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Marketing is an organizational function
and a set of processes for
creating, delivering, and communicating
value to customers and for managing
in ways that benefit the
organization and its stakeholders.
creating, delivering, and communicatingvalue to customers
Marketing Management is the art and science of choosing target markets
and getting, keeping, and growing
creating, delivering, and communicating
superior customer value.
through creating, delivering, and communicatingsuperior customer value.
Events and experiences
Places and properties
Define these demand states:
Negative - consumers dislike the product and may even pay a price to avoid it.
Nonexistent- Consumers may be unaware or uninterested in the product.
Latent- Consumers may share a strong need that cannot be satisfied by an existing product.
Declining- Consumers begin to buy the product less frequently or not at all
Irregular- Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis
Unwholesome- Consumers may be attracted to products that have undesirable social consequences.
What are the 4 P's of marketing? (aka Marketing Mix)
Product, Price, Place,
Developing marketing strategies
Capturing marketing insights
Connecting with customers
Building strong brands
Shaping market offerings
Creating long-term growth
Strengthening the brands
Measuring marketing effectiveness
Driving new product development based on customer needs
Gathering meaningful customer insights
Utilizing new marketing technology
A substantial increase in buying power
A greater variety of available goods and services
A great amount of information about practically anything
Greater ease in interacting and placing and receiving orders
An ability to compare notes on products and services
An amplified voice to influence public opinion
Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well.
Social Responsibility Marketing
Develop market strategies and plans
Capture marketing insights
Connect with customers
Build strong brands
Shape market offerings
Create long-term growth
Define the value segment
Define the value proposition
Define the value network
(can refer to ppt slide in ch 2 pt 1)
transforming inputs into outputs that customers value
The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.
Define Marketing as the
American Marketing Association
August 2004 did...
What are Porter’s Generic Strategies?
An organization seeks to distinguish itself from competitors through the quality of its products or services. Developing
An organization concentrates on a specific regional market, product line, or group of buyers.
New-offering realization process
Customer acquisition process
Customer relationship management process
Fulfillment management process
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and coprosperity among key stakeholders.
A marketing plan is the central instrument for directing and coordinating the marketing effort.
It operates at a strategic and tactical level.
A marketing plan is a written document detailing the current situation with respect to customers, competitors, and the external environment and providing guidelines for objectives, marketing actions, and resource allocations over the planning period for either an existing or a proposed product or service.
Strategic and Tactical
Target marketing decisions
Analysis of marketing opportunities
Define the corporate mission
Establish strategic business units (SBUs)
Assign resources to each SBU
Assess growth opportunities
Focus on a limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful
Slide examples include Rubbermaid, Motorola and Ebay
It is a single business or collection of related businesses
It has its own set of competitors
It has a leader responsible for strategic planning and profitability
Can the benefits involved in the opportunity be articulated convincingly to a defined target market?
Can the target market be located and reached with cost-effective media and trade channels?
Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
Can the company deliver the benefits better than any actual or potential competitors?
Will the financial rate of return meet or exceed the company’s required threshold for investment?
Unit’s objectives must be hierarchical
Objectives should be quantitative
Goals should be realistic
Objectives must be consistent
I. Executive summary
Presents a short overview of the issues, objectives, strategy, and actions incorporated in the plan and their expected outcomes for quick management review.
II. Current situation
Summarizes relevant background information on the market, competition and the macroenvironment, and trends therein, including size and growth rates for the overall market and key segments.
III. Performance review
Examines the past performance of the product and the elements of its marketing (for an existing program (e.g., distribution, promotions, etc.). product or service only)
IV. Key issues
Identifies the main opportunities and threats to the product that the plan must deal with in the coming year, and the relative strengths and weaknesses of the product and business unit that must be taken into account in facing those issues.
Specifies the goals to be accomplished in terms of sales volume, market share, and profit.
VI. Marketing strategy
Summarizes the overall strategic approach that will be used to meet the plan’s objectives.
VII. Action plans
This is the most critical section of the annual plan for helping to ensure effective implementation and coordination of activities across functional departments. It specifies• The target market to be pursued.• What specific actions are to be taken with respect to each of the 4 Ps.• Who is responsible for each action.• When the action will be engaged in.• How much will be budgeted for each action.
VIII. Projected profit-and-loss statement
Presents the expected financial payoff from the plan.
Discusses how the plan’s progress will be monitored; may present contingency plans to be used if performance falls below expectations or the situation changes.
