could produce more goods than buyers could consume)
3)marketing concept era (50s- motivating force)
4) customer relationship era (80s-f
Marketing concept
idea that an organization should 1) strive to satisfy the needs of consumers 2)while also trying to achieve the organization's goals
ex: general electric introduced marketing at the beginning rather than the end of their production cycle
market orientation
focuses its efforts on 1)continuously collecting information about customer's needs 2) sharing this information across departments 3) using it to create customer value
customer relationship management (CRM)
process of identifying prospective buyers, understanding them intimately, and developing favorable long term perceptions of the organization and it's offerings to buyers will choose them in the marketplace
customer experience
internal response that customers have to all aspects of an organization and its offering; it includes direct and indirect contacts of the customer with the company
societal marketing concept
view that the organizations should satisfy the needs of consumers in a way that provides for society's well-being
ex: ScotchBrite Never Rust soap pads (made from recycled bottles) are more expensive than competitors but superior b/c they don't rust or scr
macromarketing
the study of aggregate flow of nation's goods and services to benefit society
micromarketing
how an individual organization directs its marketing activities and allocates its resources to benefit its customers
goods
physical objects like toothpaste cameras or computers
services
intangible items like airline trips financial advice or art museums
ideas
thoughts about concepts actions or causes
ultimate consumers
people who use goods and services purchased for a household
organizational buyers
manufacturers, wholesalers, retailers, and gov agencies that buy goods and services for their own use or for resale
utility
benefits or customer value received by users of the product; its the result of the marketing exchange process and the way society benefits from marketing
form utility
production of the good or service
place utility
having the offering available where consumers need it
time utility
having it available when needed
possession utility
value of making an item easy to purchase through the provision of credit cards or financial arrangements
organization
legal entity of people who share a common mission
business firm
privately owned organization such as Amazon or Nike that serves its customer to earn a profit so it can survive
profit
money left after a business firm's total expenses are subtracted from its total revenues and the reward for the risk it undertakes in marketing its offerings
nonprofit organization
nongovernmental org that serves its customers but does not have profit as an organizational goal- it may be operational efficiency or client satisfaction
strategy
an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals
corporate level
where top management directs over-all strategy for the entire org. usually is the board of directors and senior management; CEO is highest ranking officer in the org and usually part of the BOD
strategic business unit (SBU)
a subsidiary, division, or unit of an organization that markets a set of unrelated offerings to a clearly defined group of customers
functional level
each SBU has one, where groups of specialists actually create value for the organization. usually department refers to them; key role is to look outward and keep the org focused on creating value for it and customers
cross-functional teams
when marketing programs are developing new offerings or improving existing ones; its a small # of people who are mutually accountable to accomplish a task or a common set of performance goals
core values
fundamental, passionate, and enduring principles that guide its conduct over time; the firm's founders or senior management develop them and are consistent with their beliefs and character; they serve to inspire and motivate its stakeholders; they are tim
mission
a statement of the org's function in society, often identifying its customers, markets, products, and technologies. it should be clear, concise, meaningful , inspirational, and long-term
organizational culture
the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of the organization
business
describes the clear, broad, underlying industry or market sector of an organization's offering
business model
strategies an org develops to provide value to the customers it serves
goals/objectives
statements of an accomplishment of a task to be achieved, often by a specific time
marketing dashboard
visual computer display of the essential information related to achieving a marketing objective
ex: when a CMO wants to see daily what the effect of a new TV ad campaign is on a product's sales
marketing metric
a measure of the quantitative value or trend of a marketing activity or result
marketing plan
a road map for the marketing activities of an org for a specified future time period
organization's core competencies
special capabilities (skills, technologies, and resources) that from other orgs and provide customer value
competitive advantage
unique strength relative to competitors that provides superior returns, often based on quality, time, or innovation
business portfolio analysis
quantifies performance measures and growth targets to analyze its clients' strategic business units as though they were a collection of separate investments
cash cows
SBUs that generate large amounts of cash, far more than invested profitably in themselves. they have dominant shares of slow-growth markets and provide cash to cover the org's overhead and to invest in other SBUs
Stars
SBUs with a high share of high-growth markets that may need extra cash to finance their own rapid future growth. when growth slows, they are likely to become cash cows
question marks
SBUs with a low share of high-growth markets. they require large injections of cash just to maintain their market share, much less to increase it.
