Intro to Marketing Exam 1 – Schwartz

Marketing
Marketing is CUSTOMERS, or managing profitable customer relationships. There are two overall goals in marketing: attracting new customers by promising superior value, and keeping and growig current customers by delivering satisfaction.
5 C’s of Marketing Analysis
1) Customers
2) Company
3) Competitors
4) Collaborators
5) Context (Environment)
Marketing Process
1) Understand the marketplace and customer needs/wants (Analysis)
2) Decisions: Design a customer-driven marketing strategy (Decisions)
3) Construct an integrated marketing program that delivers superior value (Decisions)
4) Build profitable relationships and create customer delight (Outcomes)
5) Capture value from customers to create profits and customer equity (Outcomes)
Needs
States of felt deprivation; part of being human
Wants
Form of human needs as they are shaped by culture and individual personality
Demands
When wants are backed by buying power, this becomes demand. Wants are shaped by one’s society and described in terms of objects that will satisfy those needs.
Market Offerings
Some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. These are not limited to physical products, can also include intangible services
Marketing Myopia
The mistake of paying more attention to the specific products a company offers rather than the benefits and experiences produced by these products. Another way to phrase it is when companies focus too much on their own products instead of the changing needs/wants of CUSTOMERS
Exchange
The act of obtaining a desired object from someone by offering something in return
Markets
The set of all actual and potential buyers of a product or service that share a particular need/want that can be satisfied through exchange relationships
Marketing Management
The art and science of choosing target markets and building profitable relationships with them; customer management and demand management
Customer-Perceived Value
The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers
Customer Satisfaction
The extent to which a product’s perceived performance matches/surpasses customer expectations; low expectations = satisfied while expectations that are too high = unsatisfied
Production Concept
The idea that consumers will favor products that are available and highly affordable, meaning that companies should focus on improving production and distribution efficiency (not just what customers want)
Product Concept
The idea that consumers will favor products that offer the most quality, performance, and features, meaning that companies should devote their energy to making continuous product improvements
Selling Concept
The idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort
Marketing Concept
A philosophy where achieving organizational goals depends on knowing the needs/wants of target markets and delivering the desired satisfactions better than competitors do, aka focusing on delivering customer needs and values
Societal Marketing Concept
The idea that a company’s marketing decisions should consider consumers’ short-term wants and long-term welfare
Customer LTV
Customer Lifetime Value, the value of the entire stream of purchases a customer makes over a lifetime of patronage
Customer Relationship Management
Strategies used to manage different types of customer relationships, represented by matrix with butterflies, strangers, barnacles, and true friends
Customer Equity
The total combined LTVs of all the company’s current and potential customers
Share of Customer
Percent of customer’s total spending that they get in the customer’s spending in their product category
Strategic Planning
The process of developing and maintaining a strategic fit between the organizations foals/capabilities and its changing market opportunities
Strategy Planning Process
1) Defining the company mission
2) Setting company objectives and goals
3) Designing the business portfolio
4) Planning marketing and other functional strategies
1, 2, and 3 are at the corporate level, while 4 is the business unit, product and market level
Mission Statement
Statement of the organization’s purpose and what it wants to accomplish in the larger environment; a good mission statement guides the people in the organization and is market (customer) oriented, emphasizes strengths, and is purposeful and aspirational
Business Portfolio
The collection of businesses and products that make up the company
Strategic Business Unit (SBU)
Can be a company division, a product line within a division, or sometimes a single product or brand. The company next assesses the attractiveness of its various SBUs and decides how much support each one deserves
BCG Growth-Share Matrix
A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share
Stars
high market growth, high market share businesses/products, need heavy investments to finance short-lived rapid growth
Cash Cows
low market growth, high market share, produce a lot of cash the company uses to pay bills/support other SBUs needing investment
Question Marks
High market growth, low market share businesses/products, require a lot of cash to hold their share/increase it, tough decision for management whether or not to build these into stars
