MKT 203 EXAM 1

Simon Sinek

"What you believe" -inside out: why -> how -> what

Core Competencies

"What's your special sauce?" -a source of competitive advantage that makes a significant contribution to perceived customer benefits -applications in a wide variety of markets -difficult for competitors to imitate (i.e. Nike)

Deciding whether to go abroad - forms of trade restrictions

-Tariffs = taxes, surcharges, or duties levied against imported goods - paid by importers of goods -Quotas = limit the amount of a certain product that countries can import -Embargoes = a complete bans on imports or exports -Sanctions = are politically motivated embargoes that revoke normal trade relations status

CMC - Value Proposition

-a cogent reason why the target market should buy -captures the way a customer or services' key benefits provide value to customers by satisfying their needs in a unique way **Geoffrey Moore - "Crossing the Chasm"

SA - Defining the strategic business unit

-a single business or collection of related business -has its own set of competitors -has a leader responsible for strategic planning and profitability -make execution decisions inside the BU -types of BUs: 1. customer groups (i.e. GE Aviation) 2. customer needs (i.e. GE Appliances) 3. technology (i.e. GE technology infrastructure)

The Value Chain is...

-a tool for identifying ways to create value -a set of activities that a firm operation in a specific industry performs in order to deliver a valuable offering **Every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product

Why is customer retention essential

-acquiring new customers cost 5X more than satisfying and retaining existing -average churn rate if 10% (90% retention) -5% reduction in churn rate can lift profits 25-85% depending on industry -profit rates increase over the life of a retained customer

Customer profitability

-activity based costed - ABC costing: -> measures all costs specific to a customer -> difficult to capture -> may have to use some proxies or assumptions -> can reveal a lot -are your biggest customer your most profitable? (not necessarily) -where is the sweet spot? -> midsized: standard "efficient" service - good prices -are there "bad customers" (yuh) -what is the goal? revenue or profit? (generating revenue)

Core marketing concepts - Brand

-an offering from a known source -identifies one seller's good or service as distinct -the essence of what a company stands for -"Steve Jobs on Marketing"

Developing effective B2B integrated solutions

-communication and branding activities -systems or solution buying and selling -> total problem solution from one seller (turnkey solution) -growing role of services

The buying decision process - post-purchase behavior

-consumers might feel dissonance after purchase -> "buyers remorse" -influences by satisfaction -> dissatisfied - satisfied - delighted -provide positive reinforcement -> reinforce value; initiate usage -goals: -> avoid abandonment or return; accelerate re-purchase; encourage positive word of mouth

SA - Setting and Influencing Culture

-corporate culture: "the shared experiences, stories, beliefs, and norms that characterize an organization -culture is about how people behave -creating a culture takes time and serious management attention

What is branding?

-creates differences between products -process - creates mental structure for the consumer -> helps consumers organize their knowledge about the product

Culture

-culture is the most basic cause of a person's wants and behaviors -culture is learned from family, church, school, peers, and colleagues -culture includes basic values, perceptions, wants, and behaviors

Trade shows in B2B marketing

-delivery of company message to large audiences -intro of new products > large audiences -customer opportunity for "hands on experience" with new products -potential customers can be identifies - qualified leads -general company goodwill/ free PR opportunities -father "competitive product intelligence"

Major macro-environmental forces

-demographic -natural -economic -technological -socio-cultural -political-legal

Marketing Insights

-desired end result of market research -critical learning -fundamental observation -about the market or an element of the market -diagnostic - it explains

Marketing Management Tasks

-develop market strategies and plans -capture marketing insights -connect with customers -build strong brands -shape market offerings -deliver value -communicate value -create long-term growth

Measuring brand equity - brand asset valuator

-differentiation = brand's ability. to capture attention in the cultural landscape. a powerful driver of curiosity, advocacy, and pricing power -relevance = how appropriate and meaningly a brand is to consumers. drives brand consideration and trial -esteem = measure of how highly regarded a brand is and how well is delivers on its promises. leads to trial and commitment -knowledge = depth of understanding people have of a brand - both its positive and negative info

Key customer points

-don't assume customers who don't complain are satisfied -there ARE some bad customers - non-satisfiable -the customer defines satisfaction & every employee impacts it -seek out customer complaints - they provide positive opportunities -always express appreciation for the customer's business -bring the customer "into the equation" from time to time -DO NOT overpromise and under-deliver

Deciding whether to go abroad - tactical risks to consider

-firm might not understand foreign preferences failing to offer competitively attractive product -firm might not understand foreign country's culture -firm might underestimate foreign regulations and incur unexpected costs -firm might lack managers with international experience -foreign country stability might change commercial laws, devalue currency, or expropriate foreign property

Good mission statements

-focus on a limited number of goals -stress major policies and values -define major competitive spheres -take a long term view -are short, memorable meaningful -i.e. Patagonia = "built the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis

Deciding how to enter the market - Joint Ventures ("JV")

-foreign and domestic investors "join" -each firm "shares" ownership & control -often economic/ political reasons -blend of core competencies -penetrate "touch" foreign markets quicker -opportunities for BIG disagreements!

The emergence of a new customer

-greater price awareness/ sensitivity -more value conscious -higher level of cynicism -less technophobia -openness for/ demand for new, innovative solutions -more skepticism re: politics, big business, etc -greater environmental awareness

The Market research process Step 2: develop the research plan questionnaire - Dos & Don'ts

-make it simple & specific -> avoid ambiguous or complicated words -> avoid jargon or short hand or acronyms -> no questions with a negative in them -> don't use words that can be misheard -> no hypothetical questions -avoid any bias -use response bands -no overlap in fixed responses -offer "other" in fixed response questions

Brand architecture - brand terms

-master/ family brand = source brand with multiple extension or sub-brands (i.e. Danon) -parent brand = source brand spawns extension brand or sub-brand (i.e. Danon yogurt) -brand extension = new product from existing brand (i.e. Danon yogurt fruit on the bottom) -sub-brand = combines new brand with existing brand (i.e. Toyota Camry) -brand resonance = the customer's relationship with the brand; to what level is the consumer "in synch" with the brand

Horizontal expansion - leveraging the evolved product

-merging 2 or more companies with similar operation or production processes in the supply chain (company moves to perform more services or produce more goods on the same part of the supply chain) -i.e. production mail -> production print & mail

Deciding how to enter the market - direct investment

-most costly -potentially... biggest rewards, payback -foreign based manufacturing & facilities: -> cheaper labor/ materials opportunity -> domestic firm develops better image in foreign country (creates jobs) -develop stronger relationships with suppliers, customers, gov, middlemen, etc

States of demand

-negative = customer dislikes/ avoid product -nonexistent = no awareness/ interest in product -latent = consumers have underlying need buy may not be aware of a specific solution -declining = demand for product decreasing -irregular = demand fluctuates unpredictably (often due to seasonal factors) -full = demand matches or exceeds available supply -overfull = demand exceeds available supply -unwholesome = demand may have negative social or ethical implications

Cultivating customer relationships

-personalizing/ permission marketing -customer empowerment -customer advocacy -customer complaints -> first have to hear it (25% are dissatisfied but only 5% complain) -> resolve: tell 5 others -> not resolve: gripe to 11 -> resolve quickly: repeat business jumps to 95%

Causes of switching behavior

-pricing = high price; unfair pricing; prices increases; deceptive pricing -inconvenience = location/ hours; wait for appointment or service -core service failure = service mistakes; billing errors; service catastrophe -service encounter failures = uncaring; impolite; unresponsive; unknowledgeable -response to service failure = negative, no, or reluctant response -competition = found better service -ethical problems = cheat, hard sell, unsafe, conflict of interest -involuntary switching = customer moved; provider closed

The value of E-procurement

-reduces transaction costs -> for suppliers & buyers -improves workflow -reduces cycle time -removes manual errors -greater visibility -deepens the relationship -provides efficient access Can create switching costs!

