Intro to Marketing Rutgers Chapter 1 – 6 Midterm Methot

Marketing
Process by which
companies CREATE VALUE
for customers and build
strong customer
relationships in order to
CAPTURE VALUE from
customers in return
“Marketing is __________”
marketing is customers
Marketing is the process by which
companies create _____________ for
customers and capture __________ in
return.
value; value
Value=
perceived benefits – perceived costs
The value of an offering is its
perceived ______ minus its
perceived ___________.
benefits; costs
The Marketing Process
Analysis -> Decisions -> Outcomes
4 P’s
Product, Place, Price, Promotion
Marketing Mix
Decisions
4 P’s :Product, Place, Price, Promotion
The 5 Cs
• Customers
• Company
• Competitors
• Collaborators
• Context
The Marketing Process: ANALYSIS
Understand the marketplace and customer needs and wants

ex: The 5 Cs

The Marketing Process: DECISIONS
Design a customer value driven marketing strategy

Construct an integrated marketing program that delivers superior value

Aspirational and Marketing Mix decisions
ex: segmentation, target positioning, 4P’s

• Customer Needs
• States of felt deprivation
• Part of being human
• e.g. physical needs,
individual needs
The Marketing Process: OUTCOMES
Engage customers, build profitable relationships, and create customer delight.

Relationship Management (customers and partners)
Capture Value : (Create Satisfied,
Loyal Customers, generate referrals)

Customer Wants
-Needs shaped by culture and
individual personality
• Described as specific objects
Customer Demand
Wants backed by buying power.
Marketing Myopia
Focus on company’s needs instead of customers’ needs and wants
Market Offerings
Market Offerings fulfill customer needs & wants.
Customer Satisfaction
How well a market offering meets or
surpasses customer expectations
When customer expectations
exceed their actual experiences, the
result is _______________.
dissatisfaction
Exchange
Exchange is the act of
obtaining a desired
object from someone
by offering something
in return.
Marketing Management Orientation
-The company orientation
towards the marketplace.
-The philosophy the company applies
while targeting a market.
-There are 5 different
marketing management orientations…
Types of Marketing Management Orientation
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Concept
Production Concept
“Inside Out” Approaches
FOCUS:
production &
distribution
efficiency
Product Concept
“Inside Out” Approaches
FOCUS:
continuous
product
improvement
Selling Concept
“Inside Out” Approaches
FOCUS:
large-scale
selling and
promotion
Marketing Concept
“Outside In” Approaches
FOCUS:
delivering
customer
needs and
value
Societal Marketing Concept
“Outside In” Approaches
FOCUS:
improving
customer and
society wellbeing
Customer Lifetime Value (LTV)
LTV is the
value of the
entire stream
of purchases a
customer
makes over a
lifetime of
patronage
Share of Customer
Share of Customer is the % they get of the customer’s purchasing in their product categories

Increase SOC of existing customers by:
• Good customer relationship mgmt
• More product variety
• Cross-sell and up-sell opportunities

Share of Customer helps
companies measure __________.
their percentage of
spending from specific
buyers in the market
Customer Equity
Customer
Equity is the
total combined
LTVs of the all
the company’s
current &
potential
customers
Customer Relationship Management
Short-term / Long-term

High Profit Butterflies/ True Friends
Low Profit Strangers/ Barnacles

Companies should invest in
retaining all customers who
purchase from them. (T/F)
False
I splurged on an expensive vacation
in Hawaii 7 years ago but haven’t
traveled much since. The resort likely
now views me as a _______.
Butterfly
Customer Satisfaction relates to
how well a market offering meets or
surpasses ____________.
customer expectations
Strategic Planning
Strategic planning helps a firm to maintain a strategic
fit between its goals and capabilities and its changing
marketing opportunities.
Strategic Planning Process
Strategic planning helps a firm to maintain a strategic
fit between its goals and capabilities and its changing
marketing opportunities.

-define company’s mission
-setting company objectives and goals
-designing the business portfolio

Mission Statement
Market (customer) oriented
• Purposeful
• Emphasizes strengths
• Aspirational
• Clarifies what’s in, and what’s out
Company Goals and Objectives
The mission leads to long-term objectives
– Business objectives
– Marketing objectives
• Objectives are achieved through short-term
strategic goals
ex: customer obj. operational obj. financial obj
Business Portfolio
Business Portfolio is a collection of businesses and
products that make up the company.

Steps in business portfolio planning:
– Analyze the firm’s current business portfolio
– Develop strategies for growth and downsizing to shape the
future portfolio

The BCG Growth-Share Matrix
The BCG Growth-Share Matrix
Market Expansion Grid
Market Expansion Grid
Market Penetration
Making more sales to current
customers without changing your
original products/services
Market development
Identifying and developing new
markets for existing products
Product development
Offering modified or new products
to current markets
Diversification
Starting up or buying businesses
beyond its current products or
markets
Offering modified or new products
to current markets represents which
expansion strategy?
Production development
Downsizing
Reduces the business portfolio by eliminating products
or business units that are not profitable or that no
longer fit the company’s overall strategy
• Reasons for downsizing:
– Rapid growth of the company
– Lack of experience in a market
– Change in market environment
– Decline of a particular product
SWOT Analysis
SWOT Analysis
_________ are internal
limitations that may interfere with a
company’s ability to achieve its
objectives.
weaknesses
Marketing Strategy & Action Program - 4Ps
Marketing Strategy & Action Program – 4Ps
Product: variety, quality, design, features, brand name, packaging, services,

Price: list price, discounts, allowances, payment periods, credit terms

Promotion: Advertising, personal selling, sales promotion, public relations.

Place: channels, coverage, locations, inventory, transportation, logistics

Controls = Accountability
Marketing ROI:
– Standard marketing performance measures

Financial ROI: Net return from a marketing
investment divided by the costs of the marketing
investment

Contents of a marketing plan
1. executive summary
2. current marketing situation
3. threats and opportunities analysis
4. objectives and issues
5. marketing strategy
6. action program
7. budgets
In the Growth Share Matrix (aka BCG
Matrix), SBUs that represent new innovations/
new product launches typically start in which
quadrant?
Question Mark
Marketing Environment
Outside forces that affect marketing management’s ability to
build and maintain successful relationships with customers.
Microenvironnment
Actors close to the
company that affect its
ability to serve its
customers.

-company
-customers
-competitors
-collaborators

Macroenvironment
Larger societal forces
that affect the
microenvironment
Actors close to the company that
affect the organization’s ability to serve
its customers are part of the company’s
______________.
Microenvironment
5 majors forces in Macroenv.
Demopgraphic
economic
natural
technological
political
cultural
Demographic Environment
Demography: Study of human populations in terms
of size, density, location, age, gender, race,
occupation, and other statistics
• Marketers analyze:
• Changing age* and family structures
• Geographic population shifts
• Educational characteristics
• Population diversity
Economic Environment
Economic factors that affect consumer purchasing power
and spending patterns
• Type of economy
(industrial,
developing, etc.)
• Differences in
income
distribution
• Changes in
consumer
spending
Natural Environment
• Physical environment and natural resources needed as
inputs by marketers or affected by marketing
activities
• Environmental sustainability concerns increasing
• Trends:
• Shortages of raw materials
• Increased pollution
• Increased government intervention
Technological Environment
Most influential force
• New technologies create new markets and
opportunities.
Cultural Environment
• Institutions and other forces affect shape our
basic beliefs, values, perceptions, preferences,
and behaviors.
• Cultural characteristics that affect marketing
decision making
• Core beliefs & values
• Persistent, passed down
through institutions and
generations
• Secondary beliefs & values
• Cultural swings cause
beliefs & values to change
over time
Political Environment
Forces that influence and limit various organizations
and individuals in a society
– Laws, government agencies, and pressure groups
• Goals of enacting business legislation:
– Protect companies from each
other
– Protect consumers from
unfair business practices
– Protect the interests of
society against unrestrained
business behavior
which of the following is a good
strategy for marketing during a
recession?
Focus on family values
According to the five- step model of the
marketing process, the first step in
marketing is
________.
A) understanding the marketplace and customer
needs and wants
B) engaging customers, building profitable
relationships, and creating customer delight
C) designing a customer- driven marketing
strategy
D) constructing an integrated marketing program
that delivers superior value
E) capturing value from customers to create profits
and customer equity
A) understanding the marketplace and customer
needs and wants
________ is the art and science of
choosing target markets and building
profitable relationships
with them.
A) Segmentation
B) Positioning
C) Differentiation
D) Marketing management
E) Value engineering
D) Marketing management
Dividing a market into several sections
of customers is known as ________.
market segmentation
JetBlue’s promise to put “You Above All”
by “bringing humanity back to travel” is
their ________.

A) selling concept
B) value proposition
C) market offering
D) production concept
E) segmentation strategy

B) Value proposition
A ________ is purposeful, specifying
what an organization wants to accomplish in
the larger environment.
Mission statement
Which of the following best describes a
company’s business portfolio?
A) the target segments of the company’s various
businesses
B) the list of all the marketing activities in which
the company invests
C) the company’s strengths in terms of
technology, people, and products
D) the collection of businesses and products that
make up the company
E) the company’s products or services in a
particular market
D) the collection of businesses and products that make up the company
The two dimensions the BCG approach
uses to evaluate and manage SBUs are
________.
A) market growth rate and relative market share
B) relative market share and market penetration
C) relative market share and product development
D) market growth rate and market development
E) market growth rate and market penetration
A) market growth rate and relative market share
Which of the following is part of the
microenvironment of a firm’s marketing
environment?
A) the cultural forces that exist in a society
B) the political state of the country in which the
firm exists
C) the technological resources available to the
company
D) the different demographic trends in the market
E) the suppliers who work with the company
E) the suppliers who work with the company
Demographic, economic, natural,
technological, political, and cultural forces
form the ________ of an organization.
A) microenvironment
B) supply chain
C) internal environment
D) marketing intermediary network
E) macroenvironment
E) macroenvironment
________ markets consist of
individuals and households that buy goods
and services for personal use.
A) Consumer
B) Business
C) Retailer
D) Government
E) Wholesaler
A) Consumer
Market
A Market is the set of actual and potential buyers of a product or service

-share a particular want or need that can be satified through an exchange relationship

Bic believes that saving handwriting will
serve short-term customer needs and their
long-term welfare. This represents which
marketing management orientation?
A. Societal Marketing
Orientation
B. Customer Relationship
Orientation
C. Sustainable Orientation
D. Product Orientation
A) Societal Marketing orientation
A growing number of college
students have a laptop or tablet with
them at all times. Using SWOT analysis,
what does this represent for Bic?
A. Strength
B. Weakness
C. Opportunity
D. Threat
D. Threat
Some customers have continued to
purchase Bic pens for many years, and prefer
more expensive designs and colors. To which
customer relationship group do these
customers likely belong?
A. Strangers
B. True Friends
C. Barnacles
D. Butterflies
B. true friends
Customer Insights
are fresh understandings of
customers and the marketplace, derived from
marketing information.

– used to create more value for customers
-difficult to obtain because its not obvious and cusotmers are unsure of their own behavior

Marketing Information Systems (MIS)
Marketing Information Systems (MIS)
represent people and
procedures for:
1. Assessing information needs
2. Developing needed information
3. Analyzing and using information
Internal
Data
Consumer and market info obtained from data sources within the company network
Marketing Intelligence
Collection and Analysis of publicly available info about consumers, competitors & developments in the marketplace

Actively scan environment

Marketing Research
Design, collection, analysis & reporting of data relevant to a specific marketing situation facing an organization

focused studies

exploratory research
descriptive research
causal research

Exploratory Research
Gather preliminary info to help define problem and suggest hypotheses.
Descriptive Research
Describe things, such as the market potential for a product of the demographics / attitudes of customers who buy it
Causal Research
Test hypothesis about cause and effect relationships.
Q. In 1985, Coca-Cola should have first
undergone ______ research to gather
preliminary info and create a hypothesis as to
why people were drinking less cola.
A. Causal
B. Usability
C. Exploratory
D. Descriptive
C. Exploratory
If Coca-Cola wanted to study the impact of
changing the taste of Coke on purchase
preference, they could have undergone _____
research.
A. Causal
B. Usability
C. Exploratory
D. Descriptive
A. causal
Primary Data
• Gathering info for the
specific purpose at hand.
Secondary Data
Collecting info that already exists somewhere; collected prior to purpose

sources can include: internal, purchased outside, commercial database, and search engines