Dogs
Low market share, low market growth business/products, may generate enough cash to support themselves but are not promising to provide large amounts of cash
Product/Market Expansion Grid
A portfolio-planning tool for identifying company’s future growth opportunities through market penetration, market development, product development, or diversification
Market Penetration
Company growth by increasing sales of current products to current market segments without changing the product
Market Development
Company Growth by identifying and developing new market segments for current company products
Product Development
Company growth by offering modified or new products to current market segments
Diversification
Company growth through starting up or acquiring businesses outside the company’s current products and markets (new market, new products)
SWOT Analysis
An overall evaluation of a company’s strengths, weaknesses, opportunities, and threats
Strengths
Internal capabilities that may help a company reach its objectives
Weaknesses
Internal limitations that may interfere with a company’s ability to achieve its objectives
Opportunities
External factors that the company may be able to exploit to its advantage
Threats
Current and emerging external factors that may challenge the company’s performance
Executive Summary
Brief summary of the company’s main goals and objectives
Current Marketing Situation
Gives the market description and the product, competition, and distribution review
Threats and Opportunities Analysis
Helps manage to anticipate important positive or negative developments
Objectives and Issues
States and discusses marketing objectives and key issues
Marketing Strategy
Outlines the broad marketing logic and specifics of target markets, positioning, marketing expenditure levels, and strategies for each marketing mix element
Action Programs
Spells out how marketing strategies will be turned into specific action programs
Budgets
Details a supporting marketing budget that is a projected profit-and-loss statement
Controls
Outlines the controls that will be used to monitor progress, allow management to review implantation results, and spot products that are not meeting their goals
Downsizing
Reduces the business portfolio by eliminating products/business units that are not profitable or that no longer fit the company’s overall strategy
Financial ROI
Net return from a marketing investment divided by the costs of the marketing investment
Marketing Environment
The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers
Microenvironment
The actors close to the company that affect its ability to serve its customers (customers, company, competitors, and collaborators)
Macroenvironment
The larger societal forces that affect the microenvironment (demographic, economic, natural, technological, political, and cultural forces
Customers (As an actor in the microenvironment)
The aim of the entire value delivery network is to serve target customers and create strong relationships with them. There are consumer markets (individuals/households buying goods and services for individual consumption), business markets (buy goods/services for further processing or use in their production processes), reseller markets (buy goods and services to resell at profit), government markets (gov’t agencies that buy goods/services to produce public services or transfer them to others who need them), and international markets (consist of gov’t buyers in other countries, including consumers, producers, resellers, and governments).
Company (As an actor in the microenvironment)
Other company groups must be taken into account when designing marketing plans. Top management sets the company’s mission, objectives, broad strategies, and policies, and marketing leads the way for all other portions of the company to fulfill customer needs and create customer value
Competitors (as actors in the microenvironment)
Competitors must also be taken into consideration when developing marketing strategies; large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. Small firms can also develop unique strategies that give them better rates of return than what large firms can enjoy.
Collaborators (as actors in the microenvironment)
Suppliers (provide resources needed by company to produce its goods and services, marketing managers much watch supply and availability costs and keep short term/long term conditions into consideration), Marketing Intermediaries (help the company promote, sell, and distribute its products to final buyers, ex. product movers, consultants, banks, etc.), and Publics (any group that has an actual or potential interest/impact on an organization’s ability to achieve its objectives)
Demography (as an actor in the macroenvironment)
The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers keep a close eye on people, who make up markets, and analyze changing age/family structures, geographic population shifts, educational characteristics, and population diversity).
Economic (as an actor in the macroenvironment)
Consists of economic factors that affect consumer purchasing power/spending patterns. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets.
