Marketing 321 – Texas A&M

Marketing
The process of creating, distributing, promoting pricing goods, services and ideas to facilitate satisfying exchange relationships with customers and develop and maintain favorable relationships with stakeholders in a dynamic environment.
Sam Walton
“There is only one boss, and whether a person shines shoes for a living or heads up the biggest corporation in the world, the boss remains the same. The customer is the person who pays everyone’s salary and who decides whether a business is going to succeed or fail.
Customer focus
Businesses exist to serve customers

Market-driven businesses sell what customers want to buy

AMA
American Marketing Association
Customers
The purchasers of organizations’ products; the focal point of all marketing elements
Target Market
The group of customers on which marketing efforts are focused.
Marketing Mix
Four marketing elements–product, distribution, promotion, and pricing–that a firm can control to meet the needs of customers within its target markets.
Marketing concept
A philosophy that an organization should try to provide products that satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals.
Marketing orientation
A process (application).
Exchange
The provision or transfer of goods, services, or ideas in return for something of value.
Marketing Requires
Two or more parties with unsatisfied needs.
Desire and ability to satisfy the needs.
A way for the parties to communicate.
Something to exchange.
Focus
Customer
Marketing Mix
Price, product, distribution, and promotion.
Environmental forces
Socio-culture forces, technological forces, legal and regulatory forces, political forces, economic forces, competitive forces.
Products
Goods, services, or ideas.
Price
The value that is exchanged for a product.
Place (distribution)
Making products available at the right time and place.
For en exchange to take place
Two or more individuals, groups, or organizations must participate, and possess something of value the other party desires.
The exchange should provide a benefit or satisfaction to both parties in the transaction.
Each party must have confidence in the promise of the valued product, held by the other.
Parties must meet expectations to build trust.
Stakeholders
Constituents who have a claim, in some aspect of a company’s products, operations, markets, industry, and outcomes.
Marketing Environment
The competitive, economic, political, legal and regulatory, technological, and sociocultural forces that surround the customer and affect the marketing mix. Mark. activities DO NOT take place in a vacuum (whatever the hell that means)
Evolution of product orientation
Industrial revolution which brought electricity, division of labor, mass production, made it possible to produce goods more efficiently.
Evolution of Sales orientation
1920’s-1950’s businesses viewed sales as the major means of increasing profit, and adopted sales orientation.
Evolution of Market orientation
An organizationwide commitment to researching and responding to customer needs. By 1950’s realize must first find what customers want, then make those products.
Six values required by organizations wanting to become more marketing oriented
Trust, openness, honoring promises, respect, collaboration, and recognizing the market as the raison d’etre.
Relationship Marketing
Establishing long-term, mutually satisfying buyer-seller relationships.
Customer-centric marketing
Developing relationships with customers based on focusing on their individual needs and concerns. “sense and respond”
Customer Relationship Management (CRM)
Using information about customers to create marketing strategies that develop and sustain desirable customer relationships.
Fundamental goal
Achieving the full profit potential of each customer relationship should be the goal of every marketing strategy.
Profit can be obtained through relationships by
Acquiring new customers, enhancing the profitability of existing customers, and extending the duration of customer relationships.
e-marketing
Internet-based marketing strategies.
Value
A customer’s subjective assessment of benefits relative to costs in determining the worth of a product. Customer value = customer benefit – costumer costs.
Value – profit tradeoff
A tradeoff between increasing the value offered to a customer, and maximizing the profits from a transaction.
Marketing Management
The process of planning, organizing, implementing, and controlling marketing activities to facilitate exchanges effectively and efficiently. Effectiveness is the degree to which an exchange helps achieve an organization’s objectives. Efficiency refers to minimizing the resources an organization must spend to achieve a specific level of desired exchanges.
Effective control process
Ensure a rate of information flow that allows the manager to detect any differences between actual and planned levels of performance
Must accurately monitor various activities and be flexible enough to accommodate changes
Should be designed so that both manages and subordinates can understand it.
Costs of the control process must be low relative to costs that would arise without such controls
Facts
50 percent of a buyer’s dollar goes toward marketing costs.
81 percent of southwest airlines booked online.
25-33 percent of all civilian workers in the U.S. perform marketing activities.
Green marketing
A strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment.
Marketing jobs include
Personal selling, advertising, packaging, transportation, storage, marketing research, product development, wholesaling, and retailing.