Observational Research
Gathering primary data by observing relevant people, actions,
and situations
• Ethnographic research
Ethnographic research
Sending trained observers to watch
and interact with consumers in their natural environments
Many companies are using _____ to gain
more speed, scale, and efficiency from its
ethnographic research efforts.
A. in-house research
teams
B. mobile apps
C. customer surveys
D. online focus groups
B. Mobile apps
Survey Research
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
Contact Methods
Contact Methods
Mail, telephone, personal, online.
Sampling Plan
A Sample is a segment of the population selected to
represent the population as a whole.
Questionnaires
A research instrument, can be administered in person, by phone, by email, or online. -closed-end ?’s or -open-end ?’s
Mechanical Instruments
neuromarketing
checkout scanners
smart shelves
Steps in the Marketing Research Process
-Defining the problem and research objectives
-developing the research plan for collecting information
-implementing the research plan — collecting and analyzing the data
-Interpreting and reporting the findings
Responsibilities of the market researcher:
Interpret findings
– Draw conclusions
– Report findings to management
Responsibilities of marketing managers:
Work closely with researchers to interpret research results
– Share responsibility for the research process and resulting
decisions
Forces Influencing Consumer behavior
Forces Influencing Consumer behavior
Cultural, social, personal, psychological
Adoption rate categories
Relative advantage
compatibility
complexity
divisibility
communicability
Relative advantage
superiority vs/ existing products
compatibility
“Fit” with values of potential cusotmers
complexity
Difficulty to understand or use
divisibility
ability to be tried on a limited basis
communicability
results can be observed or described to others
Relative Time of Adoption of Innovations
Relative Time of Adoption of Innovations
Innovators
early adopters
early mainstream
late mainstream
lagging adopters
Buyer decision process
high involvement vs. low involvement

utilitarian vs. self-expressive

Segmentation
Divide the total market into smaller segments
Targeting
Select the segment or segments to enter
Differentiation
differentiate the market offering to create superior customer value
positioning
position the market offering in the minds of target customers.
Segmentation Variables
Geographic, Demographic, Psychographic, Behavioral
Demographic Segmentation
Dividing a market into segments based on
demographic variables

Such as age, life-cycle stage, gender, income, occupation,
education, religion, ethnicity, and generation

Psychographic Segmentation
Dividing a market into segments based on
interests, attitudes, and opinions (IAO)

– Social class
– Consumer lifestyles
– Consumer personality

Behavioral Segmentation
Dividing a market into segments based on their
knowledge, attitudes, uses or responses about a product
Occasion Segmentation
•When get
idea to
buy
•When
make
their
purchase
•When use
the
product
Benefit Segmentation
•Segment
by
different
benefits
buyers
seek from
the
product
User Status
Nonusers
•Ex-users
•Potential
users
•First-time
users
Usage Rate
Light
users
•Medium
users
•Heavy
users
Loyalty Status
Loyal to
brand
•Loyal to
store
•Loyal to
company
Multiple Segmentation Bases
help companies to:
– Identify smaller, better-defined target groups
– Identify and understand key customer segments
– Reach customers more efficiently by tailoring market offerings and
messages to customers’ specific needs
• Help marketers segment people and locations into
marketable groups of like-minded consumers.
Behavioral Segmentation in Digital Mktg
Contextual:
• Targeting
based on
content of a
specific
webpage

Retargeting:
• Targeting
based on
previous
interactions
with
specific
cookies

InterestBased
• Targeting
based on
previous
browsing
activity

Requirements for Effective Segmentation
-Measurable:
Size & profiles can
be measured
-Accessible:
Segment can be
effectively reached
-Substantial:
Large, profitable
enough to serve
-Differentiable:
Distinguishable
segments respond
differently
-Actionable
Programs can be
developed in to
reach segments:
Undifferentiated (mass)marketing
targets broadly, Focuses on
needs that
are COMMON
instead of
needs that
are different.
Differentiated (segmented) marketing
Focuses on
several
market
segments,
with a
separate
offering for
each
Concentrated (niche) marketing
Focuses on
going after a
large share
of one or a
few smaller
segments
(or niches)
Micromarketing (local or individual marketing)
Focuses on
tailoring
products &
marketing
programs to
individual
customers

** most relevant but most expensive

Value Proposition
Value Proposition
benefits and price vs their competitors
More for More Proposition
Provides the most upscale product or service
• Charges a higher price to cover the higher costs
More for the same
High quality at lower prices

can be used to attack a more-for-more positioning

More for less
-Best winning position
-Very difficult for companies to sustain such best-of-both positioning
The same for less
-Gives a good deal
-Used by discount stores that offer deep discounts based on superior purchasing power and lower-cost operations
Less for much Less
Meeting consumer’s lower performance or quality requirements at a much lower price.
Less for much Less
The same for less
More for less
More for the same
More for More Proposition
Value Proposition
Micromarketing (local or individual marketing)
Concentrated (niche) marketing