Marketing Definitions and Concepts

Marketing Definition

• Marketing, according to the American Marketing Association (AMA) in 1935, directs the flow of goods/services from producers to consumers.
• The AMA defined marketing in 1985 as planning and executing the conception, pricing, promotion, and distribution of offerings to create exchanges satisfying both individual and organizational goals.
• In 2004, the AMA stated marketing is an organizational function and a set of processes that deliver value to customers and benefit the organization/stakeholders
• Marketing involves creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large (AMA 2007, 2017)

Marketing Definitions

• Marketing is a set of institutions and processes for creating, communicating, delivering, and exchanging offerings with value.
• Dr. Philip Kotler defines marketing as the science and art of exploring, creating, and delivering value to satisfy needs/desires of a target market at a profit.
• Marketing also quantifies the identified market size and profit potential and pinpoints which segments a company can serve, while designing/promoting suitable products/services.

Important Terms and Definitions

• Marketing research links the consumer, customer, and public to the marketer through information used to; identify/define opportunities and problems, generate/refine/evaluate actions, monitor performance, and improve understanding.
• The research specifies the information required, designing the method to collect it, managing the data process, analyzing the results, and communicating the findings.
• A brand is a name, term, design, symbol, or feature that distinguishes a seller's goods/services
• A brand is a known source's offering.

Core Marketing Concepts

• Needs are basic human requirements like food, air, water, clothing, and shelter.
• Wants are specific satisfiers for needs; demands are wants for specific products given an ability to pay.
• A product is a bundle of benefits, with consumers buy only if there is perceived benefit
• Companies address needs through a value proposition, which is a set of benefits offered to satisfy customer needs.
• The intangible value proposition is made physical by an offering, potentially combining products, services, information, and experiences.
• Value is the sum of perceived tangible/intangible benefits and costs to customers.
• The "customer value triad" is a combination of quality, service, and price, value increases with quality/service but decreases with price
• Value is central to marketing which identifies, creates, communicates, delivers, and monitors customer value.
• Satisfaction reflects a person's judgments of a product's perceived performance versus expectations.

What is Marketed?

• Physical goods are the bulk of most countries' marketing effort.
• As economies advance, services focus on the production of services.
• Events are promoted via time-based events like trade shows, artistic performances, as well as company anniversaries.
• Experiences are created when orchestrating several services and goods.
• Persons: Celebrity marketing is a major business, which involves artists, musicians, CEOs, physicians, and financiers.
• Places such as cities, states, regions, and nations are marketed to attract tourists, factories, new residents, and company headquarters.
• Properties are intangible rights of ownership of either real or financial.
• Organizations actively build a strong, favorable, and unique image for their target public
• Information; books, schools, and universities are marketed and distributed to parents, students, and communities.
• Every market offering includes a basic idea, with services and products being platforms for delivering some idea or benefit

Marketing Environment

• Marketing environment includes internal and external areas.
• The external environment is concerned with everything outside the company and the internal environment consists of internal marketing factors.
• While the external environment receives more attention, both are important.
• Two basic approaches regarding an environmental force include: proactive and reactive managers.
• Uncontrollable factors are handled by reactive managers who adjust plans to fit environmental changes.
• Proactive managers try to change the organization's environment due to the belief that most environmental factors are influenced otherwise controlled.

4 Ps of Marketing

• A product is a bundle of attributes (features, functions, benefits, and uses) that are exchanged usually in intangible and tangible forms
• A product can be an idea, an entity (good), or a service which exists to satisfy individual and organizational goals.
• The term "product" includes both goods and services.
• Price indicates the quantity of money, goods, or services needed to acquire a given quantity of goods or services.
• Price is the amount a customer has to pay to acquire a product.
• Distribution is the act of marketing and carrying products to consumers which also describes the extent of coverage in a given market.
• In the 4 Ps, distribution is represented by place or placement.
• The Association of National Advertisers (ANA) defines promotion marketing as tactics that encourage short-term purchase to influence trial and purchase quantity.
• Examples of marketing promotion include; coupons, sweepstakes, rebates, cause-related marketing, premiums, and special packaging.

7 Ps of Marketing

• People are reliant on people to perform them, and deal directly with the consumer.
• A waiter's demeanor constitutes as a waiter experience for consumers.
• Since services are carried out with consumer presence, the service process is part of what consumers pay for.
• Consumers seeking a fast process prefer fast food, while other consumers seeking an evening out prefer a slower process.
• Evidence: All services contain physical elements, including an insurance company and hairdressing salon.

Holistic Marketing Management.

• This concept bases on development, implementation, design, and marketing programs, processes, and activities that recognize breadths and interdependencies.
• It recognizes everything in marketing matters and an integrated perspective becomes necessary.
• This aims to build long-term relationships in order to earn and hold on to business.
• Ensuring that everyone in the organization understands marketing principles, especially senior management.
• The task of internal marketing makes sure the proper employees are hired, trained, and remain motivated to serve their customers.
• Occurs when the marketer devises activities/programs to create, communicate and deliver consumer value.
• Integrated marketing also states many different marketing activities can formulate, communicate, and deliver value.
• Integrated marketing helps design and implement each activity with all other activity in mind.

Holistic Marketing Orientation and Customer Value

• The framework is designed to address three key management questions.
• How can a company identify new value opportunities? (Value exploration)
• How can a company create new value offerings? (Value creation)
• How can companies use their capabilities to deliver new value efficiently? (Value delivery)

The value chain in creating more customer value includes:

• Activities performed to design, produce, market, deliver, and support a product.
• The value chain identifies nine strategically relevant activities, 5 primary and 4 support, that create value and cost.
• The primary activities are: inbound logistics; operations/converting them into the final; outbound products; marketing; and servicing them.
• The support activities are; procurement, technology, human resources, as well as the firm's infrastructure.
• Examine costs and performance in each value-creating activity to improve it.
• Compare costs/performances to competitors as benchmarks and study the best in each class.

Steps in 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

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

Target Marketing

• It consists of a set of buyer sharing common needs or characteristics.
• Segment size and growth
• Segment structure attractiveness:
  • Level of competition
  • Substitute products
  • Power of buyers
  • Powerful suppliers
• Company objectives and resources

Segmenting Consumer Markets

• Geographical segmentation
• Demographic segmentation
• Most popular segmentation (age, sex, education)
• Psychographic segmentation
• Lifestyle, social class, personality-based segmentation
• Behavioral segmentation

Selecting Target Market Segments

• A company can utilize the following methods in targeting consumer markets
• Undifferentiated (mass) marketing
• Differentiated (segmented) marketing
• Concentrated (niche) marketing
• Micromarketing (local or individual)

Choosing a Target Marketing Strategy

• Considerations include: Company resources, product variability, a product's lifecycle stage, market variability, as well as competitors' marketing strategies
• Socially Responsible Targeting; some segments, including children, are at risk, potential abuses, controversies.

Positioning

• Selecting Target Market Segments
• Position maps plot positions where commonly used brands are used.

Choosing a Positioning Strategy

• Identifying possible competitive advantages: competitive advantages involve products, services, channels, people, images
• Choosing the right competitive advantage: How many differences to promote is inclusive with selling propositions as well as respective benefits.

Included to promote, these criteria include:

• Important, distinctive, superior, communicable, preemptive, affordable, and the idea of becoming profitable.
• The full position of a brand is represented in value propositions.
• Possible value propositions often are related to; More for more, more for the same, more for less, as well as some that are cheaper and cause to lessen much less cost.
• Positions must be monitored over time with communication.

Brand Value Chain

• Companies are provided a snapshot of the brand's marketing program investments and initiatives, and provides a structured way to understand how value is created.
• More appropriately, areas needing improvement target where those lie.
• The brand value chain is built on four simple principles:

1. A brand's value resides with customers
2. Brand value creation starts with a company's marketing
3. Multipliers exist between stages of the model
4. Actions by different stakeholders can affect the organization's brand equity.

Business model explanation

• A business model is the outline of how a company plans to make money with the customer base in a specific market.
• It's core explains four things:
• The product and services.
• The market that's in use of those products and services.
• What are the expenses that are presented in the business plan.
• How it expects to turn a profit

Essential components of a business model:

• What makes the product unique and attractive to consumers.
• A group of consumers whom are very interested in the product.
• The product/service that can not easily be copied by competitors.
• Fixed/variable that your business requires to properly affect pricing.
• How a company measures success.
• assets of your company: physical, financial, and intellectual.
• Customer pain points.
• Sources of income a company may choose.

Most Common Types of Business Models

• Subscription: A set cadence which is used to obtain and maintain a subscriber as a customer using a brick and mortar/Online base model.

• Bundling: Selling two or more items in a discounted set.

• Freemium: Provide a proprietary software tool that's available using a freeware version.

Most Common Types of Business Models (cont.)

• Razor blades model - A business model that involves selling a cheaper product that involves more expensive replacement in the future.
• Leasing model - To have a 3rd party buy the product and allow the comapny to use it.
• Product to service- Business follows customers to obtain a specific piece and weld it back together with another company to save money.

Most Common Types of Business Models (cont.)

• Crowdsourcing model - Tap into different talent without directly hiring in house employees.
• One-for-one model - For every single product purhcased a separate one is used in donaiton.
• Franchise model - A business model most people are familiar in there daily bases.
• Distribution model - Take manufactured goods to market.

Most Common Types of Business Models (cont.)

• Manufacturer model - Relates to when a manufacturer converts raw goods to create different products.
• Retailer model - Chain businesses purchases different sources to sell products.
• Key points before committing:
• How is the product doing vs the customers.
• Will it generate revenue.

Most Common Types of Business Models (cont.)

• Find out who the target demographic of your business is.
• Discover all the startup costs.
• See if there is a need for variable and fixed expenses
• If there is a need for support from investors.
  • What Is Design Thinking
• A problem solving approach to handle systems level.
• Culture that fosters exploration.
• An alternative management buzzword to a strategic tool.

Design Thinking

• Help identify challenges
• Integrate user needs
• Magical balanace between design structures

Design Thinking: Process

• Includes the elements; empathy, define, ideate, prototype, test

Linking Design Thinking Solutions

• Business challenges can be solved using design thinking:
  • Use Storytelling to encourage Growth
• Use Foresight to ensure Predictability
• Use Sensing for Change
• Value Redefinition for Relevance
• Experience design for Extreme Competition
• Humanization for Standardization
• Prototyping Creative Culture
• Business Model Design for Strategy and Organization

Value Innovation

• Value Innovation can greatly impact how a buyers values are lifted due to the introduction of elements where the industry has never been offered.
• Cost savings are made by reducing what a industry competes on

Blue Ocean Strategy

• The Blue Ocean Strategy can lead to new market openining using low costs tactics.
• This will help remove competiton creating uncontested market space.

Terms for differentiation

• Red oceans- A saturated market
• Blue oceans- Unknown markets

Why do we call them red oceans and blue oceans?

• Red Oceans is a cut throat environment which is highly competitive with slow growth.
• Blue oceans- Unexplained and untained that cause huge growth.
• Red Ocean has increased competitveness, which causes greater losses to occur.

Key details of blue ocean strategy

• Blue ocean strategy creates new demand. Companies develop uncontested market space rather than fight over a shrinking profit pool.
• Competitiveness in red oceans. A market-competing strategy divides existing wealth between rival companies

Blue Ocean Strategy vs Red Ocean Strategy

• Red Ocean: New Market, Beat Competitor, Existing Demand, Make Value Cost Tradeoff
• Blue Ocean: Overcome Competiton, Overcome Demand, Make and break value Source: Harvard Business Review Press

Six Principles of Blue Ocean Strategy

• Formulation Principle -Reach beyond existing demand -Reconstruct market balance -Focus for the numbers to keep it together -To get straight forward for the process
• Execution Principles
• -Overcome organizational hurdles -Build execution into strategy -Blue Ocean Strategy Tools : Strategy Canvas

The importance of strategy canvas

• Provides a graphic depiction of a company’s relative performance across its industry factors of competition.
• A diagnostic and an action framework for building a compelling blue ocean strategy.

Four Actions Framework

• The four actions framework is a useful tactic that breaks the trend of low cost creation to create new value.
• Questions such as how can we remove what is already granted, below industry standards, raise these levels, and what should the industry offer.

Strategic Management

• Strategic management answers the question; "What is your business going to do" -How is this all getting there
  • How is one knowing when they get there
• A strategy is the direct resource used long term to achieve organizational goals with sustainable competitive advantage.

More details with strategy plans

• Vision statements describe what do we need to accomplish
• A mission statement that describes what the business means from its customers.

Other points to look for within a strategic business:

• Strategic Management Basic Concepts Objectives
• what needs to be accomplished
• by when
• quantification

Strategic concepts

• Policies are a broad guideline for decision to be made that correlates with strategy through implementation. Key Strategic Questions by Peter Drucker -What is the plan for the business -Who are the target customers -Describe customer value -Describe results of the plan

Innovation description

-New idea, practice or object implemented by various types of adaption. -Using new knowledge to add innovation Value from Invention + Commercialization -For discovery of commercialization for new improvements

Innovation details to users

• What is viable for the marketplace
• The cost of each value/item.
• Possible to maintain
• This can be classified with what innovation can truly do

Innovation classifications

• Innovates a tool using process to allow it into the martketplace
• Results based in commercialization
• Inducation is important
• Spread to different organizations
• If needed to happen pre or after innovation

The implementation of what is to come consists of:

• Building and creating what you can
• Taking all your resources for existing projects
• What to and not to do
• When things are delegated from and to whom
• Taking rewards and working in an organized order/area

Innovation

• Disruptive innovation reinvents a technology, business. -Sustaining innovation seeks to improve an existing product -Product is what will capture new technologies.

Types of Innovation

• Product & Process
• Open & Closed
• Incremental & Radical
• Modular & Architectural

Types of Innovation (cont.)

• Product innovation refers to a change in the product.
• Process innovation involves improvement

Explanation of external effects

• Open Innovation- raising the tech being used is by stakeholders.
  • Closed innovation- is just to be improved within the organization not sharing.

Radical Innovation

• Focuses to create Long-term impact.
• Architectural or incremental creation for new features and innovation.

Structural conditions for a new plan

• A carefull study unit is what needs the right product Most common when new product development is used Analytical is important for cost effects Information effects are what will be critical