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Test 1


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customer satisfaction
the extent to which a firm fulfills a customer's needs, desires, and expectations
how much of every consumer dollar is spent on marketing in advanced economies?
50 cents - for some goods/services percentage is much higher
why marketing is important
1- marketing is important to every consumer- affects almost every aspect of daily life 2-marketing will be important for your job- lots of opportunities in different areas of marketing, also important for getting a job 3-affects innovation and standard of living (ex- ipad)
how marketing affects standard of living
marketing creates more choices and this fosters competition for consumer's money -this competition drives down prices -firms that develop good products means higher income and higher employment
definition of marketing
the performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods or services from producer to consumer or client
production v. marketing
-we used to have production-oriented economy- assumption was that if you produce it, people will buy it marketing- making sure the right goods and services are produced, providing customer satisfaction
value proposition
your personal value- have to demonstrate this to get a job
key characteristics of marketing
1- applies to profit and nonprofit organizations 2-its more than persuading consumers- not just selling and advertising - if needs are identified and met, the product sells itself 3-begins with customer needs - marketing begins with potential customer needs, not the production process 4- doesn't go it alone- production, accounting, etc important too 5-marketing involves exchanges - exchange of money for offering 6-builds a relationship with the customer
pure subsistence economy
when each family unit produces everything it consumes
macro v. micro marketing
micro- set of activities- performed by individual organizations macro- accomplishes objective of society, matches supply with demand- emphasis is on how the whole marketing system works -social process
key characteristics of macro-marketing
1- emphasis is on whole system 2-separation between consumers and producers- they are separated in several ways 3- marketing functions help narrow the gap- matches producer output with consumer demand 4-producers, consumers, and marketing specialists perform functions 5-new specialists develop to fill market needs -ex- growth of internet resulted in rapid growth of e-commerce 6-functions can be shifted an shared- no function can be eliminated (from a macro standpoint) -but from a micro viewpoint, not eery firm must perform all of the functions- instead, responsibility for performing the marketing functions can be shifted and share d in a variety of ways - and not all goods/services require all functions at every level of their production ex-pure services- plane ride- don't need storing
types of separation b/w consumers and producers
1- spatial separation- producers locate where it makes sense to produce, consumers are all over the place 2-separation in time- may not want goods when they are produced, time may be required to get good to consumer 3-separation of information- producers don't know how needs what, where, when and at what price- consumer do not know what is available from whom, where, when, and at what price 4-separation of values- producers value costs and competitive prices, consumers value needs and ability to pay 5- separation of ownership- producers hold titles to goods and services that they themselves do not want to consume, consumers want goods/services they do not own
production sector
specialization and division of labor result in heterogeneous supply capabilities
consumption sector
heterogeneous demand for different goods/services and when and where they need to be to satisfy needs/wants
economies of scale
-as a company produces larger numbers of a product, the cost of producing each unit of the product goes down
someone who specializes in trade rather than production - retailers and wholesalers
firms that facilitate or provide on or more of the marketing functions other than buying or selling- ex= advertising agencies, public warehouses, transporting firms, financial institutions- banks
economic system
the way in which an economy organizes to use scarce resources to produce goods and services and distribute them for consumption
two types of economic systems
command economy- government officials decide what an dhow much is to be produced and distributed by whom, when, to whom, and why - planned economies - ex- North Korea, Cuba, Iran market-directed economy- individual decisions make the macro-level decisions for the whole economy- the economy adjusts itself
unilever's indian subisdiary- using Shakti ammas (women entrepreneurs) as home-based distributors and sales agents to sell sachets- small bags of product that are affordable- to people in rural areas
characteristics of market-directed economic system
1- price is a measure of value 2-greatest freedom of choice- consumers and producers in market-directed economy enjoy great freedom of choice 3-society assigns supervision of the system to the government- control interest rates, rules of game, supply of money
is macro system effective?
the effectiveness and fairness of a particular marketing system must be evaluated in term's of a society's objectives
5 stages in marketing evolution
1-simple trade era- families traded or sold surplus output to local distributors 2-production era-industrial revolution to 1920s- companies focused on production of a few specific products 3-the sales era- once there were a lot of producers, had to beat competition- sales era (starting in 30s) was time when company emphasizes selling because of increased competition 4-marketing development era- begins about 1950- 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 5-marketing company era- since about 1960- time when marketing people develop long-range plans and whole company effort is guided by the plan
marketing concept
an organization aims all its efforts at satisfying its customers at a profit production orientation- making whatever products are easy to produce and then trying to sell them marketing orientation- trying to carry out the marketing concept, trying to offer consumers what they need
3 parts of marketing concept
1- customer satisfaction 2-total company effort 3-profit
characteristics of marketing system
1-customer satisfaction guides whole system 2-work together to do a better job- ideally, all managers should work together as a team 3-survival and success require a profit 4-adoption of the marketing concept is not universal- it is easy to maintain a product-oriented way of thinking- ex- producers of steel, coal, and chemicals
marketing concept and customer value
1-take the customer's point of view - customers have two views- one about potential benefits of offering, other concerns what customer has to give up to get those benefits 2-customer value (difference b/w offering and cost of obtaining it) reflects benefits and costs 3- customer may not think about it very much- customers don't stop and compute before making each purchase 4- can't ignore competition- usually best way to beat competition is to first satisfy a need that others have not even considered 5- build relationships with customer value - have to provide it before and after each purchase- have to deliver on promises
process of building relationships
total company effort to satisfy needs -> offer superior customer value -> attract customers -> satisfy customers ->retain customers -> increase sales to customers ->build relationships with customers
marketing concept and nonprofit organizatiosn
-it does apply to non-profit orgnaizations -support may not come form satisfied "customers"- support doesn't always come directly from the people who receive benefits from organization -bottom line- measures for success are different from profit organizations -may not be organized for marketing- often no one has overall responsibility for marketing activities
micro-macro dilemma
what is good for some firms and consumers may not be good for society as a whole - ex- people buy bottled water when tap water is fine
social responsibility
a firm's obligation tot improve its positive effects and reduce its negative effects on society
other questions of social responsibility
1- should all consumer needs be satisfied? some products are dangerous 2-do all marketer s act responsibly? no - often when products are complicated consumers may be vulnerable to unscrupulous sellers (Ex- mortgages) 3-what if it cuts into profits? when society feels that social benefits are important,, it may add regulations to create a level playing field for firms
marketing ethics
the moral standards that guide marketing decisions and actions- -many organizations develop written codes of ethics - American Marketing Association's code of ethics
Cirque du soleil
-circus for adults- many different shows- travle across countries and also have permanent homes -new show takes 5 years to develop and $100 million dolars -also reaches new customers through DVDs and TV specials -cirque's ad efforts focuses on getting people to see their first show- once they see one they want to see more - also host premiers for influential people in community
marketing management process
1- planning marketing activities= set objectives, evaluate opportunities, create marketing strategies, prepare marketing plans, develop marketing program 2-directing the implementation of the plans 3-controlling these plans= measure results, evaluate progress MANAGERS SHOULD SEEK NEW OPPORTUNITIES
strategic (management) planning
managerial process of developing and maintaining a match between an organization's resources and its market opportunities- planning not only for marketing but also production, finance, etc- looking at whole company
marketing strategy
1-specifies target market- homogenous group of consumers to whom a company wishes to appeal 2-and a related marketing mix - the 4 Ps
mass marketing v. target marketing
mass marketing- aims at everyone with same marketing mix target marketing- marketing mix is tailored to fit some specific target customers - target market can be very large- about customers' specific needs
channel of distribution
any series of firms or individuals that participate in the flow of products from producer to consumer ex- directly from producer to consumer- Geico - often wholesalers, retailers, dealers
types of promotion
1-personal selling- direct spoken communications between the seller and potential customer- personalized o sometimes involves customer service, you are a problem solver - -can be very expensive 2- mass selling- communicates with large numbers of customers at the same time- o advertising (paid form of non-personal presentation of ideas, goods, and services), and publicity (nonpaid- ex- press release 3- sales promotion- other promotional activities other than advertising, publicity, and personal selling -ex- coupons, POP, samples, signs, contests, events, catalogs
characteristics of price
• 1- pricing objectives- marketers choose different objectives • 2-price flexibility- not too high, not too low • 3- price changes over the life cycle • 4- discounts and allowances • 5- geographic pricing terms • 6- competition
the 4 Ps
one is not more important than the other- all interconnected- all decisions should be made at same time
Toddler University example
indentified four targets for baby shoes 1- traditionalists- wanted well-known brand with reputation for quality 2- economy oriented- in lower income group, wanted basic shoe at low price- saw all as pretty much the same 3- fashion conscious- wanted shoes that looked like smaller versions of current popular styles 4-attentive parents- wanted shoes to be fun, fashionable, and functional, well-informed -saw market for attentive parents- designed shoes that were fun, fashionable, fit well, and functional -created shoes with better fit- adjustable widths- retailers liked this -promotion- developed close-up photos of babies wearing his shoes and informative details about their special benefits - also put shoe riders (like rocking horse but a shoe0 in retailers to attract kids -priced them at 35 to 40 dollars
marketing plan
written statement of a marketing strategy AND the time-related details for carrying out the strategy
details of plan
1- what marketing mix will be offered, to whom, and for how long 2-what company resources (costs) will be needed at what rate (month by month perhaps) 3-what results are expected (sales and profits perhaps monthly and quarterly, customer satisfaction levels etc) -should also include control procedures- so whoever is carrying out the plan can know when something is going wrong - analyzing and correcting what you've done operational decisions- short-run decisions to help implement the plan - operational decisions will have to be within the strategy (four Ps)- some of these are made daily
firm's marketing program
marketing plan + other marketing plans - blends all of a firm's marketing programs into one big plan
marketing plan should build customer equity
customer equity= the expected earning stream (profitability) of a firm's current and prospective customers over some period of time why do you want this? 1-owners expect financial returns 2-profit growth comes from customers - customers are source of revenue
model T -> model A to compete with Chevrolet -> Edsel- but too expensive and looked like other models, discontinued after 3 years -> Mustang in 60s -> lost a lot of market share to Japanese competitors in 80s when gas prices were high -> SUV (Explorer and Mountaineer) took off in 90s when gas prices were low-> in 2004 launched first hybrid SUV (Escape) - initially people were willing to pay for high price but later not so much -> collaborated with microsoft to develop SYNC- in car communications and entertainment system - targeted toward fiesta drivers- also used facebook, youtube, and twitter for fiesta's launch - very succesful bottom line- Ford has been adapting its marketing mixes for more than 100 years
breakthrough opportunities
help innovators develop hard-to-copy marketing strategies that will be profitable for a long time
competitive advantage
a firm has a marketing mix that is seen as better than a competitor's mix by the target market
how to a void ht-or-miss marketing
avoid hit-or miss marketing by following a logical marketing strategy and basing the process on sound marketing research ex-Honda element- SAV
how to select a strategy
-start with broad look at the market -develop screening criteria -segmentation helps pinpoint target- identifying groups of consumers who are similar -narrow down to a superior marketing mix- differentiation- the marketing mix is distinct from and better than what is available from a competitor
SoapWorks example
-kid was allergic to soaps- created hypoallergenic line- radio ads that said brand was created by a mom for moms- encouraged people to ask for it to get it on the shelves - played to her strengths with the target market
market penetration
trying to increase sales of a firm's present products in its present markets - coleman outdoor products reached its target market with promotional displays at outdoor events like NASCAR
market development
trying to increase sale by selling present products in new markets - golf carts now used in malls, factories, etc
product development
offering new or improved products for present markets - ex- campbell's low-sodium soup
moving into totally different lines of business - new products in new markets -ex - Mcdonald's hotels in Switzerland
international opportunities should be considered
-world is getting smaller- trade barriers coming down, internet -develop a competitive advantage at home and abroad- may improve economies of scale - get an early start in a new market where demand for your product is just starting to grow-less competition -may find better trends abroad - in other places of the world population and income are increasing rapidly (unlike in US) -but you have to weigh the risks of going abroad- foreign culture presents a difficulty
direct market environment
1-company • objectives- have to have a strategy (ex- UT business school wanted to have top public business school in the country) • resources- pull resources to accomplish a goal- try to raise funds, go after best professors 2-customers 3-competitors • current- current competitors • prospective- other possible competitors
external market environment
• economic • technological • political and legal • cultural and social
evaluating opportunities, use
1-screening criteria 2-planning grids 3-planning for multiple products
marketing objectives
marketing objectives set a firm's course, three basic objectives: 1-engage in specific activities that will perform a socially and economically useful function- have to have consumers' approval 2-develop an organization to carry on the business and implement its strategies 3-earn enough profit to survive - have to specify a time period during which you do this **company objectives should lead to marketing objectives -mission statement sets course for objectives
mission statement
helps set the course for the firm's objectives- sets out the organization's basic purpose for being --should focus on a few key goals -may need to be revised as market conditions change or new market needs arise -mission statement is not a substitute for more specific objectives (ex- earn 25% annual ROI)
hierarchy of objectives
1- company objectives 2-production, finance, marketing, HR, R&D, IT objectives 3- within marketing- 4P objectives 4- within promotion- personal and mass selling, sales promotion objectives
ex of hierarchy
USAA- customer satisfaction is top objective =so they have a HR objective to guide the hiring and training of god CSRs -also guides IT objective- developed software so CSR can better help customers- enabled them to allow the CSR to view the same online screens as customers see at home
company resources may limit search for opportunities
• 1- Financial strength- opportunities require capital, couldn't have built the huge stadium without capital • 2- producing capability and flexibility- making changes can be costly and time-consuming- company must maximize production and save money • identifying right opportunity and timing is key • 3- marketing strengths- have to be able to market your product-ex- familiar brand could be a big strength in product area 4- collaborators can help offset weakness ex- Clorox green works- had good relationship with retailers and wholesalers- got the product on shelves, also got sierra club to endorse it - now green works is largest seller in natural cleaning products category
20 year monopoly to develop and use product, process, or material
competitive environment
affects the number and types of competitors the marketing manager must face and how they may behave
4 competitive situations
1- monopoly- one company serving the entire customer base- basically a competitor-free environment (these are rare in market-directed economies and governments usually regulate monopolies) 2-monopolistic competition- a number of different firms offer different marketing mixes that some consumers see as different -each competitor tries to get control in its own target market ex- Texaco can't differentiate itself by claiming it offers better gas, instead it offers Seattle's best coffee, discounted car wash etc -these approaches may not work for long because they are easily copied 3-pure competition- a large number of firms competing with similar products- price is usually the determining factor in making a purchase -this is the type of environment we have in the US -managers just lower prices, which makes profit margins shrink 4-oligopoly- -oligopoly- a small number of firms control the market
competitor analysis
is an organized approach for evaluating strengths and weaknesses and marketing strategies of current and future competitors -basically compare your strategy to what others or already doing or are likely to do in response to your strategy
competitive rivals
firms that are the closest competition - offer similar products- these firms are usually easy to identify -successful strategies are often copied
sustainable competitive advantage
marketing mix that some customers see as better than competitors and cannot easily be copied -typically does not involve price
competitive barriers
conditions that may make it difficult, or even impossible, for a firm to compete in a market- cultural differences can often be barriers (ex- Chevy Nova in Mexico- means no go, Tata nano- tried to market it as poor man's car)
public information on competitors
trade publications, alert sales reps, supplies, etc - customers may also be quick to explain what competing suppliers are offering
ethical issues
ex-people who change jobs and move to competing firms may have a lot of information about competitor- is it ethical for them to use it? -may look through competitor's trash or break into computer systems -this is illegal- called industrial espionage
economic environment
macro-economic factors- national income, economic growth, and inflation- these affect consumer spending
key economic factors
1- global economy- competitors can come from almost anywhere, global trade is affected by exchange rates, all countries' economies are co-dependent- why the US wants the European economy to be turned around -amount of international trade also increasing 2-rapid change- the economy can change very quickly (ex- US housing market) 3-marketing strategies change in a recession- makes consumers spend less - olive garden- never ending pasta bowl- boosted sales, Hyundai promised customers if they lost their job after buying a car, they could return it with no impact on their credit 4-interest rates (charge for borrowing money) and inflation affect buying- can affect consumer buying process, as interest rates go up sharply buying power declines - usually increase during periods of inflation - US levels- about 3 to 20 percent, but in some Latin American countries as much as 400 percent
exchange rate
how much one country's money is worth in another country's money- when dollar is strong, its worth more in foreign countries- makes US products more expensive overseas and foreign products cheaper here- then more competition arises in US
the application of science to convert an economy's resources to output -creates new products -creates new processes -ex- information technology makes it possible for people in different parts of the world to communicate
key characteristics of technology
1-technology transfer is rapid-15 years ago Google didn't exist 2-internet technologies are reshaping the market 3- the internet changes how consumers shop and marketers market - we can give consumers ads when they WANT the information -also created new approaches to pricing- get hotels for cheap because they are going to go unused 4-technology also poses challenges- change can be difficult and many marketing managers avoid new technologies they do not understand 5- technology has ethical issues- ex- tracking people on website
the political environment
1- Nationalism- emphasis on country's interests before anything else- ex when IBM was in India they nationalized the IBM plant- nationalistic feelings can reduce sales for US firms in international markets ex- China makes it difficult for outside firms to do business there -also "buy american" in many government contracts and business purchases -nationalistic feelings can determine if a firm can enter markets because often you have to get permission to operate 2-regional groups are becoming more important - ex- EU (trade is very easy in Europe-reduces prices and creates new jobs) - have similar dimensions of political environment, NAFTA- knocked down trade barriers and established forum for resoling trade disputes - has increased jobs and leveled competition, also a lot of people moving production to Mexico where labor is cheaper- may call for modification of NAFTA
lands end ex
opened stores in England and Germany- German rules prohibited promotion of its lifetime guarantee - wanted this rule to apply even if someone purchased something from website in England
legal environment characteristics
1-trying to encourage competition- based on idea that competition among many small firms helps the economy - there are anti-monopoly laws to encourage competition 2- the four Ps are affected differently by different monopoly laws 3-prosecution is serious- you can go to jail - 4-consumer protection laws are not new - some are even built into US common law systems 5-foods an drugs are controlled- first law was pure food and drug act in 1906- now FDA controls manufacturers of these products 6-product safety is controlled- Consumer Product Safety Act (1972)- sets safety standards and imposes penalties for failure to meet those standards - can force a product off a market 7-state and local laws vary 8- know the laws- follow the courts and federal agencies 9-laws and enforcement differ across countries - ex- Microsoft served with anti-trust ruling in UK but not in US
cultural and social environment
1- changing role of women- woman's place is no longer in the home- women are in positions of responsibility in the workplace while men are trying to get their jobs back- women now have more economic power- delaying marriage and staying in workplace any having fewer children -now children and men do more household chores- has changed the target marketing for many products -also may be strapped for time- creates opportunities for frozen meals, child care centers etc -women now purcahse half of all cars 2-changes come slowly
ways to evaluate opportunities
1-developing and applying screening criteria 2-planning grids 3-planning for multiple products
screening criteria
-should include quantitative and qualitative components -quantitive=firm's objectives- sales, profit, ROI, etc -qualitative- what kinds of businesses it wants to be in, what weaknesses it should avoid, what resources and trends it should build on -sustainability is important for a lot of firms- ex- GE and ecomagination-
total profit approach
-magagement forecasts potential sales and costs during the life of a plan to estimate likely profitability
ROI approach
many firms may also calculate the ROI of resources needed to implement plans - equally profitable plans may require vastly different resources and offer different rates of ROI
planning grids
9 box grid developed by GE and used by many others -make judgments about BUSINESS STRENGTHS and INDUSTRY ATTRACTIVENESS (high, low, medium)
planning for multiple products
-have to approve plans that make sense for whole company
strategic business unit
organizational unit (within a larger company) that focuses on some product-markets and is treated as a separate profit center milked=used to generate cash for the businesses with more potential
portfolio management
treats alternative products, division, or strategic units are though they were stock investment, to be bought or sold using financial criteria - various products should be supported, milked, or sold off (depending on profitability and ROI) -main weakness of portfolio approach=neglecting the long run
evaluating international markets
its useful for the analysis to include inputs from locals- they can identify issues that may be missed -some products are insensitive to cultural/economic environment they're in- industrial products -consumer products that are linked to social or cultural variables are much more environmentally sensitive

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