Consumer buying behavior

-refers to the buying behavior of people who buy goods and services for personal use -these people make up the consumer market -the central question fro marketers is: -> "how do consumers respond to various marketing efforts the company might use?"

Benefits of customer satisfaction

-satisfied customers do many positive things like increase brand loyalty and refer to friends -tremendous difference b/w the loyalty of satisfied customers and completely satisfied-delighted customers -> delighted customers have emotional and rational preferences for products, and this creates high customer loyalty

Good marketing research

-scientific method -> careful observation, hypothesis, prediction & testing -research creativity -> brand mascot Chester Cheetos -multiple methods -> 2-3 increase confidence -interdependence of models & data -> data interpreted from underlying models -value & cost of information -> marketing investment to justify -healthy skepticism -> can eliminate gut only decisions -ethical marketing -> watch privacy issues and hidden sales pitches

A brand plays on important role of consumers

-set and fulfill expectations -reduce risk -simplify decision making -take on personal meaning -become part of identity

Deciding which markets to enter - evaluating potential markets

-should i stay close.. -they speak our language.. -is fewer and deeper better?

Brands are hugely important to the firm

-simplify product handling -organize inventory & accounting -offer legal protection -create customer loyalty -secure price premium -enable competitive advantage

It's more and more a world market

-the world is shrinking rapidly with the advent of: -> faster communication, transportation & financial flows -trade agreements have increased flows of goods -international trade is booming -> exports account for 12-14% of the US GDP -> balance of trade concerns - worldwide -global competition is intensifying -outsourcing is on the rise -economic power is shifting - emerging economies -higher risks with globalization

The aim of really great marketing

-understand the market and the consumer so well that the product sells itself -deliver a customer that is ready to buy

Key players in the buying center

-user or initiator = will benefit most from or recognizes benefits of acquisition -influencers = more people involved as complexity and cost increase -deciders (think head of department) = can approve/ disapprove including specs, terms of sale -approvers (think VP of finance) = make final decision about purchase process and activities -buyers/ purchaser = select suppliers, negotiate terms of sale, complete purchase -gatekeepers = control information flow in purchase decisions

Of concern to marketers

-who are the major decision participants? -what decisions do they influence? -what is their level of influence? -what evaluation criteria do they use? -what's driving their actions?

The demographic environment

-worldwide population growth -age mix -ethnicity -education -household

Monitoring customer satisfaction

-you get what you measure - customer surveys, loss rates, mystery shoppers -should be goal driven -report outs don't matter unless they drive action Net Promoter Score: -how likely is it that you would recommend this product or service to a friend or colleague? -rate against a scale of 1-10; detractors: 1-6; promoters: 9-10 -net promoter score = promoters - detractors -i.e. ESL: 85%; Amazon: 64%

Holistic Marketing

1. Internal marketing = marketing department, senior management, other departments 2. Integrated marketing = communications, product & services, channels 3. Relationship marketing = customers, channel, partners 4. Performance marketing = sales revenue, brand & customer equity, ethics, environment, legal, community

The Classic 4Ps of Marketing

1. PRODUCT = variety, features, quality, design, sizes, brand, packaging, services, warranties 2. PRICE = list prices, discounts, allowances, payment period, credit terms 3. PLACE = channels, coverage, assortments, locations, inventory, transport 4. PROMOTION = sales promotion, advertising, public relations, direct marketing

The new marketing realities

1. Technology = transparency of information 2. Globalization = shifting economic drivers 3. Social responsibility = ethical, environmental, legal & social impact

How do companies work?

1. Value create = how a company helps customer to solve problem or perform a job-to-be-done at a given price -often referred to as a "value proposition" 2. Value delivery = the key resources, activities, and partners that are needs for the company to carry out what the value proposition required 3. Value capture = how the company makes money by means of a given revenue model and a given cost structure

Stages in the business buying process

1. problem recognition = need found - acquiring a good or service meets 2. general need description = high level characteristics determined 3. product specification = detailed specifications documented 4. supplier search = many avenues available - who's really searching? 5. proposal solicitation = qualified suppliers invited to submit proposal 6. supplier selection = options evaluated and selection made 7. order routine specification = final negotiations and details completed 8. performance review = suppliers routinely evaluated on performance

Three Primary buying situations

1. straight rebuy 2. modified rebuy 3. new task - considering buying for the first time

A good strategy addresses..

1. where do we compete? 2. what unique value do we bring? 3. what capabilities/ resources do we have/ need? 4. how will we sustain our unique value? 5. are we clear about what we do... and not do?

CMC - Supply Chain

A channel stretching from raw materials to components to finished products carried to final buyers -vertical integration... seeks to own as many stages as possible

What is a market?

A collection of buyers and sellers who transact over a particular product or product class -markets define a modern exchange economy

Information overload -> Market Intelligence System

A set of procedures and sources that managers use to obtain everyday info about developments in the marketing environment This is about exploring and listening: -trade publications, industry analysts, blogs (social media), employees (sales force), customer advisory boards, customers, distributors, secondary & primary research

CMC - Competition

All of the actual and potential rival offerings AND substitutes a buyer might consider

The B2B Market

All the organizations that acquire goods and services used in the production of other products or services that are sold, rented or supplied to others -organizations that provide inputs to other organizations

A dramatically changing marketplace continued

Changing Channels: -disintermediations = the process of cutting out the financial intermediary in a transaction (i.e. ally BANK "no branches = great rates") -retail transformation (i.e. coffee in a bank) Heightened Competition: -private labels = allows brands to outsource product sourcing and manufacturing to a 3rd party -mega-brands = transcends one category -deregulation = removal of legal barriers and restrictions on price, range, or geographic scope -privatization

Downsizing and divesting businesses

Companies must carefully prune, harvest, or divest businesses to release needed recourses for other uses and reduce costs (i.e. Dell phones)

The Natural Environment

Corporate Environmentalism = opportunities await those who can reconcile prosperity with environmental protection

Building relationships in the B2B world

Credibility: -expertise: level of capability -trustworthiness - motived to be honest -likability: enjoyable to work with Trust: -willingness to rely on a business partner -how open and transparent is the org> -perception of competence... integrity? -personal interactions with employees like? Reputation: -is in large part driven by the development of credibility and trust, and how that aligns with the brand -how "authentic" is the org?

Key influences of consumer behavior

Cultural factors: -culture, subculture, social classes Social factors: -reference groups, cliques, family, roles & status Personal factors: -age and stage in life, occupation & economic circumstances, personality & self concept, lifestyle & values

Deciding whether to go abroad - tactical drivers to go

Factors that draw companies into the international area: -some international markets present better profit opportunities than domestic market -firm needs larger customer base to achieve economies of scale -firm wants to reduce dependence on many one market -firm counterattacks global competitors in home markets -customers going abroad require international service

Analyzing the macro-environment

Fad = unpredictable, short lived, no real significance Trend = momentum, durability, strategic direction Mega-trend = slow to form, influences over time, significant impact

Culture - subculture

Groups of people with shared value systems based on common life experiences Major groups: -nationalities, religions, racial groups, geographic regions

Customer retention & Churn

If you "retain" 90% of your customers, you have "churned" 10% of them Causes of churn: -unmet needs/ expectations -product quality & complexity -billing issues -employees Addressing churn: -define it and set a goal -measure it and understand causes -define potential actions -justify actions

KPP - Learning

Induces changes in our behavior arising from experience -stimuli = something that causes a response -drives = strong internal stimulus impelling action -cues = minor stimuli that determine when, where and how a person responds -responses = how one reacts to stimuli -reinforcement = consequence that strengthens a response to a specific received stimulus Build a demand for a product by associating it with strong drives, using motivational cues, and providing positive reinforcement

Strategy activity - driving growth

Intensive growth: -drive additional growth out of the existing portfolio -standard course of business - always an area of focus -industry level of growth plus... grow market share -new markets, new products, new channel investments... Integrative growth: -must deeply understand customer's workflow -assess current customer work flow & where you add value -> explore ways to extend backward or forward (or within) Diversification growth: -think of this as "step out growth" -good place to start are close market adjacencies -but don't be myopic - go back to core competencies -still have to deeply assess external opportunity

Deciding how to enter the market - Licensing

Issue a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty -management contract (i.e. hotels) -contract manufacturing (local production) -franchise (turnkey approach; "business in a box")

SA - Funding business units

Management must decide how to allocate corporate resources to each SBU -portfolio-planning models -shareholder/ market value analysis

Marketing metrics

Measures that help marketers quantify, compare, and interpret performance -awareness, consideration, trial, cost per acquisition, cost per click, cost per thousand page impression (CPM) -landing page conversions, sales from innovation, customer satisfaction. retention, product quality, revenue by product, margin by product, market share, complaints, availability, share of wallet, cross sell, upsell

CMC - Needs, Wants, Demand

NEEDS: -basic human requirements: food, water, clothing, shelter -recreation, education, entertainment NEEDS BECOME WANTS: -when directed to specific objects that satisfy the need WANTS BECOME DEMANDS: -when there is an ability to pay

A Brand is...

Name, term, sign, symbol, or design (or a combination of them) intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors -"a brand is a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need"

A dramatically changing marketplace

New CONSUMER Capabilities: 1. internet = powerful info and purchasing aid 2. mobility = search, communicate, & purchase on the move 3. social media to share opinions and express loyalty 4. selective participation 5. reject a position... and reflect dissatisfaction New COMPANY Capabilities: 1. internet as a powerful information and sales channel 2. can collect fuller and richer info 3. social/ mobile = rapid - targeted "invites" 4. can improve purchasing, recruiting, training, and internal and external communications 5. can improve cost efficiency

CMC - Media

PAID MEDIA: -TV, magazine, display ads, paid search, sponsorships -fee based OWNED MEDIA: -brochures, web sites, blogs, facebook page, LinkedIn page, twitter account EARNED MEDIA: -word of mouth, buzz, gorilla, viral marketing -stills requires investment

The Market research process Step 2: develop the research plan sources of data

Primary data: -does not exist today -must be "created" -expensive -often very specific Secondary data: -exists and available -relatively inexpensive -may not be precise enough -may only answer part of the question

Quality & Marketing's role in quality

QUALITY is the totality of features and characteristics of a product or service that bear on its ability to satisfy states or implied needs Marketing drives quality: -identify and prioritize needs -define the solution to best meet the needs -position and price to deliver value - meet & exceed expectations -monitor & adjust product - price - positioning Quality drives profitability

CMC Continued

SEGMENT = group of like individuals with the same needs and wants TARGET MARKETS = prioritized segments that offer the greatest opportunity OFFERINGS: -developed for a target market -products, services, information, experiences POSITIONING = creates a distinctive place in the minds of the target market

Building loyalty

Seek out customer connection: -listening mechanisms, customer advisory board, core customer groups Build loyalty programs: -airline frequency programs, red bird Deliver values: -authentically, consistently

The Political-Legal Environment

Selecting markets: -stability... do yo play -corruption... can you successfully play Fundamental drivers in the market: -laws of the land -regulators -special interest groups Trends: -growing business legislation WW -increasing power of special interest groups (i.e. NRA)

KPP - Perception

Selective Attention: -screening out process to deal with stimuli overload -people are most likely to notice stimuli: anticipate, relate to a current need, "relatively big" Selective distortion: -we interpret info to fit our preconceptions -power of branding! -> blind taste tests prove it all the time Selective retention: -don't retain everything -more likely to retain what supports our attitudes and beliefs -plays to strong brands.. we retain the positive on brands we like

