Marketing Fundamentals Notes PDF

MARKETING FUNDAMENTALS Chapter 1 Marketing: process that includes the set of strategies and activities by which companies acquire and engage customers, build strong customer relationships, and create superior customer value in order to capture value from customers in return Marketing Model: 1) S...

MARKETING FUNDAMENTALS Chapter 1 Marketing: process that includes the set of strategies and activities by which companies acquire and engage customers, build strong customer relationships, and create superior customer value in order to capture value from customers in return Marketing Model: 1) Segmentation 2) Targeting 3) Positioning 4) Competitive advantage Creating and capturing customer value: 1) Understand the marketplace and customer needs and wants 2) Design a customer value-driven marketing strategy 3) Construct an integrated marketing program that delivers superior value 4) Engage customers, build profitable relationships, and create customer delight 5) Capture value from customers to create profits and customer equity Needs: states of felt deprivation, from physical needs (e.g. food, clothing) to personal ones (e.g. knowledge, self-expression) Wants: the form human needs take as they are shaped by culture and individual personality Demands: human wants that are backed by buying power Market offerings: combination of products, services, information, or experiences offered to a market to satisfy a need or want Marketing myopia: focusing only on existing wants and losing sight of underlying customer needs Customers form expectations about the value and satisfaction of market offerings: - Satisfied customers buy again - Dissatisfied customers switch to competitors Exchange: act of obtaining a desired object from someone by offering something in return Marketing actions try to create, maintain, and grow desirable exchange relationships Market: set of actual potential buyers Consumers market when they: - Search for products - Interact with companies to obtain information - Make purchases Modern Marketing system: Marketing management: art and science of choosing target markets and building profitable relationships with them 1) What customers can we serve? (target market) 2) How can we best serve these customers? (value proposition) Brand’s value proposition: set of benefits or values it promises to deliver to customers to satisfy their needs Designing a customer value-driven marketing strategy: 1) Production concept 2) Product concept 3) Selling concept 4) Marketing concept 5) Societal marketing concept The selling and marketing concepts: Societal marketing: company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests Marketing mix 4 Ps: - Price - Product - Promotion - Place Integrated marketing program: comprehensive plan that communicates and delivers intended value Customer relationship management: the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Customers form expectations about the value and satisfaction that various market offerings will provide them, set the correct level of expectations:  - Expectations that are too low will not attract enough buyers - Expectations that are too high will disappoint buyers Customer-perceived value: the difference between total customer perceived benefits and customer cost Customer satisfaction: the extent to which perceived performance matches a buyer’s expectations Customer-engagement marketing: fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community Consumer-generated marketing: brand exchanges created by consumers themselves - consumers are playing an increasing role in shaping brand experiences UGC: User generated content Partner relationship management (PRM): involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers Customer lifetime value: the value of the entire stream of purchases that the customer would make over a lifetime of patronage Share of customer: the portion of the customer’s purchasing that a company gets in its product categories Customer equity: total combined customer lifetime values of all of the company’s customers Customer relationship groups: Major trend and forces that are changing the marketing landscape: 1) Digital age 2) Changing economic environment 3) Growth of not-for-profit marketing 4) Rapid globalisation 5) Sustainable marketing Digital and social media marketing: using digital marketing tools such as websites, social media, mobile ads and apps, online videos, e-mail, and blogs that engage customers anywhere, at any time, via their digital devices Internet of Things (IoT): where everything is connected to everything else Social media: provide exciting opportunities to extend customer engagement and get people talking about a brand Mobile marketing: using mobile channels to stimulate immediate buying, make shopping easier, and enrich the brand experience Big data and AI: brands can use big data to gain deep customer insights, personalise marketing offers, and improve customer engagements and service Not-for-profit marketing growth: marketing has also become a fundamental part of the strategies of many non-profit organisations: public universities, hospitals, museums, etc - non-profit companies face great competition to receive support and gain support, a successful marketing can help them attract followers, funds, and support Rapid globalisation: - Managers around the world are taking both local and global views of the company from: industry, competitors, and opportunities - Companies are trying to sell larger volumes of their locally produced goods to international markets; they also buy more items and components abroad and develop new products for specific markets around the world Sustainable marketing: - Involves increased environmental and social responsibility - Corporate ethics and social responsibility have become important issues in almost any business - Today’s consumers expect businesses to deliver value in a socially and environmentally responsible way Chapter 2 Strategic planning: process of developing and maintaining a strategic fit between the organisation’s goals and capabilities, and its changing marketing opportunities Company-Wide Strategic Planning: 1) Defining company mission 2) Setting company objectives and goals 3) Designing the business portfolio 4) Planning marketing and other functional strategies Mission statement: the organisation’s purpose; what it wants to accomplish in the larger environment Product-oriented Definition (starbucks