Marketing 1030 - Textbook - Marketing Principles

Marketing 1030 **[1.1 Define Marketing ]** **Marketing: "**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." 1. 2. 3. 4. Traditional way of viewing the co...

Marketing 1030 **[1.1 Define Marketing ]** **Marketing: "**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." 1. 2. 3. 4. Traditional way of viewing the components of marketing (emerged in early 1950s), based on 4 Ps 1. 2. 3. 4. The four Ps are called the **marketing mix,** a mix of the four components. Product, price, place, and promotion are nouns that fail to capture all the activities of marketing. **Value:** benefits buyers receive that meet their needs, what the customer gets by purchasing and consuming a company's offering. Although the offering is created by company, the value is determined by the customer. - - **Marketing Concept:** philosophy underlying all that marketers do, requires that marketers seek to satisfy customer wants and needs. Firms operating with that philosophy are said to be **market oriented.** However, that is no excuse to fail to make profit. 1800s ( Industrial Revolution) - 1920s: companies were **production oriented**, the best way to compete was by reducing production costs. 1920s - post WWII: companies tended to be **selling oriented**, meaning they believed it was necessary to push their products by heavily emphasising advertising and selling. Because of the Great Depression, production orientation was still relevant. Post-WWII environment: demand for goods increased as the economy soared. Some products were now plentiful to the point of surplus, so in order to remain competitive, companies focused on product innovation, known as **product orientation**. And with many choices available for customers, companies had to find new ways to compete and developed the marketing concept. This resulted in the **marketing era** from about 1950 to 1990. Present: There are differing opinion on today's era, below are three: - - - **Company's offering:** Marketing creates those goods and services that the company offers at a price to its customers or clients. That entire bundle, consisting of the tangible good, the intangible service, and the price, is the company\'s **offering.** Marketing does not create an offering alone, but it is marketing's responsibility to ensure that the new product delivers value. **Communicating:** describing the offering and its value to your potential and current customers, as well as learning from customers what it is they want and like. **Delivering:** getting the product to the consumer and making sure that the user gets the most out of the product and service. - - - **Exchange:** the actual transaction **[1.2 Who Does Marketing? ]** For-profit companies use marketing to promote and sell products/services. - - - - - Nonprofits use marketing to achieve their missions rather than direct profits. - - Individuals market themselves through résumés, LinkedIn profiles, and interviews. - **[1.3 Why Study Marketing? ]** - - - - **[1.4 Themes and Organization of This Book]** Marketing is a functional area in companies, like operations or accounting, and often involves other departments. For example, pricing an offering requires input from finance and accounting, while marketing strategies flow from a company's overall strategy. A **marketing plan** is a document that is designed to communicate the marketing strategy for an offering. The purpose of the plan is to influence executives, suppliers, distributors, and other important stakeholders of the firm so they will invest money, time, and effort to ensure the plan is a success. The marketing plan is the strategy for implementing the components of marketing: creating, communicating, delivering, and exchanging value. Once a company has decided what business it is in and expressed that in a mission statement, the firm then develops a corporate strategy. Marketing strategists subsequently use the corporate strategy and mission and combine that with an understanding of the market to develop the company's marketing plan. 1. 2. 3. 4. 5. The view of marketing has shifted from a static set of four Ps to dynamic processes influenced by: - - - - - **[2.1 The Value Proposition ]** A **value proposition** is a concise statement summarizing the key benefits a product, service, or individual offers to a target audience. It answers the question: - - - **[2.2 Components of the Strategic Planning Process]** **Strategic planning** is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Typically, it is a long-term process. -  As part of the strategic planning process, a **situation analysis** must be conducted before a company can decide on specific actions. It is an assessment of an organization's internal and external environments. Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats. This is a SWOT analysis. When an organization evaluates which factors are its strengths and weaknesses, it is assessing its **internal** environment. - Analyzing the **external** environment involves tracking conditions in the macro and micro marketplace that, although largely uncontrollable, affect the way an organization does business. - All organizations must consider their **competition**, whether it is direct or indirect competition vying for the consumer's dollar.  When a firm conducts a **competitive analysis**, it tends to focus on direct competitors and tries to determine a firm's strengths and weaknesses, its image, and its resources - - - In addition to their direct competitors (competitive rivals), organizations must consider the strength and impact the following could have: - - - - All organizations must comply with **government regulations** and understand the political and legal environments in which they do business. The **economic environment** has a major impact on spending by both consumers and businesses, which, in turn, affects the goals and strategies of organizations. - The **demographic and social and cultural environments**---including social trends and demographic characteristics, such as people's age, income, marital status, education, and occupation; and culture, which relates to people's beliefs and values---are constantly changing in the global marketplace. The **technology** available in the world is changing the way people communicate and the way firms do business. - **Natural resources** are scarce commodities. - - A firm's **mission statement** states the purpose of the organization and why it exists. **[2.3 Developing Organizational Objectives and Formulating Strategies]** **Objectives**: what organizations want to accomplish---the end results they want to achieve---in a given time frame. - - **Strategies:** Means to the ends, the game plan, or what a firm is going to do to achieve its objectives - **Tactics**: include specific actions, such as coupons, television commercials, banner ads, buy one--get one free, and so on, taken to execute the strategy. **Marketing plan**: strategic plan at the functional level that provides a firm's marketing group with direction. - - **Product and market entry Strategies (Ansoff Matrix)** **Market penetration strategies** - - **Product development strategies** - - **Market development strategies:** - - - - - - -  **Diversification strategies** - - **[2.4 Where Strategic Planning Occurs within Firms]** **Corporate-level plans**: Plans developed for the corporation as a whole take place at the corporate level. **Business-level plans:** Plans developed for each strategic business unit (SBU) typically have their own mission statement. **Functional-level plans:** Different departments, or functions (accounting, finance, marketing) within a company or SBU, might also develop strategic plans **[2.5 Strategic Portfolio Planning Approaches]** **Portfolio**: Group of business units owned by a single firm. **Portfolio planning approach:** involves analyzing a firm's entire collection of businesses relative to one another - - - - - - - - - - - - - - - - - - - - - **[16.1 Marketing Planning Roles]** The Chief Marketing Officer (CMO) of a business unit is likely to be responsible for the final creation and approval of its marketing plan. However, a team of marketing specialists is involved in creating a marketing plan, sometimes multiple teams are involved. - **[16.2 Functions of a Marketing Plan]** The marketing plan you create will be written primarily for executives, who will use the forecasts in your plan to make budgeting decisions. These people will make budgeting decisions not only for your marketing activities but also for the firm's manufacturing, ordering, and production departments, and other functions based on your plan. Your firm's sales force will use the marketing plan to determine its sales strategies and how many salespeople are needed. The entire marketing staff will rely on the plan to determine the direction and nature of their activities. The advertising agency you hire to create your promotional campaigns will use the plan to guide its creative team. **Outline:** I. II. a. III. b. c. d. e. f. IV. g. h. i. j. k. l. V. m. n. o. p. VI. **[16.3 Forecasting]** An important component in developing the marketing plan is the sales forecast, which is the estimate of how much the company will actually sell 1. 2. Forecasting methods: - - - - - - - - - - - - - - - Building better forecasts: - - - - - **[16.4 Ongoing Marketing Planning and Evaluation]** **Causality:** relationship between two variables whereby one variable is a direct consequence of the other - **Control:** the degree to which you can separate the effects of a variable on a consequence - - **Marketing audit:** examination or snapshot of the state of a company's marketing strategies as they are actually implemented - **[Lecture Notes 1: ]** - - - - - **[5.1 Targeted Marketing Versus Mass Marketing]** **Targeted marketing (differentiated):** you differentiate some aspect of your marketing (the product, promotion, price, or place), based on different groups of customers. **Mass marketing (undifferentiated)**: came before targeted marketing, a marketing strategy in which a firm decides to ignore market segment differences and appeal to the whole market with one offer or one strategy. **Benefits of Segmenting and Targeting Markets** - - - - - - **Segmenting and Targeting a Firm's Current Customers** - - - - - - - - **[5.2 How Markets Are Segmented]** A firm will often use multiple **segmentation bases**, or criteria, to classify buyers to get a fuller picture and create real value for them. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Segmentation in B2B Markets - - - - **[5.3 Selecting Target Markets and Target-Market Strategies]** After you segment buyers and develop a measure of consumer insight about them, you can begin to see those that have more potential. That way you can focus your efforts, and your marketing budget, on people who have money to spend and want what you offer. An attractive market has the following characteristics: - - - - - - **Multisegment marketing:** strategy that can allow firms to respond to demographic changes and other trends in markets **Concentrated marketing:** Targeting a very select group of customers. involves targeting a very select group of customers. Concentrated marketing can be a risky strategy because companies really do have all their eggs in one basket - **Microtargeting (narrowcasting):** Involves gathering all kinds of data available on people---everything from their tax and phone records to the catalogs they receive and using that information to create highly personalized communications  **[5.4 Positioning and Repositioning Offerings]** **Positioning:** How consumers perceive a product relative to the competition **Repositioning:** An effort to "move" a product to a different place in the market and a different place in the minds of consumers **Perceptual Map:** A two-dimensional graph that visually shows where your product stands, or should stand, relative to your competitors, based on criteria important to buyers. The criteria can involve any number of characteristics---price, quality, level of customer service associated with the product. **Tagline:** Catchphrase designed to sum up the essence of a product. **[Lecture 2 Notes]** What is a marketing plan? - - - - Why is targeting important? - - - **[3 Consumer Behavior: How People Make Buying Decisions]** **Consumer behaviour:** considers the many reasons---personal, situational, psychological, and social---why people shop for products, buy and use them, sometimes become loyal customers, and then dispose of them. **Search advertising:** advertising that appears on web pages pulled up when online searches are conducted. **[3.1 Factors that Influence Consumers' Buying Behaviour]** **Situational factors:** - - - - - - - **Personal factors:** - - - - - - **Psychological factors:** - - - - - - - - - **Societal Factors** - - - - - - - - **[3.2 Low-Involvement Versus High-Involvement Buying Decisions, and the Customer's Decision-Making Process]** **Routine Response Behaviour:** When consumers make automatic purchase decisions based on limited information or information they have gathered in the past. **Impulse buying:** purchases made with no planning or previous thought **Low-involvement decisions:** Products that carry a low risk of failure or have a low price tag for a specific individual or group making the decision. **High-involvement decision:** Products that carry a high price tag or high level of risk to the individual or group making the decision. **Extended problem solving:** Purchasing decisions in which a consumer gathers a significant amount of information before making a decision. **Limited problem solving:** Purchasing decisions made based on consideration of some outside information. **Stages in the buying process:** 1. 2. 3. - 4. 5. - 6. - **[4.1 The Characteristics of Business-to-Business (B2B) Markets]** B2B market differ from B2C markets: **Derived demand:** Demand that springs from, or is derived from, a secondary source other than the primary buyer of the product. - **Fluctuating demand:** Demand that fluctuates sharply in response to a change in consumer demand. **[4.2 Types of B2B Buyers]** - - - - - **[4.3 Buying Centers]** Buying centers: groups of people within organizations who make purchasing decisions - - - - - - - - **Initiators:** people within an organization who first see the need for a product **Users:** people and groups within the organization who actually use the product. **Gatekeepers:** people who decide if and when a salesperson gets access to members of the buying center. **Deciders:** person who makes the final purchasing decision **[4.4 Stages in the B2B Buying Process and B2B Buying Situations]** 1. 2. 3. 4. - 5. - 6\) An order routine is established 7\) A postpurchase evaluation is conducted and the feedback provided to the vendor. **Types of B2B Buying Situations:** - - - **[4.5 B2B E-Commerce and Social Media Marketing]** **E-Commerce:** Transactions conducted electronically rather than face-to-face. Types of B2B websites: - - - - - **Content marketing:** strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience---and, ultimately, to drive profitable customer action **[4.6 International B2B Markets and Ethics in B2B Markets]** Firms in the same industry tend to cluster in the same geographic areas around the world because the resources these firms need---both human and natural---are located in some areas and not others. Another reason is that sellers want to be close to their buyers. B2B businesses have to follow enforced laws and regulations. Most major companies have ethics codes that provide general guidelines about how their employees should behave and require them to go through ethics training so they know what to do when they face tricky ethical dilemmas. - **[Tutorial 3 Notes]** **Ethnography:** qualitative research method used to study people and culture in the natural environment. It involved observing, interacting, and sometimes participating in the daily lives of the subjects to understand their behaviors, beliefs, and social interactions - - **[10.1 Marketing Information Systems and the Rise of Big Data]** **Touchpoint:** Any type of contact a company has with its customers. **Customer Relationship Management (CRM) system:** system for managing all of your company\'s interactions with current and potential customers. **Customer Data Platform (CDP):** populated with information gathered both internally and external to create a "profile" of an individual customer. Companies prefer CDP over CRM nowadays. **Big data:** The massive amounts of data being gathered by the internet and computer systems today. **Data management platform (DMP**): used to target groups of consumers automatically with online advertisements Ideally, a marketing information system should include not only transactional data, data about individual customers, and big data, it should include the following: - - - - **Clickstream data**: Data