Principles of Marketing PDF

Chapter 1: Marketing: 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 proces: Need: is the difference between a consumer's ac...

Chapter 1: Marketing: 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 proces: Need: is the difference between a consumer's actual state and desired state, states of felt deprivation. Types of needs: - Physical: food, clothing etc. - Social: belonging, affection - Individual: learning, knowledge, self-expression Benefit occurs when a product satisfies a need. Want: is a desire for a particular product to satisfy a need in specific ways that depends on an individual's history, learning experiences and cultural environment. Demand: Occurs when one couples desire with buying power to satisfy a want. Human wants that are backed by buying power. Exchange: The act of obtaining a desired object from someone by offering something in return. Marketing: Meeting needs Creating value Exchange and grow desirable exchange relationships Marketing myopia: paying more attention to the specific products than to the benefits and experiences produced Key to succes - Know your Environment Market offerings: Some combination of products, services, solutions, and experiences offered to a market to satisfy a need or want. Market: The set of all actual and potential buyers of a product or service. Production concept: The idea that consumers will favor products that are available and highly affordable; therefore, the organization should focus on improving production and distribution efficiency. Product concept: The idea that consumers will favor products that offer the most quality, performance, and features; therefore, the organization should devote its energy to making continuous product improvements. Selling concept: The idea that consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort. Marketing concept: Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Societal marketing concept: The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. Customer relationship management: The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer-perceived value: The customer’s evaluation of the difference between the benefits delivered by and the costs of obtaining and using a market offering, relative to those of competing offerings. Customer satisfaction: The sense of pleasure a buyer feels when a product’s perceived performance matches or exceeds their expectations. Customer-engagement marketing: Making the brand a meaningful part of customers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community. Partner relationship management: 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 a customer makes over a lifetime of patronage Share of customer: The portion of the customer’s spending in its product categories that a company captures. Customer equity: The total combined customer lifetime values of all of the company’s customers. Internet of Things (IoT): A global environment where everything and everyone is digitally connected to everything and everyone else. Digital and social media marketing: Using digital marketing tools such as websites, social media, mobile apps and ads, online video, email, and blogs to engage consumers anywhere, at any time, via their digital devices. Book summary: Chapter 2 (P.69-80): Marketing strategy: The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. Market segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes. Market segment: A group of consumers who are expected to respond in a similar way to a given set of marketing efforts. Market targeting: Evaluating each market segment’s attractiveness and selecting one or more segments to serve. Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Differentiation: Actually differentiating the market offering to create superior customer value relative to the competition. Marketing Mix (4 Ps): 1. Product: The goods-and-services combination the company offers to the target market. 2. Price: The amount of money customers must pay to obtain the product. 3. Place: The company’s activities that make the product available to target consumers. 4. Promotion: Activities that communicate the merits of the product and persuade target customers to buy it. In addition to being good at the marketing in marketing management, companies also need to pay attention to the management. Managing the marketing process requires the five marketing management functions shown SWOT: Marketing implementation: Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives. Marketing control: Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved. Marketing ROI: The net return from a marketing investment divided by the costs of the marketing investment. It measures the profitability generated by marketing activities. Book summary: Chapter 3: Marketing Environment: The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Microenvironment: Includes the actors close to the company that affect its ability to serve its customers— the company, suppliers, marketing intermediaries, competitors, publics, and customers. Macroenvironment: The larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political, and cultural forces. Marketing intermediaries: Firms that help the company to promote, finance, sell, and distribute its goods to final buyers. Public: Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. Demographic Environment: The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Baby boomers: The 71 million people born during the years following World War II, from 1946 through 1964. Generation X: The 65 million people born between 1965 and 1980 in the “birth dearth” following the baby boom. Millennials (or Generation Y): The 73 million children of the baby boomers born between 1981 and 1996. Generation Z: People born between 1997 and 2012 who make up the tween to mid-20-something markets. Generation Alpha: Kids born after 2012, largely the children of the millennials. Economic Environment: Consists of factors that affect consumer purchasing power and spending patterns. Natural environment: The physical environment and the natural resources that are needed as inputs by marketers or that affect or are affected by marketing activities. Environmental sustainability: Developing strategies and practices that create a world economy that the planet can support indefinitely. Technological Environment: Forces that create new technologies, creating new product and market opportunities. Political Environment: Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. Cultural Environment: The institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Book summary: Chapter 5: Consumer Buyer Behavior: The buying behavior of individuals and households who buy goods and services for personal consumption. This is distinct from business buyer behavior, which involves the purchasing decisions of organizations. Consumer Market: All individuals and households who buy or acquire goods and services for personal consumption. The consumer market represents a massive pool of buyers with diverse characteristics, making understanding their behavior essential for effective marketing. 