SBUs often starts as question marks go counterclockwise to become stars then cash cows then dogs
dogs
SBUs with low shares of slow-growth markets. they generate enough cash to sustain themselves, but don't hold the promise of ever becoming real winners for the org
strength of business portfolio analysis
forces firms to place each of its SBUs in the growth-share matrix which in turn suggests which SBUs will be cash producers and cash users in the future
weaknesses of business portfolio analysis
1) getting the needed information
2) incorporation competitive data into business portfolio analysis
diversification analysis
tool that helps a firm search for growth opportunities from among current and new markets as well as current and new products
market penetration
marketing strategy to increase sales of current products in current markets like B&J ice cream to US customers. there is no change to basic product line or markets served
market development
marketing strategy to sell current products to new markets. B&J, Brazil is an attractive new market b/c households there buy more ice cream but the brand may be unknown to brazilian consumers.
product development
marketing strategy of selling new products to current markets B&J could leverage its brand by selling children's clothing in the US
diversification
marketing strategy of developing new products and selling them in new markets. can be high risk for B&J b/c the firm has neither previous production nor marketing experience on which to draw to market the offerings of brazilian consumers
strategic marketing process
an org allocates its marketing mix resources to reach its target markets; it's divided into 3 phases: planning, implementation, and evaluation
Planning phase has 3 steps
1)situation (SWOT) analysis
2)market-product focus and goal setting
3)marketing program
step 1: SWOT analysis
aka situation analysis, taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's marketing plans and the external forces and trends affecting it. SWOT stands for internal strengths
step 2: market-product focus & goal setting
determining which products will be directed toward which customers; goal setting involves setting measurable marketing objectives to be achieved
market segmentation
involves aggregating prospective buyers into groups or segments that 1) have common needs 2) will respond similarly to a marketing action
points of difference
those characteristics of a product that make it superior to competitive substitutes. it has unique characteristics of one of its products that make it superior to competitive products it faces in the marketplace
step 3: marketing program
developing the program's marketing mix (4 Ps) and its budget
Product, Price, Promotion, & Place strategy
implementation phase
second phase of strategic marketing process; involves carrying out the marketing plan that emerges from the planning phase; 4 components 1) obtaining resources 2)designing the marketing org 3)developing planning schedules 4) actually executing the marketi
marketing strategy
means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it
marketing tactics
detailed day-to-day operational decisions essential to the overall success of marketing strategies
evaluation phase
third phase of strategic marketing process; seeks to keep the marketing program moving in the direction set for it it must 1)compare the results of the marketing program with the goals in the written plans to identify deviations and, 2) act on these devia
environmental scanning
the process of continually acquiring information on events occurring outside the org to identify and interpret potential trends
5 sources of environmental trends
social, economic, technological, competitive, and regulatory forces
social forces
includes the demographic characteristics of the population and its values; changes can have dramatic impact on marketing strategy
demographics
describing a population according to selected characteristics such as age, gender, ethnicity, income, and occupation
baby boomers
generation of children born b/t 1946 and 1964; they're retiring at a rate of 10000 every 24 hours; their participation in the work force has made them the wealthiest generation in US history
Generation X
includes 15% of the population born b/t 1965 and 1976; aka baby bust b/c # of children born each year was declining. they are self-reliant, supportive of racial and ethnic diversity, and better educated than previous generation
Generation Y
includes 72 million Americans born b/t 1977 and 1994; period of increasing births and often referred to as the echo-boom or baby boomlet. they exert influence on music, sports, computers, video games, and especially cell phones
blended family
one formed by merging two previously separated units into a single household
multicultural marketing
combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races
culture
second social force; incorporates the set of values, ideas and attitudes that are learned and shared among the members of a group.
one of the most notable cultural changes-attitudes and roles of men and women in the market place "strong enough for a man,
value consciousness
concern for obtaining the best quality, features, and performance of a product or service for a given price
economy
second component of environmental scan: pertains to the income, expenditures, and resources that affect the cost of running a business and household.
macroeconomic conditions
concern for inflationary or recessionary state of the economy whether actual or perceived by consumers or businesses.
inflationary economy
cost to produce and buy products and services escalates as prices increase; if prices rise faster than consumer incomes, the number of items consumers can buy decreases
recessionary economy
time of slow economic activity; businesses decrease production, unemployment rises, and many consumers have less money to spend
gross income
total amount of money made in one year by a person, household, or family unit
disposable income
money a consumer has left after paying taxes to use for necessities such as food, housing, clothing, and transportation
discretionary income
money that remains after paying for taxes and necessities. it is used for luxury items such as a cruise
technology
third environment force; refers to inventions or innovations from applied science or engineering research; difficult to predict
marketspace
an information and communication-based electronic exchange environment mostly occupied by sophisticated computer and telecommunication technologies and digitized offerings
electronic commerce
any activity that uses some form of electronic communication in the inventory, exchange, advertisement, distribution, and payment of goods and services
competition
fourth component of environmental scan; refers to the alternative firms that could provide a product to satisfy a specific market's needs.
pure competition
there are many sellers and they each have a similar product
ex: agribusiness companies like wheat rice and grain
monopolistic competition
many sellers compete with the substitutable products within a price range ex: price of coffee rises too much, consumers may switch to tea
oligopoly
common industry structure, occurs when a few companies control the majority of industry sales ex: wireless telephone industry dominated by verizon, at&t, sprint and tmobile
pure monopoly
occurs when only one firm sells the product ex: producers of water, electricity, and cable service
barriers to entry
can be in the form of capital requirements, advertising expenditures, product identity, distribution access or the cost of customers of switching suppliers; firms must assess the likelihood of new entrant
regulation
fifth component of environmental scan; consists of restrictions state and federal laws place on a business with regard to the conduct of its activities
consumerism
grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions
self-regulation
an industry attempts to police itself. major television networks have used this to set their own guidelines for tv ads for children's toys.
consumer behavior
actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions
purchase decision process
stages a buyer passes through in making choices about which products and services to buy 1)problem recognition 2)information search 3) alternative evaluation 4) purchase decision 5) postpurchase behavior
problem recognition
perceiving a difference b/t a person's ideal and actual situations big enough to trigger a decision
information search
first scan memory for previous experiences with products or brands (internal search) used for things like shampoo; they can also use an external search like 1)personal sources like relatives & friends 2)public sources like product-rating orgs 3)marketer-d
evaluative criteria
represent both objective attributes of a brand and subjective ones you use to compare different products and brands
consideration set
group of brands that a consumer would consider acceptable from among all the brands of which he or she is aware in the product class
purchase decision
having examine the alternatives in the consideration set, you are almost ready to make a purchase decision; you must 1)decide from whom to buy and 2) when to buy
postpurchase behavior
after buying the product, the consumer compares it with his or her expectations and is either satisfied or dissatisfied
cognitive dissonance
postpurchase psychological tension or anxiety "should i have purchased the samsung?"; to alleviate consumers often attempt to applaud themselves for making the right choice
involvement
sometimes consumers skip parts of the 5-stage process and use some depending on their involvment which is the personal, social, and economic significance of the purchase to the consumer
extended problem solving
each of the 5 stages is used including considerable time and effort on external information search and in identifying and evaluation alternatives
limited problem solving
consumers typically seek some information or rely on a friend to help them evaluate alternatives
routine problem solving
for products such as table salt and milk, consumers recognize a problem, make a decision, and spend little effort seeking external info
situational influences
have an impact on the purchase decision process 1) purchase task 2) social surroundings 3) physical surroundings 4) temporal effects 5) antecedent states
motivation
energizing force that stimulates behavior to satisfy a need
hierarchy of needs
physiological, safety, social, personal, and self-actualization
physiological needs
basic to survival and must be satisfied first ex: red lobster ad
safety needs
involve self-preservation as well as physical and financial well-being ex: smoke detectors and burglar alarm
social needs
concerned with love and friendship ex: dating services
personal needs
include the need for achievement status, prestige, and self-respect ex: American Express Platinum Card
self-actualization needs
involve personal fulfillment ex: long-running US army recruiting program "be all you can be
personality
refers to person's consistent behaviors or responses to recurring situtation
key traits
enduring characteristics within a person or in his or her relationship with others; they include assertiveness, extroversion, compliance, dominance, and aggression.
