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an organizational function (not a marketing function, everyone has to believe in it) and a set of processes for:
· creating communicating and delivering value to customers
· managing customer relationship (not transactions) in ways that benefit the organization and its stakeholders
A product is:
a bundle of physical, service, and symbolic attributes designed to satisfy a customer's wants and needs.
Greta has been analyzing the competitive standing of one of her products. Since Greta’s product was introduced, 20 similar products have appeared, forcing her to change distribution strategies. Greta has also had to change pricing strategies in order to remain competitive. Sales volume has dipped, and she suspects sales of her product have reached a saturation level. The product is at which stage of the product life-cycle?
occurs when the new item eats up sales of an existing brand as the firm’s current customers simply switch to the new product.
activity in which two or more parties give something of value to each other to satisfy perceived need. Takes a couple of people to make it work, at the end you want each party to be satisfied. That way you build a relationship with your customers.
management’s failure to recognize the scope of its business (tunnel vision) Take the blinders off! focusing on customer need satisfaction can overcome myopia
marketing philosophies, policies, procedures and actions whose primary objective is to enhance society
· determining an organizations primary objectives,
· adopting courses of action that will achieve these objectives,
· addresses long-term actions
· guides the implementation of activities specified in the strategic plan,
· addresses shorter term aspects
o Cost advantages
o Financial resources
o Customer loyalty
o Modern production facilities
The Strategic Window
· Limited periods when key requirements of a market and firm’s particular competencies best fit together
· Requires an analysis of:
o Current and projected external environmental conditions
o Current and projected internal MORE ON SLIDE
Production of goods/ services
Segmentation by end-use application
· Segmenting a business to business market based on how industrial purchasers will use the product. Creating a personalize product for their client by figuring out exactly what the company uses it for.
Demand is said to be inelastic when the:
calculated elasticity of demand is less than 1.
a recurring purchase decision in which a customer repurchases a good or service that has performed satisfactorily in the past. More simple
I buy from you, you buy from me
assessment of supplier performance such as price, back orders, timely deliver, and attention to special requests
participants in a organizational buying center, more people makes it more timely and complex
· - the people who are actually using the good or service
· Influencers- affecting the buying decisions by supplying information to guide evaluation of alternatives or by setting buying specifications
· Buyers- have the formal authority to select a supplier and to implement the procedures for securing the good or service
form of exporting whereby goods and services are bartered rather than sold for cash
· Way to control balance-of-trade problems
· May be imposed in less developed nations that lack sufficient foreign currency to obtain goods and services they want.
Dumping- selling your products at a cost lower than you should be in an attempt to suck up market shares.
standardized marketing mix with minimal modifications that a firm uses in all of its domestic and foreign markets. Companies would love to standardize their product, but you can only really do it for raw items or tech.
process of family lifestyle and dissolution
-empty nesters, boomerangs
marketing effort sponsored by an organization that solicits responses from idividuals who share common interests and activities
A buying center is a basic component of a firm's formal organization structure.
A firm has decided to purchase hybrid delivery vehicles in response to rising gasoline prices. Which step in the business buying process does this illustrate?
Recognize a problem or opportunity
Assume the price of jet fuel rises, but airlines continue to purchase the same amount of fuel in order to meet operational needs. As a result, the demand for jet fuel is said to be inelastic.
Compared to the SIC system of classification, the NAICS not only standardizes classifications among nations, but also provides flexibility for each country to measure its own business activity.
Due to the complexity of the buying process and the sheer volume of transactions involved, the distribution channels in the B2B marketplace tend to be longer than those in the consumer market.
Geographic location is considered a demographic basis for segmenting the business market.
In a B2B market, relationships between for-profit and not-for-profit organizations are not as important as those between two commercial organizations.
India has emerged as the preferred destination for production offshoring, while China has emerged as the dominant player in services offshoring.
Personal selling plays a much bigger role in consumer markets than in business markets.
The biggest distinction between B2B marketing and consumer marketing is the lack of advertising and visibility in the marketplace the company services.
International trade now accounts for at least 50 percent of the U.S. gross domestic product (GDP).
Manufactured goods account for the lions share of U.S. production output today.
"Over the decades, the U.S. economy has seen a shift from being a service economy to a manufacturing economy."
Nearly 90 percent of the U.S. gross domestic product comes from the service sector of the economy.
"The most profitable service exports for the United States are business and technical services, banking, retailing, entertainment, and communications."
"Despite the sheer size of their markets, India and China do not appeal to marketers as their per-capita incomes are much lower than those of the United States or Europe."
The only challenge technology poses in front of marketers is the growth of Internet usage and new telecommunications technologies.
"In general, tariffs are imposed to raise revenue, protect prices of domestic products, control access to markets, or gain bargaining clout with another country."
Revenue tariffs are usually higher than protective tariffs.
"Tariffs and import quotas serve to restrict the importation of products, but embargoes completely ban the importation of the specified goods or the products of a particular country."
"The World Trade Organization oversees GATT agreements, mediates disputes, and continues the effort to further reduce trade barriers throughout the world."
"One of the main reasons NAFTA has been successful is that the United States, Canada, and Mexico have achieved political integration."
The most common reason cited by U.S. marketers for going global is to find other markets for their products.
"Importing and exporting is a low-risk strategy for entering a foreign market, as it allows a firm more control over how products are sold."
"Foreign licensing grants foreign marketers the right to distribute a firm's merchandise or use its trademark, patent, or process in a specified geographic area."
International direct investment involves a higher degree of risk and involvement than does foreign licensing.
"Although the first multinational corporations were U.S. based, today it is likely for a multinational corporation to be Japanese, German, or British."
Use of a straight extension marketing strategy usually results in economies of scale in production and marketing.
"A company that changes its products package sizes, prices, and promotional messages to meet the local markets tastes is using a straight extension marketing strategy."
"In a countertrade, products of one country are exchanged for products of another instead of cash."
"Relationship marketing views customers as equal partners in buyer seller transactions, thus motivating customers to enter into a long-term cycle of repeat purchases, customer satisfaction, and profitability."
converting customers into loyal customers
levels of customers:
o loyal supporter
o regular purchaser
o new customer
"One of the underlying concepts of internal marketing is that employees can affect the overall value the firm can provide, even if they have no direct contact with the organization's external customers."
Frequency marketing programs are promotional efforts sponsored by organizations that solicit involvement by individuals who share common interests and activities.
Database marketing involves the use of information technology to analyze data about customers and their transactions.
Viral marketing involves efforts that encourage satisfied customers to spread the word on products to other customers.
Customer win-back refers to the part of CRM strategy that focuses on rejuvenating lost relationship with customers.
Duncan Hines brownies made with Hershey s syrup and Diet Coke made with Splenda are two examples of cobranding.
The supply chain relationship affects only the upstream relationship between a company and its suppliers.
Lifetime value calculations involve matching the costs of acquiring and maintaining customer relationships with the profit produced by those customers over the length of time they can be expected to do business with the company.
The average lifetime of a customer relationship ultimately depends on the sales representative assigned to handle the account or customer.
"A name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating these products from competitors offerings, is known as the trademark."
"Brand preference is the stage of brand loyalty at which consumers rely on previous experience with a branded product when choosing it, if available, over competitors' products."
"Deanna purchases only Diet Coke at the local store. In fact, she never considers any other brands. Deanna has reached the level of brand preference."
Makers of generic products are dependent on brand loyalty for their marketing success.
Market shares held by generic products increase during economic upswings but decline when the economy worsens.
National brands sold exclusively by a retail chain are called captive brands.
Family brands cost more than individual brands to market because the firm must budget for all products that come under the family brand umbrella.
"Tide laundry detergent commands an extremely high market share. Purchases of the product are less sensitive to price changes. Based on this assessment, it can be said that Tide has extremely high brand equity."
Trademarks seeking legal protection through registration may contain generic descriptive phrases such as motor oil or light bulb.
"When a brand name becomes the name by which a class of products is generally known, the original owner loses exclusive claim to the brand name."
"A brand name differs from a brand mark in that the name can receive legal protection, but the brand mark cannot."
Heinz ketchup s easy-squeeze bottles create a convenience benefit for the consumer that assists the company in marketing the product.
"Merrill Lynch s bull logo is considered generic because of the Bulls and Bears adage and is thus, not a part of the product's trade dress."
"Line extensions are the addition of new sizes, styles, flavors, or related products to an existing group of products."
Brand licensing involves the purchase of the brand name by another company to use on unrelated products.
"Dell Computers has begun marketing its own brand of consumer electronics, such as MP3 players, in what is called a market development strategy."
Pantene sent free samples of their new shampoo to a researched list of potential customers. This strategy was designed to accelerate and enhance the evaluation and trial stages of the consumer adoption process.
"The more complex a new product is by comparison with existing products, the more rapidly it will be adopted by consumers."
About half of all new products developed turn out to be marketplace successes.
"The rate at which a new product is adopted depends on, among other things, its relative advantage over previous ideas and its compatibility with existing ways of doing things."
· production- a product will sell itself
· sales- creative advertising will convince people to buy
· marketing- the consumer rules! Find a need and fill it
· relationship- long term relationships with customers and other partners lead to success
focus is to generate revenue to support their causes and not on the bottom line
· may market tangible goods and services
· markets to multiple audiences
· often possess some degree of monopoly power in a given geographic region
· service users have less control over the firm’s future
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
Rivalry among Competitors
Porter’s Five Forces Model
· The threat of new entrants
· The bargaining power of buyers
· The bargaining power of suppliers
· The threat of substitute products
· Rivalry among competitors
Elements of a Marketing Strategy
· The target market
· Marketing mix variables
individuals conform to majority rule, even if that majority rule goes against their beliefs
People or institutions whose opinions are valued and to whom a person looks for guidance in his or her own behavior, values, and conduct, such as family, friends, or celebrities
changing, there is an art to knowing where customers are going “skate where the puck is going to be”
· Identifying customer needs (marketing creates wants into needs)
· Designing products to meet those needs
· Communicating information
· focus on the benefits for goods and services
· require skill
· should listen to consumer needs
· Person marketing
· Place Marketing
· Cause marketing
· Event Marketing
· Organization marketing
Planning at Different Managerial Levels
· Top Management- strategic planning
· Middle Management- Tactical planning
· Supervisory Management- Operational Planning
first company to offer a product in a marketplace will be the long-term market winner
observing the innovations of first movers and then improving on them to gain advantage in the marketplace.
Marketing Mix: blending of the four strategy elements
EXTERNAL MARKET ENVIRONMENT (uncontrollable)
· could be costly, but worth it to the big firm
· small firms don’t have the ability to scan the market continuously so they are re-active rather than pro-active
· interactive process that occurs in the market place among:
o marketers of directly competitive products
o marketers of products that can be substituted for your
· marketing decisions by individual firms influence:
o consumer responses
o marketing strategies
· Few organizations have monopoly positions
o Some pharmacies have temporary monopolies provided by patents on drugs
· designed to prevent restraints on trade such as business monopolies
· few number of sellers in an industry with high start up costs which keep our new competitors.
· Direct Competition
o Among marketers of similar products
· Indirect Competition
o Involves products that are easily substituted
· methods through which a firm deals with its competitive environment
· Enforces laws regulating unfair business practices and stops false and deceptive advertising
· They use several procedures to enforce laws
o Consent order
o Cease and desist orders
The Economic Environment
· GDP- sum of all goods and services produced by a nation in a year
· Economic environment- factors that influence consumer buying power and marketing strategies
· Business cycle- patterns of stages in the level of economic activity
Stages in the Business cycle:
· Prosperity- consumer spending is brisk
· Recession- consumers focus on basic, fundamental products
· Depression- consumer spending sinks to it’s lowest level
marketers must recalculate their strategies and concentrate on their most promising products
Inflation and deflation
· Inflation devalues by reducing the products it can buy through persistent price increases
· Deflation can cause
o A freefall in business profits
o Lower returns on most investments
o Widespread job layoffs
· proportion of people in the economy actively seeking work but do have
· influences consumer buying power, marketers focus on discretionary income, the amount of money we have after buying necessities
· reducing consumer demand for a good or service to a level that the firm can supply
· New products
· Improvements in existing products
· Better customer service
· Reduced prices
Sources of Technology:
· Educational institutions
· Not for profit institutions
· Federal government
SOCIAL CULTURE ENVIRONMENT
· Relationship between the marketer, society and culture
· Marketers must be sensitive to demographic shifts and changing values
· Increasing importance of cultural diversity
· Consumer rights
o The right to choose freely
o The right to be informed
o The right to be heard
o The right to be safe
marketers’ standards of conduct and moral values
product quality, planned obsolescence, brand similarity, and packaging raise ethical issues (i.e. packaging strategy)
Social corporate responsibility:
3. Legal/ Economic
Marketing Responsibilities · Marketers must consider:
o The global effects of their decisions
o The long term effects of the decisions
o The well being of future generations
· Entire communities can benefit through socially responsible investing.
1. that competition can be defined in terms of dissimilar products vying for a limited supply of discretionary buying power.
organizational sales and purchases of goods and services to support production of other products to facilitate daily operations or for resale.
Personal selling is far more effective in selling items from business to business. It is worth it to have a person go show something to another business.
The channels that products have to go through are much shorter for B2B vs. B2C
· Interpersonal- Reality is that people make decisions that are in their own best interests
Business demographics are related to
· Size which can be based on…
o Sale revenue
o Number of employees
classification for businesses
· The more numbers the more specific
o i.e. 424120 Stationary and Office supplies merchant wholesalers in the U.S. Industry
NAFTA- north American free trade agreement
Accord removing trade barriers between Canada, Mexico, and the US.
· NAFTA is particularly important to US marketers because Canada and Mexico are two of its largest
Geographic market concentration
· Things are made majorly in one area
o i.e. D-Ram= Silicon Valley
Sizes and number of buyers
· Business market has limited number of buyers, but they are large
The purchase decision process
· Far more formal that B2C
· The level of involvement is higher. If you make a bad decision as a buyer, you may lose your job
· Typically takes a lot longer
· More complex than consumer relationships
· Require superior communication among the organizations’ personnel
· JIT (just in time) inventory policies boost efficiency by cutting inventory and requiring vendors to deliver inputs as they are needed by the production process
o Leads to sole sourcing, buying a firm’s entire stock
Firms acquiring finished goods have three options
· Make the good or provide the service in house
· Buy it from another organization
· Lease it from another organization
movement of high way jobs from one country to lower-cost overseas locations
moving jobs to vendors in countries close to the business’s home country
· Reasons for outsourcing
o Cost reduction
o Quality and speed of software maintenance and development
o Greater value
· Downsides of outsourcing
o Mostly the lack of safety of showing someone else how to build your product
Influences on Purchase Decisions· Environmental factors
o Economical, political, competitive, technological
o Natural disasters
Influences on Purchase Decisions
· Organizational factors
o Must understand their customers organizational structures, policies and purchasing systems
o Many companies use multiple sourcing to avoid depending too heavily on a sole supplier
· Interpersonal influences
Influences on Purchase Decisions
o Human side come into play here
Stages in the B2B buying process
1. Recognize/ Anticipated problem
2. Determine characteristics and quantity
3. Describe characteristics and quantity
4. Search for and qualify sources
5. Acquire and analyze proposals
6. Evaluate proposals and select suppliers
7. Select order routine
8. Obtain feedback and evaluate performance
first time or unique purchase situations that requires considerable effort by decision makers
· Gatekeepers- control the information that all buying center members will review
· Deciders- choose a good or service, although another person may have the formal authority to do so
1. B2B relationships tend to last longer than those in the consumer market---
1. Capital purchases are expended quickly whereas expense items are more expensive and last longer—
1. A firm deciding to purchase more energy efficient machines in response to rising fuels prices illustrates the first step in the business process—
1. Dell computer purchases parts and resources for its computers from multiple suppliers that are spread across the world. This practice is known as…
1. As the demand for personal computers increases the demand for microprocessor chips will also increase. This is an example of derived demand—
1. Business marketers advertise primarily to announce new products—
1. Due to the complexity for the buying process and the sheer volume of the transactions involved, the distribution channels in the B2B market tend to be longer than in the consumer market—
1. advertising plays a larger role in the business market
1. If the demand for a product A stays constant regardless of the increase or decrease in demand for product B, it can be said that product A is experiencing ___ demand…
1. Businesses choose outsourcing as an alternative to making goods in house or providing in house services when:
1. Adam, a purchasing agent for the American Heart Association, has made a list of potential suppliers for payroll services. Which stage of the organization buying process is he in?
Global trade accounts for __% of the US gross domestic product.
Demand for U.S. Products is _____ in fast-growing economies
Globalization and the Internet allow every marketer to be an international marketer
____ is the world’s largest exporter of services and retailing.
Benefits of Going Global
New insights into customer behavior (learning a new market)
Alternative distribution strategies
Advance notice of new products
A major key to achieving success in foreign markets
· Ability to adapt products to local preferences and culture
· Many companies will not be able to export a product just as they make it here. i.e. food must be different in America and China.
Factors determining a nation’s prospects as a host for international business expansion
· Per-capita income
· Stage of economic development
Firms set up ______ unit to evaluate the political risks of the market places in which they operate.
FCPA- foreign corrupt practices act bans bribes to foreign officials in exchange for business advantage. People get around it because bribing is THE way to do exchanges
U.S. has friendship, commerce and navigation treaties (FCN) with many nations.
Europe has pushed for mandatory ___certification to standardize quality level. Boosts confidence for consumers
Barriers fall into two major categories
· Tariff tax levied against imported goods
· Admin barriers
Two types of tariffs
Revenue tariffs- making money
Protective tariffs- trying to take care of home producers. Gives domestic producers a chance.
a complete ban on the import of a product (typically political issue)
GATT turns into the
Oversees GATT agreements
Serves as a forum for trade negotiation
Works to further reduce trade barriers
Companies go global because
· Domestic market is saturated
· They have strong domestic share
· Globalization of customers- changing your product to fit your new climate
· Globalization of competitors
Strategies for entering markets
Simple import and export (low risk) (low control of marketing globally)
Building facility in another country (high risk) (high control)
Contractual Agreements i.e. franchises (mid risk) (mid control)
E- Business can be divided into 5 broad categories
· B2b transactions
· Electronic data interchanges
· Web-enabled communication tools and their use as media for reaching prospective and existing customers
· The gathering and use of demographic, product, and other information through Web contacts
Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools
· Application of electronic tools to contemporary marketing has the potential to:
Corporate Web site -
Marketing Web site -
Banner ad -
Pop-up ad -
Preroll video ad -
An e-business Web site can:
Broaden customer bases
· Provide immediate access to current catalogs
· Accept and process orders
· Offer personalized customer service
Assessing Site Effectiveness
· Web-to-store shoppers - Consumers who use the Internet as a tool to aid them at brick-and-mortar retailers
· Click-through rate - Percentage of people presented with a banner ad who click on it
· Conversion rate - Percentage of visitors to a Web site who make a purchase
· Engagement - Amount of time users spend on sites
Groups with their own distinct modes of behavior
· Can differ by ethnicity, nationality, age, rural versus urban location, religion, and geographic distribution
Everyone belongs to multiple social groups: family, neighborhood, clubs, and sports teams
· Group membership influences
Trendsetters who purchase new products before others in a group and then influence others in their purchases
Imbalance between a consumer’s actual and desired states
Inner state that directs a person toward the goal of satisfying a need
Shaping- Applying a series of rewards and reinforcements, to permit more complex behavior to evolve
Evoked set - Number of alternatives that a consumer actually considers in making a purchase decision