marketing exam 1. ch 1-3

peter F Drucker quote

"the purpose of an org is to create and satisfy a customer"

•Disposable Income

- After-tax income

value

-A customer's subjective assessment of benefits relative to costs in determining the worth of a product customer value = customer benefits - customer costs

Business-unit strategies

-Business-unit strategy should be consistent with corporate strategy -Strategic business unit (SBU) is a division, product line, or other profit center within the parent company -Each of these units sells a distinct set of products to an identifiable group of customers, and each competes with a well-defined set of competitors -The revenues, costs, investments, and strategic plans of each SBU can be separated from those of the parent company and evaluated -Strategic planners should recognize the strategic performance capacities of each SBU and allocate scarce resources among those divisions -A market is a group of individuals and/or organizations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products -The percentage of a market that actually buys a specific product from a particular company is referred to as that product's (or business unit's) market share

corporate ID

-Companies develop and manage their corporate identity —their unique symbols, personalities, and philosophies—to support all the firm's activities, including marketing -Managing identity requires: 1. Broadcasting a company's mission, goals, and values 2. Sending a consistent image 3. Implementing a visual identity with stakeholders

Corporate Strategies

-Corporate strategy determines the means for utilizing resources in the functional areas of marketing, production, finance, research and development, and human resources to reach the organization's goals -The broadest of the three levels of strategy (corporate, business unit, and marketing) and should be developed with the organization's overall mission in mind

Marketing Environment

-Effects of these forces on buyers/sellers can be dramatic and difficult to predict -Impact on value can be extensive as market changes can easily impact how stakeholders perceive certain products -Unlike marketing mix variables, a firm has little control over marketing environment forces

Components of the Strategic Planning Process - organization mission and goals

-Mission statement is a long-term view, or vision, of what the organization wants to become -The goals of any organization should derive from its mission statement -An organization's mission statement should answer two questions: 1. Who are our customers? 2. What is our core competency?

•Procompetitive Legislation

-Preserves competition -Laws have been created to prevent businesses from gaining an unfair advantage through bribery

•Consumer Protection Legislation

-Protects people from harm -Prohibits hazardous products -Requires information disclosure -Aimed at particular marketing activities

•Market-Growth/Market-Share Matrix (cont'd) -BCG Classification

-Star—high growth market, dominant market share -requires additional resources for continued growth •Cash cow—low growth, dominant market share -generates surplus resources for allocation to other SBUs •Dog—low/declining market, subordinate market share -has diminished prospects and represents a drain on the portfolio •Question mark—high growth market, low market share -represents a high-risk/cost opportunity requiring a large commitment of resources to build market share

technological forces

-The application of knowledge and tools to solve problems and perform tasks more efficiently -Impacts of technology: •Dynamic change •Ability to reach customers •Self-sustaining in nature; spurs more development -Rapid technological growth and change are expected to accelerate

Market Growth/Market Share Matrix

-The market growth/market share matrix is a helpful business tool, based on the philosophy that a product's market growth rate and its market share are important considerations in determining its market strategy -All the companies SBUs and products should be integrated into a single, overall matrix and evaluated to determine strategies for individual products and overall portfolio strategies

Environmental Analysis

-The process of assessing and interpreting the information gathered through environmental scanning -How you deal with the information collected during scanning

Environmental Scanning

-The process of collecting information about forces in the marketing environment

political forces Marketers may:

-View political forces as beyond their control and simply adjust to conditions that arise -Influence the process through contributions and lobbying

marketing plan

-Written document that specifies the activities to be performed to implement and control the firm's The systematic process of: •Assessing marketing opportunities and resources •Determining objectives •Defining Strategies •Establishing guidelines for implementation and control of the marketing program -Aligned with corporate/business-unit strategies and is accessible/shared with employees •marketing strategies

stakeholders

-are constituents who have a stake, or claim, in some aspect of a company's products, operations, markets, industry, and outcomes -ex: customers, employees, investors, supplies...