Environmental scanning
The process of collecting information about forces in the marketing environment.
Environmental analysis
The process of assessing and interpreting the information gathered through environmental scanning.
Two approaches marketing managers take
Accepting the environmental forces, or attempting to influence, and shape them.
Competition
Other organizations that market products that are similar to or can be substituted for a marker’s products in the same geographic area
Brand competitors
Firms that market products with similar features and benefits to the same customers at similar prices. (diet coke, diet pepsi) Most important competition, often most focused on by marketers.
Product competitors
Firms that compete in the same product class, but market products with different features, benefits, and prices. (water, juice, soda)
Generic competitors
Firms that provide very different products that solve the same problem or satisfy the same basic customer need. (water from tap vs soda)
Total budget competitors
Firms that compete for the limited financial resources of the same customers. (diet coke vs. gum)
Monopoly
A competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply.
Oligopoly
A competitive structure in which a few sellers control the supply of a large proportion of a product.
Monopolistic competition
A competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to differentiate its product.
Pure competition
A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply.
Business cycle
A pattern of economic fluctuations that has four stages: prosperity, recession, depression, and recovery. Much more complex on a global scale.
Prosperity
A stage of the business cycle characterized by low unemployment and relatively high total income, which together ensure high buying power provided the inflation rate stays low.
Recession
A stage of the business cycle during which unemployment rises and total buying power declines, stifling both consumer and business spending.
Depression
A stage of the business cycle when unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy.
Recovery
A stage of the business cycle in which the economy moves from recession or depression toward prosperity.
Buying power
Resources, such as money, goods, and services, that can be traded in an exchange.
Income
For an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period.
Disposable income
After-tax income.
Discretionary income
Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter.
Wealth
The accumulation of past income, natural resources, and financial resources. When you gain wealth your buying power increases by being able to mark current purchases, generate income, and acquiring large amounts of credit.
Willingness to spend
An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces. Factors include expectations about future employment, income levels, prices, family size (bigger more spent), and economic conditions.
Federal Trade Commission (FTC)
An agency that regulates a variety of business practices and curbs false advertising, misleading pricing, and deceptive packaging and labeling.
BBB Better Business Bureau
A system of nongovernmental, independent, local regulatory agencies supported by local businesses that helps settle problems between customers and specific business firms.
NARB National Advertising Review Board
A self-regulatory unit that considers challenges to issues raised by the National Advertising Division (an arm of the council of better business bureaus) about an advertisement.
Technology
The application of knowledge and tools to solve problems and perform tasks more efficiently.
Sociocultural forces
The influences in a society and its culture that change people’s attitudes, beliefs, norms, customers, and lifestyles.
Consumerism
Organized efforts by individuals, groups, and organizations to protect consumers’ rights.
Marketing research
The systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities.
Research process
Locating and defining problems or issues, designing the research project, collecting data, interpreting research findings, and reporting research findings.
Research Design
An overall plan for obtaining the information needed to address a research problem or issue.
Hypothesis
An informed guess or assumption about a certain problem or set of circumstances
Exploratory Research
Research conducted to gather more information about a problem or to make a tentative hypothesis more specific. less structure
Conclusive research
Research designed to verify insights through objective procedures and to help marketers in making decisions.
Descriptive research
Research conducted to clarify the characteristics of certain phenomena to solve a particular problem.
Experimental research
Research that allows marketers to make casual inferences about relationships.
Reliability
A condition that exists when a research technique produces almost identical results in repeated trials.
Validity
A conclusion that exists when a research method measures what it is supposed to measure.
Primary data
Data observed and recorded or collected directly from respondents.
Secondary data
Data compiled both inside and outside the organization for some purpose other than the current investigation. Due to internet more then half of data comes from secondary.
Population
All the elements, units, or individuals of interest to researchers for a specific study.
Sample
A limited number of units chosen to represent the characteristics of a total population
Sampling
The process of selecting representative units from a total population.
Probability sampling
A type of sampling in which every element in the population being studied has a known chance of being selected for study.
Random sampling
A form of probability sampling in which all units in a population have an equal chance of appearing in the sample, and the various events that can occur have an equal or known chance of taking place.
Stratified sampling
A type of probability sampling in which the population is divided into groups with a common attribute and a random sample is chosen within each group.
