MARKETING 1-10

Social Criticism of Marketing (4)

*Complaint*: : Marketing creates false wants and too much materialism. *Complaint*: Marketing creates "cultural pollution".

Social Criticism of Marketing (3)

*Complaint*: Companies often provide products or services that are not good for consumer welfare: - Products that provide little real benefit - Products that are not made well - Products that are harmful - "Planned obsolescence"

Social Criticism of Marketing (2)

*Complaint*: Companies use deceptive practices that lead customers to believe they will get more value than they actually do: - Deceptive pricing - Deceptive promotion - Deceptive packaging

Social Criticism of Marketing (1)

*Complaint*: Marketing activities force consumers to pay higher prices than they should otherwise pay. Prices are too high because of high costs associated with: - Distribution - Advertising and promotion - Excessive markups

Marketing Information System

->People, procedures and methods for generating, analyzing, disseminating, and storing marketing decision information on a regular, continuous basis.

STP marketing

Process: Analyze, Strategy, Programs [repeat]

Products, Goods & Services

Products: Goods, services, persons, ideas, organizations, activities Goods: Tangible Services: Intangible

Why Marketing Information?

Relying on: -Intuition -Executive judgment -Past experience ... ... is *insufficient.* [+ *"Group-think"* , *"Big Brain"* *"Execu-centrism"*] -> Problems

Marketing Environment

Consists of controllable factors[1], uncontrollable factors[2], organizational performance[3], feedback[4], and adaptation[5]

Measuring and Forecasting Demand (1)

Demand - Total market demand = total volume to be bought by consumers in geographic region at a point in time in a defined environment - Potential demand = upper limit of market demand - Primary demand = level of demand for all brands or products - Selective demand = level of demand for a particular brand or product

Segmentation

Dividing up a heterogeneous marketplace into smaller, homogeneous groups

Channel Structure and Prices

M -> W -> R -> C [Margin on each step] Margin: Selling price - cost of acquisition Percent Margin: Margin / Selling price

Positioning

Making the product/service/brand/firm uniquely valuable to a consumer segment [that is, in a way that sets it apart from competitors]

Simple Buyer Behavior Model

Marketing Stimuli and Other Stimuli -> Buyer's Response

Importance of Marketing

Marketing stimulates consumers, constitutes a large part of selling costs, employs many people, supports industries, affects all consumers, and plays a major role in our lives *Marketing awareness is invaluable for those in non-marketing jobs

Wants

Need shaped by culture and personality

Satisfaction

Performance compared to expectations [Performance - Expectation]

Measuring and Forecasting Demand (2)

*Estimation Methods:* - What people say? -> Survey of buyers' intentions -> Sales force opinions -> Expert opinions/multiple opinions - What people do? -> Test marketing - What people have done? -> Past sales analyses -> Leading indicators - Simulations

Business Ethics

*Ethics*: The discipline dealing with what is good and bad and with moral duty and obligation. [Definition 1] *Ethics*: Moral principles and values that govern the actions of an individual or group. [Definition 2] *Question*: Is "business ethics" an oxymoron? *Recent study*: - 79 % of teens surveyed said they felt prepared to make ethical decisions when they enter the workforce. - 38 % said it is sometimes necessary to cheat, steal, lie or behave violently to succeed.

Tenets of Environmentalism

*Pollution prevention*: Not just cleaning up waste but also eliminating or minimizing waste before it is created *Design for environment (DFE)*: Thinking ahead to design products that are easier to recover, reuse, or recycle *New clean technologies*: Looking ahead and planning new technologies for competitive advantage but which stay clean

A new Era in Marketing?

*Relationship Marketing*: all marketing activities should be oriented toward developing and nurturing long-term, trusting relationships with customers. *Societal Marketing Concept*: companies should make good marketing decisions by considering consumers' wants, the company's requirements, consumers' long-term interests, and society's long-run interests. [ 3P's -> *People, Planet, Profit*] *"Sustainability Marketing"*: Marketing that sustains the environment, limited resources and achieves profits.

Satisfied vs. Dissatisfied Customers

*Satisfied Customers*: - Are loyal: Satisfied customers migrate to competitors at a rate of 5% - Refer others: Tell 3 others about their good experiences - Are less-price sensitive, pay less attention to marketing for competing brands - Help create satisfied employees *Dissatisfied Customers*: - Stop buying: Migrate at a rate of 40% - Don't complain: 96% never report it - Do complain to others: Tell 11 others about problem

Primary vs. Secondary Data

*Single- Source data collection

Competitive Strategies

*Value Disciplines*: Basic strategies that companies use to gain leadership positions by delivering superior value to their customers. - *Operational excellence* - *Customer intimacy* - *Product leadership*

Consumer Types

- *Final consumers* (individual or households) buy goods for personal consumption - Organizational consumers buy for: -> Use in operations -> Further production, and/or -> Resale to other consumers *Question*: How do consumers respond to marketing efforts the company might use?

Competitive Strategies (2)

- *Operational excellence*: Company provides value by leading its industry in price and convenience, by reducing costs and creating a lean and efficient value delivery system. - *Customer intimacy*: Company provides value by segmenting markets and tailoring products or services to best match the needs of the targeted customers -> High customization -*Product leadership*: Company provides value by offering a continuous stream of leading-edge products or services. Product leaders are open to new ideas and solutions and bring them quickly to market.

Marketing Mix: "The 4 Ps"

- *Product* [Features, quality, brand name, packaging, service, warranty] - *Price* [ List price, discounts, price promotions, payment period] - *Promotion* [Advertising, PR and publicity, sales promotion, personal selling, Internet, event marketing] - *Place* (distribution) [Channels, location, coverage, transportation]

Break-even Analysis (2)

- BE volume (volume at which total revenues equal total costs) - BE market share - BE time BE Volume = Fixed Costs / Unit Contribution

Reasons for Entering Foreign Markets

- Chasing increased sales and profits - Comparative advantage - Advanced product life cycle and high competition in home markets

1. Identify Problem (Issue)

- Develop a statement of research objectives: -> Why is research needed? -> How will results be used? May require *exploratory research* to gain ideas and insights and/or *conclusive research* related to a specific problem/issue

Benefits of Standardization

- Economies of scale - Economies of scope - Faster marketing plan formulation - Easier control and coordination from Headquarter - Prestige of having a worldwide identity "Global Brand"

8 Marketing Functions

- Environmental analysis and marketing research - Broadening the scope of marketing - Consumer analysis - Product planning - Distribution planning - Promotion planning - Price planning - Marketing management

Marketing Plan (2) - Business Plan

- Executive Summary - Situation Analysis (5Cs, SWOT, etc.) - Key Issues, Problems and Opportunities - Marketing Objectives - Marketing Strategies (6Ps) - Action Programs and Timeline - [Budgets] - Evaluation and Control

5. Recommendations

- Firm's future actions are based on research findings. - Reports are written in language for the intended audience. - Graphs and charts are used to simplify presentation and incorporate implications of results. - Research reports should be kept in the data warehouse for future reference.

Consumer Insights

- Fresh and deep insights into customers needs and wants - Difficult to obtain [Not obvious, Customer's often unsure of their own behavior] - Not derived from more information but from better information, and more effective use of existing information.

Factors that affect customer satisfaction

- Friendly employees - Helpful employees - Courteous employees - Knowledgeable employees - Quick service - Billing clarity - Accuracy of billing - Billing timeliness - Good value - Service quality - Competitive pricing

Good marketing information enables marketers to:

- Gain a competitive edge - Reduce financial and image risks - Improve marketing mix decisions - Gain management support for decisions - Measure performance - Verify intuition ->So, it is useful both for strategic planning and for implementation (making day-to-day tactical decisions).

What is competitive advantage?

- Generate greater sales and m.s. - Attain higher margins - Create more loyal customers - Sustain long-term higher profits/firm value

Benefits of Adaptation

- Greater customer satisfaction - Increased sales - Increased brand loyalty

Marketing within the Firm (Key Issues & Questions)

- Importance of marketing in the company - Functions performed by marketing - Integration between marketing and other departments *Questions*: - How can you tell if marketing is important in a company? - Do other departments have same goals? If no, what are some divergent goals? Which are same? - How to integrate marketing with other departments?

Controllable vs. Uncontrollable Factors

- Internally directed by an organization and its marketers. - The external elements affecting an organization's performance that cannot be fully directed by that organization and its marketers.

Value Chain Concept

- Made up of marketing entities - Value chains must perform all marketing functions - Compete against other value chains - Have individual goals, but aligned through goal of delivering *superior value* to end consumer *M->W->R->C [information flow]

Challenges for Global Marketers

- Problem of Ethnocentrism - Recognizing important Cross-Cultural Differences - Finding and Reaching Global Segments [ National borders less relevant than commonalities within segment]

[2. Secondary Data] [3. Primary Data] 4. Data Analysis

- Questionnaire information is coded and numbered. - Response categories are labeled. - Summary data for each response category is calculated. - Responses are evaluated using statistical techniques, and relationships between factors are examined. -> *Correlation vs. causation*

6. Implementation of Findings

- Research reports present feedback to marketing managers. - Managers are responsible for using research results. - Implementation works best when: -> Managers have helped to design research -> Managers have control over decisions -> Managers believe in results (!)

"Consumer Bill of Rights"

- To be informed and protected against fraudulent deceitful, and misleading statements, advertisements, labels, etc.; and to be educated as to how to use financial resources wisely. [ *The right to be informed*] - To be protected against dangerous and unsafe products. [*The right to be safe*] - To be able to choose from among several available goods and services. [*The right to choose*] - To be heard by government and business regarding unsatisfactory or disappointing practices. [*The right to be heard*]

Customer value anaylsis

-> Benchmarks your firm's offerings against competitor offerings in consumers' eyes. - Identify major attributes that customers value and importance of these values. - Assess company's and competitors' performance on the valued attributes. *TWO MAJOR GOALS*: 1) Attraction/Satisfaction of consumers 2) Attainment of competitive advantage over rivals

Sustainability Marketing in Practice

-> Define mission in broad social terms rather than narrow product terms - *Through innovation company seeks ...* - Real product and marketing improvements - To reduce planned obsolescence - To reduce carbon footprint - To enhance conservation of resources

Competitor Analysis - Identifying Competitors

-> Must think both narrowly and broadly about competition *Competitors can include*: - All firms making the same product or class of products - All firms with products that supply the same benefit - All firms competing for the same consumer dollars *Defining competition in terms of "share-of-X"* - "Share of wallet" - "Share of throat"

Company Mission

-> Serves as a guide for what the organization wants to accomplish A good mission statement should be: - Market-oriented, defining the business in terms of satisfying basic customer needs - Not too broad, not too narrow - Based on the company's distinctive capabilities - Inspirational

Cannibalization [1] & Cannibalization rate

-> The diversion of some portion of your sales to your new product. [1] ->% of sales of new product coming from existing products. *Rule*: -> OK to cannibalize if ...profit from sales of new product makes up or more than makes up for lost profit from sales of existing product.

Product/Market Expansion Matrix

-> Tool for identifying company growth opportunities through market penetration, market development, product development, or diversification

Designing the Business Portfolio

-> collection of businesses and products that make up the company. *Portfolio analysis*: major activity in strategic planning whereby management evaluates the products, brands and businesses that make up the company. - Must decide which ones get high or low investment (or dropped) - Must develop strategies for growth

Value of retaining customers

->Costs 5-8 times as much to attract a new customer as to keep a current one [Ex: Ziff-Davis estimates the lifetime value of a sophisticated computer user to be about $45,000 ($25,000 for the non-technical user)]

Evolution of Marketing

1) *Barter Era* 2) *Production Era* [Output increases to meet demand, demand high & competition low] 3) *Sales Era* [Product-> Consumer] 4) *Marketing Era* [Consumer -> Product] -> Marketing Department Era & Marketing Company Era 5) *A new Era??* *Market competition and sophistication increases over time to a high level

What motivates a consumer?

1) *Needs* 2) *Wants* 3) *Demand*

Management of demand includes

1) *Stimulation* -> motivates consumer's to want firm's offerings 2) *Facilitation* -> makes it easy to purchase offerings 3) *Regulation* -> involves balancing inventory to consumer demand

3 Marketing definitions

1) Marketing is the delivery of *customer satisfaction* - at a profit. 2) Marketing is managing profitable customer relationships. 3) Marketing is the anticipation, management and satisfaction of demand through the exchange process.

Promoting Business Ethics by

1. Codes of ethics. 2. Role models. 3. Examples of (un)ethical behavior. 4. Specified punishments and encouragements. 5. Recognition that acting ethically will never put a person's job in jeopardy.

Company-wide strategic planning

1. Define the Mission 2.Design Business Portfolio 3.Set Objectives 4. Make Functional Plans

Information needed to do a BE-Analysis

1. Unit price at which the product will be sold. 2. Unit (variable) cost of the product. 3. Contribution margin [(1) - (2)]. 4. Fixed costs associated with the strategy. 5. Likely demand upon implementation of the strategy (to calculate BE time)

Break-Even for Discount, Promotion, Campaign

A price discount breaks even if: -> Unit sales [with the new price x profit margin with new price] cover the total cost of the discount A sales promotion breaks even if: -> Unit sales with the promotion are equal to the sales required to cover added variable costs. An ad campaign breaks even if: -> New unit sales cover the new fixed costs (old fixed costs plus cost of ad campaign).

Marketing Concept

Achieving organizational goals depends on knowing the needs and wants of the target markets and delivering desired satisfactions better than competitors do. - > Marketing strategies rely on a better understanding of the consumer.

What is a Market?

All the individuals (or buying units) who share a particular need or want which may be satisfied by a company's products or services now or in the future *Existing buyers * Potential buyers

Consumerism Movement

An organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers - *The right to be informed* - *The right to be safe* - *The right to choose* - *The right to be heard*

Environmentalism

An organized movement of concerned citizens, businesses, and government agencies to protect and improve people's living environment

Value

Benefits gained by customer compared to cost of obtaining the product *[Quality/Price]*

Corporate Marketing Ethics

Broad guidelines that everyone in the organization must follow that cover marketing decisions (distributor relations, advertising standards, customer service, pricing, product development, etc ...)

Targeting

Focusing on one or more consumer segments with an appropriately designed marketing mix

Needs

State of felt deprivation

Publics' demand

The attributes and needs of employees, unions, stockholders, the general public, government agencies, consumer groups, and other internal and external forces that affect company operations

Consumer demand

The attributes and needs of final consumers, industrial consumers, wholesalers and retailers, government institutions, international markets, and nonprofit institutions

Strategic Planning

The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities.

Extended Marketing Mix: "The 6Ps"

Traditional 4 Ps + *Partnerships* [- Tactical vs. Strategic partnerships] + *Position* (product, brand, company ...)

Corporate Social Responsibility

Understanding the ethical responsibility a firm has in dealing with its stakeholders, and behaving in accordance with that understanding.

The Sustainability Oriented Company

While seeking profits, goes beyond caring for the needs of today's customers and has concern for tomorrow's customers and the broader world [3P's]

Break-even Analysis

a tool to evaluate the feasibility of a prospective strategy. Determines how much sales the strategy must generate in order for it to at least pay for itself.

Satisfaction of demand includes

product availability, product performance, perceptions of safety & after-sale services

Demand

wants backed up by buying power