Corporate strategy planners

-concerned with broad issues such as -Corporate culture -Competition -Differentiation -Diversification -Interrelationships among business units -Environmental and social issues -Match the resources of the organization with the opportunities and threats in the environment

promotion variable

-relates to activites used to inform ind or groups about the organization and its products -aims to increase public awareness of the org and of new or existing products -educate customers about product features -urge people to take a stance on a political or social issue -help sustain interest in established products

price variable

-relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices -price is a critical component of the marketing mix as customers are concerned about value obtained in an exchange -often used as a competitive tool and can lead to price wars

Strategic Planning Process

-the process of establishing an organizational mission and formulating goals, corporate strategy, marketing objectives, and marketing strategy -Should be guided by a market orientation to ensure that a concern for customer satisfaction is an integral part of the process and permeates the entire company -A market orientation is also important for the successful implementation of marketing strategies

Self-Regulatory Forces 1. Better Business Bureau (BBB) 2. National Advertising Review Board (NARB)

1. -A system of nongovernmental, independent, local regulatory agencies supported by local businesses that help settle problems between customers and specific business firms 2. -- A self-regulatory unit that considers challenges to issues raised by the National Advertising Division (an arm of the Council of Better Business Bureaus) about an advertisement

Self-Regulatory Forces 1. advantages 2. Disadv

1. -Establishment and implementation are usually less expensive -Guidelines are generally more realistic and operational -Effective self-regulatory programs reduce the need to expand government bureaucracy 2. -Nonmember firms do not have to abide -Lack the tools/authority to enforce guidelines -Often less strict than those established by government agencies

Competitive Structures 1. Monopoly 2. Oligopy

1. A competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply 2. •A competitive structure in which a few sellers control the supply of a large proportion of a product

Competitive Forces

1. Competition - Other organizations that market products that are similar to or can be substituted for a marketer's products in the same geographic area -Most firms have competition -When marketing managers define the target market(s) their firm will serve, they establish a set of competitors -Marketing managers must consider the type of competitive structure in which the firm operates

Becoming marketing oriented requires...

1. Establishing an information system to discover customers' needs and using the information to create satisfying products. 2. Coordinating all marketing activities by restructuring the organization. 3. Obtaining the support of all managerial and staff levels in the organization.

Types of Competitors 1. Brand Competitors 2. Product

1. Firms that market products with similar features and benefits to the same customers at similar prices 2. •Firms that compete in the same product class but market products with different features, benefits, and prices

SWOT analysis examples 1. Gluten allergies seem to be rising in the U.S. 2. You have hired a talented cook who specializes in gluten-free recipes. 3. A popular restaurant in your town has recently begun offering several gluten-free menu options. 4. You do not have the money to purchase new kitchen equipment, so you have to make do with used equipment. 5. More and more people are viewing gluten as unhealthy. 6.You do not have any money for marketing. •There is a recession and more people are opting not to eat out. 7. Your recipes are unique and are hard to copy.

1. Opportunity 2. Strength 3. Threat 4. Weakness 5. Opportunity 6. Weakness 7. Threat 8. Strength

Responding to Environmental Forces Marketers take two approaches to environmental forces:

1. Passive - Accepting them as uncontrollable 2. Proactive - Attempting to influence and shape them

Evolution of the Marketing Concept

1. Production Orientation - efficent production of goods allowed firms to meet strong customer demand 2. Sales Orientation - focus on selling, advertising, and distribution 3. Market Orientation - customer focused. commitment to researching and responding to customer needs

levels of strategic planning

1. mission stmt 2. Corporate strategy 3. Business-unit strategy 4. marketing strategy 5. marketing mix: -product, distribution, promotion, pricing

product variable 1. a good - 2. service - 3. idea -

1. physical entity you can touch 2. the application of human and mechanical efforts to people or objects to provide intangible benefits to customers 3. concept, philosophy, image, or issue

exchange conditions

1. two or more participants have something of value that the other party desires 2. exchange provides mutual benefit/satisfactio 3. each party has confidence in the exchange value of the other partys offering 4. each party must meet the expectations of the exhange to become trusted by the other parties

Types of Competitors 3. Generic 4. Total Budget

3. Firms that provide very different products that solve the same problem or satisfy the same basic customer need 4. Firms that compete for the limited financial resources of the same customers

promotion

Activities that inform customers about the organization and its products

customer costs

Anything a customer gives up in an exchange for benefits -$ price of the benefit -search costs (time and effort) to locate the product -risks associated with the product

customer benefits

Anything desired by the customer that is received in an exchange

pricing

Decisions and actions that establish pricing objectives and policies and set product prices

Discretionary Income

Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter

Income

For an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period

product

Goods, services, or ideas that satisfy customer needs

Buying Power

Resources, such as money, goods, and services, that can be traded in an exchange

distribution aka Place

The ready, convenient, and timely availability of products

•Long-term health of an organization depends on...

having some products that generate cash and others that use cash to support growth

goals of distribution to satisfy customers, products must be...

make products available in quantities desired to as many target market customers as possible while minimizing these costs: -inventory -transportation -storage -idea -available at the right time and in convenient locations

the process...

plan, organize, implement, control

monopolistic Comp

•A competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to differentiate its product

Pure Comp

•A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply •Does not exist in the real world, although some industries come close

The Business Cycle 1. Prosperity 2. Recession 3. Depression 4. Recovery

•A pattern of economic fluctuations that has four stages 1. -Low unemployment and relatively high total income, which together ensure high buying power (provided the inflation rate stays low) 2. Unemployment rises and total buying power declines, stifling both consumer and business spending 3. Unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy 4. -The economy moves from depression or recession to prosperity •Difficult to ascertain how quickly and to what level prosperity will return •Maintain as much flexibility in marketing strategies as possible to allow for any needed adjustments

marketing concept

•A philosophy that an organization should try to satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals

Marketing Strategy

•A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market -leads to target market selection and creating a marketing mix

target market

•A specific group of customers on whom an organization focuses its marketing efforts -Large or small customer groups -Single or multiple product markets -Single or multiple products Local to global markets

Marketing Objective

•A statement of what is to be accomplished through marketing activities -Should: •Be based on a study of the SWOT analysis •Match strengths to opportunities and/or eliminate weaknesses or threats •Be stated in clear, simple terms •Be accurately measurable •Specify a time frame for accomplishment •Be consistent with business-unit and corporate strategy

Creating the Marketing Mix contd

•All marketing mix decisions should be: •Consistent with the business-unit and corporate strategies •Flexible to permit the organization to alter the marketing mix in response to changes in market conditions, competition, and customer needs

customer lifetime value (CLV)

•Also referred to as "Lifetime Customer Value" •Predicts the net value for the future relationship with a customer •Crucial to marketing and organizational success •Calculated by taking sum of customer's present value contributions to profit margin over a specific time frame •It is far more cost effective and profitable to keep and grow existing relationships than to constantly build new ones.

Federal Trade Commission (FTC)

•An agency that regulates a variety of business practices and curbs: -False advertising -Misleading pricing -Deceptive packaging and labeling •Most heavily influences marketing activities (of all regulatory units) •Assists businesses in complying with laws and evaluates new marketing methods

Willingness to spend

•An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces •Factors that affect consumers' general willingness to spend: •Expectations about future employment •Income levels •Prices •Family size •General economic conditions

customer satisfaction

•Analysis of customers' current and long-term needs •Analysis of competitors' capabilities •Integration of firm's resources

planning (marketing managment)

•Assessing opportunities and resources •Determining marketing objectives •Developing a marketing strategy and plans for implementation and control •How, when and by whom are marketing activities performed?

Sustainable Competitive Advantage

•At the marketing mix level, a company can detail how it will achieve a competitive advantage •A sustainable competitive advantage is one that the competition cannot copy in the foreseeable future •How can an organization make its competitive advantage sustainable over time?

Organizing the Marketing Unit -centralized organizations -decentralized organizations

•Centralized organizations -Authority is concentrated at the top level -Very little delegation to lower levels •Decentralized organizations -Decision making authority is delegated as far down the chain of command as possible

Demographic and Diversity Characteristics

•Changes in a population's demographic characteristics lead to changes in how people live and consume products -Increasing market of retired Baby Boomers -Generation Y -Growing Hispanic/Latino market in the U.S. •A more diverse customer base means marketing practices must be modified and diversified to meet changing needs

Cultural Values

•Changes in cultural values alter people's needs/desires for products -Health, nutrition, and exercise growing in importance (sales of organic foods, herbal remedies, and vitamins have escalated) -Definition of family is changing -Children continue to be very important -Trend towards eat-out and take-out meals -Green marketing helps establish long-term consumer relationships by maintaining, supporting, and enhancing the natural environment

Organizing the Marketing Unit

•Companies that truly adopt the marketing concept develop a distinct organizational culture: •A culture based on a shared set of beliefs that makes the customer's needs the pivotal point of the company's decisions about strategy and operations

competitive advantage

•Competitive advantage is the result of a company matching a core competency to opportunities it has discovered in the marketplace -place where opportunities, core competencies, and strategic windows meet

implementation (marketing managment)

•Coordinating marketing activities •Motivating marketing personnel •Developing effective internal communications within the unit

Core Competencies

•Core competencies are things a company does extremely well, which sometimes gives it an advantage over its competition -Walmart's core competency, which is efficiency in supply chain management, has enabled the chain to build a strong reputation for low prices at high quality levels on a wide variety of goods

Credit

•Credit enables people to spend future income now or in the near future •Credit increases current buying power at the expense of future buying power •Factors affecting credit use: •Must be available •Interest rates •Credit terms (such as size of down payment and amount and number of monthly payments) •

Encouraging Compliance with Laws

•Current trend is away from legally-based organizational compliance programs -Emphasis on providing incentives to create ethical and responsible corporate cultures •Regulatory agencies monitor marketing activities and may enforce some laws

Creating the Marketing Mix

•Decisions made in creating a marketing mix are only as good as the organization's understanding of its target market •Requires: •In-depth research into the characteristics of the target market •Analysis of customer needs, preferences, and behaviors with respect to product design, pricing, distribution, and promotion

organizing (marketing managment)

•Developing the internal structure of the marketing unit •Functions, products, regions, customer types

Late-Mover Risks

•Disadvantages of being a late mover: -First mover may have patents on its technology and trade secrets that prevent the late mover from reverse engineering its product or producing a product that is too similar -Customers who have already purchased the first mover's product may believe that switching to the late mover's product is too expensive or time-consuming for them -Timing of entry to the market is crucial and can determine the amount of late-mover advantage that is actually possible

Establishing a Timetable for Implementation

•Establishing an implementation timetable involves several steps: •Identifying the activities to be performed •Determining the time required to complete each activity •Separating the activities to be performed in sequence from those to be performed simultaneously •Organizing the activities in the proper order •Assigning responsibility for completing each activity to one or more employees, teams, or managers

relationship marketing

•Establishing long-term, mutually satisfying buyer-seller relationships allowing for cooperation and mutual dependency •Increased value of customer (loyalty) over time results in increased profitability •More value = more exchanges = more profit •Achieving the full profit potential of each customer relationship should be the fundamental goal of every marketing strategy

control (marketing managment)

•Establishing performance standards •Comparing actual performance to established standards •Reducing the difference between desired and actual performance

Adoption and Use of Technology

•Firms must keep up with technology to maintain their status as market leaders -Must ensure that their technology is not easily copied •Use a technological assessment to learn about and attempt to foresee the effects of new products and processes -Estimate whether benefits of adopting a specific technology outweigh costs

first mover advantage

•First-mover advantage is the ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace •Build a firm's reputation as a market leader •Market is free of competition •Establish brand loyalty for the firm due to its customer's costs to switch later on •Firm can protect its trade secrets or technology through patents

marketing mix

•Four marketing activities—product, distribution, promotion, and pricing—that a firm can control to meet the needs of customers within its target market

Monitoring Comp

•Helps determine competitor's strategies and their effects on firm's own strategies •Guides development of competitive advantage and adjusting firm's strategy •Provides ongoing information about competitors •Information about competitors allows marketing managers to assess the performance of their own marketing efforts and to recognize the strengths and weaknesses in their own marketing strategies

Comparing Actual Performance with Performance Standards

•If actual performance exceeds performance standards: -Marketing strategy is viewed as being effective -Try to gain an understanding of why the strategy is effective •If actual performance does not meet performance standards: -Determine why a marketing strategy was less effective -Determine whether the marketing objective, against which performance is measured, is realistic or not

Late-Mover Advantage

•Late-mover advantage is the ability of later market entrants to achieve long-term competitive advantages by not being the first to offer a certain product in a marketplace -Learn from first mover's mistakes and thus create an updated/improved product design and marketing strategy -Lower initial costs since first mover has developed an infrastructure/educated buyers -More certainty about the success of the market for the product

Market Opportunities and Strategic Windows

•Market opportunity is a combination of circumstances and timing that permits an organization to take action to reach a particular target market •Strategic windows are temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a company competing in that market

Analyzing Actual Performance -marketing cost

•Marketing cost analysis breaks down and classifies costs to determine which are associated with specific marketing efforts -One way to analyze costs is by comparing a company's costs with industry averages •When looking at industry averages, a company should take into account its own unique situation •Company's costs can differ from the industry average for several reasons, including its own marketing objectives, cost structure, geographic location, types of customers, and scale of operations

importance of marketing in our global economy

•Marketing costs consume a sizable portion of buyers' dollars •Marketing is used in nonprofit organizations •Marketing is important to business and the economy •Marketing fuels our global economy •Marketing knowledge enhances consumer awareness •Marketing connects people through technology •Socially responsible marketing can promote the welfare of customers and society •Marketing offers many exciting career prospects

coordinating marketing activites

•Marketing managers must work with other departments to ensure marketing activities mesh with other functions of the firm •Must coordinate the activities of marketing staff within the firm and integrate those activities with the marketing efforts of external organizations •Managers can improve coordination by making each employee aware of how his or her job relates to others and how his or her actions contribute to achieving marketing objectives

Impact of Technology

•Mobile devices and consumers' increasing use of the Internet have changed: -How people communicate -How marketers reach consumers •Can improve productivity and opportunities for e-commerce •Negative impacts include: -Concerns over privacy -Intellectual property protection issues

Communication within the Marketing Unit

•One of the most important types of communication in marketing is communication that flows upward from the frontline of the marketing unit to higher-level marketing managers •Communication is facilitated by an: •Effective training program where employees can learn, ask questions, and become accountable for marketing performance •Information system within the marketing unit and with other departments in the organization

SWOT analysis opportunities and threats

•Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted on properly •Threats refer to conditions or barriers that may prevent the company from reaching its objectives

Establishing Performance Standards

•Performance standard is an expected level of performance against which actual performance can be compared -For example, a 20% reduction in customer complaints, a monthly sales quota of $150,000, or a 10% increase per month in new-customer accounts -Performance standards are derived from marketing objectives that are set while developing marketing strategies

First-Mover Risks

•Risks of being the first to enter a market: •High cost associated with creating a new product from scratch •Market research, product development, production, and marketing or buyer education costs •Early sales growth may not be as high as the company predicted if it makes mistakes with regard to the product or its marketing •Risk that the product will fail due to market uncertainty, or that the product might not meet consumers' expectations or needs

SWOT Analysis

•SWOT analysis is a tool marketers use to assess an organization's strengths, weaknesses, opportunities, and threats -Strengths and weaknesses are internal factors that can influence an organization's ability to satisfy its target market -Opportunities and threats exist independently of the company and therefore represent issues to be considered by all organizations, even those that do not compete with the company

Analyzing Actual Performance -sales analysis

•Sales analysis uses sales figures to evaluate a firm's current performance -Most common method of evaluation because sales data partially reflect the target market's reactions to a marketing mix and often are readily available -Current sales data must be compared with forecasted sales, industry sales, specific competitor's sales, or the costs incurred to achieve the sales volume

Target Market Selection

•Selecting an appropriate target market may be the most important decision a company makes in the strategic planning process •Identification and analysis of a target market provide a foundation on which a company can develop a marketing mix •Marketers should also assess whether the company has the resources to develop the right marketing mix to meet the needs of a particular target market

Growth Share Matrix

•Stars are products with a dominant share of the market and good prospects for growth •Cash cows have a dominant share of the market but low prospects for growth •Dogs have a subordinate share of the market and low prospects for growth •Question marks have a small share of a growing market and generally require a large amount of cash to build market share

Evaluating Marketing Strategies

•Strategic performance evaluation consists of: -Establishing performance standards -Measuring actual performance -Comparing actual performance with established standards -Modifying the marketing strategy, if needed

SWOT analysis strengths and weaknesses

•Strengths refer to competitive advantages or core competencies that give the company an advantage in meeting the needs of its target market •Weaknesses refer to any limitations a company faces in developing or implementing a marketing strategy

wealth

•The accumulation of past income, natural resources, and financial resources •Global wealth is increasing •Like income, wealth is unevenly distributed •As people become wealthier, they gain buying power: •To make current purchases •To generate income •To acquire large amounts of credit

effectiveness (marketing managment)

•The degree to which an exchange helps an organization achieve its objectives

Sociocultural forces

•The influences in a society and its culture(s) that change people's: •Attitudes •Beliefs •Norms •Customs •Lifestyles •Determine what, where, how, and when people buy products

Consumerism

•The organized efforts of individuals, groups, and organizations to protect consumers' rights -Lobbying government officials and agencies -Letter-writing/e-mail sending campaigns •The movement's major forces are: -Individual consumer advocates -Consumer organizations and other interest groups -Consumer education -Consumer law

marketing

•The process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment

efficiency (marketing managment)

•The process of minimizing the resources an organization must spend to achieve a specific level of desired exchanges

marketing managment

•The process of planning, organizing, implementing, and controlling marketing activities to facilitate exchanges effectively and efficiently

Marketing Implementation

•The process of putting marketing strategies into action •Depends on: •Organization of the marketing department •Motivating marketing personnel •Effectively communicating within the marketing unit •Coordinating all marketing activities •Establishing a timetable for the completion of each marketing activity

exchange

•The provision or transfer of goods, services, or ideas in return for something of value -builds satisfying exchange relationships -buyers have something of value to the seller like $, credit, labor, goods -sellers have something of value to the buyer like goods, services, ideas

customers

•The purchasers of organizations' products; the focal point of all marketing activities

Assessing Organizational Resources and Opportunities

•The strategic planning process begins with an analysis of the marketing environment, including a thorough analysis of the industry in which the company is operating or intends to sell its products -Any strategic planning effort must assess the organization's available financial and human resources and capabilities as well as how the level of these factors is likely to change in the future

Motivating Marketing Personnel

•To motivate marketing personnel, managers must discover their employees' needs and then develop motivational methods that will help employees satisfy those needs •Rewards to employees should be tied to organizational goals and be fair, ethical, and well understood by employees •Selecting effective motivational tools has become more complex because of greater differences among workers in terms of race, ethnicity, gender, and age

customer relationship management (CRM)

•Using information about customers to create marketing strategies that develop and sustain desirable customer relationships •Identifying buying-behavior patterns of customers •Using behavioral information to focus on the most profitable customers