Definition of Marketing, and what are its two main goals
Marketing is the activity for creating, communicating, delivering and exchanging offerings that benefit its customers, the organization, its stakeholders and society at large.
1. Discover needs and wants of prospective customers
2. Satisfy them
What are the 4 key things needed for marketing to occur?
1. Two or more parties with unsatisfied needs
2. Desire and ability to satisfy those needs
3. A way for parties to communicate
4. Something to exchange
One or more specific groups of potential consumers toward which an organization directs its marketing program
Name the 4 Controllable Marketing Mix Factors
1. Product: good/service/idea to satisfy consumer’s needs
2. Price: what is exchanged for the product
3. Promotion: a way to communicate b/w seller and buyer
4. Place: a way to get product to consumer
What are some uncontrollable, Environmental forces?
Social, economic, technological, competitive, regulatory
The unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price; usually given through best price, best product or best service
Links organization to its individual customers, suppliers, employees, and other partners for mutual long-term benefit; involves personal, ongoing relationship, and begins before and continues after sale
Organization should 1. Strive to satisfy the needs of consumers while 2. also trying to achieve organization’s goals
1. Continuously collecting info about customers’ needs
2. Sharing this info across departments
3. Using it to create customer value
Customer Relationship Management (CRM)
The process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace
Societal Marketing Concept
View that organizations should satisfy the needs of consumers in a way that provides for society’s well-being
Ultimate consumers vs. Organizational buyers
Ultimate consumers = people who use products and services for a household
Organizational buyers = manufacturers, wholesalers, retailers, govt agencies that buy products and services for their own use or for resale
What is Utility, and what are the four types?
Utility = benefits or customer value received by users of product
1. Form – production of product or service
2. Place – having the offering where needed
3. Time – having the offering when needed
4. Possession – value of making product easy to purchase
A legal entity of people who have a common mission or goal
Business firm definition
A privately owned organization that serves customers to earn profit so it can survive
Aims to better the company’s PRODUCTIVITY.
-Harvesting: (Retain Product and Markets) Not investing too much in ads. Ex. Nabisco Animal Crackers.
-Retrenchment: Offer the same product line but retreat to strongest markets. (Eliminate markets/Retain Products)
-Pruning: Continue serving the same market, but not all segments within a market. (Eliminate Products/Retain Markets)
-Divestment: Sell of a part of a business or product line that doesn’t fit well in main company. (Eliminate Markets/Eliminate Products)
Objectives/Goals of an organization
(Interchangeable Terms) A targeted level of performance set in advance of actual work.
Ex. Market Share, Quality, etc.
Trying to better the companies REVENUE.
-Market Penetration: increase sales of our product in existing markets
-Market Development: Sell existing products to new market.
-Product Development: New product to existing market.
-Diversification: New products in new markets.
Explain Corporate Structure (3 key levels)
1. Corporate level – top management directs overall strategy for whole firm
2. Strategic Business Unit – sub-division that markets a set of related offerings to clearly defined group of customers
3. Functional level – teams or departments within SBU, eg. marketing, finance, risk, HR, IT, etc.
Only focusing on the business service or product, companies are defined by one of their products not by their overall service.
A statement of organization’s function in society that often identifies its customers, markets, products and technologies; should be clear, concise, meaningful, inspirational and long term
The set of values, ideas, attitudes and norms of behavior that is learned and shared among members of an organization
The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself
Measure of the quantitative value or trend of a marketing activity or result
A road map for the marketing activities of an organization for a specified future time period (generally 1-5 years)
Planning Phase: Step 1
– Situation Analysis
Situation Analysis: taking stock of where firm or product has been recently, where it is now, and where it is headed in terms of organization’s plans and external forces
*Competencies: what the company does well.
* Competitive Advantage: Unique strength of our company in relation to our competitors. Ex. McDonalds.
-Competition (Current Vrs. Potential)
-Customer (Understanding them and their wants and needs)
Planning Phase: Step 1
– SWOT analysis
Strengths and Weaknesses (Internal),
Opportunities and Threats (External)
– Need to ID trends in industry, analyze competition, assess organization itself, research present/prospective customers
Planning Phase: Step 2 – Market-Product Focus and Goal Setting – what does this stage involve?
-Market segmentation (see chapter 9)
– Deciding which products will be directed toward which customers
Planning Phase: Step 3 – Marketing Program
Developing Marketing program’s marketing mix (4 Ps) and budget
Implementation Phase: Carrying out the marketing plan (4 parts)
1. Obtain resources
2. Design the marketing organization
3. Develop planning schedules
4. Actually execute marketing program designed in planning phase
Evaluation Phase: Part 1 – Comparing results of marketing program to plans
– Planning gap – diff b/w projection of path to reach goal and projection of path of results of plan already in place – purpose of marketing program is to fill that gap
-Goal is to compare actual results to goals set; often hard to accurately make long-term predictions in industries where technology is rapidly changing
Evaluation Phase: Part 2 – Acting on deviations
-Exploit a positive deviation (eg. product development, aka. penetrating new market)
-Correct a negative deviation (eg. reduce prices)
Process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends; 5 main sources: Social, economic, technological, competitive and regulatory
Include demographic characteristics of population and its values
Changing Age Demorgaphics
Describing a population according to selected characteristics such as age, gender, ethnicity, income and occupation
– Rise in people over 65 in the US.
– Generation Z (1990-2010) Need Brand authenticity, well designed packaging, Brand Engagement, Crowdsourcing.
Fad vrs. Trend
– Fad: Make your money and run! Only lasts a little bit of time. (Ex. Pet Rocks)
– Trend: Lasts an average of 10 Years or more.
Cultural Trends (Faith Popcorn)
– Cocooning (Want to stay at home and be safe)
– Clanning (People that like what I like)
– Fantasy Adventure (Thrill without the risk)
– Pleasure Revenge (Invest in things that are not good for us once in a while. Ex. Diet all week, eat a candy bar on saturday)
– Egonomics (Seeking Personalization/ Customization)
– Vigilante Customer (Let our voices be heard. Reviews, Complot, etc)
– Clockless Day (The day doesn’t at 8pm, need for flexibility, Midnight to 5am, McDonalds)
Tech Trends – 2014
– Smart home tech explosion
– Privacy Backlash
– Promising Advances in nano tech
– Cloud Wars
Consumer Income (3 types)
-Gross income – total amount of money made in one year by a person, household or family unit
-Disposable Income – money a consumer has left after paying taxes, to use for necessities like food, housing, clothes and transportation
-Discretionary Income – money that remains after paying for taxes and necessities
Barriers to entry
Business practices that make it difficult for new firms to enter the market. Need to know them, to see what prevents competition from coming in.
– High Advertising Dollars
– High Capital Expenditures
– Distribution Access (Ex. Airport Gates)
– Switching Cost (Switching from producing one to another)
– Product Identity
Single traditional Status goods have lost morst of their meaning, because they are no longer exclusive. Change from Horizontal desire (What our neighbor has) to Vertical desire (What celebrities have)
– New badge of high-end consumption’s Lifestyle
– Consumption of personal services or exclusive experiences.
Trademarks & FTC
Federal Trade Commission (FTC) Regulates the market (Cease and Desist/ Corrective Ads)
Trademark: protecting the name of a brand
-™ are adjectives not nouns
-™ Should not be pluralized
-™ are never verbs
– ™ shouldn’t be used in the possessive form
The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions
Purchase decision process:
Step 1: Problem recognition
Step 2: Information search, seeking value
Step 3: Alternative Evaluation, assessing value
Step 4: Purchase decision
Step 5: Post-purchase behavior
What are some types of information searches done in stage 2?
-Internal search (based on memory, past experiences with products or brands)
-External search – gathering internal information from personal sources, public sources, marketer-dominated sources
Stage 3: Alternative Evaluation: what are Evaluative Criteria?
-Objective attributes of a brand (eg. display/ Numbers/ Facts /Figures)
-Subjective attributes (eg. prestige/ Appeal/ things that are important to me)
Both used to compare different products or brands.
Stage 3: Alternative Evaluation: what is the Consideration Set?
The group of brands that you would consider among all the brands of which you are aware in the product class.
Stage 4: Purchase Decision:
The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences; influences how extensive the information search stage is.
Stage 5: Post-purchase behavior: what is Cognitive Dissonance?
The feeling of post-purchase psychological tension or anxiety, often alleviated by seeking information to confirm you made the right choice by asking friends or doing research online. (Anxiety)
Stage 5: Post- Purchase Behaviours: Buyers Remorse
Regret form purchasing our product. “I don’t want what I bought anymore”. (Regret)
A person’s consistent behaviors or responses to recurring situations
The way people see themselves and the way they believe others see them; marketers are aware that people have an actual self-concept and an ideal self-concept
Perception: definition and the different types of Perception Filters (Selective perception, exposure, comprehension, retention, and subliminal perception)
Perception – the process by which an individual selects, organizes and interprets information to create a meaningful picture of the world.
– Selective perception – filtering of exposure, comprehension and retention.
– Selective exposure – paying attention only to messages that are consistent with their attitudes/beliefs. (We choose to see what we want to see)
– Selective comprehension – interpreting information so that it is consistent with your attitudes/beliefs. (Ex. Noisy Blenders/Vacuums validate our beliefs that they are working)
– Selective retention – don’t remember all info you hear/see/read even minutes after exposure (Marketing tries to make us remember Ex. Geiko’s Gecko.
