Marketing Definitions: AMA & Kotler

Marketing Definitions

• American Marketing Association (AMA) 1935: Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers.
• AMA 1985: Marketing involves planning and executing the conception, pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals.
• AMA 2004: Marketing involves organizational functions and a set of processes for creating, communicating, and delivering value to customers while managing customer relationships in ways that benefit the organization and its stakeholders.
• AMA 2007 & 2017: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
• Dr. Philip Kotler: Marketing is defines as "the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.

Important Marketing Terms

• Marketing Research: It helps identify and define marketing opportunities and problems as well as generate, refine, and evaluate marketing actions.
  • The function links the consumer, customer, and public to the marketer through information.
  • Marketing research designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.
• Brand: A name, term, design, symbol, or any other feature that identifies one seller's goods or service as distinct from those of other sellers as well as an offering from a known source.

Core Marketing Concepts

• Need: It describes basic human requirements like food, air, water, clothing, and shelter.
• Want: It is a speicific satisfier for a need e.g needing food and wanting curry.
• Demand: It constitutes wants for specific products backed by an ability to pay for them.
• Product: It is a bundle of benefits and a consumer-orientated view.
• Value Proposition: It is a set of benefits that companies offer to customers to satisfy their needs. It is made physical by an offering, which can be a combination of products, services, information, and experiences.
• Value: It reflects the sum of the perceived tangible and intangible benefits and costs to customers. It's primarily a combination of quality, service, and price ("qsp") and is called the "customer value triad".
  • It increases with quality and service and decreases with price, although other factors can also play an important role in perceptions of value.
  • It is a central marketing concept and can think of marketing as the identification, creation, communication, delivery, and monitoring of customer value.
• Satisfaction: It reflects a person's judgments of a product's perceived performance (or outcome) in relationship to expectations.

What is Marketed?

• Goods: Physical goods constitute the bulk of most countries' production and marketing effort.
• Services: Economies focus activities on the production of services.
• Events: Marketers promote time-based events, such as major trade shows, artistic performances, and company anniversaries.
• Experiences: Firms create, stage and market experiences by orchestrating services and goods.
• Persons: Celebrity marketing is a major business with artists, musicians, CEOs, physicians, lawyers, financiers, and other professionals all getting help from celebrity marketers.
• Places: Cities, states, regions, and whole nations compete actively to attract tourists, factories, company headquarters, and new residents.
• Properties: These are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds).
• Organizations: They actively work to build a strong, favorable, and unique image in the minds of their target publics.
• Information: It is essentially what books, schools, and universities produce, market, and distribute at a price to parents, students, and communities.
• Ideas: Every market offering includes a basic idea. Products and services are platforms for delivering some idea or benefit.

Marketing Environment

• Marketing environment is divided into two areas: external and internal
• External Environment: This involves everything happening outside the organization.
• Internal Environment: This concerns marketing factors that happen within the organization.
• Organizations often focus more on the external but both are important.
• Reactive and Proactive: Two basic approaches to environmental forces:-
  • Reactive Manager: Regards environmental factors as uncontrollable.
  • Proactive Managers: Seeks ways to change the organizations environment.

4 Ps of Marketing

• Product: This is defined as a bundle of attributes (features, functions, benefits, and uses) capable of exchange or use, usually a mix of tangible and intangible forms. It may be an idea, a physical entity (goods), or a service, or any combination of the three.
• Price: This is the formal ratio that indicates the quantity of money, goods, or services needed to acquire a given quantity of goods or services.
• Place (or Distribution): Refers to the act of marketing and carrying products to consumers, also market coverage for a given product.
• Promotion: According to the Association of National Advertisers (ANA), promotion marketing includes tactics that encourage short-term purchase, influence trial and quantity of purchase, and are very measurable in volume, share and profit e.g coupons, sweepstakes, rebates, premiums, special packaging, cause-related marketing and licensing.

7 Ps of Marketing

• People: Virtually all services are reliant on people to perform them.
• Process: The process by which the service is delivered forms part of what the consumer is paying.
• Physical Evidence: Almost all services contain some physical elements e.g restauraunt meal, or haircut.

Holistic Marketing

• Holistic Marketing Concept: This is based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies.
• Relationship Marketing: This aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business.
• Internal Marketing: This ensures that everyone in the organization embraces appropriate marketing principles, especially senior management.
• Integrated Marketing: This occurs when the marketer devises activities and programs to create, communicate, and deliver value for consumer such that "the whole is greater than the sum of its parts."

Holistic Marketing Orientation and Customer Value

• The holistic marketing framework is designed to address three key management questions:
  • Value Exploration: How can a company identify new value opportunities?
  • Value Creation: How can a company efficiently create more promising new value offerings?
  • Value Delivery: How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently?

Value Chain Model

• Michael Porter: He proposed the value chain as a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product.
• The value chain identifies nine strategically relevant activities-five primary and four support activities-that create value and cost in a specific business.
  • Primary Activities: These are inbound logistics, operations, outbound logistics; marketing, sales, and servicing.
  • Support Activities: These are procurement, technology development, human resource management, and firm infrastructure.
• Task: The firm's task is to examine its costs and performance in each value-creating activity and to look for ways to improve it.
  • Managers should estimate their competitors' costs and performances as benchmarks against which to compare their own costs and performance and study the "best of class" practices of the world's best companies.

