marketing

The metrics used to evaluate a firm vary depending on

(1) the level of the organization at which the decision is made (2) the resources the manager controls.

macroenvironmental factors

(external environment) the culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment, or CDSTEP.

Marketing impacts various stakeholders:

(ie: supply chain partners, society at large)

Firms achieve efficiencies by:

developing sophisticated distribution and information systems as well as strong relationships with vendors.

Product Development

a product development strategy offers a new product or service to a firm's current target market.

loyalty programs:

firms can identify members through the loyalty card or membership information the consumer provides when he or she makes a purchase. Using that purchase information, analysts determine which types of merchandise certain groups of customers are buying and thereby tailor their offering to meet the needs of their loyal customers better.

Locational excellence

having a good physical location and internet presence

Sharing Information:

in a value-based marketing-oriented firm, marketers share information about customers and competitors and integrate it across the firm's various departments. Sharing and coordinating such information represents a critical success factor for any firm

ideas (product)

include concepts, opinions, and philosophies; intellectual concepts like these can also be marketed. EX: groups promoting bicycle safety go to schools, give talks, and sponsor bike helmet poster contests for children. The exchange of value occurs when the children listen to the sponsors' presentation and wear their helmets while bicycling, which means they have adopted, or become "purchasers" of the safety idea that the group marketed.

supply chain partners

include wholesalers, retailers, or other intermediaries like transportation or warehousing companies. All of these entities are involved in marketing to one another.

sustainable competitive advantage

is an advantage over the competition that is not easily copied and thus can be maintained over a long period of time.

market share

is the percentage of a market accounted for by a specific entity, and is used to establish the product's strength in a particular market. It's usually discussed in units, revenue, or sales

relative market share

is used in this application because it provides managers with a product's relative strength, compared with that of the largest firm in the industry.

marketing mix or four P's:

product, price, place, promotion

question marks BCG Matrix

- (upper right quadrant) appear in high-growth markets but have relatively low market shares -they are often the most managerially intensive products in that they require significant resources to maintain and potentially increase their market share. -Managers must decide whether to infuse question marks with resources generated by the cash cows, so that they can become stars, or withdraw resources and eventually phase out the products.

A marketing plan entails 5 steps:

- In step 1 of the planning phase, marketing executives define the mission of the business. - In step 2 of planning phase conduct a SWOT analysis. (strengths, weaknesses opportunities, and threats) -In step 3 of the implementation phase, go through process of segmentation, targeting, and positioning -In step 4, of the implementation phase the marketing mix using the 4 Ps. -In step 5 of the control phase entails evaluating the performance of the marketing strategy using marketing metrics and taking any necessary corrective actions. It's not always necessary to go through the entire process for every evaluation, EX: a firm could evaluate its performance in step 5 then go directly to step 2 to conduct a situation audit without redefining its overall mission.

Step 4: Implement Marketing Mix and Allocate Resources:

- marketers implement the actual marketing mix - product, price, promotion, place - on the basis of what they believe their target markets will value. - marketers make important decisions about how they will allocate their scarce resources to their various products and services.

Product excellence

- providing products with high perceived value and effective branding and positioning. -firms have been able to maintain their sustainable competitive advantage by investing in their brand itself; positioning their product or service using a clear, distinctive brand image; and constantly reinforcing that image through their merchandise, service, and promotion.

cash cows BCG Matrix

-(lower left quadrant) are in low-growth markets but are high market share products -these products have already received heavy investments to develop their high market share, they have excess resources that can be spun off to those products that need it. EX: the firm may decided to use the excess resources generated by the cash cow Brand to fund products in the question mark quadrant.

dogs BCG Matrix

-(lower right quadrant) are in low-growth markets and have relatively low market shares. Although they may generate enough resources to sustain themselves, dogs are not designed for "stardom" and should be phased out unless they are needed to complement or boost the sales of another product or for competitive purposes. -ex: Animal Health area in Bayer HealthCare

Marketing Is Pervasive across Marketing Channel (supply chain) Members

-All the various channel members (ie: suppliers, manufacturers, wholesalers, and retailers) of the supply chain are firms that are likely to provide career opportunities to marketing professionals. -Effectively managing supply chain relationships often has a marked impact on a firm's ability to satisfy the consumer, which results in increased profitability for all parties

Who is Accountable for Performance?

-At each level of an organization, the business unit and its manager should be held accountable only for the revenues, expenses, and profits that they can control. - expenses that affect several levels of the organization shouldn't be arbitrarily assigned to lower levels. Performance evaluations are used to pinpoint problem areas. -Reasons performance may be above or below planned levels must be examined. -The manager should only be held accountable in the case of the inadequate sales force job or setting inappropriate forecasts. When it appears that actual performance is going to be below the plan because of circumstances beyond the manager's control, the firm can still take action to minimize the harm. -When something beyond their control happens, marketing managers need to ask themselves did I react to salvage an adverse situation, or did my reactions worsen the situation?

BCG Matrix

-Each quadrant in the matrix has been named on the basis of the amount of resources it generates for and requires from the firm. -useful for conceptualizing the relative performance of products or services and using this information to allocate resources, -difficult to implement in practice. -it's difficult to measure both relative market share and industry growth. -Another issue for marketers is the potential self-fulfilling prophecy of placing a product or service into a quadrant (profound implications on whether it is classified as question mark or star as question marks require more marketing and production support. ) - firms have started making these decisions as lower level of the firms and have employee checks and balances to force managers at each level of the organizational hierarchy to negotiate with those above and below them to reach their final decisions

Marketing Can Be Entrepreneurial

-Great and distinguished entrepreneurs have visions of how certain combinations of products and services can satisfy unfilled needs. They find and understand a marketing opportunity (ie the unfilled need), conduct a thorough examination of the marketplace and develop and communicate the value of their product and services to potential consumers.

Strategic Planning is Not Sequential

-The planning process in the "marketing plan" diagram suggests that managers follow a set sequence when they make strategic decisions. -But actual planning processes can move back and fourth among these steps. EX: a situation analysis may uncover a logical alternative that might not be included in the mission statement, meaning the mission statement would need to be revised. The development of the implementation plan also might reveal that insufficient resources have been allocated to a particular product for it to achieve its objective so in that case the firm would need to either change the objective or increase the resources; alternatively, the marketer might consider not investing in the product at all.

a product line

-a group of products that consumers may use together or perceive as similar in some way.

marketing metric

-a measuring system that quantifies a trend, dynamic, or characteristic -used to explain why things happened and to project the future

Product (The four P's)

-although marketing a multifaceted function, its main purpose is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs. -must be perceived valuable enough to buy by the customers

culture

-as the shared meanings, beliefs, morals, values, and customs of a group of people. Transmitted by words, literature, and institutions, culture gets passed down from generation to generation and learned over time -The challenge for marketers is to have products or services identifiable by and relevant to a particular group of people. -Our various cultures influence what, why, how, where, and when we buy. -2 dimensions of culture that marketers must take into account as they develop their marketing strategies are the culture of the country and that of a region within a country

Step 2 of marketing plan (Conduct a Situation Analysis)

-conduct a SWOT analysis that assesses both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats. -it should assess the opportunities and uncertainties of the marketplace due to changes in Cultural, Demographic, Social, Technological, Economic, and Political forces (CDSTEP). -With this information, firms can anticipate and interpret change, so they can allocate appropriate resources.

Customer Service:

-consistency in this area can prove difficult as it is provided by employees and, and invariably, humans are less consistent than machines. -Firms that offer good customer service must instill its importance in their employees over a long period of time that it becomes part of the organizational culture. --once a marketer has earned a good service reputation, it can sustain this advantage for a long time, because a competitor is hard pressed to develop a comparable reputation.

Factors that affect the marketing enviornment

-consumers are the center piece because they are the center of all marketing efforts -Consumers may be influenced directly by the immediate actions of the focal company, the company's competitors, or corporate partners that work with the firm to make and supply products and services to consumers -The firm, and therefore consumers indirectly, is influenced by the macro environment, which includes various impacts of culture, demographics, and social, technological, economic, and political/legal factors.

competitors

-critical that marketers understand their firm's competitors, including their strengths, weaknesses, and likely reactions to the marketing activities that their own firm undertakes.

Marketers also use several methods to build customer loyalty:

-developing a clear and precise positioning strategy. -creates an emotional attachment through loyalty programs.

a market penetration strategy

-employs the existing marketing mix and focuses the firm's efforts on existing customers. -Such a growth strategy might be achieved by attracting new customers to the firm's current target market or encouraging current customers to patronize the firm more often or buy more merchandise on each visit. -requires greater marketing efforts, like increased advertising and additional sales and promotions, or intensified distribution efforts in geographic areas in which the product or service already is sold.

A market development strategy

-employs the existing marketing offering to reach new market segments, whether domestic or international. -International expansion generally is riskier than domestic expansion because firms must deal with differences in government regulations, cultural traditions, supply chains, and language. However, many U.S. firms enjoy a competitive advantage global markets because, especially among young people, U.S. culture is widely emulated for consumer products

Step 5: Evaluate Performance Using Marketing Metrics:

-evaluating the results of the strategy and implementation program using marketing metrics. -metrics make it possible to compare results across regions, strategic business units (SBUs), product lines, and time periods. -The firm can determine why it did or didn't achieve its performance goals with the help of these metrics. -Understanding the causes of the performance, regardless of whether that performance exceeded, met, or fell below the firm's goals, enables firms to make appropriate adjustments. -Typically, managers begin by reviewing the implementation programs, and their analysis may indicate that the strategy (or even the mission statement) needs to be reconsidered. -Problems can arise both when firms successfully implement poor strategies and when they poorly implement good strategies.

Price

-everything has a price, though it doesn't always have to be monetary. Price is everything the buyer gives up - money, time, energy - in exchange for the product -Marketers must determine the price of a product carefully on the basis of the potential buyer's belief about its value. - the key to determining prices is figuring out how much customers are willing to pay so that they are satisfied with the purchase and the seller achieves a reasonable profit -price should be based on the value that the customer perceives.

CSR metrics

-firms are starting to report corporate social responsibility metrics in major areas like their impact on the environment, their ability to diversify their workforce, energy conservation initiatives, and their policies on protecting the human rights of their employees and the employees of their suppliers.

Why Is Marketing Important?

-has evolved into a major business function that crosses all areas of a firm or organization. -Marketing advises production about how much of the company's product to make and then tells logistics when to ship it. -creates long-lasting, mutually valuable relationships between the company and the firms from which it buys. -identifies those elements that local customers value and makes it possible for the firm to expand globally. -can be entrepreneurial -enriches society as a whole -pervasive across all channel members

a diversification strategy

-introduces a new product or service to a market segment that currently is not served. Diversification opportunities may be either related or unrelated.

strategic business unit (SBU)

-is a division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.

A marketing plan

-is a written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the 4 Ps, action programs, and projected or pro-forma income (and other financial) statements. -provides a reference point for evaluating whether or not the firm has met its objectives.

Operational excellence

-is achieved through firms' efficient operations, excellent supply chain management, and strong relationships with suppliers. -All marketers strive for efficient operations to get their customers the merchandise they want when they want it, in the required quantities, and at lower delivered cost than that of their competitors. -by doing this, they ensure good value to their customers, earn profitability for themselves, and satisfy their customers' needs.

Customer excellence

-is achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service.

Promotion: Communicating the Value Proposition

-is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions and elicit a response. -Promotion generally can enhance a product's or service's value. -the value proposition to their customers is done through a variety of media (TV, radio, magazines, sales force, Internet). -A relatively new promotion channel relies on daily deal websites like Groupon to get the word out. -Many smaller companies find that these sites give them greater name recognition than they ever could have achieved on their own. But when a well-known company uses the sites, the effect is even more remarkable.

a relative metric of sales or profits

-is its increase or decrease over the prior year -comparing results to other benchmark companies.

Portfolio Analysis

-management evaluates the firm's various products and businesses - its "portfolio" - and allocates resources according to which products are expected to be the most profitable for the firm in the future. -typically performed at the strategic business unit (SBU) or product line level of the firm -managers also can use it to analyze brands or even individual items. --One of the most popular portfolio analysis methods, developed by the Boston Consulting Group (BCG), requires the firms classify all their products or services into a two-by-two matrix, measuring relative market share and market share growth from high to low

Performance Objectives and Metrics

-many factors contribute to a firm's overall performance, which makes it hard to find a single metric to evaluate performance. -One approach is to compare a firm's performance over time or to competing firms, using common financial metrics like sales and profits. -Another method of assessing performance is to view the firm's products or services as a portfolio. Depending on the firm's relative performance, the profits from some products or services are used to fuel growth for others.

Marketing Enriches Society:

-marketing focuses on factors other than financial profitability, like good corporate citizenry (ie developing greener products, making healthier food options and safer products, and improving their supply chains to reduce their carbon footprint). -Socially responsible firms recognize that including a strong social orientation in business is a sound strategy that is in both its own and its customers' best interest. -It shows the consumer marketplace that the firm will be around for the long run and can be trusted with their business. In a volatile market, investors view firms that operate with high levels of corporate responsibility and ethics as safe investments.

Vendor relationships:

-must be developed over the long term and generally cannot be easily offset by a competitor. -Firms with strong relationships may gain exclusive rights to: (1) sell merchandise in a particular region, (2) obtain special terms of purchase that are not available to competitors, or (3) receive popular merchandise that may be in short supply.

circles in BCG Matrix

-represent brands, and their sizes are in direct proportion to the brands' annual sales.

Financial Performance Metrics

-some commonly used metrics to assess performance include revenues, or sales, and profits. -An attempt to maximize one metric may lower another. -Managers must therefore understand how their actions affect multiple performance metrics. -can also use relative metrics

market growth rate

-the annual rate of growth of the specific market in which the product competes. -measures how attractive a particular market is.

Company Capabilities

-the first factor that effects the consumer is the company itself -Successful marketing firms focus on satisfying customer needs that match their core competencies -Marketers can use an analysis of the external environment, like the SWOT analysis to categorize an opportunity as either attractive or unattractive. -if attractive, evaluate in terms of core competencies -

Step 1 of marketing plan (Define the Business Mission)

-the mission statement is a broad description of a firm's objectives and the scope of activities it plans to undertake - it attempts to answer 2 main questions: 1) What type of business are we? And 2) What do we need to do to accomplish our goals and objectives? -These fundamental business questions must be answered at the highest corporate levels before marketing executives can get involved. -Most firms want to maximize stockholders' wealth increasing the value of the firms' stock and paying dividends. -A key goal or objective often embedded in a mission statement relates to how the firm is building its sustainable competitive advantage. However, owners of small, privately held firms frequently have other objectives like achieving a specific level of income and avoiding risks. Nonprofit organizations instead have nonmonetary objectives.

Market positioning

-the process of defining the marketing mix (4 P's) variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products. -After identifying its target segments, a firm must evaluate each of its strategic opportunities. Firms typically are most successful when they focus on opportunities that build on their strengths relative to those of their competition.

Country culture

-the visible nuances of a country's culture, like artifacts, behavior, dress, symbols, physical settings, ceremonies, language differences, colors and tastes, and food preferences, are easy to spot. -But the subtler aspects of country culture generally are trickier to identify and navigate. -Sometimes the best answer is to establish a universal appeal within the specific identities of country -EX: BMW bridged the cultural gap by producing advertising that appeals to the same target market across countries, the only thing that changes is the language.

stars in BCG Matrix

-upper left quadrant) occur in high-growth markets and are high market share products. -often require a heavy resource investment in such things as promotions and new production facilities to fuel their rapid growth. -As their market growth slows, starts will migrate from heavy users of resources to heavy generators of resources and become cash cows. - ex: uber

Step 3 (Identifying and Evaluating Opportunities)

-using STP (segmentation, targeting, and positioning) identify and evaluate opportunities for increasing sales and profits. -With STP, the firm first divides the marketplace into subgroups or segments, determines which of those segments it should pursue or target, and finally decides how it should position its products and services to best meet the needs of those chosen targets.

Firms become value driven by focusing on 4 activities:

1) They share information about their customers and competitors across their own organization and even with other firms like the manufacturing and transportation companies that help them get their product or service to the marketplace 2) they strive to balance their customers' benefits and costs 3) they concentrate on building relationships with customers 4) they need to take advantage of new technologies and connect with their customers using social and mobile media.

A marketing strategy identifies

1) a firm's target market(s) (2) a related marketing mix - its 4 P's (3) the bases on which the firm plans to build a sustainable competitive advantage.

Sales-Oriented Era

1920-1950 production and distribution techniques became more sophisticated, and the Great Depression and World War II made customers consume less or manufacture items themselves. As a result, manufacturers had the capacity to produce more than customers wanted or were able to buy. Firms responded to their overproduction in becoming sales oriented; they depended on heavy doses of personal selling and advertising.

the process of selling merchandise or services from one business to another is called

B2B (business-to-business) marketing.

The process by which businesses sell to consumers is known as

B2C (business-to-consumer)

When consumers sell to other consumers it is called

C2C (consumer-to-consumer) marketing.

combining goods and services

EX: when you go to an optical center, you get your eyes examined (a service) and purchase new contact lenses (a good

marketing firm must consider the entire business process from

a consumer's point of view

marketing didn't get to its current prominence over night:

The marketing evolution - production era, sales era, marketing era, and value era

market segmentation

The process of dividing the market into groups of consumers with different needs, wants, or characteristics - who therefore might appreciate products or services geared especially for them

Retaining Loyal Customers:

Viewing customers with a lifetime value perspective, rather than on a transaction-by-transaction basis, is key to modern customer retention programs.

customer relationship management (CRM)

a business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers.

Market-Oriented Era

after World War II, manufacturers turned from focusing on the war effort toward making consumer products. The USA entered a buyers' market - the customer became king! When consumers again had choices, they were able to make purchasing decisions on the basis of factors such as quality, convenience, and price. Manufacturers and retailers began to focus on what consumers wanted and needed before they designed, made, or attempted to sell their products and services. It was during this period that firms discovered marketing.

Marketing channel management

also known as supply chain management, is the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction (ie: transportation companies) into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, while minimizing systemwide costs and satisfying the service levels required by the customers.

services (product)

are intangible customer benefits that are produced by people or machines and cannot be separated from the producer. When people buy tickets, they're not paying for the physical ticket stub, but for the experience they gain. Hotels, insurance agencies, and spas provide services.

Goods (product)

are items that you can physically touch, EX: Nike shoes, Budweiser, Kraft cheese, Tide, an iPad...

The four P's

are the controllable set of decisions/activities that the firm uses to respond to the wants of its target markets.

Production-Oriented Era

around the 20th century, most firms were production oriented and believed that a good product would sell itself. Manufacturers were concerned with product innovation, not with satisfying the needs of individual consumers, and retail stores typically were considered places to hold the merchandise until a consumer wanted it.

Marketing Expands Firms' Global Presence:

as marketing helps expand firms' global presence, it also enhances global career opportunities for marketing professionals.

using CRM systematically

collect information about their customers' needs and then use that information to target their best customers with the products, services, and special promotions that appear most important to them.

A market segment

consists of consumers who respond similarly to a firm's marketing efforts.

value cocreation

customers can act as collaborators to create the product or service

A competitive advantage

like a wall that the firm has built around its position in a market, it makes it hard for outside competitors to contact the customers inside aka the marketer's target market. Over time, advantages will erode because of these competitive forces, but by building high, thick walls, marketers can sustain their advantage, minimize competitive pressure, and boost profits for a longer time, thus establishing a sustainable competitive advantage is key to long-term financial performance.

Growth Strategies:

market penetration, product development, market development, and diversification. (2 by 2 matrix measuring products and services vs. markets current to new)

Connecting with Customers Using Social and Mobile Media (embracing new technology)

marketers are steadily embracing new technologies, like social and mobile media, to allow them to connect better with their customers and thereby serve their needs more effectively. Businesses take social and mobile media seriously, including these advanced tools in the development of their marketing strategies. Beyond social media sites, online travel agencies (Expedia, Travelocity, Priceline...) have become the first place that users go to book travel arrangements. Several restaurant chains are exploiting location-based social media applications, these customers tend to be more loyal and can help spread the word to others about the restaurant. Users are driving the way brands and stores are interacting with social media

Building Relationships with Customers:

marketers have begun to develop a relational orientation as they have realized that they need to think about their customers in terms of relationships rather than transactions. To build relationships, firms focus on the lifetime profitability of the relationship, not how much money is made during each transaction

Value-Based Marketing Era

most successful firms today are market oriented, meaning they generally have transcended a production or selling orientation and attempt to discover and satisfy their customers' needs and wants. Before the turn of the 21st century, better marketing firms recognized that there was more to good marketing than simply discovering and providing what consumers wanted and needed; to compete successfully they would have to give their customers greater value than their competitors did.

Place: Delivering the Value Proposition

place represents all the activities necessary to get the product to the right customer when that customer wants it. Place commonly deals specifically with retailing and marketing channel management

The 3 major phases of the marketing plan are:

planning, implementation, and control.

Value

reflects the relationship of benefits to costs, or what you get for what you give. Customers want products of services that meet their specific needs or wants and that are offered at a price that they believe is a good value.

a marketing plan

specifies the marketing activities for a specific period of time. The marketing plan is broken down into various components: how the product or service will be conceived or designed, how much it should cost, where and how it will be promoted, and how it will get to the consumer.

Marketing

the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Factors that affect the customers Immediate Environment:

the company's capabilities, competitors, and corporate partners.

related diversification opportunity

the current target market and/or marketing mix shares something in common with the new opportunity. In other words, the firm might be able to purchase from existing vendors, use the same distribution and/or management information system, or advertise in the same newspapers to target markets that are similar to their current consumers.

unrelated diversification

the new business lacks any common elements with the present business. Unrelated diversifications do not capitalize on either core strengths associated with markets or with products. Thus, they would be viewed as very risky.

target marketing or targeting

the process of evaluating each segment's attractiveness and deciding which to pursue

marketing is about an exchange

the trade of things of value between the buyer and the seller so that each is better off as a result. Sellers provide products or services, then communicate and facilitate the delivery of their offering to consumers. Buyers complete the exchange by giving money and information to the seller.

Efficient operations enable firms to:

to provide their consumers with lower-priced merchandise or, even if their prices are not lower than those of the competition, to use additional margin they earn to attract customers away from competitors by offering even better service, merchandise assortments, or visual presentations.

Balancing Benefits with Costs:

value-oriented marketers constantly measure the benefits that customers perceive against the cost of their offerings. They use available customer data to find opportunities to better satisfy their customers' needs, keep costs down, and develop long-term loyalties. EX: IKEA doesn't have highly paid salespeople to sell its furniture, but its simple designs mean customers can easily choose a product and assemble it themselves.

There are 4 macro strategies that focus on aspects of the marketing mix to create and deliver value and to develop sustainable competitive advantages:

•Customer excellence: focuses on retaining loyal customers and excellent customer service. •Operational excellence: achieved through efficient operations and excellent supply chain and human resource management. •Product excellence: having products with high perceived value and effective branding and positioning. •Locational excellence: having a good physical location and Internet presence.