CE chapters 5 & 7: the meaning of marketing and external environment

customer realtionships
are created when businesses and consumers interact through a sales transaction of a product or service and continue that relationship based on ongoing interaction between the business and continue that relationship based on ongoing interaction between the business and customer
customer relationship management
involves those elements of business strategy that enable meaningful, personalized communication between businesses and customers
customer lifetime value
includes the projected sales revenue and profitability that a customer could provide to a firm
marketing concept
when customer relationships serve as the foundation for marketing activities
prior to the 1920s
era of marketing focused on production “a good product will sell itself”
prior to the 1950s
era of marketing focused on sales “creative advertising and selling will overcome consumers’ resistance and convince them to buy
since the 1950s
era of marketing focused on marketing “the consumer rules! find a need & fill it!”
since the 1990s
era of marketing focused on relationship “long term relationships with customers and other parties lead to success”
social responsibility
is the idea that businesses consider society as a whole as one of their stakeholders and that businesses make decision that take into account the well being of society
exchange functions, physical functions, facilitating functions
marketing functions can be grouped into 3 general categories:
exchange functions
activities that promote and enable transfer of ownership (selling, pricing, advertising)
physical functions
activities that enable the flow of goods from manufacturer to consumer (packaging, storing, transporting)
facilitating functions
activities that assist in the execution of exchange and physical functions. (financing, research, servicing)
product, price, placement, promotion
4 ps
marketing mix
a collection of marketing variable that are managed to achieve the desired sales performance in a target market
external marketing participants
include investors, consumers & customers, advertising/PR agency, information providers/marketing research companies, government, partners, competitors
investors
participants in the external market that influence marketing ideas through letters to mgmt and through attending shareholder meetings
consumers and customers
participants in the external met who make purchasing decisions and feedback on survey questions
advertising
participants in the external market that assist businesses in understanding consumers and customers, as well as presenting products and services in the most favorable perspective through the creation of media content
market research companies
participants in the external market that collect a wide range of consumer and market information for marketing departments
governments
participants in the external market that influences marketing through legislation or regulation
partners
participants in the external market that already work with or may work with a particular business, influence marketing choices by presenting opportunities to reach more consumers or to share in the cost of marketing activities
competitors
participants in the external market that advertise investment and product launches
objective, audit, strategy, allocating resources and monitoring performance
4 major components of marketing planning
marketing objective
something a marketing function is attempting is attempting to achieve in support of a strategic business plan
marketing audit
the comprehensive review and assessment of a business’s marketing environment. It is important that a business understands the external and internal forces that can influence its success
marketing strategy
is a statement of how a business intends to achieve its marketing objectives. It includes selecting a target market and then creating an appropriate marketing mix for the target market
product strategy
identifies the product and service portfolio, including packaging, branding, and warranty for its target market
place strategy
identifies where, how, and when products and services are made available to target consumers
pricing strategy
identifies what a business will charge for its products or services
promotion strategy
identifies how a business communicates product or service benefits and value to its target market
allocating resources and monitoring performance
people and money both must be assigned to support implementation of marketing strategies
marketing plan
document that includes an assessment of the marketing situation, marketing objectives, marketing strategy, and marketing initiatives
swot analysis
is a toll that helps identify business strengths, weaknesses, opportunities, and threats
internal
strengths and weaknesses are based on _________ characteristics
external
opportunities and threats are based on ______ characteristics
return on marketing investment
is the impact on business performance resulting from executing specific marketing activities
customer perceived value
= expected benefits- expected costs
psychological benefits
additional benefits created primarily through a company’s branding efforts. Include emotional benefits, self-expression benefits, and social benefits
price performance value map
examines the trade offs customers make between costs and benefits when making a purchase decision
fair value zone
products that are perceived to deliver benefits equal to the products’ total cost
negative
satisfaction level that is the result when the product’s performance does not live up to expectations. Degrees: dissatisfied or defect
neutral
occurs when a product’s performances matches expectations. A buyer has reached the baseline of satisfaction. Degrees: satisfied, switchable
positive
when expectations are exceeded and the buyer is highly satisfied. Degrees: delighted, loyal
loyalty
customers who are satisfied are likely to continue to purchase the same brands, or business with the same service provider
product champions
satisfied customers cannot wait to share their experiences with anyone who listens
reduced costs
the costs benefits of having satisfied customers is found in multiple areas from lower warranty expenses to few phone calls to customer service representatives
larger share of wallet
satisfied customers are more likely to purchase other products from a company to which they are loyal
customer loyalty
is the degree to which a customer will select a particular brand when a purchase from that product category is being considered. It is a buyer’s feeling of attachment to a particular product, brand or company
pareto principle
80% of a company’s profits are generated by 20% of its customers. Another 60% of customers will generate the remaining profits. The additional 20% of customers will generate a loss
customer lifetime value
is the present value of all profits expected to be earned in the future from a customer
customer lifetime value
to calculate _________ a company must know: customer average purchases per year, profit margin earned on those purchases, costs to service the customer, customer retention rate, the firm’s discount rate
long term
customer profitability may be limited or even at a loss at the beginning of a relationship, but profits will increase over time
customer relationship marketing
seeks to ensure that every effort an organization undertakes has as its purpose the development and maintenance of a profitable customer relationship
external processes
those that connect the company with its customers
internal processes
involve the management of information acquired from customers
business to business
in a __________ market, firms know who their customers are because of previous purchases
consumer
in a _______ market, companies must make great effort to even identify their customer
loyalty programs
companies benefit from loyalty programs by collecting information about customers, including contact information and a customer’s spending habits
data mining
statistical techniques used successfully in direct marketing to uncover individuals or groups of individuals who are most likely to respond to an offer and types of offers that will elicit a response
marketing environment
a set of forces, some controllable and some uncontrollable, that influence the ability of a business to create value and attract and serve customers.
internal environment
involves all those activities, including marketing that occur within the organizational functions in a business
internal marketing
is the implementation of marketing practices within an organization to communicate organizational policies and practices to employees and internal stakeholders
external marketing
is the implementation of marketing practices directed outside the business to create value and to form productive customer relationships
microenvironment
includes those forces close to a company, yet outside its internal environment that influence the ability of a business to serve its customers (customers, suppliers, competitors and other business)
five forces model
can assist a business with understanding the potential for new product development, the attractiveness of a particular market segment, or he potential to reduce costs of supply or distribution
threat of new entrants
can influence a business’s level of power in an industry by the existing barriers to entry
bargaining power of suppliers
suppliers can assert power if they are only one or one of a few businesses that can provide a particular product or service
bargaining power of customers
buyers can exert power on a business through the number and nature of buyers.
threat of substitute products
can reduce the power of a business if many substitutes exist for a particular product or service
competitive rivalry within an industry
influences the balance of power in the industry. any change in status, whether it be the quantity and size of competing businesses, their portfolio, or their financial position, will influence the power any one business can exert on the industry
macroenvironment
includes societal forces that are essentially uncontrollable and influence the microenvironment of a business
subenvironments
different segments of macroenvironments that include economic, social & cultural, competitive, legal, political and technological
economic environment
includes factors that influence consumer purchase ability and buying behavior.
economic environment
inflation rates, income levels, and unemployment levels all contribute to the economic environment
inflation
is an increase int he price of a collection of goods that represents the overall economy
income levels
are average consumer earnings used to approximate national earnings. Changes in income inversely relate to changes in demand
unemployment levels
are the number of unemployed persons divided by the aggregate labor force. increases in these levels reduce the ability of individuals to purchase products and services
social and cultural environment
includes factors that relate marketing to the needs and wants of society and culture
demographics
characteristics of human population that are used to identify markets.
competitive environment
includes factors that relate to the nature, quantity, and potential actions of current and potential competitors
small
with a _____ number of competitors, there are fewer requirements to react to a competitive action and more time to make a strategic decision
lots
with ____ of competitors, it can impede a business from taking the actions that it wants to take. maintaining margins would take second place to a need to respond to maintain market position
legal environment
includes factors that provide rules and penalties for violations, and is designed to protect society and consumers from unfair business practices and to protect businesses from unfair competitive practices
political environment
includes factors that select national leadership, create laws, and provide a process for discourse on a wide range of issues
technological environment
includes factors that influence marketing based on scientific actions and innovation
consumer markets
the end users of the product or service who include individuals and households that are potential or actual buyers of products and services
consumer products
are products that directly fulfill the desires of consumers and are not intended to assist in the manufacture of other products
consumer surplus
occurs when a consumer purchases a product or service at a price less than the utility of the product or service