generated about the number of people who visit a website and its various pages, how much time they spend on each, what they "like" and don't like, and what they buy or don't buy. **Analytics software:** Software that utilizes a firm's data, regression models, linear programming, and other statistical methods to help managers who are not computer experts make decisions. **Predictive analytics:** Advanced branch of analytics that utilizes sophisticated techniques such as data mining, statistics, experiments, and machine learning, to detect patterns and develop models used to predict future outcomes. **Artificial intelligence:** The ability of machines and computers to do things commonly associated with intelligent beings, such as the ability to reason, discover meaning, generalize, or learn from past experience. **Sentiment analysis**: A method of examining content in blogs, tweets, and other online media such as Facebook posts to determine what people are thinking at any given time. Other ways to collect market research: - - - - - **Agile marketing:** Using data and analytics to continuously identify promising opportunities or solutions and conduct tests quickly **[10.2 Steps in the Marketing Research Process]** - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1. 2. 3. - 4. - 5. - 6. - **[6.1 What Compromises an Offering? ]** Most offerings consist of: 1. - - 2. - 3. **Customer experience (CX):** Every touchpoint a customer has with a brand or company, including promotions, visiting a website, ordering or scheduling offerings, and receiving products and services. **RATER Model:** model used to focus marketers' attention on key dimensions of services. - - - - - **Product-dominant:** an approach to products and offerings that clearly separates the physical product from services and from price. **Product-oriented:** an approach to business that centers on capturing business by focusing on creating and manufacturing better products at lower prices. **Service-dominated**: An approach to offerings that integrates the physical product, attendant services, and price into the total offering. **Core product:** The physical component of an offering. **Augmented product:** Services and accessories that improve the core product's ability to deliver benefits. **Sharing economy:** The use of information technology to allow owners of assets to increase utilization of those assets, whether for money or exchange of other goods or services (barter). **Technology platform**: The core, or basic, technology on which a product is built. **Product line:** A group of offerings that serve similar needs and are sold under the same name. - - - **Product mix:** The entire assortment of products that a firm offers.  **[6.2 Types of Consumer Offerings]** Consumer offerings fall into four general categories: 1. - - 2. - 3. - 4. - **[6.3 Types of Business-to-Business (B2B) Offerings]** **Capital equipment:** Tangible equipment business purchases that are depreciated. **Raw materials offerings:** Raw material products are materials firms offer other firms so they can make a product or provide a service. These offerings are processed only to the point required for economic handling and distribution. - **Original equipment manufacturer (OEM):** A company that assembles and manufactures a product into its final form. - **Maintenance, repair, and operations (MRO):** Offerings used to maintain, repair, and operate the physical assets of an organization. **Facilitating offerings:** Offerings that support an organization's ability to do business but do not go into the final product. **[6.5 Branding, Labeling, and Packaging]** **Branding:** set of activities designed to create a **brand** (a name, picture, design, or symbol, or combination of those items) and position it in the minds of consumers. - - - - - **Cannibalization:** The process of utilizing an existing brand name or brand mark for a new product category. Types of packaging: - - - - - - - **[6.5 Who Manages the Offering]** **Brand manager:** A person responsible for all business decisions regarding offerings within one brand. A brand manager is often charged with running his or her brand as if it is its own separate business. **Product manager:** Someone with business responsibility for a particular product or product line. Like brand managers, product managers must make decisions, such as which offerings to include, advertising selection, and others. **Category manager:** Someone responsible for managing a broad group of products that may belong to multiple manufacturers. **Market manager:** Someone responsible for managing efforts within a particular market, such as a geographic market or another grouping of customers into a market (e.g., a single industry or size). **Vertical market:** B2B customers that compose a particular industry, such as the healthcare industry. - **[Lecture Note 5: ]** A brand isn't just a noun, it's also an adjective because it describes a product that has power. Setting price: - - - 2 Pricing strategies - - **[Tutorial Note 5]** Brand architecture: strategic structure that defines how a company\'s brands, sub-brands, products, and services are organized and related to each other. It's like a family tree that shows the relationships between the parent brand and its sub-brands or products - - - - - - Branded House: A single, strong parent (like Google) brand that connects all its products (Gmail, Google maps, Google forms) - - - House of Brands: independent sub-brands )like Jordan Brand, Converse) that operate separately - - - Helps companies organize their brand portfolio, target different markets, and maximize brand equity while managing risks.