Natural (as an actor in the macroenvironment)
The physical environment/natural resources that are needed as inputs by marketers or that are affected by marketing activities, ex. growing shortages of raw materials, increased pollution, increased gov’t intervention in natural resource management
Technological (as an actor in the macroenvironment)
Forces that create new technologies, creating new product and market opportunities
Political
Consists of laws, gov’t agencies, and pressure groups that influence or limit various organizations and individuals in a given society ex. protecting companies from each other, protecting consumers, and protecting the interests of society against unrestrained business behaviors
Cultural
Consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors, ex. core beliefs/values passed on from parents to children/reinforced by society, secondary beliefs/values that are more open to change (much easier for marketers to influence these values in comparison to core values)
Customer Insights
Fresh understandings of customers and the marketplace derived from marketing information that becomes the basis for creating customer value and relationships
Marketing Information System
People and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to gain customer insights
Internal Data
Consumer and market information obtained from data sources within the company network
Competitive Marketing Intelligence
The systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment (marketers must actively scan the environment)
Marketing Research
The systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
Exploratory Research
Gather preliminary info to help define problem and suggest hypotheses
Descriptive Research
Describes things, such as market potential for a product or the demographics/attitudes of customers who buy it
Causal Research
Tests hypothesis about cause and effect relationships
Marketing Research Process
1) Define the problem and search objectives
2) Develop Research Plan for Collecting Information
3) Implement the research plan, collect/analyze data
4) Interpret and report findings
Secondary Data
Information that already exists elsewhere, having been collected for another purpose
Primary Data
Information collected for the specific purpose at hand
Observational Research
Gathering primary data by observing relevant people, actions, and situations
Ethnographic Research
Sending trained observers to watch and interact with consumers in their “natural environments”
Survey Research
Gathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behavior
Experimental Research
Selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses
Sample
segment of population selected for marketing research to represent the population as a whole
Research instruments
In collecting primary data, marketing researchers have a choice of two main research instruments: questionnaires (most common, very flexible, and can be done through a variety of contact methods) and mechanical instruments (monitors consumer behavior through people meters, checkout scanners, neuromarketing, etc.)
Customer Relationship Management (CRM)
Managing detailed information about individual customers and carefully managing customer touch points to maximize customer loyalty
Consumer Buyer Behavior
The buying behavior of final consumers (individuals and households that buy goods and services for personal consumption)
Consumer Market
All the individuals and households that buy or acquire goods and services for personal consumption
Model of Buyer Behavior
1) The Environment (marketing stimuli)
2) Buyer’s Black Box (buyer’s characteristics and decision processes, hard to study because it’s hard to know what’s going on in customers’ minds)
3) Buyer Responses (buying attitudes and preferences, what the buyer buys, when, where, how much, etc., and brand and company relationship behavior)
Factors Influencing Consumer Behavior
Cultural (subculture, social class)
Social (groups and social networks, family, roles & status, etc.)
Personal (age, occupation, economic situation, lifestyle, personality)
Psychological (motivation, perception, learning, beliefs/attitudes)
Consumer Buyer Decision Process
1) Need recognition (trigger)
2) Info search (know)
3) Evaluate Alternatives (feel)
4) Purchase decision (do)
5) Post-purchase behavior
Utilitarian (Rational) Buyer Decision Process (“Buy the Best”)
Know > Feel > Do. Active info search, actual/desired, trigger = gap. AIDA: Awareness (of product), Interest (in product’s benefits), Desire (for product), Action (buy)
Self-Expressive Decision Process (“Buy what I like”)
Feel > Do > Know. Trigger = impulse
Low-Involvement Decision Process (“Buy the familiar/cheapest”)
Know > Do > Feel
Consumer Decision Journey
Circular Model that is dynamic (shoppers interact interchangeably across channels, make purchase decisions at less predictable points), accessible (shoppers receive info anytime and anywhere, can come from or through anyone), and continuous (the touch points shoppers are exposed to are “always on”
Business Buying
purchased gods/services used in the production of other products and services that are sold, rented, or supplied to others
Business Buying Process
determining which products and services an organization needs to purchase
Straight Rebuy
buyer routinely reorders something without any modifications
Modified Rebuy
buyer wants to modify product specifications, prices, terms, or suppliers
New Task
buyer purchases a product or service for the first time
Systems Selling/Solutions Selling
buying a packaged solution to a problem from a single seller; avoids the separate decisions involved in a complex buying situation
Factors Affecting Business Buyer Behavior
Environmental, Organizational, Interpersonal, Individual
E-Procurement
purchasing through electronic connections between buyers and sellers (usually online)