MTG315 Exam #1

Market opportunity

*A combination of circumstances and timing* that permits an organization to take action to reach a particular target market

Marketing Objective

*A statement of what is to be accomplished through marketing activities* To be effective, objectives should: -Be based on a study of SWOT -Be stated in clear, simple terms -Be accurately measurable -Specify a time frame for accomplishment -Be consistent with business-unit & corporate strategy

All marketing mix decisions should be ____

*Consistent* with the business-unit & corporate strategies *Flexible* to permit the organization to alter the marketing mix in response to changes in market conditions, competition, & customer needs

Corporate Strategy

*determines the means for utilizing resources* Match the resources of the organization with the opportunities and threats in the environment

Customer Lifetime Value

*predicts the net value (profit or loss) for the future relationship with the customer -Requires identifying patterns of buying behavior to focus on profitable customers -Intangible asset argument by addressing the customer's varying needs & preferences -May include strong word-of-mouth

Relationship Marketing

*refers to long-term, mutually beneficial buyer/seller relationships* -Value enhancement through satisfying exchanges -Continually deepens the buyers' trust -Increases the understanding needs -Use of e-marketing: personalization & one-on-one basis

Strategic windows

*temporary periods* of optimal fit between the key requirements of a market and the particular capabilities of a company competing in that market.

Customer Lifetime Value (Cont.)

-*Emphasis changes from "share of market" to "share of customer"* (Most basic application of this idea is 80% of business profits come from 20% of customers) -Calculated by taking the sum of the customer's present value contributions to profit market over a specific time frame (Helps determine how best to allocate resources to marketing strategies to sustain a customer over a lifetime)

If actual performance does not meet performance standards...

-Determine why a marketing strategy was less effective -Determine whether the marketing objective, against which performance is measured, is realistic or not

Sales Orientation

-During first half of 20th century, competition increased -Focus shifted to selling -Marketers learned many products did not meet consumers' needs -View sales as equaling profit -Some people incorrectly equate marketing with a sales orientation -Some firms still use a sales orientation

-Communication is facilitated by an:

--Effective training program where employees can learn, ask questions, and become accountable for marketing performance -Information system within the marketing unit and with other departments in the organization *Upward communication flow is critical to good customer service*

Value

-A customer's subjective assessment of benefits relative to costs in determining the worth of a product -Marketing creates value -Customer benefits include anything a buyer receives in exchange -Customer costs include anything a buyer must give up to obtain the benefits the product provides including cost, time, effort, & risk

Pure Competition

-A market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply -Does not exist in the real world, although some industries come close -No barriers -Unlimited Competition -E.g. Agricultural corn market

3 ways profits can be obtained through relationships

-Acquiring new customers -Enhancing the profitability of existing customers -Extending the duration of customer relationships

Centralized Organizations

-Authority is concentrated at the top level -Very little delegation to lower levels

Late-Mover Risks

-Barriers to market entry -Intellectual Property Issues (First mover may have patents on its technology & trade secrets that prevent the late mover from reverse engineering its product or producing a product that is too similar -Brand Loyalty (Customers who have already purchased the first mover's products may believe that switching to the late mover's product is too expensive or time-consuming -Opportunity Costs (Timing of entry to the market is crucial)

Corporate strategy planners are concerned with broad issues such as:

-Corporate culture -Competition -Differentiation -Diversification -Interrelationships among business units -Environmental & Social Issues

The importance of marketing in our global economy

-Costs consume a sizable portion of buyer's dollars -Used in nonprofit organizations -Important to business and the economy -Fuels our global economy -Knowledge enhances customer awareness -connects people through technology -Can promote the welfare of customers & stakeholders

Management must established an information system to ____

-Determine needs -Create satisfying products

Marketing Orientation

-Emerged in mid-20th century -Requires market intelligence: -Current and future customer needs -Disseminate info across departments -Organization-wide commitment to it Focus on new-product innovation to serve target markets

Price

-Establishes pricing objectives & policies: -Price is a critical component of the value proposition -Price can be a competitive tool -Intense price competition can lead to price wars

The marketing process consists of:

-Exchange -Value -Communication -Perceptions -Relationships

Creating the marketing mix requires

-In-depth research into the characteristics of the target market -Analysis of customer needs, preferences, and behaviors with respect to product design, pricing, distribution, and promotion

Product Orientation

-Industrial Revolution brought speed & efficiency -Products poured into the marketplace -Firms were developing to mass produce -Intense competition

Place/Distribution

-Make products available -Break bulk -Desired quantities Minimize costs: -Inventory -Transportation -Storage -Make products available at the right time & place

If actual performance exceeds performance standards...

-Marketing strategy is viewed as being effective -Try to gain an understanding of why the strategy is effective

Evolution of the Marketing Concept

-Product orientation -Sales orientation -Marketing orientation

Customers

-Purchasers of the products that organizations develop, promote, distribute, and price -Focal point of all marketing activities

Marketing

-process of creating, distributing, promoting, and pricing goods, services, & ideas -facilitate satisfying exchange relationships with customers -to develop and maintain favorable relationships with stakeholders in a dynamic environment

AMA (American Marketing Association) definition

-the activity, set of institutions, and processing of creating, communicating, delivering, and EXCHANGING offerings that have VALUE for customers, clients, partners, and society at large.

Exchanges

-the provision of transfer of goods, services, or ideas in return for something of value -Marketing builds relationships

4 Types of Competitors

1) Brand Competitors 2) Product Competitors 3) Generic Competitors 4) Total Budget Competitors

Managing Corporate Identity requires (3)

1) Broadcasting mission, goals, & values 2) Sending a consistent image 3) Implementing a visual identity with stakeholders

Competitive Structures

1) Monopoly 2) Oligopoly 3) Monopolistic Competition 4) Pure Competition

4 Stages of Business Cycle

1) Prosperity 2) Recession 3) Depression 4) Recovery

4 Conditions that must be met for an exchange to take place

1) Two or more parties possess something of VALUE 2) Provide a BENEFIT or satisfaction 3) Must have CONFIDENCE in that value 4) TRUST EXPECTATIONS must be met

2 Questions a mission statement should answer

1) Who are our customers? 2) What is our core competency?

Depression

is a business cycle stage in which unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy.

Corporate identity

A company's *unique symbols, personalities, & philosophies*, to support all the firm's activities, including marketing.

Oligopoly

A competitive structure in which a few sellers control the supply of a large proportion of a product -Some barriers -Few competitors E.g. UPS, FedEx

Monopolistic Competition

A competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to *differentiate* its product -Few barriers -Many competitors E.g. Levi Strauss jeans (Geico uses price promotion to differentiate)

Monopoly

A competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply -Many barriers -1 Competitor E.g. Utilities

Organizational Culture

A culture based on a *shared set of beliefs* that makes the customer's needs the pivotal point of the company's decisions.

Mission Statement

A long-term view, or vision, of what the organization wants to become (The goals of any organization should derive from its mission statement)

Marketing Strategy

A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market Target market selection + Creating marketing mix

Target market

A specific group of customers on whom an organization focuses its marketing efforts

SWOT Analysis

A tool to assess an organization's strengths, weaknesses, opportunities, & threats. *Strengths and weaknesses are INTERNAL factors* that can influence and organization's ability to satisfy its target market *Strengths* refer to competitive advantages or core competencies *Weaknesses* refer to any limitations a company faces *Opportunities and threats exist independent of the company (externally)* *Opportunities* refer to favorable conditions in the environment than organizations can act on *Threats* refer to barriers that may prevent the company from reaching its objectives

Passive (Environmental Scanning)

Accepting them as uncontrollable

Promotion

Activities used to inform -Increase awareness -Educate about product features -Urge people to action -Sustain interest

The strategic planning process begins with ____

An analysis of the marketing environment -including the industry in which the company is operating or intends to sell its products -Company's assess the organization's available financial and Human Resources & capabilities

Marketing Concept

An organization should -Provide products that satisfy needs -through a coordinated set of activities -that also allow achievement of organizational goals

Proactive (Environmental Scanning)

Attempting to influence and shape them

Decentralized Organizations

Decision making authority is delegated as far down the chain of command as possible

Product

Can be: -Good: A physical entity that you can touch -Service: The application of human and mechanical efforts to people or objects to provide intangible benefits to customers. -Idea- concept, philosophy, image, or issue -Product variable includes the creation or modification of brand names and packaging (May also include decisions regarding warranty and repair services).

Communication within the marketing unit

Communication that flows upward from the frontline of the marketing unit to higher-level marketing managers

Strategic Performance Evaluation

Consists of: -Establishing performance standards -Measuring actual performance -Comparing actual performance with established standards -Modifying the marketing strategy as needed

Stakeholders

Constituents who have a stake, or claim, in some aspect of a company's products, operations, markets, industry, and outcomes. -E.g. Customers, employees, Investors and shareholders, supplies, government, communities, & more.

Cash cows

Have a dominant share of the market but low prospects for growth

Total Budget Competitors

Firms that compete for the limited financial resources of the same customers

Product Competitors

Firms that compete in the same product class but market products with different features, benefits, and prices

Brand Competitors

Firms that market products with similar features and benefits to the same customers at similar prices

Generic Competitors

Firms that provide very different products that solve the same problem or satisfy the same basic customer need

Business Cycle

Fluctuations in the economy follow a general pattern

Monitoring Competition

Helps determine competitor's strategies and their effects on firm's own strategies -Guides development of competitive advantage and adjusting firm's strategy -Provides ongoing information about competitors -Information about competitors allows marketing managers to assess the performance of their own marketing efforts and to recognize the strengths and weaknesses in their own marketing strategies

Motivating Marketing Personnel

Managers must understand their employees' needs and then develop motivational methods that will help employees satisfy those needs -Rewards to employees should be tied to organizational goals and be fair, ethical, and well understood by employees -Selecting effective motivational tools has become more complex because of greater differences among workers in terms of race, ethnicity, gender, and age

Marketing Mix

Marketing is more than simply advertising or selling a product. -Product -Place/Distribution -Promotion -Price

Coordinating Marketing Activities

Marketing managers should: -Coordinate the activities of all marketing staff and integrate those activities with the marketing efforts of external organizations they work with. -Make each employee aware of how his or her job relates to others and how his or her actions contribute to achieving marketing objectives.

Sustainable Competitive Advantage

One that the *competition cannot copy* in the foreseeable future -Companies must constantly assess how to keep their competitive advantages sustainable over time

Cost Analysis

One way to analyze costs is by comparing a company's costs with industry averages

Competition

Other organizations that market products that are similar to or can be substituted for a marketer's products in the same geographic area -Established when target audience is determined -Marketing managers must consider the type of competitive structure in which the firm operates

Strategic Marketing Management

Planning, implementing, & evaluating the performance of marketing activities and strategies -Effectiveness & Efficiency

Stars

Products with a dominant share of the market and good prospects for growth

First-Mover Risks

Risks of being the first to enter a market: -High cost: It is expensive to create a new product & bring it to market. Costs include: Market research, product development, production, & marketing or buyer education costs -No guarantees for profit (Early sales growth may not be as high as the company predicted it is makes mistakes with regard to the product or its marketing) -Risk of product failure

Business-Unit Strategy

Should be consistent with corporate strategy

Establishing a Timetable for Implementation

Steps: -Identifying the activities to be performed -Determining the time required to complete each activity -Separating the activities to be performed in sequence from those to be performed simultaneously -Organizing the activities in the proper order -Assigning responsibility for completing each activity to one or more employees, teams, or managers. Planning Software

Market share

The % of a market that actually buys a specific product from a particular company is that product's (or business unit's) market share.

First-Mover Advantage

The ability of a company to achieve *long-term competitive advantages* by being the first to offer a product or service. -Build a firm's reputation as a market leader Market is free of competition Establishes brand loyalty To sustain the advantage companies protect trade secrets and technologies through patents

Late-Mover Advantage

The ability of later market entrants to achieve long-term competitive advantages by waiting to enter a market. -Learning curve (Company's can learn from first mover's mistakes, lower market entry costs since first mover has developed a supply chain infrastructure and educated consumers) -More certainty about the success of the market for the product (Market knowledge makes planning and implementing strategy easier)

Core Competencies

Things a company does extremely well, which sometimes gives it an advantage over its competition E.g. Walmart- *efficiency in supply chain management* has enabled chain to build a strong reputation for low prices at high quality levels on a wide variety of goods

Competitive Advantage

The place where *market opportunities, core competencies, & strategic windows* meet the result of a company *matching a core competency to opportunities* in the marketplace E.g. Tesco entered western U.S. market with its Fresh & Easy Neighborhood markets Competitive advantage: offering cheap, healthy food options such as 98 cent produce packages and cheap cuts of mean, local sourcing of produce and meats, offer organic and hormone-free foods, use less energy than typical grocery stores

Environmental Analysis

The process of assessing and interpreting the information gathered through environmental scanning -How Marketers deal with the information collected during scanning

Environmental Scanning

The process of collecting information about forces in the marketing environment -Monitoring the environment is crucial to an organization's survival and to the long-term achievement of its goals.

Strategic Planning Process

The process of establishing an -organizational mission -and formulating goals -corporate strategy -Marketing objectives -Marketing strategy Guided by a *market orientation* so customer satisfaction is an integral part of the process (Marketing, Production, Finance, HR)

Marketing Implementation

The process of putting marketing strategies into action Depends on: -Organization of the marketing department -Motivating marketing personnel -Effective communication -Coordinating all marketing activities -Establishing a timetable for the completion of activities

Marketing Plan

Written document that specifies the activities to be performed to implement and control the firm's marketing strategies -Provides a systematic process of: -Assessing marketing opportunities and resources -Determining objectives -Defining Strategies -Establishing guidelines for implementation and control of the marketing program

Strategic Business Unit (SBU)

a division, product line, or other profit center within the parent company *Each unit sells a distinct set of products* -to an identifiable group of customers -each competes with a well-defined set of competitors -The revenues, costs, investments, & strategic plans of each SBU can be separated from those of the parent company and evaluated to *allocate scarce resources*

Market

a group of individuals and/or organizations that have needs for products and *have the ability, willingness, & authority* to purchase those products

Green Marketing

a strategic process involving stakeholder assessment to create long-term relationships with customers while maintaining, supporting, & enhancing the natural environment

Performance Standard

an expected level of performance against which actual performance can be compared -For example, a 20% reduction in customer complaints, a monthly sales quota of $150,000, or a 10% increase per month in new-customer accounts -Performance standards are derived from marketing objectives that are set while developing marketing strategies

Question marks

have a small share of a growing market and generally require large amounts of cash to build market share

Dogs

have a subordinate share of the market and low prospects for growth

Prosperity

is a stage of the business cycle characterized by low unemployment and relatively high total income, which together cause high buying power. Marketers often expand their product offerings to take advantage of increased buying power. They may intensify distribution and promotion efforts to capture greater market share.

Recession

is a stage of the business cycle during which unemployment rises and total buying power declines, stifling both consumer and business spending. -Marketers should focus on marketing research during a recession to determine precisely what functions buyers want and integrate these functions into their product. -Promotion efforts should emphasize value and utility.

Recovery

is a stage of the business cycle in which the economy moves from depression or recession to prosperity. Marketers should be as flexible as possible to be able to adjust their strategies as economic gloom subsides and buying power increases.

Marketing environment & its 6 categories

is dynamic and includes: -Sociocultural -Legal and regulatory -Economic -Political -Technological -Competitive -"SLEPT C"

Target market selection

may be the most important decision a company makes in the strategic planning process -Identification and analysis of a target market is the foundation for developing a marketing mix -Marketers should also assess whether the company has the resources to develop the right marketing mix to meet the needs of a particular target market

Efficiency

minimizing the resources an organization uses to achieve a specific level of desired customer relationships

Effectiveness

the degree to which long-term *customer relationships* help achieve an organization's objectives

Customer Relationship Management (CRM)

uses info about customers to create marketing strategies that develop and sustain desirable customer relationships

Sales Analysis

uses sales figures to evaluate a firm's current performance -Most common method of evaluation because sales data are often are readily available -Current sales data can be compared with forecasted sales, industry sales, specific competitor's sales, or the costs incurred to achieve the sales volume