Industry Cycle Model

• In the industry cycle, the stages are: development, growth, shakeout, maturity, and decline.

Product Lift Cycle

• The stages in product life cycle are: Introduction, Growth, Maturity & Decline

Steps to Market Segmentation, Targeting and Positioning.

• Market Segmentation:
  • Identify bases for segmenting the market
  • Develop segment profiles.
• Target Marketing:
  • Develop measure of segment attractiveness.
  • Select target segments .
• Market Positioning:
  • Develop positioning for target segments .
  • Develop a marketing mix for each segment.

Market Segmentation

• This involves dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Segmenting Consumer Markets

• This includes geographical, demographic, psychographic and behavioural segmentation.

Target Marketing

• Target Market: It consists of a set of buyers who share common needs or characteristics that the company decides to serve.
• Evaluating Market Segments:
  • Segment size and growth.
  • Segment structural attractiveness.
  • Company objectives and resources.
• Selecting Target Market Segments:
  • Undifferentiated (mass) marketing.
  • Differentiated (segmented) marketing.
  • Concentrated niche marketing.
  • Micromarketing (local or individual).
• Considerations choosing a target marketing strategy:
  • Company resources.
  • The degree of product variability.
  • Product's life-cycle stage.
  • Market variability.
  • Competitors' marketing strategies.

Selecting Target Market Segments

• Socially Responsible Segmenting:
  • Some segments, especially children, are at special risk
  • Many potential abuses on the internet, including fraud internet shoppers
  • Controversey occurs when the methods are questionable

Positioning

There are number of processes that can be used to selecting Target Market Segments.

• The place the product occupies in consumers' minds relative to competing products.
• Typically defined by consumers on the basis of important attributes
• Involves implanting the brand's unique benefits and differentiation in the customer's mind
• Positioning maps that plot perceptions of brands are commonly used

Choosing a Positioning Strategy

• This requires identifying possible competitive advantages, with differentiation being based on products, services, channels, people or image. It also requires choosing the right competitive advantage and criteria.
• Value propositions represent the full positioning of the brand as well as certain value propositions, such as More for More, More for the Same, More for Less, The Same for Less, and Less for Much Less.

Brand Value Chain

• This gives a snapshot of program investments and it offers the company a means of understanding where and how value is created. It is based on 4 basic principles:
  • An assumption that the value of the brand resides with customers
  • Brand value creation starts with the company's marketing investments and expenditure.
  • There are factors (multipliers) which intervene between each stage of the model
  • A recognition that the actions of different stakeholders within the organisation can affect brand equity.

Business Model

• It is an outline of how a company plans to make money with its product and customer base in a specific market. At its core, a business model explains four things
  • What product or service a company will sell.
  • How it intends to market that product or service.
  • What kind of expenses it will face.
  • How it expects to turn a profit.

Essential components of a business model

• Value proposition: A feature that makes your product attractive to customers.
• Target market: A specific group of consumers who would be interested in the product.
• Competitive advantage: A unique feature of your product or service that can't easily be copied by competitors.
• Cost structure: A list of the fixed and variable expenses your business requires to function, and how these affect pricing.
• Key metrics: The ways your company measures success.
• Resources: The physical, financial, and intellectual assets of your company.
• Problem and solution: Your target customers' pain points, and how your company intends to meet them.
• Revenue model: A framework that identifies viable income sources to pursue.
• Revenue streams: The multiple ways your company can generate income.
• Profit margin: The amount your revenue exceeds business costs.

Types of Business Models

• Subscription: businesses charges customers a recurring fee for access to products or services e.g Netflix, Disney+, Hulu.
• Bundling: two or more products are sold together e.g Adobe, Burger King.
• Freemium: software company provides access to select proprietary apps or tools for free, with limits on advanced features. To gain access, users must pay for a subscription e.g Spotify and LinkedIn.
• Razor Blades: product that requires the continuous purchase of a related consumable e.g printer and ink, or Keruig.
• Product to Service: businesses allow customers to obtain a result with out making purchase of the equipment that that delivers it e.g. Uber and zipcar.
• Leasing: buy product for periodic fee e.g U-Haul, Rent-a-Center.
• Crowdsourcing: tapping the collective opinions of multiple people using the internet and social media e.g YouTube, Wikipedia.
• One-for-One: this type of businesses donates some item to a charitable organization as a result of consumer purchases e.g Toms.
• Franchise: purchase blueprint and reproduced, Franchisee pays part of profits e.g UPS Store, Subway.
• Distributor: transfer and sells goods e.g Hershey's.
• Manufacturer: converts raw materials into a product e.g Hewlett- Packard and Dell computers.
• Retail Model: businesses purchase goods from distributors and sell them to customers e.g Best Buy and Nordstrom.

Design Thinking

• This is taking on design challenges by applying empathy.

Design Thinking Process

• Empathize
• Define
• Ideate
• Prototype
• Test

Blue Ocean Strategy

This is the pursuit of differentiation and low cost to open a new market and its foundations include:

• Value Innovation: Is is created in the region where a company's actions. Buyers value is lifted by raising and creating elements.
• Red Oceans: Represent all the industries in existence today.
• Blue Oceans: Represent all of the industries not in existence today.