Principles of Marketing Chapter 1 & 2

Loyalty Ladder:

Advocate Loyal Supporter Regular Purchaser New Customer

Opportunities:

Add to the product line, enter new markets, acquire firms with needed technology

Planning

process of anticipating future events and conditions and of determining the best way to achieve organizational objectives (creates a blueprint for everyone),

Marketing variables

product, price, promotion, distribution= customer satisfaction

Strategic Business Units (SBUs) aka Categories

Key business units within diversified firms, focus on the attention of a company managers so that they can respond effectively to changing customers demand with limited markets ( each SBU has its own managers, resources, objectives, product line, distinct mission, ect.)

Strategic Window

Limited periods when key requirements of a market and a firm's particular competencies best fit together ( gives planners a way to relate potential opportunities to company capabilities )

Marketing Myopia (Theodore Levitt)

Management failure to recognize the scope of its business (Product oriented rather customer oriented management endangers future growth) - i.e when a company narrows products down so much it can't survive (example: Vegas pinpoints Vegas but not everything) To avoid: must develop mottos to avoid, broader marketing- oriented business ideas focusing on customer need satisfaction (Apple is myopic because they have new products)

Leverage

Matching an internal strength with external opportunity

Six Steps in the Marketing Planning Process: Corporate Level- (1). Define the missions of the organization (2). Determine organizational objectives (3). Access organizational resources and evaluate environmental risks and opportunities (capabilities of the firm's production, marketing, financing technology, and employees) Business Unit Level- (4). Formulate strategy (5). Implement strategy through operating plans (6). Monitor and adapt strategies when necessary based on feedback

Mission: essential purpose that differentiates one company from another, specifies the organizations overall goals and operational scope and provides general guidelines for the future management actions

Marketing Strategy

Overall, companywide program for selecting a particular target market and then satisfying customers in that market through the marketing mix (product, distribution, promotion, & price)

Marketing Environment

Political- legal, social-cultural , technological, economic, competitive

BCG Matrix: plots market share against market growth potential horizontal axis- indicates its market share relative to those of competitor in the industry vertical axis- indicates annual growth rate of the market

Relative Market Share high low high A B low C D ^Industry Growth rate (A). Stars- generate considerable income Strategy: invest more funds for future growth rate (B). Question Marks: Have potential to become stars of cash cows Strategy: Either invest more funds for growth or consider disinvesting (C). Cash Cows: Generate strong cash flow Strategy: Milk profits to din ace growth of stars and question marks (D). Dogs: Generate little profits (SBU's promise poor future prospects) Strategy: Consider withdrawing

Converting Needs to Wants

Satisfying needs for clothing, food, shelter, transportation by purchasing or renting -> a need for a pair of pants may be converted to a desire for jeans and further a desire for jeans from H&M or luck brand

Developing Partnerships and Strategic Alliances:

Strategic Alliances: Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market (used in not- for- profit organizations) - Product Development Partnerships: Involve shared costs for research and development and marketing - Vertical Alliances: company provides a product or component to another firm, which then distributes or sells it under its own brand

Strategic Planning VS. Tactical Planning Strategic Planning: (long-term direction) process of determining an organizations primary objectives and adopting courses of action that ill achieve these objectives

Tactical Planning:planning that guides the implementation of activities specifies in the strategic plan; short term actions that focus on current activities that a firm must complete to implement its larger strategies

Elements of a Marketing Strategy:

Target Market: in specific global markets represent a challenge and approach Marketing Mix: Blending of the four strategy elements to fit the needs/ preferences of a specific target market

Promotion Strategy

communications links between buyers and sellers - Integrated Marketing Communications (IMC) unified and consistent message

Marketing Planning

implanting planning activities devoted to achieving marketing objectives (establishes a basis for marketing strategy) "virtual conferences": teleconferences with computer interfaces, represent a new way to build relationships among people in different geographic locations - relationship marketing: a firm's effort to develop long-terms, cost-effective links with individual customers and suppliers for mutual benefit

For Profit Organizations Differences: -profit seeking tend to focus their marketing on one public - not for profit has less control over organizations destiny, often possess some degree if monopoly power in a given geographic area, social media gives increased attention, meets service objectives

measure profitability and their goal is to generate revenues above and beyond their costs to make money for all stakeholders involved including employees, shareholders and the organization itself Similarities: - may market tangible goods or intangible services

Pricing Strategy

methods of setting profitable and justifiable prices

Marketing specialist are responsible for most of the activities necessary to the customer the organization wants including;

(1) identifying customer needs (2) designing to meet those needs (3) communicating to prospective buyers (4) making items available at times and places (5) pricing merchandise and services to reflect cost competition and customers ability to buy (6) providing necessary service and follow up to ensure customer satisfaction

Categories of Non-Traditional Marketing: (1). Person Marketing: Marketing efforts designing to cultivate the attention, interests, and preferences of a target market towards a person (i.e celebrities, political campaigns) - celebrity endorsements: well known athletes, entertainers, ect. promote products for companies or social causes for not-for-profit organizations (2). Place Marketing: Marketing efforts to attract people and organizations to a particular geographic area; cities, states, regions, publicize their attractions to lire vacation travelers, promote themselves as a good business, showcase for ingenuity (innovative, clever), (i.e. after 9-11 there was a lot of place marketing to get people back to NYC "Find yourself Here") **(3). Cause Marketing: Identification anf marketing of a social issue, cause, or idea to selected target markets; covers a wide wide range of issues: physical fitness, literacy, child- abuse prevention, drunk driving prevention (i.e "Click it or Ticket") - Profit seeking firms link their products to social causes as a marketing practice -Can help build relationships with customers

(4). Event Marketing: Marketing of sporting, cultural, and charitable activities to selected target markets; includes sponsorship of events by firms seeking to increase public awareness/ bolster images/ boost purchase volume, (i.e Super Bowl commercials ) (5). Organization Marketing:Marketing by mutual- benefit organizations, service organizations , and government organizations intended to persuade others to accept their goals, receive their services, or contribute to them in some way (i.e American Red Cross "We Can Save Lives") - included, universities, mutual- benefit, service, cultural, and government organizations use organizational marketing to help raise funds

Cost and Functions of Marketing: (half the cost involved in a product can be traced directly to marketing) Eight Universal Functions: (1). Buying: ensuring that product offerings are available in sufficient quantities to meet customer demands (2). Selling: Using advertising, personal selling, and sales promotion to match products to customer needs (3). Transporting: Moving products from their point of production to locations convenient for purchasers (4). Storing: Warehousing and products until needed for sale (manufacturers, wholesalers, and retailers perform these) (5). Standardizing and Grading: Ensuring the product offering meet quality and quantity control of size, weights, and other variables

(6). Financing: Providing credit for channel members (wholesalers and retailers) and consumers (7). Risk Taking: Dealing with uncertainty about future customer purchases (8). Securing Marketing Information: Collecting information about consumers, competitors, and channel members for use in making marketing decisions ( called facilitating functions because it helps control standards and grades set by the federal government (final four functions- facilitating functions because they help the marketer perform the exchange and physical distribution functions) - Wholesalers: Intermediaries that operate between producers and resellers - Exchange Functions: Buying and selling

Porter's Five Forces: Model that identifies five competitive forces that influence planning strageies (A). Potential New Entrants (People): Internet reduces berries to entry; internet can increase customer's buying power by providing information that might not otherwise be easily accessible such as alternate supplies and prices -potential new entrants are sometimes blocked off by cost & difficulty entering the market (B). Bargaining Power of Suppliers: Internet increases by owners power of suppliers; the number of suppliers available to a manufacturer or retailer affects their bargaining power

(C). Bargaining Power of Buyers: Internet shifts greater power end consumers (D). Threat of Substitute Products- Internet creates new substitution threats (if customers have the opportunity to replace, marketers have to find a new market) (E). Rivalry Among Competitors: (Central idea) the four forces influences rivalry among competitors, issues such as cost & differentiation/ or lack of, with products along with the internet influences the strategies companies use to stand out from their competitors

Supervisory Management: Regional Sales Manager Supervisor- Telemarketing Office

(operational planning); daily and weekly plans, unit budgets, departmental rules and procedures

Top Management: Board of Directors Chief Executive Officer Chief Operating Officer Chief Financial Officer

(strategic planning); organization wide objectives, fundamental strategies, long term plans, total budget

Middle Management: General Sales Manager Team Leader Director of Marketing Research

(tactical planning); quarterly and semiannual plans, business unit budgets, divisional policies and procedures

Emergence of the Marketing Concept (crucial change in management philosophy) : -Sellers Market: more buyers for fewer services & goods - Buyer's Market: more goods and services than people are willing to buy (drift from this with marketing concept)

- Consumer Orientation: (advent of a strong buyer's market created a need for this, had been identified as the emergence of the marketing concept) business philosophy incorporating the marketing concept that emphasizes first determining unmet customer needs and then designing a system to satisfying them, *companies market goods, just not produce them - Marketing concept: companywide consumer orientation with the objective of achieving long- run sucess * marketing and selling will no longer by a synonymous term (market orientation- extent to which a company adopts the marketing concept)

Marketing in a Not For Profit: hope to generate as much revenue as possible to support their cause

- operate in public and private (libraries, hospitals, ) sectors, generate revenues each year through contributions and fund-raising - Generally the alliances between not-for-profit organizations and commercial firms and their executives benefit, the reality of opertating with multimillion- dollars budgets require not-for-profit organizations to maintain a focused business approach * bottom line: reference to overall company profitability

what is marketing?

- the production and marketing of goods and services - marketing has its origins in economics - psychology and sociology tie in too (explain how people make purchasing decisions)

Converting New Customers to Advocates: -Interactive Marketing: buyer-seller communication in which the customer controls the amount and type of information received from a marketer through channels such as the internees and virtual reality kiosks (provides immediate access to to key product information, allows for marketers and customers to customize their communication)

-Mobile marketing: marketing messages transmitted via wireless technology -Social Marketing: use of online social media as a communications channel for marketing messages - Buzz Marketing: some of the best repeat customers are those who are willing to spread the word- create a buzz- about a product (can be effective in attracting new customers by bridging the gap between a company and its products) Visual Buzz- the tangible expression of an issue or position

Organizations create a customer

1. identifying needs in the marketplace 2. finding out which organization can profitably serve 3. developing goods and serves to convert potential buyers into customers

Three major factors for a global marketplace:

1. international agreements are negotiated to explain trade among nations 2. technology has brought isolated companies to the marketplace 3. interdependence of the worlds economy (no nation produces all o the raw material and finish goods its citizens needs or consumes without exporting some to other countries)

4 types of utility: 1) form: conversion of raw materials and comments into finished goods and services (dinner at apple bees, samsung galaxy, jeans) - Production 2) time: availability of goods and services when consumes want them (next day delivery, dental appointment)- Marketing

3) place: availability of goods and services at convenient locations (banks in grocery stores, onsite day care)- Marketing 4) Ownership (possession): ability to transfer title to goods or services from marketer to buyer (retail sales like buying a tv , in exchange for currency, credit, or debit card payment)- Marketing

five eras in history of marketing: 1. Production Era: prior to the 1920's, "a good product will sell itself" - product orientation: (dominated business philosophy for decades) business philosophy stressing efficiency in producing a quality product, with the attitude marketing a good product will sell itself. Efficient in produce quality no guarantee *eighty percent of new products fail* 2. Sales Era: Prior to the 1950's, firms attempted to match their output to the potential number of customer who would want it "creative advertising and selling will overcome consumers resistance and persuade them to buy." -sales orientation: Assume that customers will resist purchase or nonessential goods and services but by personal selling to persuade -Marketing departments began to emerge, but selling is only one component of marketing

3. Marketing Era: Since 1950's " the consumer rules! Find a need and fill it." Followed the Great Depression, up to marketing techniques to persuade, shift from management to market perspective (shift in the focus from products and sales to satisfying customers needs). 4. Relationship Era: Since 1990's " Long term relationships with customers and other partners lead to success." - Relationship Marketing: development and maintenance of long-term, cost effective relationships with individual customers, suppliers, employees, and other partners for mutual benefit. 5. Social Era: Since 2000's "Connecting to consumers via internet and social media sites is an effective tool."

Threats:

Changing buyers tastes, likely entry of new competitors, adverse government policies

Strengths:

Cost advantages, finical reports, customer loyalty, modern production facilities

Product Strategy

Encompasses the satisfaction of all customers needs in relation to a good, service, or idea, deals with what the form should offer, and decisions about customer service like package design eat

Ethics and Social Responsibility: Doing Well by Doing Good Sustainable Products: products that can be produced, used, and disposed of with minimal impact on the environment - To be sxubstainabe, organizations myst embrace a new objective: optimize operations to minimize environmental impact/ improve social outcomes that maximized performance -relationship building in marketing begins as the product is being generated -todays complex and technologically sophisticated market environment requires making profit to employ critical thinking

Ethics: moral standards oh behavior expected by a society Social Responsibility: Marketing philsophies, polices, procedures, and actions that have the enhancement of society's welfare as a primary objective, i.e Walmart reducing energy in stores, efforts improve customer relationships, employee loyalty, marketplace success, and improved financial performance

Business Portfolio Analysis

Evaluation of a company products to determine strong or weak

First Mover Strategy:

Theory advocating that the companies first to offer a product in a marketplace will be the long-term market winner (i.e Apple, Ford, Amazon) - Risks: companies can learn from mistakes by first movers

Second Mover Strategy:

Theory that advocates observing closely the innovations of first movers and them improving on them to gain advantage in the marketplace (i.e Facebook after MySpace)

Weaknesses:

Too narrow a product line , lack of management in depth, high- cost operation due to high labor cost and obsolete production facilities, inadequate financing capabilities, weak market image

From Transaction-Based Marketing to Relationship Marketing

Transaction Based Marketing (Simple Exchange Process): Buyer and seller exchanges characterized by limited communication and little or no ongoing relationships between the parties ^ being replaced by a long-term approach that emphasizes building relationships with a customer ^ important to attract new customers, even more important to maintain loyal relationships Relationship Marketing: recognizes the critical importance on internal marketing to the sides of external marketing plans.

exchange process

activity in which two or more parties give something of value to each other to satisfy perceived needs (intangible service like haircut, college tuition or tangible like clothes, groceries)

Distribution Strategy

ensure customers find their products int he proper quantities at the right place and time, involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels

SWOT Analysis: strengths, weaknesses, opportunities, threats

review that helps planners compare internal organizational strengths and weakness with external opportunities and threats; provides managers with a critical view of organizations internal/external environments and helps them evaluate the firm's fulfillment of its basic mission

Marketing: North American Free Trade - NAFTA World Trade Organization - WTD

the activity, set of instructions, and process for reading, communicating, delivering, and changing orderings that have value for customers, clients. partners, and society at large (i.e action of business of promoting and selling products including research ) includes: 1. analyzing customer needs 2. obtaining intro to produce 3. satisfying preference 4. creating and maintain relationships

Utility (need it to survive)

want satisfying power of a good or service (i.e. the pleasure, happiness, or satisfaction obtained from consuming)