X. Contingency plans
Describes actions to be taken if specific threats or opportunities materialize during the planning period.
What decisions do you regularly make?
What information do you need to make these decisions?
What information do you regularly get?
What special studies do you periodically request?
What information would you want that you are not getting now?
What are the four most helpful improvements that could be made in the present marketing information system?
Sales information system
Databases, warehousing, data mining
Marketing intelligence system
Train sales force to scan for new developments
Motivate channel members to share intelligence
Utilize a customer advisory panel
Utilize government data sources
Collect customer feedback online
Independent customer goods and service review forums
Distributor or sales agent feedback sites
Combination sites offering customer reviews and expert opinions
Customer complaint sites
Profound shifts in centers of economic activity (13 & 30)
Increases in public-sector activity
Change in consumer landscape
Scarcity of well-trained talent
Increase in demand for natural resources
Emergence of new global industry structures
Ubiquitous access to information
Management shifts from art to science
Increase in scrutiny of big business practices
Population age mix
Describe The Cohort Effect
Savings, Debt, and Credit
Key indicators inflation, unemployment, interest rates, GDP growth, balance of trade
Views of themselves
Views of others
Views of organizations
Views of society
Views of nature
Views of the universe
Increased energy costs
Consumer Value Positioning
Calibration of Consumer Knowledge
Credibility of Product Claims
Pace of change
Opportunities for innovation
Varying R&D budgets
Increased regulation of change
The need for top management to foresee and understand changes in the environment has become increasingly important over the years (Aguilar, 1967).
The external environment is vast and complex, and managers are constrained by bounded rationality (Cyert and March, 1963; Daft et al, 1988).
“Giving up the illusion that you can predict the future is a very liberating moment. All you can do is give yourself the capacity to respond to the only certainty in life – which is uncertainty. The creation of that capability is the purpose of strategy.”
Lord John Browne,
Group Chief Executive, BP
Wrote the book
Scanning the Business Environment
1967 and then didnt write another book about it again.
Amount of Targeted Effort
Number of Sources
General areas of interest;
specific need to be revealed
Scan broadly a diversity of sources, taking advantage of what's easily accessible
Able to recognize topics of interest
Browse in pre-selected sources on pre-specified topics of interest
Able to formulate queries
Increase knowledge within narrow limits
Search is focused on an
issue or event, but a good-enough search is satisfactory
Able to specify targets
Formal use of information for planning, acting
of information on a target,
following some method or procedure
the irregular model
the regular model
the continuous model
Represents ad hoc environmental study triggered by an unanticipated occurrence in the environment.
Significantly more comprehensive and systematic; regular review of the external environment, often as part of an annual business plan preparation.
the inner layer representing day-to-day operations and goal attainment and includes the competitor, supplier and customer sectors.
also called the operating environment
Organizing the Marketing Effort for Scanning
Assign the responsibility to an existing functional group .
Mobilize ad hoc issue groups.
Create a high-level lookout . (Cross functional crow’s nest)
Start new initiatives. (CIA’s In-Q-Tel)
Invest in start-up ventures.
Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.
The sum total of learned beliefs, values, and customs that serve to regulate the consumer behavior of members of a particular society.
- the broadest component of social behavior in an entire society
- in a sense, culture is a society's personality
THE INVISIBLE HAND OF CULTURE
The impact of culture is so natural and automatic that its influence on behavior is usually taken for granted.
Often, it is only when we are exposed to people with different cultural values or customs that we become aware of how culture has molded our own behavior.
Beliefs consist of the very large number of mental or verbal statements that reflect a person’s particular knowledge and assessment of something.
Values also are beliefs, however, values differ from other beliefs because they must meet the following criteria:
Customs are overt modes of behavior that constitute culturally approved or acceptable ways of behaving in specific situations.
Formal Learning - adults and older siblings teach a young family member "how to behave."
Informal learning - a child learns primarily by imitating the behavior of selected others.
Technical learning - teachers instruct the child in an educational environment as to what, how, and why it should be done.
chews 300 sticks of gum a year
goes to the movies 9 times a year
takes 4 trips per year
attends a sporting event 7 times
A distinct cultural group that exists as an ____________ within a larger, more complex society.
Each subculture has its own unique traits, yet both groups share the _________ of the overall American culture.
Within a class, people tend to behave alike
Social class conveys perceptions of inferior or superior position
Class may be indicated by a cluster of variables (occupation, income, wealth)
Class designation is mobile over time
is guided by
is driven by
Short-term memory(STM) - a temporary and limited repository of information.
Long-term memory(LTM) - a more permanent, essentially unlimited repository.
Memory encoding - how and where information gets into memory.
Heuristics - rules of thumb or mental shortcuts in the decision process
Non-compensatory models - positive and negative attribute considerations don’t necessarily net out.
Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.
Capital items vs. non-capital items?
Opportunism is some form of cheating or undersupply relative to an implicit or explicit contract.
Social, demographic and economic sectors
Needs: basic human requirement; stated needs, real needs, unstated needs, delight needs, secret needs.
Demands: wants for specific products backed by an ability to pay.
Target markets: distinct groups of buyers who might prefer or require varying product and service mixes.
Positioning: putting in minds of target buyers as delivering some central benefit.
Value proposition: a set of benefits offered to customers to satisfy their needs.
Brand: an offering from a known source.
Value: reflects the sum of the perceived tangible and intangible benefits and costs to customers.
Satisfaction: reflects a person’s judgments of a product’s perceived performance in relationship to expectations.
What are the 3 types of Marketing channels and define each.
Communications channels: deliver and receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, billboards, Internet, etc.
Distribution channels: used by marketer to display, sell, or deliver the physical product or service to the buyer or user.
Service channels: used by marketer to carry out transactions with potential buyers, includes warehouses, transportation companies, banks, and insurance companies.
task environment and broad environment.
includes the actors engaged in producing, distributing, and promoting the offering. (company, suppliers, distributors, dealers, target customers)
consumers will prefer products that are widely available and inexpensive
: consumers and businesses, if left alone, won’t buy enough of the organization’s products and the organization must undertake an aggressive selling and promotion effort.
: Instead of find the right customers for your products, find the right products for your customers. The key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your chosen target markets.
: understanding and meeting customers’ expressed needs.
focus is on customers’ latent needs.
based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies.
aims to build mutually satisfying long-term relationships with key constituents in order to ear and retain their business.
What does marketing network consist of?
consists of the company and its supporting stakeholders
create, communicate, and deliver value for customers with marketing mix
all the activities in gathering market intelligence, disseminating it within the organization, and acting on the information
The new-offering realization process
The new-offering realization process: All the activities in researching, developing, and launching new high-quality offerings quickly and within budget.
(1) It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits. (2) It has applications in a wide variety of markets. (3) It is difficult for companies to imitate.
may be necessary to maximize core competencies. (1) Redefining the business concept or “big idea”. (2) Reshaping the business scope. (3) Repositioning the company’s brand identity
understanding the relationships among the customer’s cognitive space, the company’s competence space, and the collaborator’s resource space.
reflects existing and latent needs
breadth – broad versus focused scope; depth – physical versus knowledge based capabilities.
includes horizontal partnerships, with partners chosen for their ability to exploit related market opportunities, and vertical partnerships, with partners who can serve the firm’s value creation.
skills include identifying new customer benefits from the customer’s view, utilizing core competencies from the business domain, and selecting and managing business partners from its collaborative networks.
Customer relationship management allows the company to discover who its customers are, how they behave, and what they need or want. Internal resource management integrates major business processes. Business partnership management allows the company to handle complex relationships with its trading partners.
central instrument for directing and coordinating the marketing effort.
Strategic marketing plan: lays out the target markets and the value proposition the firm will offer, based on an analysis of the best market opportunities.
Tactical marketing plan: specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.
All corporate headquarters undertake four planning activities
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities
Target market definition: focuses on selling a product or service to a current market
Strategic market definition: focuses also on the potential market
Intensive growth: A company considers whether it could gain more market share with its current products in their current markets using a market-penetration strategy. Next it considers whether it can find or develop new markets for its current products in a market-development strategy. Then it considers whether it can develop new products of potential interest to its current markets with a product-development strategy. Later the firm will also review opportunities to develop new products for new market s in a diversification strategy.
Integrative Growth: A business can increase sales and profits through backward, forward, or horizontal integration within its industry.
Diversification growth: makes sense when good opportunities exist outside the present businesses – the industry is highly attractive and the company has the right mix of business strengths to be successful.
5 key strategies for managing change in an organization:
1. Avoid the innovation title
2. Use the buddy system
3. Set the metrics in advance
4. Aim for quick hits first
5. Get data to back up your gut
Management by objectives (MBO) : objectives must meet 4 criteria
1. They must be arranged hierarchically, from the most to the least important.
2. Objectives should be quantitative whenever possible.
3. Goals should be realistic.
4. Objectives must be consistent.
marketing strategy, technology strategy, and sourcing strategy.
1. Product or service alliances: one company licenses another to produce its product, or two companies jointly market their complementary products or a new product
2. Promotional alliances: one company agrees to carry a promotion for another company’s product or service
3. Logistics alliance: one company offers logistical services for another company’s product.
4. Pricing collaborations: one or more companies join in a special pricing collaboration.
Core skills to keep strategic alliances thriving
grew out of careful marketing research, which revealed that different ethnic and demographic niches did not always respond favorably to mass-market advertising
Reference groups: all the groups that have a direct or indirect influence on their attitudes or behavior
Membership groups: groups having a direct influence
Primary groups: groups with whom a person interacts fairly continuously and informally
Secondary groups: tend to be more formal and require less continuous interaction
Aspirational groups: those a person hopes to join
Dissociative groups: those whose values or behavior an individual rejects
Opinion leader : the person who offers informal advice or information about a specific product or product category
Family of orientation: consists of parents and siblings
Family of procreation: one’s spouse and children
the specific mix of human traits that we can attribute to a particular brand
1. Sincerity: down to earth, honest, wholesome, and cheerful
2. Excitement: daring, spirited, imaginative, and up to date
3. Competence: reliable, intelligent, and successful
4. Sophistication: upper class and charming
5. Ruggedness: outdoorsy and tough
Biogenic needs: arise from physiological states of tension such as hunger, thirst, or discomfort
Psychogenic: arise from psychological states of tension such as the need for recognition, esteem or belonging
Learning: induces change in our behavior arising from experience
Drive: a strong internal stimulus impelling action
Cues: minor stimuli that determine when, where, and how a person responds
Awareness set: individual consumer will come to know only a subset of brands
Consideration set: brands that meet initial buying criteria
Choice set: strong contenders
Conjunctive heuristic: the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets the minimum standard for all attributes
Lexicographic heuristic: the consumer chooses the best brand on the basis of its perceived most important attribute
Elimination-by-aspects heuristic: the consumer compares brands on an attribute selected probabilistically – where the probability of choosing an attribute is positively related to its importance – and eliminates brands that do not meet minimum acceptable cutoffs
1. Functional risk: the product does not perform up to expectations
2. Physical risk: the product poses a threat to the physical well-being or health of the user or others
3. Financial risk: the product is not worth the price paid
4. Social risk: the product results in embarrassment from others
5. Psychological risk: the product affects the mental well-being of the user
6. Time risk: the failure of the product results in an opportunity cost of finding another satisfactory product
Richard Petty and John Cacioppo; influential model of attitude formation and change, describes how consumer make evaluations in both low- and high-involvement circumstances; central route: attitude formation or change stimulates much thought and is based on a diligent, rational consideration of the most important product information; peripheral route: attitude formation or change provokes much less thought and results from the association of a brand with either positive or negative peripheral cues, including celebrity endorsements, credible sources, or any object that generates positive feelings
Low-involvement marketing strategies: marketers use four techniques to try to convert low-involvement products into one of higher involvement
Link the product to some involving issue
Link the product to some involving personal situation
Design advertising to trigger strong emotions
Add an important feature
Availability heuristic: consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind
Representative heuristic: consumers base their predictions on how representative or similar the outcome is to other examples
Anchoring and adjustment heuristic: consumers arrive at an initial judgment and then adjust it based on additional information
1. Informal (learning)
2. Undirected (sensing)
3. Conditional (Sensemaking)
4. Formal (Deciding)
Define New task
Obvious way (lower price) but also establishing resprictive conditions. (limited quantities, no refunds, no adjustments, no servies)
Buying basic and selling- routine exchanges
Bare bones- more adaption from seller and less cooperation and info exchange
Contractual transaction- formal contract and have low levels of trust
Customer supply- competition is form of governance
Cooperative systems- united in operational ways but neither demonstrates structural commitment through legal means
Collaborative- much trust
Mutually adaptive- make relationship but not really trusting
Customer is King- cooperative relationship, seller adapts to meet customer needs without expecting much adaptation or change
Learn from the past to point out blindspots and lessons from other industries
Find out who in industry is skilled at picking up weak signals
Examine present (what important signals are you missing)
Watch maverics and outliers
Needs of 3 customers
3.On the fringe
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