Chapter 1 Marketing in Today’s Economy PDF

CHAPTER 1 Marketing in Today’s Economy © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Introduction  Commoditization  A consequence of mature industries, where slowing innovation, extensive pro...

CHAPTER 1 Marketing in Today’s Economy © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Introduction  Commoditization  A consequence of mature industries, where slowing innovation, extensive product assortment, excess supply, and frugal consumers force margins to the floor.  All organizations – both for-profit and nonprofit – require effective planning and a sound marketing strategy to achieve their goals and objectives.  Today’s economy is characterized by rapid technological change, economic/financial anxiety, and increasing consumer skepticism. 2 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Challenges and Opportunities of Marketing in Today’s Economy  Power shift to customers  Massive increase in product selection  Audience and media fragmentation  Changing value propositions  Shifting demand patterns  Privacy, security, and  Unclear ethical concerns legal jurisdiction 3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Change in Daily Media Usage by U.S. Adults, 2008-2011 (Exhibit 1.1) 4 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Children’s Online Privacy Protection Act (Exhibit 1.2) 5 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Increasing customer power is a continuing challenge to marketers in today’s economy. In what ways have you personally experienced this shift in power; either as a customer or as a business person? Is this power shift uniform across industries and markets? How so? 6 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Marketing Concepts: Marketing Defined  Marketing  (2005 AMA definition) “… an organizational function and a set of business processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”  Marketing  (2007 AMA definition) “… 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.” 7 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Marketing Concepts: What is a Market?  Market  A collection of buyers and sellers; a group of individuals or institutions that have similar needs  Marketspace  Electronic marketplaces unbound by time or space  Metamarket  A cluster of closely related goods and services that center around a specific consumption activity  Metamediary  Provides a single access point where buyers can locate and contact many different sellers in the metamarket 8 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Common Metamarkets and Participants (Exhibit 1.3) 9 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Marketing Concepts: What Is Exchange?  Exchange  The process of obtaining something of value by offering something in return; typically obtaining products for money  Five      Conditions of Exchange There must be at least two parties to the exchange. Each party has something of value to the other party. Each party must be capable of communication and delivery. Each party must be free to accept or reject the exchange. Each party believes it is desirable to exchange with the other party. 10 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Marketing Concepts: What Is a Product?  Product  Something that can be acquired via exchange to satisfy a need or a want  Examples      of Products Goods Services Ideas Information Digital products      People Places Experiences and events Real or financial property Organizations 11 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Marketing Concepts: Utility  Utility  The ability of a product to satisfy a customer’s needs or wants  Five Types      of Utility Form utility – attributes or features that set the product apart Time utility – products available when customers want them Place utility – products available where customers want them Possession utility – transfer of ownership or title; ease of acquisition Psychological utility – positive experiential attributes that customers find satisfying 12 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Major Marketing Activities and Decisions  Strategic    Strategy – the organization’s game plan for success Tactical planning – specific markets/segments and the marketing programs that will meet their needs/wants Marketing plan – the outline of the marketing program  Research     Planning and Analysis Internal analysis – analyzing the firm’s current strategy and performance Competitive intelligence – analyzing competing businesses Environmental scanning – analyzing the external environment Situation analysis – combination of all three analyses 13 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How concerned are you about privacy and security in today’s economy? Why do so many people, particularly younger people, seem to be unconcerned about privacy? Will these issues still be important in 10 years? Explain. 14 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Major Marketing Activities and Decisions (continued)  Developing   Competitive advantage – something the firm does better than competing firms SWOT analysis – strengths, weaknesses, opportunities, threats  Marketing    Competitive Advantage Strategy Decisions Market segmentation and target marketing Marketing program decisions (the marketing mix) Branding and positioning 15 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Major Marketing Activities and Decisions (continued)  Social   Responsibility and Ethics Social responsibility – maximizing positive impact on society, while minimizing negative impact Marketing ethics – principles/standards that define acceptable conduct in marketing activities  Implementation   Process of executing the marketing plan Marketing activities must be controlled to ensure that the strategy stays on course.  Developing   and Control and Maintaining Customer Relationships Transactional marketing Relationship marketing 16 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transactional and Relationship Marketing (Exhibit 1.4) 17 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Challenges of Marketing Strategy  Unending Change  People-Driven  Lack of Rules for Choosing Marketing Activities  Increasing  Declining Customer Expectations Customer Satisfaction and Brand Loyalty  Competing   Nature of Marketing in Mature Markets Increasing commoditization Little real differentiation among product offerings  Aggressive Cost-Cutting Measures 18 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The text argues that marketing possesses very few rules for choosing the appropriate marketing activities. Can you describe any universal rules of marketing that might be applied to most products, markets, customers, and situations? 19 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. American Customer Satisfaction Index (Exhibit 1.5) 20 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Competitive Marketing Strategy ‘a market-oriented approach that establishes a profitable competitive position for the firm against all forces that determine industry competition by continuously creating and developing a sustainable competitive advantage (SCA) from the potential sources that exist in a firm’s value chain.’ 21 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Strategy & Tactics: STRATEGY  strategic  they time decisions are important decisions will affect the direction of the business for a long  they have a considerable impact on the way in which organisational resources are allocated  strategic decisions are usually taken by senior members of the organisation © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Strategy & Tactics: TACTICS  Tactical decisions are made by members of the organisation at many different levels, and are often made quickly  For example, a sales executive may have to make a decision within seconds while sitting in a client’s office – would the offer of a small additional discount be enough to win an order? © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Corporate strategy & marketing strategy  Business unit strategy is concerned with how an individual business competes with its rivals, what it does and what it could do to stay in business and beat the competition.  Corporate strategy is concerned with decisions made in an organisation comprising multiple businesses (SBUs).  Questions of corporate strategy concern the overall shape of the corporation, which SBUs should form part of the overall portfolio, and how key resources should be divided between them.  Strategic marketing management is concerned with business unit strategy, also known as competitive strategy. © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Efficiency and Effectiveness  Effectiveness   ‘doing the right things’ Which markets should we compete in? With which products? What should our broad approach be?  Efficiency   (strategic marketing) (operational marketing) ‘doing things right’ Once we know what we are trying to achieve and broadly how, then we strive to deploy resources as efficiently as possible © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.