self-concept
way people see themselves and the way they believe others see them
perception
process by which an individual selects, organizes, and interprets information to create a meaningful picture of the world
selective perception
filtering of exposure, comprehension, and retention
selective exposure
occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent
selective comprehension
involves interpreting information so that it is consistent with your attitudes and beliefs
selective retention
consumers do not remember all the info they see, read, or hear, even minutes after exposure to it
subliminal perception
you can see or hear messages without being aware of them
perceived risk
represents the anxiety felt because the consumer can't anticipate the outcomes of a purchase but believes there may be negative consequences
behavioral learning
process of developing automatic responses to a situation built up through repeated exposure to it; 4 variables- drive, cue response, and reinforcement
drive
need that moves an individual to action ex: hunger
cue
stimulus or symbol perceived by consumers
response
action taken by consumer to satisfy the drive
reinforcement
the reward
stimulus generalization
occurs when a response elicited by one stimulus(cue) is generalized to another stimulus
stimulus discrimination
refers to a person's ability to perceive differences in stimuli
cognitive learning
involves making connections b/t 2 or more ideas or simply observing the outcomes of others' behaviors and adjusting your own accordingly
brand loyalty
favorable attitude toward and consistent purchase of a single brand over time
attitude
learned predispostion to respond to an object or class of objects in a consistently favorable or unfavorable way" they're shaped by our values and beliefs which are learned
beliefs
consumer's subjective perception of how a product or brand performs on different attributes; based on personal experience, advertising, and discussions with other people
lifestyle
mode of living that is identified by how people spend their time and resources, what they consider important in their environment, and what they think of themselves and the world around them
opinion leaders
considered to be knowledgeable about or users of particular products and services, so their opinions influences other's choices
reference groups
people to whom an individual looks as a basis for self-appraisal or as a source of personal standards. they influence the info, attitudes, and aspiration levels that help set a consumer's standards 1)membership group(person belongs) 2)aspiration group (pe
consumer socialization
process by which people acquire the skills, knowledge and attitudes necessary to function as consumers; children learn how to purchase by interacting with adults and through own purchasing and product usage
family life cycle
describes the distinct phases that a family progresses through from formation to retirement.
social class
defined as the relatively permanent, homogeneous divisions in a society into which people sharing similar values, interests, and behavior can be groups
subcultures
subgroups within the larger, or national, culture with unique values, ideas, and attitudes
business marketing
marketing of goods and services to companies, governments or not-for-profit organizations for use in the creations of goods and services that they can produce and market to others
organizational buyers
manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale; has 3 markets 1)industrial 2) reseller 3)government
North American Industry Classification System (NAICS)
provides common industry definitions for Canada, Mexico, and the US which makes it easier to measure economic activity in the 3 member countries of NAFTA
derived demand
demand for industrial products and services is driven by, or derived from, demand for consumer products and services
organizational buying criteria
objective attributes of supplier's products and services and the capabilities of the supplier itself; same criteria of evaluative criteria 1)price 2)ability to meet quality specifications 3)ability to meet required delivery schedules 4) technical capabili
ISO 9000
standards developed by the International Standards Organization (ISO) in Geneva, Switzerland. Refer to standards for registration and certification of a manufacturer's quality management and assurance system based on an on-site audit of practices and proc
supplier development
involves the deliberate effort by organizational buyers to build relationships that shape suppliers' products, services, and capabilities to fit a buyer's needs and those of its customers.
reciprocity
an industrial buying practice in which two organizations agree to purchase each other's products and services; the justice department disapproves of this b/c it restricts the normal operation of free market.
supply partnership
when a buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services to the ultimate customer
buying center
when several people in an organization participate in the buying process; the individuals in the group share common goals, risks, and knowledge important to a purchase decision
new buy
first-time buyer of the product or service; involves greater potential risk so the buying center is enlarged
straight rebuy
buyer or purchasing manager reorders an existing product or service from the list of acceptable suppliers, probably without even checking with users or influencers
modified rebuy
the users, influencers, or deciders in the buying center want to change the product specifications, price, delivery schedule or supplier
organizational buying behavior
decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers
make-buy decision
evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself
value analysis
a systematic appraisal of the design, quality, and performance of a product to reduce purchasing costs
bidder's list
list of firms believed to be qualified to supply a given item; it's generated from the company's purchasing databank
e-marketplace
bring together buyers and supplier organizations; online trading communities
traditional auction
seller puts an item up for sale and would-be buyers are invited to big in competition with each other
reverse auction
a buyer communicates a need for a product or service and would-be suppliers are invited to big in competition with each other.
market segmentation
involves aggregating prospective buyers into groups 1)have common needs 2)will respond similarly to a marketing action
market segments
relatively homogeneous groups of prospective buyers that result from the market segmentation process; each segment consists of people who are relatively similar to each other
product differentiation
strategy involves a firm using different marketing mix activities, like product features and advertising, to help consumers perceive the product as being different and better than competing products
one product & multiple market segments
organization produces only a single product or service and attempts to sell it to 2 or more market segments; this avoids extra costs of developing and producing additional versions of the same product ex: harry potter books
multiple products & multiple market segments
ex: Ford's different likes of cars, SUVs, and pickup trucks are each targeted at a different type of customer
segments of one:mass customization
each customer has unique needs and wants and desires special tender loving care; tailor goods or services to the tastes of individual customers on a high-volume scale
build-to-order
manufacturing a product only when there is an order from a customer
organizational synergy
increased customer value achieved through performing organizational functions such as marketing or manufacturing more effciently
cannibalization
when increased customer value involves adding new products or a new chain of stores, the product differentiation market segment trade-off raises the issue of are the new products or new chain simply stealing customers and sales from the older, existing on
step 1: group potential buyers into segments
1)simplicity and cost-effectiveness of assigning potential buyers to segments 2)potential for increased profit 3)similarity of needs of potential buyers within a segment 4)difference of needs of buyers among segments 5)potential of a marketing action to r
geographic segmentation
based on where prospective customers live or work (region, city, size)
demographic segmentation
based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) of prospective customers.
psychographic segmentation
based on some subjective mental or emotional attributes (personality), aspirations (lifestyle), or needs of prospective customers
behavioral segmentation
based on some observable actions or attitudes by prospective customers like where they buy and what benefits they seek
usage rate
quantity consumer or patronage during a specific period
80/20 rule
concept that suggests 80% of a firm's sales are obtained from 20% of its customers
segment organizational markets
1)geographic
2)demographic-NAICS
3)behavioral
step 2: group products to be sold into categories
finding a means of grouping the products a firm sells into meaningful categories
step 3: market-product grid
framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization; each grid can show the estimated market size of a given product sold to a specific market segment
step 4: select target markets
1)market size
2)expected growth
3)competitive position
4)cost of reaching the segment
5)compatibility with the organization's objectives and resources
product positioning
refers to the place a product occupies in consumer's minds on important attributes relative to competitive products.
product repositioning
changing the place a product occupies in a consumer's mind relative to competitive products
head-to-head positioning
involves competing directly with competitors on similar product attributes in the same target market
differentiation positioning
involves seeking a less-competitive, smaller market niche in which to locate a brand
determining positioning of minds
1)identify important attributes for a product or brand class
2)discover how target customers rate competing products to these attributes
3)discover where the company's product or brand is on these attributes in the minds of potential customers
4)repositio
perceptual map
means of displaying or graphing in 2 dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands