MKT

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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
intermediary: someone who specializes in trade rather than production - retailers and wholesalers
collaborator: 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
HUL: 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
FORD: 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
diversification: 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
patent: 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
technology: 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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