1. Cultural Factors:  ○ Culture: The most basic cause of a person’s wants and behavior. Culture includes values, perceptions, preferences, and behaviors learned from family, friends, institutions, and other sources. ○ Subculture: Groups of people within a culture who share value systems based on common life experiences and situations (e.g., nationalities, religions, racial groups, geographic regions). Marketers often design products and marketing programs tailored to subcultures. 2. Social Factors: ○ Reference Group: Groups that have a direct (face-to-face) or indirect influence on a person’s attitudes or behavior. These groups influence individuals in terms of lifestyle, behavior, and product choices. ○ Opinion Leader: A person within a reference group who exerts influence on others due to special skills, knowledge, personality, or other characteristics. ○ Word-of-Mouth Influence: Personal communications about products between target buyers and their acquaintances. These recommendations can heavily influence consumer behavior. ○ Influencer Marketing: Using individuals who have influence over others to promote products or services. This typically involves online platforms where influencers interact with large audiences. ○ Online Social Networks: Websites, apps, and other platforms that allow people to connect, share information, and exchange opinions. These platforms are key in spreading brand messages and word-of-mouth influence. 3. Personal Factors: ○ Lifestyle: A person’s pattern of living as expressed in their activities, interests, and opinions (AIOs). It reflects the individual’s values and what they choose to prioritize in their daily lives. ○ Personality: The unique psychological characteristics that lead to relatively consistent and lasting responses to one’s environment. Personality influences how consumers respond to various marketing efforts. ○ Motive (or Drive): A need that is sufficiently pressing to direct the person to seek satisfaction of that need. Motives can be biological (such as hunger) or psychological (such as recognition or esteem). ○ Perception: The process by which people select, organize, and interpret information to form a meaningful picture of the world. Different individuals perceive the same situation in different ways, influenced by selective attention, distortion, and retention. ○ Learning: Changes in an individual's behavior arising from experience. Marketers can shape consumer learning by providing rewarding experiences that reinforce positive product evaluations. ○ Belief: A descriptive thought that a person holds about something. Beliefs may be based on real knowledge, opinion, or faith, and marketers seek to build favorable beliefs about their products. ○ Attitude: A person’s consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Attitudes influence a person’s likelihood of purchasing a product. The consumer decision-making process includes five stages: 1. Need Recognition: The buying process starts when the buyer recognizes a problem or need. This need can be triggered by internal stimuli (such as hunger) or external stimuli (such as an advertisement). 2. Information Search: Once a need is recognized, the consumer may search for more information. Information sources include personal, commercial, public, and experiential sources. 3. Alternative Evaluation: Consumers use the information to evaluate different brands or products in the consideration set (the group of brands a consumer is choosing from) and choice set (the subset of brands they are actively considering buying). 4. Purchase Decision: The consumer forms preferences among the brands in the choice set and ultimately makes the purchase decision. The decision can be influenced by the attitudes of others and unexpected situational factors. 5. Postpurchase Behavior: After purchasing, the consumer will experience some level of satisfaction or dissatisfaction. Cognitive Dissonance (buyer’s remorse) can occur if the buyer has doubts about their purchase decision. Types of Buying Behavior: Complex Buying Behavior: Occurs when consumers are highly involved in a purchase and perceive significant differences among brands. This often applies to expensive, infrequent purchases with considerable personal risk (e.g., buying a car). Dissonance-Reducing Buying Behavior: Happens when consumers are highly involved but see little difference between brands. The consumer may experience postpurchase dissonance when they regret or doubt their decision after the purchase. Habitual Buying Behavior: Occurs when consumers have low involvement and see little brand difference. For instance, purchases of everyday products like salt typically involve little deliberation. Variety-Seeking Buying Behavior: Consumers exhibit low involvement but perceive significant differences between brands. They may switch brands for the sake of variety, not because of dissatisfaction with their current choice. Customer Journey: The complete set of experiences that customers go through when interacting with a company or brand. The customer journey includes awareness, consideration, purchase, and post-purchase stages. New Product: A product perceived as new by potential buyers, whether it’s new in terms of its actual innovation or just the customer’s perception of it. Adoption Process: The mental process an individual goes through from first hearing about an innovation to final adoption. The stages include: 1. Awareness: The consumer becomes aware of the new product but lacks information about it. 2. Interest: The consumer seeks information about the new product. 3. Evaluation: The consumer considers whether trying the new product makes sense. 4. Trial: The consumer tries the new product on a small scale to improve their estimate of its value. 5. Adoption: The consumer decides to make full and regular use of the new product. Book summary: Chapter 7: Market Segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing mixes. Market Targeting (Targeting): Evaluating each market segment’s attractiveness and selecting one or more segments to serve. Differentiation: Differentiating the market offering to create superior customer value. It involves making the company’s product distinct from competitors to ensure it is perceived as superior. Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Positioning aims to highlight the unique value the product delivers to consumers. Market segmentation: 1. Geographic Segmentation: Dividing a market into different geographical units, such as nations, regions, states, counties, cities, or neighborhoods. 2. Hyperlocal Social Marketing: Targeting customers within a specific location using highly localized social media marketing efforts. This is often used by businesses with a physical presence in a community.  3. Demographic Segmentation: Dividing the market based on demographic variables such as age, gender, family size, income, occupation, education, religion, and nationality. 4. Age and Life-Cycle Segmentation: Dividing a market into different age groups or stages in the life cycle (e.g., young adults, families, retirees). Marketers often tailor products and marketing strategies to life-cycle needs. 5. Gender Segmentation: Dividing a market based on gender, such as offering products specifically for men or women. 6. Income Segmentation: Dividing a market into different income groups, often used for luxury products or budget offerings. 7. Psychographic Segmentation: Dividing a market into different segments based on social class, lifestyle, or personality characteristics. Psychographic segmentation helps understand the "why" behind consumer purchases. 8. Behavioral Segmentation: Dividing a market based on consumer knowledge, attitudes, uses, or responses to a product. It often involves factors such as purchase occasion, user status, usage rate, and loyalty. 9. Occasion Segmentation: Dividing a market according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. 10. Benefit Segmentation: Dividing the market into segments according to the different benefits that consumers seek from the product. This identifies the major benefits people look for and groups them accordingly. 11. Intermarket (Cross-Market) Segmentation: Grouping consumers with similar needs and buying behaviors, regardless of their geographic location, into segments that transcend national boundaries. Market-targeting strategies: 1. Target Market: A set of buyers sharing common needs or characteristics that the company decides to serve. 2. Undifferentiated (Mass) Marketing: A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It focuses on what is common rather than on what is different. 3. Differentiated (Segmented) Marketing: A market-coverage strategy in which a firm targets several market segments and designs separate offers for each. 4. Concentrated (Niche) Marketing: A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. 5. Micromarketing: Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments. 6. Local Marketing: Tailoring brands and promotions to the needs and wants of local customer segments, such as cities, neighborhoods, or even specific stores. 7. Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers. This is sometimes referred to as one-to-one marketing, mass customization, or markets-of-one marketing. 1. Product Positioning: The way a product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products. 2. Competitive Advantage: An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices. 3. Value Proposition: The full mix of benefits on which a brand is positioned. It is the answer to the question of "Why should I buy your brand?" Companies must craft a compelling value proposition to give customers a reason to choose their product over others.  4. Positioning Statement: A statement that summarizes the brand positioning and is communicated internally and externally. It typically includes the target segment, the brand, and its key differentiation (the primary benefit that the brand provides). Book summary: Chapter 8 Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Service: An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in a customer’s ownership of anything. Customer experience: A market offering with a strong sensory or emotional component that plays out for the customer over time. Consumer product: A product bought by final consumers for personal consumption. Convenience product: A consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort. Shopping product: A consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price, and style. Specialty product: A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Unsought product: A consumer product that the consumer either does not know about or knows about but does not normally consider buying. Industrial product: A product bought by individuals and organizations for further processing or for use in conducting a business. Social marketing: The use of traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being. 1. Product and service attributes: Product quality: The characteristics of a product or service that bear on its ability to consistently and reliably satisfy stated or implied customer needs. (“Quality is when our custom- ers come back and our products don’t.” ) 2. Brand: A name, term, sign, symbol, or design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. 3. Packaging: Designing and producing the container or wrapper for a product. 4. Labeling should identify, describe and promote the product 5. Support services are an important part of the customer’s overall brand experience. Product line: A group of products from a company that are closely related because they function in a similar manner, are sold to similar customer groups, serve similar customer needs, are marketed through the same types of outlets, or fall within given price Product mix (or product portfolio): The set of all product lines and items that a seller offers for sale. Service intangibility: Services cannot be seen, tasted, felt, heard, or smelled before they are bought. Service inseparability: Services are produced and consumed at the same time and cannot be separated from their providers. Service variability: The quality of services may vary greatly depending on who provides them and when, where, and how they are provided. Service perishability: Services cannot be stored for later sale or use. Service profit chain: The chain that links customer satisfaction and profits for service firms with employee satisfaction. v Internal marketing: Orienting and motivating customer- contact employees and supporting service employees to work as a team to provide customer satisfaction. Interactive marketing: Training service employees in the fine art of interacting with customers to satisfy their needs. Brand equity: The differential effect that knowing the brand name has on a customer’s emotions, attitudes, and