Developing automatic responses to a situation built up through repeated exposure to it
– Drive – need that leads to action (Hunger)
– Cue – stimulus or symbol (McDonalds Arches)
– Response – action taken to satisfy drive (Do to drive thru)
– Reinforcement – reward (Not hungry anymore) The stronger the reward the more likely a habit will form. (Habit formation leads to Brand Loyalty)
A favorable attitude toward and consistent purchase of a single brand over time.
– Relates to habit formation
– Reduces Risk
– Saves Time
Consumer Involvement and Problem Solving vrs. Knowledge.
– Routine Problem Solving (High Knowledge | Low Involvement) Ex. Milk
– Limited Problem Solving (Mid Knowledge | Mid Involvement) Ex. Small Appliances
– Extended Problem Solving (Low Knowledge | High Involvement) Ex. Stocks and Bonds
Marketing Strategies in Relation to Involvement
High Involvement: We risk a lot by making a wrong decision. (Ex. Listerine)
– Informational Ads
– Personal Selling (Doctors)
Low Involvement: The decision we make is not going to affect us very much.
– Maintain Product Quality
– Avoid Stock-outs (We could loose a client that would buy the competition if we are out of stock)
– Reduce Cognitive Dissonance w/ memorable and creative ads.
The process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions
5 Step Marketing Research Approach
Step 1: Define the Problem
Step 2: Develop the Research Plan
Step 3: Collect Relevant Data
Step 4: Develop Findings
Step 5: Take Marketing Actions
3 Main types of market research
1. Exploratory research – provides ideas about a relatively vague problem, eg. interviews
2. Descriptive research – trying to find the frequency that something occurs or extent of a relationship b/w 2 factors, eg. collecting data about # of households purchasing product
3. Causal research – most sophisticated, tries to determine extent to which change in one factor changes another, eg. observing time kids spend playing with each toy
Measures of Success
Criteria or standards used in evaluating proposed solutions to the problem, eg. children spending more time playing with old toy (measure of success) –> continue with old design, not new (marketing action)
Step 2: Develop the research plan – what are 3 key parts in this phase?
1. Specify constraints on research
2. Identify data needed for marketing actions
3. Determine how to collect data
Restrictions placed on potential solutions to a problem, eg. limits on time and money available to solve problem
Approaches that can be used to collect data to solve a problem; key methods = sampling and statistical inference
Primary vs. Secondary Data
– Primary data – facts and figures newly collected for the project
– Secondary data – facts and figures that have already been recorded before the project at hand
Secondary Data – internal vs. external
– Internal = from company past research; marketing input data= related to sales efforts, and marketing outcome data = related to results of the marketing efforts
– External = used to ID characteristics and trends of ultimate consumer, eg. from US Census Bureau
Advantages and disadvantages of secondary data
Advantages: low cost, time savings, high level of detail available, we can gather it on our own.
Disadvantages: may be out of date, definitions or categories might not be right (eg. wrong age groupings), or may not be specific enough, competitors have access to the same data.
Primary data – observational data – definition and 4 key methods. Qualitative Research.
Facts and figures obtained by watching, either mechanically or in person, how people actually behave.
– Nielsen Data (TV ratings)
– Mystery Shopper
– Ethnographic research (trained observers look for subtle behavioral and emotional reactions as consumers encounter products in their home)
– Cool Hunters (Trend Spotters)
Primary data – Questionnaire data
Facts and figures obtained by asking people about their attitudes, awareness, intentions and behaviors
Types include: individual interviews, depth interviews, focus groups, panels, , online surveys, telephone surveys, mall intercept interviews
Primary data – other sources (6)
-Social media listening
-Panels – sample of consumers or stores from which researchers take a series of measurements over time
-Experiments – obtaining data by manipulating factors under tightly controlled conditions to test for cause and effect
-Information technology – operating computer networks that can store and process data
-Sensitivity Analysis – asking “what if” questions to determine how possible changes in product or brand drivers can affect sales
-Data mining – extracting information from databases to find statistical links b/w purchasing patterns and marketing actions
Problems with research Questions
– Leading Question
– Ambiguous Question
– Unanswerable Question
– Two questions in one
– Non-exhaustive Question
– Non-Mutually Exclusive Answers
When decision-maker makes judgments and estimates without any intervening steps
Types of Open-Ended Questions
– Completely Unstructured (What is your opinion on Delta airlines?)
– Word Association (What comes to mind when you hear Delta?)
– Sentence Completion (Fill in a word in a sentence)
Types of Fixed-Alternative Questions – Close Ended
– Dichotomous ( 2 answers normally yes/no)
– Multiple Choice (3+ answers)
– Likert Scale (Amount of Agreement/Disagreement)
– Intention to Buy scale (Describes intention to buy)
– Semantic Differential (Bipolar Scale, Direction and Intensity of Feeling) Ex. Love _ _ _ _ _ Hate