Basic consideration in a SWOT Analysis

Strength: -internal assessment - look inward -where do you excel - how do you win -what makes you profitable Weakness: -internal assessment - look inward -what factors are often part of where you lose -where are you losing $ Opportunity: -external assessment - look at the broader market -what dynamics can you take advantage of -what market trends can you leverage Threat: -external assessment - look at the broader market -what change in the market could damage you -competitor, legal, economic, technology, etc

CMC - Channels

THE COMMUNICATION CHANNEL: -deliver and receive messages to and from the target buyers THE DISTRIBUTION CHANNEL: -connect the organization to the buyer -> Direct = sales, internet, mail, mobile -> In-direct = distributors, wholesalers, retailers, agents THE SERVICE CHANNEL : -help carry out transactions through support of warehousing, transporting, financing and insuring, etc

Customer relationship management (CRM)

The process of carefully managing detailed info about individual customers and all customer "touch points" to maximize loyalty Objectives = make everyone "smart" about every customer: -serve better, up sell and cross sell, reduce customer churn, soften impact of sales force turnover -CRM system - Salesforce.com

Customer perceived value

Total customer benefit minus total customer cost

CMC - Value/ Satisfaction

VALUE: -influences by quality, service and price -> customer value triad! -sum of tangible and intangible benefits and costs SATISFACTION: -measures performance against expectations -> disappointed - satisfied - delight

Social factors - reference groups

Why are reference groups important: -expose us to new behaviors or lifestyles -they influence attitudes and self concept -they create pressures for conformity that may effect product and brand choice Membership, aspirational, dissociative, and opinion leader groups

Integrated marketing - a myriad of brand contacts

a brand contact is any information-bearing experience (positive or negative) a customer or prospect has with the brand, its product category, or its market -power brands are built from the inside!

Satisfaction

a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations

Brand communities

a specialized community of consumers and employees whose identification & activities focus around the brand

Customer lifetime value

customer lifetime value recognizes the time value of $! -transaction level profit assessments come up short -must look across the lifetime of a customer -> induces actions to deliver loyalty & a lifetime of financial flows -customer lifetime value = the net present value of the stream of future profits expected over the customer's lifetime purchases -customer acquisition cost vs future flows

What is marketed

goods, services, experiences, persons, properties, places, events, organizations, information, ideas

MARKETING

identifying and meeting needs of chosen market... profitably!

Product specifications go well beyond the product - major terms & conditions in organizational buying

the RFI = request for info the RFP = request for proposal the RFQ = request for quote

What is brand equity?

the added value endowed on products and services, which may be reflected in the way consumers think, feel, and act with respect to the brand Attributes of proof points of brand equity: -when consumers respond differently when brand is involved -when consumers display knowledge of a brand -when consumers evoke positive perceptions of preferences about a brand

Organizational buying is...

the decision-making process by which formal organizations establish the need for purchased, products, and services and identify, evaluate and choose among alternative brands and suppliers

What is a brand promise?

the marketer's vision of what the brand must be and do for consumers

Key Psychological Processes - Perception

the process by which we select, organize, and interpret info inputs to create a meaninful picture of the world

Strategic Planning

the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities Key responsibilities include: -assessing the market and the company's position in that market -managing the business as an investment portfolio -ensuring strategy development and alignment across the organization Key activities include: -defining the corporate mission -establishing strategic business units (SBUs) -assigning resources and goals to each strategic business unit -assessing growth opportunities (organic, inorganic)

Brand portfolios

the set of all brands and brand lines a particular firm offers for sale in a particular category or market segment -flanker brand = fighting brand; protects lead brands from competition -cash cow = established brand; profitable; probably low investment & growth -low end entry level = new brand to attract customers to the brand franchise - traffic builders -high end prestige = add class and credibility to the line These are in addition to primary brands! Objective = maximize market coverage so no potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval

Market Research Defined

the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing solution Objective = to develop marketing insights