example): We sell coffee and snacks Market-oriented definition (starbucks example): We sell “The Starbucks Experience”, one that enriches people’s lives in one moment, one human being, one extraordinary cup of coffee at a time Setting company objectives and goals: 1) Business objectives, e.g. increase sales, invest in research, improve profits 2) Marketing objectives, e.g. increase market share, create local partnerships, increase promotion Business portfolio: the collection of businesses and products that make up the company Portfolio analysis: major activity in strategic planning whereby management evaluates the products and businesses that make up the company Strategic business units (SBUs): a profit centre which focuses on product offering and market segment - they can be a company division, product line within a division, single product or brand Analysing the current business portfolio: 1) Identifying the SBUs 2) Assess the attractiveness of its various SBUs 3) Decide how much support each SBU deserves Boston Consulting Matrix (BCG): Problems with Matrix approaches: - Difficulty in defining SBUs and measuring market share and growth - Time consuming - Expensive - Focus on current businesses, not future planning  - May not apply well to markets facing structural changes or disruptions - Many companies dropped formal matrix-based methods in favour of customised approaches that suit specific situations - These approaches are more decentralised Relative market share: your market share VS the leader or VS the most important competitor The Product/Market Expansion Grid: Strategies for growth (example starbucks): To maintain its incredible growth, Starbucks has brewed up an ambitious, multipronged growth strategy - in little more than three decades, the chain has grown from a small Seattle coffee shop to an over $24 billion powerhouse Downsizing: when a company must prune, harvest, or divest businesses that are unprofitable or that no longer fit the strategy Value chain: a series of departments that carry out value creating activities to design, produce, market, deliver, and support a firm’s products Value delivery network: made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system Marketing strategy: the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships Market segmentation: the division of a market into distinct groups of buyers who have different needs, characteristics, or behaviours and who might require separate products or marketing mixes Market segment: a group of consumers who respond in a similar way to a given set of marketing efforts Market targeting: the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter ‘ Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products from competing brands and give them the greatest advantage in their target markets Differentiation: begins the positioning process Brand audit: thorough examination of a brand’s current position in the market compared to its competitors and a review of its effectiveness - helps you determine the strength of your brand together with its weaknesses or inconsistencies and opportunities for improvement and new developments Internal audit: - Brand positioning and evolution - Brand promise, or brand essence - Customer satisfaction and perceptions - product/service performance - Brand’s market share - Brand’s profit and loss - Brand’s sales per clients/region/channel External audit: - Market share and sales of competitors - Advertising expenditure and performance - Website performance - Social media performance - SEO (search engine optimization) - Sponsorships/civic-involvement/memberships performance - News/PR performance Marketing mix: set of controllable, tactical marketing tools (Product, Price, Place, and Promotion) that the firm blends to produce the response it wants in the target market Managing the Marketing Effort: Marketing Process: SWOT Analysis: - Strengths - internal capabilities that may help a company reach its objectives - Weaknesses- internal limitations that may interfere with a company’s ability to achieve its objectives - Opportunities - external factors that the company may be able to exploit to its advantage - Threats - current and emerging external factors that may challenge the company’s performance Why do we need Market Research: 1) Analysis is not enough - when the previous analysis does not give you sufficient information on the matter you are tackling, you might have to carry out extraordinary research on the matter 2) The analysis has given you a hypothesis you want to investigate before launch - A good understanding might lead you to investigate in depth a specific matter so that it can allow you to test before invest  3) The business model needs it - if your value offering depends on the collection of data - this will imply certain methods of recurring research to be market-ready Marketing plan: document that helps to reach the long term strategic goals by focusing in one year - in order to carry out the different marketing efforts companies depending on the size appoint different positions (e.g. product marketer, trade marketer, price responsible, communication leader) - more modern companies even develop positions such as CDO, CCO, CEL, CMO Modern marketing departments can be arranged in several ways: - Functional organisation - Geographic organisation - Product management organisation - Market or customer organisation Parts of a Marketing Plan: 1) Executive summary 2) Marketing situation 3) Threats and opportunities 4) Objectives and issues 5) Marketing strategy 6) Action programs 7) Budgets 8) Controls Market implementation: turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives (addresses who, when, where, and how) Marketing control: 1) Management - Sets specific marketing goals - Measures its performance in the marketplace - Evaluates the causes of any differences between expected and actual performance - Takes corrective action to close the gaps between goals and performance 2) Operating control 3) Strategic control Marketing ROI: Net return from a marketing investment divided by the costs of the marketing investments - measurement of the profits generated by investments in marketing activities Measuring and Managing Marketing ROI: Chapter 3 The marketing environment: includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers Microenvironment: the actors close to the company that affect its ability to serve its customers (e.g. the company, suppliers, marketing intermediaries, customer markets, competitors, and publics) Macroenvironment: the larger societal factors that affect the microenvironment (e.g. demographic, economic, natural, technological, political, and cultural forces) Microenvironment: 1) The company: in designing marketing plans, marketing management takes other company groups into account - Top management - Finance - R&D - IT - HH.RR. - Purchasing - Operations - Accounting 2) Suppliers: - Provide the resources to produce goods and services - Treated as partners to provide customer value 3) Marketing intermediaries: firms that help the company to promote, sell, and distribute its goods to final buyers - Resellers - Physical distribution firms - Marketing services agencies  - Financial intermediaries 4) Competitors: firms must gain a strategic advantage by positioning their offerings strongly against competitor’s offerings in the minds of consumers 5) Publics: any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its objectives - Financial publics - influences the company’s ability to obtain funds - Media publics - carries news, features, and editorial opinion - Government publics - management must take government developments into account - Citizen-action publics - a company’s marketing decisions may be questioned by consumer organisations, environmental groups, minority groups, and others - Local publics - includes neighbourhood residents and community organisations - General public - companies need to be concerned about the general public’s attitude toward its products and activities - Internal publics - includes workers, managers, volunteers, and the board of directors 6) Customers: - Consumer markets - Business markets - Reseller markets - Government markets - International markets Macroenvironment: 1) Demographic environment:  - Demography - study of human populations (e.g. size, density, location, age, gender, race, occupation) - Demographic environment - involves people, and people make up markets (i.e. segmenting people by lifestyle, life stage, income distribution) - Demographic trends - include changing age and family structures, geographic population shifts, educational characteristics, and population diversity 2) Economic environment: - Changes in consumer spending - Value marketing - offering financially cautious buyers greater value, the right combination of quality and service at a fair price 3) Natural environment: - The physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities - Trends in the natural environment: growing shortage of raw materials, increased pollution, increased government intervention, developing strategies that support environmental sustainability - Environmental sustainability - involves developing strategies and practices that create a world economy that the planet can support indefinitely 4) Technological environment: - Most dramatic force in the changing marketplace - New products and opportunities - Concern for the safety of new products 5) Political and social environment: - Legislation regulating business is intended to protect: companies from each other, consumers from unfair business practices, the interests of society against unrestrained business behaviour  - Increased emphasis on ethics - Socially responsible behaviour - Cause-related marketing - a mutually beneficial collaboration between a corporation and a non-profit that seeks to both increase profits and to better society in accordance with CSR 6) Cultural environment: - Consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviours - Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, churches, businesses and government - Secondary beliefs and values are more open to change and include people’s views of themselves, others, organisations, society, nature, and the universe Generational marketing: important in segmenting people by lifestyle or life stage instead of age Markets are becoming more diverse: - International - National - Ethnicity - Gay and lesbian - Disabled Working remotely: Apps like Slack let people working remotely collaborate anywhere and everywhere through the internet and mobile devices Responding to the marketing environment - Views on responding: - Uncontrollable - react and adapt to forces in the environment - Proactive - take aggressive actions to affect the forces in the environment - Reactive - watch and react to forces in the environment Responding to the marketing environment - PESTEL: 1) Political - government policy, political stability, corruption, foreign trade policy, tax policy, labour law, trade restrictions 2) Economic - economic growth, exchange rates, interest rates, inflation rates, disposable income, unemployment rates 3) Socio-cultural - population growth rate, age distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes, cultural barriers 4) Technological - technology incentives, level of innovation, automation, R&D activity, technological change, technological awareness 5) Ecological - weather, climate, environmental policies, climate change, pressures from NGOs 6) Legislation - discrimination laws, antitrust laws, employment las, consumer protection laws, copyright and patent laws, health and safety laws Chapter 5 Consumer buyer behaviour: the buying behaviour of final consumers/individuals and households that buy goods and services for personal consumption Consumer markets: made up of all the individuals and households that buy/acquire goods and services for personal consumption The Model of Buyer Behaviour: Relationship between the customer (buyer) and provider (seller) forms through a phenomenon called market exchange During the exchange process, each party assesses the relative trade-offs they must make to satisfy their respective needs and wants Black Box Theory: Focuses on the consumer as a thinker and problem solver who responds to a range of external and internal factors when deciding whether or not to buy - consumer purchasing behaviour is considered by many to be a mystery or ‘black box’ - when people themselves don’t fully understand what drives their choices, the exchange process can be unpredictable and difficult for marketers Factors influencing consumer behaviour: 1. Cultural - Culture - Subculture - Social class 2. Social - Groups and social networks - Family - Roles and status 3. Personal - Age and life-cycle stage - Occupation - Economic situation - Lifestyle - Personality and self-concept 4. Psychological - Motivation  - Perception - Learning - Beliefs and attitudes Chapter 6