Nonprobability sampling
A sampling technique in which there is no way to calculate the likelihood that a specific element of the population being studied will be chosen.
Quota sampling
A nonprobability sampling technique in which researchers divide the population into groups and then arbitrarily choose participants from each group.
Mail survey
A research method in which respondents answer a questionnaire sent through the mail.
Telephone survey
A research method in which respondents’ answers to a questionnaire are recorded by an interviewer on the phone.
Online Survey
A research method in which respondents answer a questionnaire via e-mail or on a website.
Crowdsourcing
Combines the words crowd and outsourcing and calls for taking tasks usually performed by a marketer or researcher and outsourcing them to a crowd, or potential market, through an open call.
Personal interview survey
A research method in which participants respond to survey questions face-to-face.
In-home (door-to-door) interview
A personal interview that takes place in the respondent’s home.
Focus-group interview
An interview that is often conducted informally, without a structured questionnaire, in small groups of 8-12 people, to observe interaction when members are exposed to an idea or a concept.
Customer advisory boards
Small groups of actual customers who serve as sounding boards for new-product ideas and offer insights into their feelings and attitudes toward a firm’s products and other elements of its marketing strategy.
Telephone depth interview
An interview that combines the traditional focus group’s ability to probe with the confidentiality provided by telephone surveys.
Shopping mall intercept interview
A research method that involves interviewing a percentage of individuals passing by “intercept” points at mall.
On-site computer interview
A variation of the shopping mall intercept interview in which respondents complete a self-administered questionnaire displayed on a computer monitor
Kinds of questionnaire questions
Open ended, dichotomous (close-ended), and multiple choice.
Statistical interpretation
Analysis of what is typical and what deviates from the average.
Marketing information system (MIS)
A framework for managing and structuring information gathered regularly from sources inside and outside the organization.
Database
A collection of information arranged for easy access and retrieval. Information should help to identify profitable inactive customers who can be reactivated, remove inactive unprofitable customers, and identify active customers who should be targeted with marketing activities.
Single-source data
Information provided by a single marketing research firm.
Marketing decision support system (MDSS)
Customized computer software that aids marketing managers in decision making.
Consumer Market
Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits.
Business market
Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations.
Undifferentiated targeting strategy
A strategy in which an organization designs a single marketing mix and direct it at the entire market for a particular product.
Homogeneous market
A market in which a large proportion of customers have similar needs for a product
Heterogeneous market
A market made up of individuals of organizations with diverse needs for products in a specific product class.
Market segmentation
The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs.
Market segment
Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs. To succeed 5 conditions must be met. Need for product must be heterogeneous, must find a characteristic for separating individuals, market should be divided to segments can be compared with respect to profits, one segment must have enough profit to justify making the campaign, and finally the company must be able t reach the chosen segment with a particular marketing mix
Concentrated targeting strategy
A market segmentation strategy in which an organization targets a single market segment using one marketing mix
Differentiated targeting strategy
A strategy in which an organization targets two or more segments by developing a marketing mix for each segment
Segmentation variables
Characteristics of individuals, groups, or organizations used to divide a market into segments.
Market density
The number of potential customers within a unit land area
Geodemographic segmentation
A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information
Micromarketing
An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets.
Benefit Segmentation
The division of a market according to benefits that consumers want from the product. Benefits must be identifiable, using these benefits, marketers must be able to divide people in recognizable segments, and one or more of the resulting segments must be accessible to the firm’s marketing efforts.
Market potential
The total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity.
Company sales potential
The maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product.
Breakdown approach
Measuring company sales potential based on a general economic forecast for a specific period and the market potential derived from it
Buildup approach
Measuring company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period, multiplying the estimate by the number of potential buyers, and adding the totals of all the geographic areas considered.
Product positioning
Creating and maintaining a certain concept of a product in customers’ minds.
Sales forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities.
Executive judgement
A sales forecasting method based on the intuition of one or more executives.
Customer forecasting survey
A survey of customers regarding the types and quantities of products they intend to buy during a specific period.
Sales force forecasting survey
A survey of firm’s sales force regarding anticipated sales in their territories for a specified period.
Expert forecasting survey
Sales forecasts prepared by experts outside the firm, such as economists, management consultants, advertising executives, or college professors.
Regression analysis
A method of predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income.
Market test
Making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts.