MAR 301 Midterm- Kwon, Syracuse University

Elements of marketing framework: Strategy

Design customer value-driven marketing strategy. Logic by which the company hopes to create customer value and achieve profitable customer relationships Overarching plan to achieve an objective. -segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes -targeting: the process of evaluating each market segment's attractiveness and selecting one or more segments to enter -positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

elements of the basic form for CLV

LTV= (p-c) x t -AC p=price charged to customer c=cost to firm t= expected time spent with the firm AC= acquisition cost LTV= m x t - AC m= p-c= margin

marketing strategy

Business's overall game plan for reaching people and turning them into customers of the product or services Select customers to serve (segmentation, targeting) Decide on a value proposition (differentiation, positioning)

Contents of a Marketing Plan

1) Executive summary 2) Situational analysis -industry overview and analysis -current market description (4 P's) 3) Marketing objectives -problems/challenges/barriers? Quantifiable results? 4) Marketing strategy -Target markets and positioning (geographic, demographic, psychographic characteristics, etc) 5) Implementation of Marketing strategy -campaign program -actions and tactics -milestones 6) Financials -sales forecast -expense forecast -breakeven analysis 7) Controls and contingency plans 8) References and/or appendix

Social factors

1. groups: groups influence a person's behavior. Groups that have a direct influence and to which a person belongs are called 2. family: family is the most important consumer buying organization in society ex) wife typically considers the main purchasing agent for the family for food, household products, clothing 3. roles and status 4. word of mouth influence: the impact of the personal words and recommendations of trusted friends, family, associates, and other consumers on buying behavior 5. opinion leaders: people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others 6. social networks: online communities- blogs, social networking web sites-where people socialize or exchange information and opinions

Psychological factors

1. motivation: a need that is sufficiently pressing to direct the person to seek satisfaction. Person's buying decisions are affected by subconscious motives that even the buyer may not fully understand 2. perception: the process by which people select, organize, and interpret information to form a meaningful picture of the world 3. learning: changes in an individual's behavior arising from experience 4. beliefs and attitudes: a descriptive thought that a person holds about something

Targeting

A strategy in which marketers evaluate the attractiveness of each potential segment and decide in which of these groups they will invest resources to try to turn them into customers. select the segment or segments to enter concentrating your marketing efforts on one or a few key segments consisting of the customers whose needs and desires most closely match your product or service offerings

consumer market

All the individuals and households that buy or acquire goods and services for personal consumption vs. B2B market: the marketing of products or services to other businesses and organizations

Factors influencing consumer behavior (cultural, social, personal, psychological): cultural

Culture: set of basic values, perceptions, wants, and behaviors learned by an individual from family and other important institutions Subculture: group of people with shared value systems based on common life experiences and situations -total market strategy integrates ethnic themes and cross-cultural perspectives within a brand's mainstream marketing Social class: ordered divisions in a society whose members share similar values, interests, and behaviors

The product/market expansion grid (ansoff's matrix)

Portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification product plan & market plan

Wants

The form human needs take as they are shaped by culture and individual personality examples: .food vs. big mac, fries, and soda

consumer involvement

The importance a consumer places on a product/service offerings state of mind that motivates a consumer to make a purchase, or the importance a consumer places on a product or service involvement increases with -importance of consumer need -importance of product performance -personal ego at stake -personal security at stake -involvement is NOT the same as price involvement varies across -products -people -usage situations level of involvement affects how extensively consumer searches: -number of brands examined -number of sellers considered -number of product attributes evaluated -number of external information sources used -time spent searching

vertical product differentiation

occurs in a market where the several goods that are present can be ordered according to their objective quality from the highest to the lowest Goods are different and all consumers would prefer one to the other if they were sold at the same price. Goods are of different qualities. Example: BMW vs Fiat

Decoy Effect

people's preference for one option over another changes as a result of adding a third (similar but less attractive) option ex) Popcorn option 1: small- $3 and large -$7 option 2: small-$3, medium $6.50, and large $7

Positioning

position the market offering in the minds of target customers

Value to customers

psychological: -social status -emotional benefits economic: total (life-cycle) cost savings from using a product in place of a current product. Can include $ benefits, such as bonuses, prizes, rewards, credit toward future purchases -limitations: consumers to not always calculate $$. calculation may not consider total life cycle cost functional value: -performance -reliability -durability -ease of use -design -customization -form -style

psychographic segmentation

segment markets using variables such as social class, lifestyle, personality characteristics factors considered are beliefs, attitudes, morals, motivations, overall outlook on life, interests people in the same demographic group can have very different psychographic characteristics marketers may use survey to identify psychographic characteristics

re-positioning

shift perception of your brand toward ideal point ex) dominos

Market Offerings

some combination of products, services, information, or experiences offered to a market to satisfy a need or want

Needs

states of felt deprivation examples: .physical- food, clothing, warmth, safety .social- belonging and affection .individual- knowledge and self-expression

positioning statement

summarizes company or brand positioning (who the product is for, what the product does for the consumer, point of difference: a product's benefits relative to competitor format: To (target segment and need) our (brand) is (concept) that (point of difference)

one-to-one marketing

tailoring your marketing to highlight important attributes for each potential consumer

Marketing Environment

the actors and forces OUTSIDE MARKETING that affect marketing management's ability to build and maintain successful relationships with target customers

Actors in the Microenvironment

the actors close to the company that affect its ability to engage and serve its customers- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics actors close to the company c,s,mi,cm,c,p

societal marketing concept

the idea that a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests

Selling Concept

the idea that consumers will not buy enough of the firm's products unless the firm undertakes a large-scale selling and promotion effort focuses on creating sales rather than on building longterm, profitable customer relationships

Forces in the Macroenvironment

the larger societal forces that affect the microenvironment- demographic, economic, natural, technological, political, and cultural forces DENTPC

Marketing Myopia

the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products they are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs smart marketers look beyond the attributes of the products and services they sell, like American Girl Doll- they create special experiences between the dolls an the girls

Marketing Research

the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

endowment effect

the tendency of people to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it people ascribe more value to things merely because they own them.

Descriptive research

used to better describe the market potential for a product or the demographics and attitudes of consumers used to describe a situation, subject, behavior, or phenomenon describe frequencies/patterns for factors such as market potential, demographics, attitudes main methods: surveys

Exploratory Research

used to gather preliminary info define the problem and suggest hypotheses; problem is a broad one provides initial insights, ideas or understanding about a problem involves small samples, and non-structured data collection procedures main methods: focus groups, depth interviews, observational study

Casual research

used to test hypotheses about cause and effect relationships advantages: possible to specify the nature of causal relationship between two or more variables disadvantages: it is hard to eliminate all other possible confounding variables

Positioning

view of how our offering should be perceived and remembered by customers; process of creating a distinct image in the customer's mind

product differentiation

a positioning strategy that some firms use to distinguish their products from those of competitors

examples of segmentation bases, or segmentation variables

geographic ex) nations, regions, states, counties, cities, neighborhood, population density, climate demographic ex) age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation psychographic ex) social class, lifestyle, personality behavioral ex) occasions, benefits, user status, usage rate, loyalty status

Extreme cases: mass marketing

goods are scarce or a commodity, goods can sell themselves, consumers have (virtually) the same needs, little/no competition a firm decides to ignore market segment differences and appeal the whole market with one offer or one strategy, which supports the idea of broadcasting a message that will reach the largest number of people possible

Market Segmentation

grouping consumers by some criteria, such that those within a group will respond similarly to a marketing action and those in a different group will respond differently divide the total market into smaller segments

Star (BCG Matrix)

high-growth, high-share businesses or products. they need heavy investments to finance their rapid growth. eventually their growth will slow down, and they will turn into cash cows ex) iphone

key levers to increase CLV

i. reduce customer acquisition cost ii. increase the margin iii. increase the customer retention

targeting strategies

identifying which customers to serve and which to ignore

Strengths

internal capabilities that may help a company reach its objectives

Weaknesses

internal limitations that may interfere with a company's ability to achieve its objectives

ideal segment to target

large, growing stable accessible profitable: low regulation, low competitive intensity, high willingness to pay segment with unmet needs where you have a competitive advantages: synergistic, compatibility with the company's objectives

Cash Cows (BCG Matrix)

low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. They produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment ex) macbook

Dog

low-growth, low-share businesses or products. they may generate enough cash to maintain themselves but do not promise to be large sources of cash ex) ipod

Question Marks (BCG Matrix)

low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out ex) apple tv

advantages of CLV

management of customer relationship as an asset determination of the optimal level of investments in marketing and sales activities encourage marketers to focus on the long-term value of customers instead of investing resources in acquiring "cheap" customers with low total revenue value

behavioral segmentation

marketing strategy based on actual consumer buying behavior occasion segmentation: segments divided according to occasions, when the buyers plan to buy the item, actually buy the item, or use the purchased item benefit segmentation: segments divided according to the different benefits that consumers seek from the product user status: markets segmented into nonusers, ex-users, potential users, first-time users, and regular users usage rate: markets can be segmented into light, medium, and heavy product users loyalty status: consumers can be loyal to brands, stores, and companies

Factors that affect the following Major environment forces

-demographic: study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics . analyze: changing age and family structures, geographic population shifts, educational characteristics, population diversity -economic: economic factors affect consumer purchasing power and spending. ex) changes in consumer spending, differences in income distribution -natural: physical environment and natural resources needed as inputs by marketers or affected by marketing activities. Environmental sustainability concerns have grown steadily over the past three decades. Trends- shortages of raw materials, increased pollution, increased government intervention ex) plastic bag ban -technological: new technologies create new markets and opportunities. Government agencies investigate and ban potentially unsafe products -political: forces that influence or limit various organizations and individuals in a society (laws, government agencies, and pressure groups) Legislation regulating business is intended to protect -cultural forces: institutions and other forces that affect a society's basic values, perceptions and behaviors. Persistence of cultural values (core beliefs and values have a high degree of persistence, secondary beliefs and values are more open to change)

Steps in strategic planning

1. defining the company mission 2. setting company objectives and goals 3. designing the business portfolio 4. planning marketing and other functional strategies mission goals portfolio strategies

steps of marketing research

1. defining the problem and research objectives 2. developing the research plan for collecting information 3. implementing the research plan- collecting and analyzing the data 4. interpreting and reporting the findings define problem develop research plan implement research plan interpret findings

Consumer Decision Making Process

1. need recognition (self generated or prompted by marketing stimuli) -need is big enough to trigger a decision that may be self generated (cold medicine) or prompted by marketing stimuli (pills and vitamins) 2. information search (search from internal vs. external sources) -internal search: your own search -external search: personal (friends, family), public (discussion forums), marketer-dominated: advertising, company websites, sales people 3. evaluation of alternatives -evaluate criteria: what attributes are important -short list of alternatives--> consideration set: a short list of alternatives. if your product is not considered, it cannot be purchased -careful product evaluation (research trial)- making tradeoffs -compensatory decision making: all attributes are considered simultaneously; higher ratings on one attribute can compensate for lower ratings on another -non-compensatory decision making: simplified decision making; focus on limited number of individual attributes; subjective evaluation to rule out attributes 4. purchase: consumers decide which alternative to choose from consideration set 5. post purchase behavior: post purchase customer satisfaction is key to building profitable customer relationships -cognitive dissonance: discomfort caused by post-purchase conflict --> customer dissatisfaction

personal factors

1. occupation: affects the goods and services bought. Blue-collar workers buy more rugged work clothes, whereas executives buy more business suits. marketers identify the occupational groups that have an above-average interest in their products and services 2. age and family life-cycle: people change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are age related. Buying is shaped by the stage of the family life cycle- the stages through which families might pass as they mature over time 3. economic situation: affect's the products they buy. Marketers look at spending, personal income, savings, and interest rates 4. lifestyle: a person's pattern of living as expressed in his or her activities, interests, and opinions. Measuring consumers activities, interests, and opinions of themselves 5. personality and self-concept: the unique psychological characteristics that distinguish a person or group. Consumers likely to choose brands that match their personalities

Three steps in designing a customer-driven market strategy

1. segmentation 2. targeting 3. positioning

Business portfolio (what it is, steps, Strategic Business Unit)

Collection of businesses and products that make up the company Steps: 1. analyze the firm's current business portfolio 2. develop strategies to shape the future portfolio Strategic Business Units: the key businesses that make up the company

Marketing management orientations: product concept

Consumers will favor products that offer the most quality, performance, and features ex) Apple is one company which works highly on product concept to get the best products to their consumers. Apple's products are perceived to be very high quality with innovative features and great performance. Customers go after the products of Apple and that creates a marketing pull

SWOT situational analysis (internal vs external, positive vs. negative, examples)

Goal of SWOT analysis is to match the company's strengths to attractive opportunities while eliminating or overcoming the weaknesses and minimizing the threats

BCG growth-share matrix

Growth-share matrix: portfolio-planning method that evaluates a company's SBUs in terms of market growth rate and relative market share two dimensions: 1. market growth rate- vertical axis, provides a measure of market attractiveness 2. relative market share- horizontal axis, serves as a measure of company strength in market 4 types of SBUs: star, cash cow, question mark, dog

Demands

Human wants that are backed by buying power if a customer is willing and able to buy a need or a want, it means that they have a demand for that need or a want.

Elements of marketing framework: tactics

Implementing marketing strategy -product: goods and services combination the company offers to the target market ex) variety, quality, design, features, brand name, packing, services -price: amount of money customers must pay to obtain the product ex) list price, discounts, allowances, payment period, credit terms -place: company activities that make the product available to target customers ex) channels, coverage, locations, inventory, transportation, logistics -promotion: activities that communicate the merits of the product and persuade target customers to buy it ex) advertising, personal selling, sales promotion, public relations *marketing mix tools should be blended into a comprehensive integrated marketing program that actually engages target customers and delivers the intended customer value

Marketing

Marketing is 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.

Customer Lifetime Value (CLV)

Net present value of all future streams of profits that a customer generates over the life of his or her business with the firm

positioning map

Shows consumer perceptions of their brands vs those of competing products on important buying dimensions to plan their differentiation and positioning strategies

Framing effect on risk performance

Risk-seeing for losses. Risk-aversion for gains people are motivated by avoiding a loss than acquiring for a small gain

Selling vs Marketing Concept

Selling concept: inside-out view, what the firm makes -Starting point: factory -focus: existing products -means: selling and promoting -ends: profits through sales volume Marketing concept: outside-in view, what the market wants -starting point: market -focus: customer needs -means: integrated marketing -ends: profits through customer satisfaction

Consumer psychology: framing effect

Shit in the perception of the existing state can influence judgement the way words and concepts are presented and "slanted" so that they will produce a wished-for effect A 90 percent survival rate and a 10 percent chance of death are the same things, but our mind tends to avoid something if it's presented negatively. The wording of what you use when you present something can affect people's decisions. where people decide on options based on if the options are presented with positive or negative semantics; e.g. as a loss or as a gain. People tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented

Elements of marketing framework: Analysis

Understand marketplace and customer needs. 3 c's -customer: analysis of the customer environment uncovers unmet or underserved customer needs, as well as the market the occupy -company: analysis of the company environment provides the current state of the company's resources -competition: analysis of the competition environment reveal the structure of the industry and market, key competitors in the marketplace, and the firm's relative advantage of each of the key players

Marketing Concept

achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do customer first approach

Consumer buyer behavior

buying behavior of final consumers

market development

company growth by identifying and developing new market segments for current company products attract new customers to existing products current products for new markets

market penetration

company growth by increasing sales of current products to current market segments without changing the product increase market share among existing customers increase sales of current products to current markets

product development

company growth by offering modified or new products to current market segments create new products for present markets new products for current markets

Diversification

company growth through starting up or acquiring businesses outside the company's current products and markets Introduce new products into new markets new products into new markets

Threats

current and emerging external factors that may challenge the company's performance

why firms do marketing research

customer needs/motives for buying are difficult to determine-> required by companies to obtain customer insights and market insights quality of customer insights matter

Horizontal Product Differentiation

distinctions in products that cannot be easily evaluated in terms of quality Goods are different but at the same price some consumers will buy one and some will buy other, it really depends on their preferences. Example: Pepsi vs Coca Cola

geographic segmentation

dividing a market into different geographical units

demographic segmentation

dividing a market into segments based on variables according to age, race, religion, gender, family size, ethnicity, income, and education

Reference Price Effects

evaluate relative to other prices that serve as reference points put low priced good next to high priced good put regular price next to sale price order effect: reference prices influenced by what is seen first buyer will be more price sensitive the higher the product's price relative the the to the prices of the buyers' perceived alternatives. In other words, if the buyer believes that there are many others who can deliver the same service he will focus much more on price

Opportunities

external factors that the company may be able to exploit to its advantage