behaviors related to the product or its marketing. Brand value: The total financial value of a brand. Store brand (or private label): A brand created and owned by a reseller of a product or service. Co-branding: The practice of using the established brand names of two different companies on the same product. Line extension: Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category. Brand extension: Extending an existing brand name to new product categories Book summary: Chapter 9 New product development: The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts Idea generation: The systematic search for new product ideas. Crowdsourcing: Inviting broad communities of people— customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process. Idea screening: Screening new product ideas to spot good ones and drop poor ones. Product concept: A detailed version of the new product idea stated in terms that are meaningful to the consumer. Concept testing: Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal. Marketing strategy development: Designing an initial marketing strategy for a new product based on the product concept. Business analysis: A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. Product development: Developing the product concept into a physical product or a detailed service blueprint to ensure that the product idea can be turned into a workable market offering. Test marketing: The stage of new product development in which the product and its proposed marketing program are tested in realistic market settings. Commercialization: Introducing a new product into the market. Customer-centered new product development: New product development that focuses on finding new ways to solve customer problems and create more customer- satisfying experiences. Team-based new product development: New product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. Product life cycle (PLC): The course of a product’s sales and profits over its lifetime. Introduction stage: The PLC stage in which a new product is first distributed and made available for purchase. Growth stage: The PLC stage in which a product’s sales start climbing quickly. Maturity stage: The PLC stage in which a product’s sales growth slows or levels off. Decline stage: The PLC stage in which a product’s sales fade away. Style: A basic and distinctive mode of expression Fashion: A currently accepted or popular style in a given field. Fad: A temporary period of unusually high sales or interest driven by consumer enthusiasm and immediate product or brand popularity. Book summary: Chapter 10 Price: The amount of money charged for a product or service, or the sum of the values that customers exchange for the Customer value–based pricing: Setting price based on buyers’ perceptions of value rather than on the seller’s cost. Good-value pricing: Offering just the right combination of quality and good service at a fair price. Value-added pricing: Attaching value-added features and services to differentiate a company’s offers and charging higher prices. Cost-based pricing: Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk Fixed costs (overhead): Costs that do not vary with production or sales level. Variable costs: Costs that vary directly with the level of production. Total costs: The sum of the fixed and variable costs for any given level of production. short-run average cost curve (SRAC), long-run average cost (LRAC) Experience curve: The drop in the average per-unit production cost that comes with accumulated production experience. Cost-plus pricing (markup pricing): Adding a standard markup to the cost of the product. Break-even pricing (target return pricing): Setting price to break even on the costs of making and marketing a product, or setting price to make a target return. Competition-based pricing: Setting prices based on competitors’ strategies, prices, costs, and market offerings. Target costing: They start with an ideal selling price based on customer value considerations and then target costs that will ensure that the price is profitable. Demand curve: A curve that shows the number of units the market will buy in a given time period at different prices that might be charged. Price elasticity: A measure of the sensitivity of demand to changes in price. Book summary: Chapter 11 Market-skimming pricing (price skimming): Setting a high price for a new product to skim maximum revenues layer by layer from customer segments in line with their willingness to pay. Market-penetration pricing: Setting a low price for a new product in order to quickly attract buyers and gain a large market share. Product line pricing: Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. Captive-product pricing: Setting a price for products that must be used along with a main product, such as toner cartridges for a printer and games for a video-game console. By-product pricing: Setting a price for by-products to help offset the costs of disposing of them and help make the main product’s price more competitive. Product bundle pricing: Combining several products and offering the bundle at a reduced price. Discount: A straight reduction in price on purchases during a stated period of time or of larger quantities. Allowance: Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way. Segmented pricing: Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs. Psychological pricing: Pricing that considers the psychology behind how consumer evaluate price and value, not just the economics. Reference prices: Prices that buyers carry in their minds and refer to when they look at a given product. Promotional pricing: Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales. Geographical pricing: Setting prices for customers located in different parts of the country or world. FOB-origin pricing: Pricing in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination. Uniform-delivered pricing: Pricing in which the company charges the same delivered price, including freight, to all customers regardless of their location.  Zone pricing: Pricing in which the company sets up two or more delivery zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price. Basing-point pricing: Pricing in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer. Freight-absorption pricing: Pricing in which the seller absorbs all or part of the freight charges in order to get or keep the desired business. Dynamic pricing: Adjusting prices continually to meet changing conditions and situations in the marketplace. Personalized pricing: Adjusting prices in real time to fit individual customer needs, situations, locations, and buying behaviors. responding to price change^^ Book summary: