Principles of Marketing Ch. 1, 2, and 4

What is Marketing?
A philosophy, an attitude, a perspective, a management orientation PLUS a the 4P’s
American Marketing Association Definition
Marketing is the process of planning and executing the 4P’s to create exchanges that satisfy individual and organizational goals
The 4P’s
Product, (stemming from product is) price, distribution, and promotion
The Concept of Exchange
The idea that people give up something to receive something they would rather have
The necessary conditions for exchange are
have at least two parties, something of value, communication and delivery, freedom to accept or reject, and desire to deal with other party
The Marketing Management Philosophies are
Production, Sales, Market, and Societal
Define Production
Focus on efficiency of internal operations
Define Sales
Focus on aggressive sales techniques and believe that high sales result in high profits
Define Market
Focus on satisfying customer needs and wants while meeting objectives
Define Societal
Focus on satisfying customer needs and wants while enhancing individual and societal well-being
The guiding factor with all orientations (the four marketing management philosophies) should be
the determination of what customers want, not what management thinks should be produced or sold
Production involves which 4P?
Price
Sales involves which 4P?
Promotion
Market involves which 4P?
Product
Societal involves which 4P?
Distribution
Production focuses on
*efficiency* saving money, lower costs, and tightening budget (Ex: homogeneous products like toilet paper)
Sales focus on
*aggressive* only cares about selling (higher sales = higher profits)
Market focuses on
*satisfying customer needs* research, cares about customer, and product convenience
Societal focuses on
*customer needs and societal well-being* cares about society (Ex: make a recyclable product to help society while making a profit)
Sales Orientation
Focus is internal, aggressive selling goods and services to everyone while aiming for maximum sales volume using the tool of promotion
Market Orientation
Focus is outward, satisfying wants and needs of people, focusing on specific groups, aiming for the goal of satisfying the customers using the tool of coordinating the use of all marketing activities
Target Market
specific group of people with a need or want (Ex: *Walmart* production, societal, and Market)
Relationship Marketing
The name of a strategy that entails forging long-term partnerships with customers, both individuals and firms
Requirements for Building Relationships
Know who your customers are, know what they value, know what they want to buy, and know how they prefer to interact
Why study Marketing?
It plays an important role in society, it is vital to business survival profits and growth, it offers career opportunities, it affects your life every day, half of every dollar spent pays for marketing costs, better-informed consumers, and a demand for customer satisfaction
Strategic Planning Equation
Resources and objectives + Evolving marketing opportunities = Long run profitability and growth
The Marketing Plan
A written document that acts as a guidebook of marketing activities for the marketing manager
Marketing Plan Process
First create a business mission statement, then come up with objectives, then situation or SWOT analysis, then marketing strategy, then implementation evaluation control
Defining the Business Mission
Focuses on the market(s) rather than the good or service and strategic business units may also have a mission statement
Example of a Business Mission
*Northwest* Education, Sports, Entertaining, Job Preparation
Marketing Myopia
Being too narrow and short-term; too broad won’t have direction; markets served and customer benefits = good mission statement
Strategic Business Units (SBUs)
Large organization needed to be broken down into smaller departments, each department requires its’ own strategies and funding
Characteristics of a Strategic Business Unit
A distinct mission and specific target market, control over their resources, their own competitors, and plans independent of other SBUs
Marketing Objectives must be
realistic, measurable, time specific, and consistent with organization’s priorities
Define the marketing objective Realistic
realistic goal
Define the marketing objective Measurable
how you’re going to meet your goal
Define the marketing objective Time Specific
Ex: check every month to make sure you’re accomplishing goals
SWOT Analysis includes
Strengths, Weaknesses, Opportunities, and Threats
Strengths
Things the company does well
Weaknesses
Things the company does not do well
Opportunities
Conditions in the external environment that favor strengths
Threats
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness
Strengths and weaknesses are a ____________ assessment.
Internal
Opportunities and Threats are a ____________ assessment.
External
SWOT Analysis
helps firms identify their competitive advantage
Internal SWOT analysis includes
Things we can control like: Production costs, marketing skills, employee capabilities, financial resources, available technology, superiority in manufacturing, service, quality, value perception, and company/brand image
External SWOT analysis includes
Things we can’t control like: Social, Demographic, Economic, Technological, Political/Legal, and Competitive
Social
Ex: # of high school students or social media
Demographic
Ex: age, income, gender, marriage status
Economic
Ex: Employment rate
Political/Legal
Ex: laws on commerce
Competitive
Ex: can’t control what competitors do
Define Environmental Scanning
Collection and interpretation of information about forces, events and relationships in the external environment that may affect the future of the organization or the marketing plan implementation
What happens in an environmental scanning
Examination of macro environmental forces (External SWOT analysis components), helps identify market opportunities, and provides guidelines for design of marketing strategy
Environmental Scan is only used for ___________
External SWOT analysis
Competitive Advantage
The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition (What they do better than anyone else)
Examples of Competitive Advantage
Southwest Airline Baggage or Northwest textbook rentals
Types of Competitive Advantage
Cost, Product/Service Differentiation, and Niche Strategies
Cost
being the low cost competitor in an industry while maintaining satisfactory profit margins (innovations, efficiency, design, and experience)
Product/Service Differentiation
advantage achieved when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than the competition (brand names, network, reliability, and image) Ex: google fiber
Niche Stategies
advantage achieved when a firm seeks to target and effectively serve a small segment of the market (having a business in only one region, being the only producer for a certain need)
Define Niche
Product that is extremely desirable
Sustainable Competitive Advantage
An advantage that cannot be copied by the competition
Organization’s Skills and Assets
Patents, Copyrights, Locations, Equipment, Technology, Customer Service, and Promotion
Portfolio Matrix
Tools for allocating resources on the basis of relative market share and market share and market growth rate
Star
High growth, Market leaders, Require cash, and Large profits
Cash Cow
Low growth, High market share, and High cash flow
Problem Child
High growth, Low market share, Need cash, and Poor profit margins
Dog
Low growth, Low market share, and Minimal cash flow
Star Examples
smartphone
Problem Child Examples
smart HDTV or hybrid cars
Cash Cow Examples
cable TV, Internet, or cell phone service
Dog examples
VHS tapes or flip phones
Benefits of marketing
competitive advantage and allocation of resources
Market Share
stops at 100%, increases by taking from someone, lose by someone taking from you (your percentage of a product you’re selling)
Market
to infinity, contracts or expands by economy, demographics, etc. (the product)
Strategies for Resource Allocation
Build, Hold, Harvest, and Divest
Build
Provide financial resources if SBU (Problem Child) has potential to be a Star
Hold
Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs. “Stay put” – already making money, don’t need help
Harvest
Increase short-term cash return. Appropriate for all SBUs except Stars
Divest
Get rid of SBUs with low shares in low-growth markets. This is the dog
Prospects
most attracted customers
Target Market Strategy
Segment the market based on groups with similar characteristics, analyze the market based on attractiveness of market segments, and select one or more target markets
The Marketing Mix
Using the 4P’s to produce exchanges with a target market
Product Strategies
product is the heart of the marketing mix and is the start of the 4 P’s
-includes a physical unit package, warranty, service, brand, image, and value
Distribution (place) Strategies
Anything to do with getting a product to a customer
-product availability
-involves all activities from raw materials to finished products
Promotion Strategies
Anything you can do to make a product more visible
-Role is to bring about exchanges with target markets
-Includes integration of personal selling, advertising, sales promotion, and public relations
Pricing Strategies
-The most flexible of the 4 P’s
– Price X Units sold = Total Revenue
What does following up the marketing plan include
Implementation, Evaluation, Control, and Marketing Audit
Implementation
execution of plan is where a plan fails – timelines, budgets, communication
Evaluation
monitor plan – track revenue/sales – formal and informal control programs
Control
control the plan
Marketing Audit
always taking an audit of our plan
-Includes Comprehensive, Systematic, Independent, and Periodic
Define The Marketing Audit
A thorough, systematic, periodic evaluation of the goals, strategies, structure, and performance of the marketing organization
Define Target Market
A defined group most likely to buy a firm’s product
External Marketing Environment
is not controllable, ever-changing marketplace, and environmental scanning
The poverty of time
A lack of time to do anything but work, commute to work, handle family situations, do housework, shop, eat, sleep
A lot of ________ parent families work now
two
On average providing for kids is ______________ from __________ to ____________
$250,000 from birth to eighteen
________ percent of all females are in the workforce
58
Demographic Factors
Age, Location, and Race and Ethnicity
Generation Y
called Millennials, age group under 25, product has to be cool, they have a lower work ethic, respond better to different types of ads, and love customized products and services
Generation X
are savvy and cynical consumers, indulge themselves with meals/alcohol clothing and electronics, and when they like somethings, they’re really into it
Baby Boomers
Cohort, Cherish youth convenience and individuality, and politics love this group because they have time and money
Older Consumers
Age 65+, healthier wealthier and better educated, know exactly what they want and need, not happy with advertising treatment, healthcare is big in this group
Multiculturalism
When all major ethnic
groups in an area– such as a city, county, or census tract–are roughly represented
New technology is a weapon against __________ and _________
inflation and recession
Inflation
decrease of the value of money
Recession
period of negative growth in the economy
U.S. excels at _________ and ________ research
basic and applied
Information technology and the internet have _________ productivity
increased
When it comes to Political and Legal Factors, Laws and Regulations Protect
Businesses, society, consumers, and new technology (Ex: FDA and FTC and identity theft and privacy)
FDA
Food and Drug Administration
FTC
Federal Trade Commission
Regulatory Agencies
Consumer Product Safety Commission, FTC, and FDA
Competitive Factors are
-Competition for Market Share and Profits
– Global Competition
Market Share shortened Definition
our sales compared to available sales
Example of Competition for Market Share and Profits
e- books are competition for Barnes and Noble
Global Competition
More foreign firms are entering U.S. market , Foreign firms in U.S. now compete on product quality , and Global markets are highly competitive
Ethical Behavior in Business
– Judgments Vary
-Just because something is legal, doesn’t mean it is ethical
Code of Ethics
A guideline to help marketing managers and other employees make better decisions
Corporate Social Responsibility
Philanthropic, Ethical, Legal, and Economic
Philanthropic
Be a good citizen
Ethical
Do what is right
Legal
Obey they law
Social Responsibility Define Economic
Be profitable
#4- A company that has a market orientation and adheres to the marketing concept does NOT
d) Fuel sales growth through the application of aggressive sales techniques
#15- There are many different kinds of cheese, but only Jarlsberg Lite has 50% less fat, 60% cholesterol, and 100% of the taste of other kinds of cheese. This describes Jarlesberg Lites:
b) Competitive Advantage
#22- Every night Universal Studios Japan hosts a firework display. The theme park recently came under Government investigation when allegations were made that the park was detonating more than 50 lbs. of explosives in its nightly fireworks displays. In small nations, the use of explosives is stringently controlled. This is an example of how ______ factors influence a business
b) Legal & Political
#13- One of the divisions of manufacture and markets health and beauty. This business has its own accounting engineering
e) SBU’s
#16- SBU’s are classified as ___________ are market leaders and growing fast
d) stars
#9- ___________ is the primary tool used by sales oriented org to achieve its corporate goals
b) promotion