Chapter 1, Chapter 2, Chapter 4, Chapter 3

Comparing Actual Performance with Performance Standards and Making Changes, If Needed

1. Comparing actual performance with established performance standards can result in actual performance exceeding performance standards or actual performance failing to meet performance standards. 2. It is important to find out why a particular strategy is effective or ineffective so that it can be improved. 3. Marketers may have to alter the marketing objective to make it more realistic.

Self-Regulatory Forces

1. In an attempt to be good corporate citizens and to prevent government intervention, some businesses try to regulate themselves. A number of trade associations have developed self-regulatory programs 2. Many were developed to stop or slow the development of laws and government regulations.

Encouraging Compliance with Laws and Regulations

1. Legal violations usually begin when marketers develop programs that unknowingly overstep legal bounds. 2. The current trend is away from legally based organizational and compliance programs to providing incentives that foster a culture of ethics and responsibility that encourages compliance with laws and regulations.

Marketing Fuels Our Global Economy

1. Marketing is necessary to advance a global economy. 2. Advances in technology, falling political and economic barriers, and the universal desire for a higher standard of living, have made international marketing commonplace while stimulating global economic growth.

Marketing Connects People through Technology

1. Technology helps marketers understand and satisfy more customers than ever before. 2. The Internet allows marketers to disseminate information about products and interact with target markets.

At the most basic level, profits can be obtained through relationships in the following ways:

By acquiring new customers By enhancing the profitability of existing customers By extending the duration of customer relationships

business cycle

Fluctuations in the economy follow a general pattern

Willingness to Spend

People's willingness to spend (their inclination to buy because of expected satisfaction from a product) is related to their ability to buy.

Mission statement

a long-term view or vision of what the organization wants to become. An organization's mission really answers two questions: a. Who are our customers? b. What is our core competency?

CLV is a key measurement that forecasts a customer's lifetime economic contribution based on continued relationship marketing efforts.

a. It can be calculated by taking the sum of the customer's present value contributions to profit margins over a specific time frame. b. CLV can help marketers determine how best to allocate resources to marketing strategies to sustain that customer over a lifetime.

Strategic planning @ corporate

often begins at the corporate level and proceeds downward to the business-unit and marketing levels However, organizations are increasingly developing strategies and conducting strategic planning that moves in both directions to seek expertise from multiple levels.

Federal Trade Commission (FTC)

(1) It regulates a variety of business practices and focuses in particular on curbing false advertising, misleading pricing, and deceptive packaging and labeling. (2) It can issue complaints and cease-and-desist orders, and can require companies to run corrective advertising. (3) It also assists businesses in complying with laws.

Weaknesses

(internal) limitations a company faces in developing or implementing a marketing strategy.

Establishing Performance Standards

1. A performance standard is an expected level of performance against which actual performance can be compared, such as a reduction in customer complaints, a sales quota, or an increase in new-customer accounts. 2. Marketing objectives directly or indirectly set forth performance standards, usually in terms of sales, costs, or communication dimensions.

Marketing Offers Many Exciting Career Prospects

1. Around 25 to 33 percent of all civilian workers in the United States perform marketing activities. 2. Marketing knowledge and skills are valuable assets no matter what the field.

Marketing Is Important to Business and the Economy

1. Businesses must engage in marketing to survive and grow, and marketing activities are needed to reach customers and provide products. 2. Marketing activities help produce profits which are essential to the survival of individual businesses, help create a successful economy and contribute to the well-being of society.

Consumerism

1. Consumerism involves organized efforts by independent individuals, groups, and organizations seeking to protect consumers' rights. 2. These individuals and groups achieve their objectives by writing letters and e-mails to companies, lobbying government agencies, broadcasting public service announcements, and boycotting companies whose activities they deem irresponsible.

Regulatory Agencies

1. Federal regulatory agencies influence many marketing activities, including product development, pricing, packaging, advertising, personal selling, and distribution. These agencies often have the power to enforce specific laws and to establish operating rules and regulations to guide some types of industry practices. 2. Many states, cities, and towns have regulatory agencies that enforce laws and regulations regarding marketing practices within their jurisdictions. 3. State consumer protection laws offer an opportunity for state attorneys general to deal with marketing issues related to fraud and deception. Most states have consumer protection laws.

Creating the Marketing Plan

1. It provides a uniform marketing vision for the firm and is the basis for internal communication among employees. 2. It delineates marketing responsibilities and tasks and outlines schedules for implementation. 3. It presents objectives and specifies how resources are to be allocated to achieve these objectives. 4. It helps marketing managers monitor and evaluate the performance of a marketing strategy. 5. A company may develop multiple marketing plans, with each relating to a specific brand or product. 6. Organizations use many different formats, and it is important is to make sure that it aligns with corporate and business-unit strategies and is shared with all key employees. 7. Marketing planning and implementation are closely linked in successful companies. a. The marketing plan provides a framework to stimulate thinking and provide strategic direction. b. Implementation is an adaptive response to day-to-day issues, opportunities, and unanticipated situations that cannot be incorporated into marketing plans.

Monitoring Competition

1. Marketers need to monitor the actions of major competitors to determine what specific strategies competitors are using and how those strategies affect their own strategies. 2. It is not enough to analyze available information; an organization must develop a system for gathering ongoing information about competitors.

Marketing Knowledge Enhances Consumer Awareness

1. Marketing improves quality of life for customers. 2. Studying marketing allows us to understand the importance of marketing to customers, organizations, and our economy and make better purchasing decisions.

Marketing Is Used in Nonprofit Organizations

1. Marketing is also important in organizations working to achieve goals other than ordinary business objectives such as profit. 2. Government agencies engage in marketing activities to fulfill missions and goals. 3. In the private sector, nonprofit organizations also employ marketing activities to create, distribute, promote, and even price programs that benefit particular segments of society.

Opportunity

1. Opportunity—conditions that limit barriers or provide rewards—may also shape ethical marketing decisions. 2. If a marketer takes advantage of an opportunity to act unethically and is rewarded or suffers no penalty, he or she may repeat such acts in future opportunities. 3. Opportunity to engage in unethical conduct is often a better predictor of unethical activities than personal values. 4. Professional codes of conduct and ethics-related policies influence opportunity by prescribing acceptable behaviors. 5. Individual factors as well as organizational culture may influence whether an individual becomes opportunistic and tries to unethically take advantage of situations.

Organizing the Marketing Unit

1. The structure and relationships of a marketing unit, including establishing lines of authority and communication that connect and coordinate individuals, strongly affect marketing activities. 2. Companies that truly adopt the marketing concept develop an organizational culture that is based on a shared set of beliefs that places the customer's needs at the center of decisions about strategy and operations. 3. Firms must decide whether operations should be centralized or decentralized, a choice that directly impacts marketing decision making and strategy. a. In a centralized organization, top-level managers delegate little authority to lower levels. Most traditional organizations are highly centralized. b. In a decentralized organization, decision-making authority is delegated as far down the chain of command as possible. Decentralized authority allows the company to adapt more rapidly to customer needs. 4. Organizing marketing activities to align with the overall strategic marketing approach enhances organizational efficiency and performance. 5. A marketing department should clearly outline the hierarchical relationships between personnel and who is responsible for performing certain activities and making decisions.

The forces of the marketing environment affect marketers' abilities to facilitate exchanges in three ways:

1. They affect customers' lifestyles, standards of living, and preferences and needs for products. 2. They help determine whether and how a marketing manager can perform certain marketing activities. 3. They affect a marketing manager's decisions and actions by influencing buyers' reactions to the organization's marketing mix.

The Market Orientation

By the early 1950s, some businesspeople recognized they must produce what consumers want, rather than make products and try to persuade customers that they need what is produced. A market orientation requires the "organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it." Today, businesses want to satisfy customers and build meaningful, long-term buyer-seller relationships.

Economic Conditions

Changes in general economic conditions affect (and are affected by) supply and demand, buying power, willingness to spend, consumer expenditure levels, and the intensity of competitive behavior.

The Sales Orientation

During the first half of the twentieth century, competition increased and businesspeople viewed sales as the major means of increasing profits. During this era, the major marketing activities were personal selling, advertising, and distribution.

Economic Forces

Economic forces in the marketing environment influence both marketers' and customers' decisions and activities.

Promotional activities can

Educate customers about product features Urge people to take a stance on a political or social issue Sustain interest in established products

Product

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 Includes creation or modification of brand names and packaging. Impact the creation of products that meet customers' needs and wants.

Stakeholders

Marketers are also concerned with building relationships with relevant stakeholders who have a "stake," or claim, in some aspect of a company's products, operations, markets, industry, and outcomes; these may include customers, employees, investors and shareholders, suppliers, governments, communities, and many others.

Political Forces

Political, legal, and regulatory forces of the marketing environment are closely interrelated.

Promotion Variable

Relates to activities used to inform individuals or groups about an organization and its products. It can be aimed at increasing public awareness of an organization and new or existing products.

Establishing a Timetable for Implementation

Successful marketing implementation requires that employees know the specific activities for which they are responsible and the timetable for completing each activity. Since scheduling can be a complicated task, some organizations use sophisticated computer programs to plan the timing of marketing activities.

The Production Orientation

The Industrial Revolution took place in the second half of the 19th century in the United States. As a result of new technology and new ways of using labor, products entered the marketplace and consumer demand was strong.

Environmental scanning

The process of collecting information about forces in the marketing environment. a. Scanning involves observation, secondary sources such as business, trade, government, general-interest publications, and marketing research. b. Environmental scanning can give marketers an edge over competitors in taking advantage of current trends.

Ethical issues in distribution involve relationships among producers and marketing middlemen. Other serious issues include counterfeiting, manipulating a product's availability for purposes of exploitation and using coercion to force intermediaries to behave in a specific manner.

a. Channel stuffing involves shipping surplus inventory to wholesalers and retailers at an excessive rate, typically before the end of a quarter. The practice may conceal declining demand for a product or inflate financial statement earnings, which misleads investors. b. Counterfeiting is a worldwide problem; counterfeit products not only cost the firm, but they can be dangerous to the consumer.

As community members, businesses also engage in community relations and try to avoid harmful actions.

a. Corporate philanthropy is on the rise. Individual communities expect marketers to make philanthropic contributions to civic projects and institutions and to be good corporate citizens. b. Firms can significantly improve a community's quality of life through employment opportunities, economic development, and financial contributions to educational, health, cultural, and recreational causes.

Managing customer relationships requires identifying patterns of buying behavior and using that information to focus on the most promising and profitable customers.

a. Customer lifetime value (CLV) predicts the net value (profit or loss) for the future relationship with a customer. b. A customer's value over a lifetime represents an intangible asset to a marketer that can be augmented by addressing the customer's varying needs and preferences at different stages in his or her relationship with the firm. c. When marketers focus on customers chosen for their lifetime value, they earn higher profits in future periods than when they focus on customers selected for other reasons.

The ability to identify individual customers allows marketers to shift their focus from targeting groups of similar customers to increasing their share of an individual customer's purchases.

a. Focusing on share of customer requires recognizing that all customers have different needs and that not all customers weigh the value of a company equally. b. The concept of CLV may include not only an individual's tendency to engage in purchases but also his or her strong word-of-mouth communication about the company's products.

Late-mover advantage

ability of later market entrants to achieve longterm competitive advantages by not being the first to offer a certain product in a marketplace. (1) Benefits include learning from first-mover's mistakes, improved products and marketing strategies, lower initial investment costs, more market certainty, and more educated buyers. (2) Risks include first-movers holding patents and other protections on products and difficulty in convincing consumers to change brands. (3) The timing of entry to the market is crucial and can determine the amount of late-mover advantage.

Most significant competition?

brand competitors because buyers typically see the different products of these organizations as direct substitutes.

Corporate strategy planners

concerned with broad issues such as organizational culture, competition, differentiation, diversification, interrelationships among business units, and environmental and social issues. They attempt to match the resources of the organization with the opportunities and threats in the environment.

Marketing Ethics

involves principles and standards that define acceptable conduct in marketing. Acceptable conduct is determined from a number of different stakeholder groups and an organization's ethical climate. 1. When marketing activities deviate from accepted standards, the exchange process can break down, resulting in customer dissatisfaction, lack of trust, and lawsuits. 2. Consumer distrust of business has increased in recent years because of the financial crisis.

competition

other organizations that market products similar to its own or products which can be substituted for its products in the same geographic area.

first-mover advantage

the ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace. (1) Benefits include building a reputation as a market leader, reducing competition, establishing brand loyalty, and protecting trade secrets. (2) Risks include high costs associated with creating and marketing a new product, slower than predicted sales growth, and the potential for product failure.

Environmental analysis

the process of assessing and interpreting the information gathered through scanning. a. Marketers evaluate the information for accuracy, try to resolve inconsistencies in the data, and assign significance to the findings. b. Environmental analysis enables marketers to identify potential threats and opportunities linked to environmental changes.

Organization's products into four basic types

(a) Stars have a dominant share of the market and good prospects for growth; they use more cash than they generate to finance growth, add capacity, and increase market share. (b) Cash cows have a dominant share of the market but low prospects for growth; they typically generate more cash than is required to maintain market share. (c) Dogs have a subordinate share of the market and low prospects for growth; these products are often found in established markets. (d) Question marks, sometimes called "problem children," have a small share of a growing market and generally require a large amount of cash to build market share.

Marketing Costs Consume a Sizable Portion of Buyers' Dollars

1. About one-half of a buyer's dollars goes to the costs of marketing. 2. It is important to know how this money is used

Marketing environment forces can fluctuate quickly and dramatically

1. Changes in the marketing environment produce uncertainty for marketers and at times hurt marketing efforts, but they also create opportunities. Marketers who are alert can adjust and capitalize on opportunities provided by change. 2. Marketing mix elements—product, distribution, promotion, and price—are factors over which an organization has control; the forces of the environment, however, are subject to far less control.

Sales analysis

1. Sales analysis uses sales figures to evaluate a firm's current performance. 2. A common method of evaluation because sales data are readily available and can reflect the target market's reactions to a marketing mix. 3. To be useful, marketers must compare current sales data with forecasted sales, industry sales, specific competitors' sales, and the cost incurred from marketing efforts to achieve the sales volume. 4. The basic unit of measurement is the sales transaction, which includes the quantity, terms, the salesperson or sales team, and the date. 5. Firms frequently use dollar volume in their sales analysis because the dollar is a common denominator of sales, costs, and profits. 6. A marketing manager who uses dollar-volume analysis should factor out the effects of price changes, which can skew the numbers by making it seem that more or fewer sales have been made than is the actual case. 7. Market share analysis lets a company compare its marketing strategy with competitor's strategies and estimate whether sales changes have resulted from the firm's marketing strategy or from uncontrollable environmental forces. However, the results must be interpreted carefully.

marketing citizenship

1. Socially responsible organizations strive for marketing citizenship by adopting a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities their stakeholders expect of them. a. Companies that consider the diverse perspectives of stakeholders in daily operations and strategic planning are said to have a stakeholder orientation, which goes beyond customers, competitors, and regulators to understand and address the needs of all stakeholders, including communities and special interest groups. b. Organizations are under pressure to undertake initiatives which demonstrate a balanced perspective on stakeholder interests.

Coordinating Marketing Activities

1. To achieve marketing objectives, marketing managers must coordinate actions within and across departments, firms, and external organizations to ensure that marketing activities align with other functions of the firm. 2. Marketing managers can improve coordination by making each employee aware of how his or her job relates to others and how his or her actions contribute to the achievement of marketing objectives.

The marketing concept is not

A second definition of marketing. It is a management philosophy guiding an organization's overall activities A philanthropic philosophy aimed at helping customers at the expense of the organization

Relationships with customers and stakeholders

Individuals and organizations engage in marketing to facilitate exchanges—the provision or transfer of goods, services, or ideas in return for something of value. Four conditions must exist for an exchange to occur: a. Two or more individuals, groups, or organizations must participate, and each must possess something of value desired by the other party. b. The exchange should provide a benefit or satisfaction to both parties involved in the transaction. c. Each party must have confidence in the promise of the "something of value" held by the other. d. To build trust, the parties to the exchange must meet expectations An exchange will not necessarily take place just because these conditions exist; marketing activities can occur even without an actual transaction or sale. Marketing activities should attempt to create and maintain satisfying exchange relationships.

The economic, legal, ethical, and philanthropic dimensions of social responsibility can be viewed as a pyramid

a. Economic: All companies have an economic responsibility to be profitable to provide a return on investment to owners and investors, create jobs for the community, and contribute goods and services to the economy. b. Legal: Marketers are expected to compete fairly and obey all laws and regulations. c. Ethical: marketing ethics refers to principles and standards which define acceptable conduct as determined by stakeholders, including the public, government regulators, private interest groups, consumers, industry, and principals within the organization. (1) Basic standards and principles are codified as laws and regulations to encourage conformity to society's conduct expectations, but marketing ethics goes beyond legal issues. (2) Ethical marketing decisions foster trust, which helps build long-term marketing relationships. d. Philanthropic responsibilities are not required of a company but promote human welfare or goodwill, as do the economic, legal and ethical dimensions of social responsibility. (1) Many organizations link products to a particular social cause on an ongoing or short-term basis, a practice known as cause-related marketing. (2) Some companies go beyond financial contributions to adopt a strategic philanthropy approach -- a synergistic use of organizational core competencies and resources to address key stakeholders' interests and to achieve organizational and social benefits.

Promotion can create ethical issues associated with false or misleading advertising and sales promotions.

a. Greenwashing occurs when products are promoted as being more environmentally friendly than they really are. b. Bribery occurs when an incentive is offered in exchange for an illicit advantage.

marketing environment

competitive, economic, legal, regulatory, technological, and sociocultural forces, surrounds the customer and affects the marketing mix. The effects of these forces can be difficult to predict.

Strategic performance evaluation

consists of establishing performance standards, measuring actual performance, comparing actual performance with established standards, and modifying the marketing strategy, if needed.

social responsibility

refers to an organization's obligation to maximize its positive impact and minimize its negative impact on society. It deals with the total effect of all marketing decisions on society 1. Stakeholders include those constituents who have a "stake" or claim in some aspect of a company's products, operations, markets, industry and outcomes; these include customers, employees, investors and shareholders, suppliers, governments, communities and many others. 2. Evidence demonstrates that ignoring stakeholder demands for responsible marketing can destroy customer trust and even prompt government regulations. 3. Socially responsible activities can generate positive publicity and boost sales. 4. Socially responsible efforts have a positive effect on local communities and indirectly help the sponsoring organization by attracting goodwill, publicity, and potential customers and employees. 5. An organizational culture conducive to social responsibility helps engender greater employee commitment and improve business performance.

Corporate strategy

should be developed with the organization's overall mission in mind, business-unit strategy should be consistent with corporate strategy, and marketing strategy should be consistent with both.

marketing objective

states what is to be accomplished through marketing activities. a. Objectives can be given in terms of product introduction, product improvement or innovation, sales volume, profitability, market share, pricing, distribution, advertising, or employee training activities. b. Objectives should be based on a careful study of the SWOT analysis, matching strengths to opportunities, eliminating weaknesses, and minimizing threats. c. Marketing objectives should: (1) Be expressed in clear, simple terms (2) Be measurable (3) Specify a time frame for its accomplishment (4) Be consistent with both business-unit and corporate strategies (5) Be achievable and use company resources effectively, and successful accomplishment should contribute to the overall corporate strategy

strategic planning process begins

with an analysis of the marketing environment, which can influence an organization's goals, resources, and opportunities.

Both strengths and weaknesses

should be examined from a customer perspective.

Although many marketers view political forces as beyond their control and simply adjust to conditions arising from those forces, other organizations seek to influence political forces through public protests or campaign contributions.

1. A recent Supreme Court decision nullified a law limiting corporate political campaign contributions. 2. Companies can also participate in the political process through lobbying to persuade public and/or government officials to favor a particular position in decision making.

Top management should develop and enforce ethical and legal compliance programs to encourage individuals make better decisions.

1. A well-implemented ethics program (includes written standards of conduct, ethics training, and hotlines) and a strong corporate culture result in the greatest decrease in ethical risks for an organization. 2. When marketers understand the policies and requirements for ethical conduct, they can more easily resolve ethical conflicts.

Demographic and Diversity Characteristics

1. Changes in a population's demographic characteristics—age, gender, race, ethnicity, marital and parental status, income, and education—have a significant bearing on relationships and individual behavior because they lead to changes in how people live and consume products. a. One demographic change affecting the U.S. marketplace is the increasing proportion of older consumers. b. The number of singles is also on the rise and they have different spending patterns than couples and families with children. c. The U.S. is about to enter another baby boom and these children are more diverse than previous generations. d. Immigration is increasing the multicultural nature of U.S. society 2. These and other changes create unique problems and opportunities for marketers. A more diverse customer base means marketing practices must be modified and diversified to meet changing needs.

Cultural Values

1. Changes in values have dramatically influenced people's needs and desires for products; these values change at varying speeds. 2. Issues of health, nutrition, and exercise have increased in importance, affecting behavior, lifestyles, and product choices. 3. The major source of cultural values is the family. Families are changing, though children remain important parts of the decision-making process. 4. Green marketing helps organizations establish long-term consumer relationships by maintaining, supporting and enhancing the natural environment. Companies are working to confront such problems as waste disposal, recycling, and reducing packaging.

Adoption and Use of Technology

1. It is important for organizations to determine when a technology is changing an industry and to define the strategic influence of the new technology. 2. The extent to which a firm can protect inventions stemming from research also influences its use of technology. 3. Through technology assessment, managers try to foresee the effects of new products and processes on the organization's operations, on other business organizations, and on society in general.

Organizational Relationships

1. Marketers resolve ethical issues based on their experiences and what they learn from others in the organization. The outcome of this learning process depends upon the strength of personal values, opportunity for unethical behavior, and exposure to others who behave ethically or unethically. 2. Organizational or corporate culture is defined as a set of values, beliefs, goals, norms, and rituals members of an organization share. An organization's culture gives its members meaning and suggests rules for how to behave and deal with problems within the organization. 3. Top management, especially the chief executive officer or vice president of marketing, sets the ethical tone for the entire organization. 4. A coworker's influence on ethical choices is dependent upon his/her exposure to unethical behavior. In ambiguous situations, a person is more likely to behave unethically if he/she is exposed to unethical activity by others in the organization 5. Organizational pressure plays a key role in creating ethical issues.

Marketing organizations must maintain good relations with elected political officials because

1. Political officials well disposed toward particular organizations or industries are less likely to create or enforce laws and regulations unfavorable to these companies. 2. Political officials can influence how much a government agency purchases and from whom. 3. Political officials can play key roles in helping organizations secure access to foreign markets.

Responding to Environmental Forces

1. Some marketers view environmental forces as uncontrollable and remain passive and reactive to the environment. 2. Other marketers believe that environmental forces can be shaped (through economic, psychological, political, or promotional skills), and these marketers are, to a certain extent, proactive. 3. Which approach is most appropriate for a particular organization depends on its managerial philosophies, objectives, financial resources, customers, human skills, and other environmental forces.

Ethical Dimensions of Managing Supply Chain Relationships

1. Supply chains require constant vigilance from marketers. 2. Although companies often create a Supplier Code of Conduct, it requires costly regular audits to ensure that factories are following compliance standards. 3. Managing supply chain ethical decision making is important because many stakeholders hold the firm responsible for all ethical conduct related to product availability. Developing good supply chain ethics is important because it ensures the integrity of the product and the firm's operations in serving customers.

Impact of Technology

1. Technology determines how society satisfies its physiological needs and has vastly improved communications. 2. Mobile devices and consumers' increasing use of the Internet have changed how people communicate and how marketers reach consumers. 3. Negative impacts of technology include concerns over privacy and intellectual property protection. 4. The effects of technology relate to such characteristics as dynamics, reach, and the self-sustaining nature of technological progress. a. The dynamics of technology involve the constant change that often challenges the structures of social institutions. b. Reach refers to the broad nature of technology as it moves through society. c. The self-sustaining nature of technology relates to the fact that technology acts as a catalyst to spur even faster development. 5. The expanding opportunities for e-commerce—the sharing of business information, the ability to maintain business relationships, and the ability to conduct marketing transactions via digital networks—are changing the relationship between marketers and consumers.

Types of Competitive Structures

1. The number of organizations which supply a product may affect the strength of competition 2. A monopoly exists when an organization offers a product that has no close substitute, making it the sole source of supply. 3. An oligopoly exists when a few sellers control the supply of a large proportion of a product. 4. Monopolistic competition exists when an organization with many potential competitors attempts to develop a marketing strategy to differentiate its product. 5. Pure competition, if it existed, would involve a large number of sellers, no one of which could significantly influence price or supply.

Codes of Conduct

1. To improve ethics, many organizations have developed codes of conduct (also called codes of ethics), which consist of formalized rules and standards that describe the organization's employee expectations 2. Codes must be periodically revised to identify and eliminate weaknesses in the company's ethical standards and policies. 3. Codes of conduct promote ethical behavior by reducing opportunities for unethical behavior; employees know what is expected of them and what kind of punishment waits if rules are violated. 4. It is not necessary for codes of conduct to detail every situation but should provide guidelines, enabling employees to achieve organizational objectives in an ethical, acceptable manner.

Individual Factors

1. When people need to resolve ethical conflicts in their daily lives, they often base their decisions on their own values and principles of right or wrong. 2. Shared ethical values and compliance standards are required to prevent deviation from desired ethical conduct. Research has established that an organization's values often have more influence on marketing decisions than a person's own values.

Competitive advantage

A company is said to have a competitive advantage when it matches a core competency to opportunities it has discovered in the marketplace.

Legal and Regulatory Forces

A. A number of federal laws influence marketing decisions and activities (see Table 3.2). B. Procompetitive legislation refers to laws designed to preserve competition and prevent unfair trade practices. C. Consumer protection legislation includes federal and state consumer protection laws that deal with consumer safety, hazardous materials, information disclosure, and specific marketing practices.

Incorporating Social Responsibility and Ethics into Strategic Planning

A. Although the concepts of ethics and social responsibility are used interchangeably, it is important to distinguish between the two concepts. 1. Ethics relates to individual and group decisions—judgment about what is right or wrong in a particular decision-making situation. It is one dimension of social responsibility. 2. Social responsibility deals with the total effect of marketing decisions on society. B. A way of determining whether an ethical issue exists is to ask members of the organization if they approve. If an issue can withstand open discussion and results in agreement or only limited debate, an acceptable solution may exist. C. A rule of thumb for resolving ethical and social responsibility issues is that if an issue can withstand open discussion that results in agreement or limited debate, an acceptable solution may exist. D. Companies must balance the costs of being socially responsible and society's demands. E. Balancing society's demands to satisfy all members of society is difficult, if not impossible. Marketers must evaluate the extent to which members of society are willing to pay for what they want. F. Social Responsibility and Ethics Improve Marketing Performance 1. Ethical and socially responsible activities result in increased profits. Evidence suggests that a broad stakeholder view of the firm can help improve marketing practices that contribute to improved financial, social, and ethical performance. 2. A stakeholder orientation helps to broaden and redefine marketing by considering primary stakeholders such as employees, suppliers, regulators, shareholders, customers, and the community. Marketers need to analyze stakeholder relationships to maximize value for specific target markets. 3. There is growing recognition that the long-term value of socially responsible business far outweighs its short-term costs. 4. The concepts of ethics and social responsibility may be controversial; however it is desirable to incorporate ethics and social responsibility into the planning process.

Improving Marketing Ethics

A. To eliminate unethical conduct, an organization must rid itself of "bad apples" through screening techniques and enforcement of the firm's ethical standards. 1. However, organizations sometimes become "bad barrels" themselves, not because the individuals within them are unethical but because the pressures to survive and succeed create conditions (opportunities) that reward unethical behavior. 2. One way to resolve the problem of the bad barrel is to redesign the organization's image and culture so that it conforms to industry and societal norms of ethical conduct.

Examining and Responding to the Marketing Environment

A.The marketing environment consists of external forces that directly or indirectly influence an organization's acquisition of inputs (human, financial, natural resources and raw materials, and information) and creation of outputs (goods, services, or ideas). B.These influences can create opportunities and threats for marketers, so marketers try to forecast what will happen. C.Environmental Scanning and Analysis

Customer satisfaction is the major focus of the marketing concept.

An organization should focus on customer analysis, competitor analysis, and integration of the organization's resources to provide customer value and satisfaction, as well as long-term profits. The organization must continue to alter, adapt, and develop products to keep pace with customers' changing desires and preferences.

Marketing Focuses on Customers

As the purchasers of the products that organizations develop, promote, distribute, and price, customers are the focal point of all marketing activities. Develop satisfying exchanges from which both customers and marketers benefit. Focus on a specific group

Buying Power

The strength of a person's buying power depends on economic conditions and the size of the resources—money, goods, and services that can be traded in an exchange—that enable the individual to make purchases. Marketers need to be aware of current levels of and expected changes in buying power because they directly affect the types and quantities of goods and services that consumers purchase.

Value

a customer's subjective assessment of benefits relative to costs in determining the worth of a product (customer value = customer benefits - customer costs).

Strategic business unit (SBU)

a division, product line, or other profit center within the parent company. Strategic planners should recognize the performance capabilities of each SBU and carefully allocate resources among the divisions.

National Advertising Review Board (NARB)

a self-regulatory entity that considers cases in which an advertiser challenges issues raised by the National Advertising Division about an advertisement. Though it has no official enforcement powers, the NARB can publicize questionable practices and file complaints with the FTC.

Better Business Bureau

a system of nongovernmental, independent, local regulatory agencies that are supported by local businesses and aid in settling problems between specific business organizations and customers. a. The Council of Better Business Bureaus is a national organization composed of all local Better Business Bureaus. b. The National Advertising Division of the Council of Better Business Bureaus operates a self-regulatory program that investigates claims of alleged deceptive advertising.

To encourage ethical supply chains, marketers should:

a. Adopt a Global Supplier Code of Conduct and ensure that it is effectively communicated to its suppliers. b. Encourage compliance and procurement employees to work together to find ethical suppliers at reasonable costs. c. Ensure company supply chains are geographically diverse. This can be difficult because sometimes the best product manufacturers are located in a single country. d. Perform regular audits on suppliers and, if necessary, discipline those found to be in violation of company standards.

A company's mission, goals, and objectives must be properly implemented to achieve and communicate the desired corporate identity—a company's unique symbols, personalities, and philosophies.

a. An organization's goals and objectives, derived from its mission statement, guide its planning efforts. b. Goals focus on the end results sought by the organization.

Types of competition

a. Brand competitors market products with similar features and benefits to the same customers at similar prices. b. Product competitors compete in the same product class, but their products have different features, benefits, and prices. c. Generic competitors provide very different products that solve the same problem or satisfy the same basic customer need. d. Total budget competitors compete for the limited financial resources of the same customers.

Willingness to spend is affected by several factors:

a. Buying power b. A product's price and its value c. The amount of satisfaction received from a product already owned d. Expectations about future employment, income levels, prices, family size, and general economic conditions

Major sources of buying power are income, credit, and wealth.

a. Income is money received through wages, rents, investments, pensions, and subsidy payments for a given period. (1) Disposable income, or after-tax income, is used for spending or saving. It is affected by wage levels, rate of unemployment, interest rates, dividend rates, and tax rates. (2) Discretionary income is disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter. (3) Credit enables people to spend future income now or in the near future, but it increases current buying power at the expense of future buying power. (a) Credit must be available. (b) Willingness to obtain credit is affected by the interest rates. (c) Credit is also affected by the terms, such as down payment size and amount of monthly payments required. (4) Wealth is the accumulation of past income, natural resources, and financial resources.

four stages of the business cycle

a. 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. b. Recession is a stage of the business cycle during which unemployment rises and total buying power declines, stifling both consumer and business spending. (1) Marketers should focus on marketing research during a recession to determine precisely what functions buyers want and integrate these functions into their product. (2) Promotion efforts should emphasize value and utility. c. 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. d. 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.

Self-regulatory programs have both advantages and disadvantages over laws and regulatory agencies.

a. Self-regulatory programs have the advantages of being less expensive to establish and implement, have more realistic and operational guidelines, and reduce the need to expand government bureaucracy. b. Self-regulatory programs are limited because they are not mandatory for nonmembers, may lack the tools or authority to enforce guidelines, and may be less strict than those established by government agencies.

Creating Marketing Mixes

a. The decisions made in creating a marketing mix are only as good as the organization's understandings of the target market. b. Understanding comes from careful in-depth research into demographics as well as customer needs, preferences, and behavior with respect to product design, pricing, distribution, and promotion. c. Marketing mix decisions should be consistent with the business-unit and corporate strategies as well as flexible enough to permit the organization to alter the marketing mix in response to changes in marketing conditions, competition, and customer needs. d. Utilizing the marketing mix as a tool set, a company can detail how it will achieve a sustainable competitive advantage. e. A sustainable competitive advantage is one that the competition cannot copy in the foreseeable future.

ethical issue

an identifiable problem, situation, or opportunity requiring an individual or organization to choose from among several actions which must be evaluated as right or wrong, ethical or unethical. Marketers must be able to identify these issues and decide how to resolve them.

Sociocultural forces

are the influences in a society and its culture(s) which bring about changes in attitudes, beliefs, norms, customs, and lifestyles.

Corporate strategy definition

determines the means for utilizing resources in the functional areas of marketing, production, finance, research and development (R&D), and human resources to achieve the organization's goals.

Market-growth/market-share matrix

developed by the Boston Consulting Group (BCG), is based on the philosophy that a product's market growth rate and its market share are important considerations in determining its marketing strategy. (1) All the organization's SBUs and products are integrated into a single matrix and compared and evaluated to determine appropriate strategies for individual products and overall portfolio strategies. (2) Managers use this model to determine and classify each product's expected future cash contributions and future cash requirements. (3) The BCG analytical approach is more of a diagnostic tool than a guide for making strategy prescriptions. (4) This model classifies an organization's products into four basic types

marketing strategy

is the selection of a target market and the creation of a marketing mix that will satisfy the needs of target market members.

Customer relationship management (CRM)

focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships. Achieving the full profit potential of each customer relationship should be the fundamental goal of every marketing strategy.

Strategic planning

helps a firm establish an organizational mission and formulate goals; corporate strategy, marketing objectives, and marketing strategy

Market

is a group of individuals and/or organizations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products. The percentage of a market which actually buys a specific product from a particular company is referred to as that product's (or business unit's) market share.

SWOT analysis

is one tool marketers use to assess an organization's strengths, weaknesses, opportunities, and threats

When an organization matches internal strengths to external opportunities

it creates competitive advantages in meeting the needs of its customers. Companies should attempt to convert internal weaknesses into strengths and external threats into opportunities.

The Product Variable

marketing mix deals with researching customers' needs and wants and designing a product that satisfies them.

Marketing mix

product, distribution, promotion, and pricing marketers decide what type of each element to use and in what amounts. Marketers must collect detailed and up-to-date information on their target market, consumer preferences, and competitors in order to develop it

Strengths

refer to competitive advantages or core competencies that give the organization an advantage in meeting the needs of its target markets.

Technology

the application of knowledge and tools to solve problems and perform tasks more efficiently. 1. It develops out of research conducted by many different kinds of organizations. 2. Rapid technological change is expected to accelerate. 3. Technology influences buyers' and marketers' decisions.

Sustainability

the potential for the long-term well-being of the natural environment, including all biological entities, as well as the interactions among nature and individuals, organizations and business strategies. It includes the assessment and improvement of business strategies, economic sectors, work practices, technologies and lifestyles while maintaining the natural environment a. Many companies make contributions to environmental protection organizations and adopt environmentally-friendly practices. b. Products that are certified as green carry a special logo or seal from organizations like the Forest Stewardship Council. c. Although demand for economic, legal, and ethical solutions to environmental problems is widespread, the environmental movement in marketing includes many different groups, whose values and goals often conflict.

Marketing

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

Strategic marketing management

the process of planning, implementing, and evaluating the performance of marketing activities and strategies, both effectiveness and efficiency. The overall goal of strategic marketing management is to facilitate desirable customer relationships and reduce costs.

Implementing the marketing concept means optimizing the exchange relationship

the relationship between a company's financial investment in customer relationships and the return generated by customers responding to that investment.

Relationship marketing

"long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges 1. Continually deepens the buyer's trust in the company, and as the customer's confidence grows and this increases the organization's understanding of the customer's needs. 2. Relationship marketing strives to build satisfying exchange relationships between buyers and sellers by gathering useful data at all customer-contact points and analyzing that data to better understand customers' needs, desires, and habits. 3. Marketers are increasingly turning to marketing research and information technology to improve CRM. 4. By increasing customer value over time, organizations try to retain and increase long-term profitability through customer loyalty. 5. Through the use of Internet-based marketing strategies (e-marketing), companies can personalize customer relationships on a nearly one-on-one basis.

Some environmentalists and marketers believe that companies should work to protect and preserve the natural environment by implementing the following goals:

(1) Eliminate the concept of waste (2) Reinvent the concept of a product (3) Make prices reflect the true cost (4) Make environmentalism profitable

Opportunities and threats affect all organizations within an industry, market, or geographic region because they exist outside of and independently of the company.

(1) Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted upon. (2) Threats refer to barriers that could prevent the organization from reaching its objectives.

Of great importance to the consumer movement are four basic rights spelled out by President John F. Kennedy. These rights include the following:

(1) The right to safety means that marketers have an obligation not to market a product they know could harm consumers. (2) The right to be informed means consumers should have access to and the opportunity to review all relevant information about a product before buying it. (3) The right to choose means consumers should have access to a variety of products and services at competitive prices; consumers should also be assured of satisfactory quality and service at a fair price. (4) The right to be heard ensures that consumers' interests will receive full and sympathetic consideration in the formulation of government policy.

Marketing Creates Value

1. Customer benefits include anything a buyer receives in an exchange. 2. Customer costs include anything a buyer must give up to obtain the benefits provided by the product. Costs include the monetary price of the product as well as less obvious non-monetary costs, such as time and effort. 3. The process people use to determine value is not scientific. 4. In developing marketing activities, it is important to recognize that customers receive benefits based on their experiences. 5. The marketing mix, especially promotional activities and extra services or features, can be used to enhance perceptions of value.

Price Variable

1. Decisions and actions associated with establishing pricing objectives and policies and determining product prices. 2. Prices a critical component of the marketing mix because customers are concerned about the value obtained in an exchange. 3. Price is a competitive tool but can lead to intense price competition. 4. Marketing mix variables are often viewed as controllable because they can be modified; however, economic conditions, competitive structure, or government regulations may limit a marketing manager's influence.

Motivating Marketing Personnel

1. Managers must address their employees' needs and then develop motivational methods that will help employees satisfy those needs. 2. Employee rewards should be tied to organizational goals. 3. A firm can motivate its workers by directly linking pay with performance, informing workers how their performance affects department and corporate results, following through with appropriate and competitive compensation, implementing a flexible benefits program, and adopting a participative management approach. 4. Managers should also use a variety of other tools, including nonfinancial rewards such as prestige or recognition, job autonomy, skill variety, task significance, increased feedback, or even a more relaxed dress code.

Marketing Cost Analysis

1. Marketing cost analysis breaks down and classifies costs to determine which are associated with specific marketing efforts. 2. By pinpointing exactly where a company incurs costs, this form of analysis can help isolate profitable or unprofitable customers, products, and geographic areas. 3. A company that understands and manages its costs appropriately has a competitive advantage and can compete on price. 4. One way to analyze costs is by comparing a company's costs with industry averages; however, a company should take into account its own unique situation. 5. Costs can be categorized into fixed costs (always the same over time) such as rent as well as variable costs (affected by sales or production volume) such as the cost to produce product. They can also be categorized by whether they can be linked to a specific business function.

Communicating within the Marketing Unit

1. Marketing managers must be in clear communication with the firm's upper-level management to ensure that they are aware of the firm's goals and achievements and that marketing activities are consistent with the company's overall goals. 2. Communication that flows upward from the front lines of the organization to higher-level marketing managers provides important information about the needs of customers and employees. 3. Training provides employees with a forum to learn and ask questions, and results in employees who are empowered and can be held accountable for their performance. 4. Information systems expedite communications within and between departments and support other activities, such as allocating scarce organizational resources, planning, budgeting, sales analyses, performance evaluations, and report preparation.

The major components of a marketing plan include:

1. The executive summary, a one- to two-page synopsis of the entire marketing plan. 2. The environmental analysis, which provides information about the company's current situation with respect to the marketing environment, the target market, and the firm's current objectives and performance. 3. The SWOT analysis, which assesses the organization's strengths, weaknesses, opportunities, and threats. 4. The marketing objectives, a specification of the company's marketing objectives that includes qualitative and quantitative measures of what is to be accomplished. 5. The marketing strategies, which outlines how the company will achieve its objectives (identifies the target market(s) and marketing mix). 6. The marketing implementation section, which outlines how the company will implement its marketing strategies. The performance evaluation section, which explains how the company will evaluate the performance of the implemented plan (includes performance standards, financial controls, and monitoring procedures).

Analyzing Actual Performance

1. The principle means by which a marketer can gauge whether a marketing strategy has been effective in achieving objectives is by analyzing the actual performance of the marketing strategy. 2. Technology advancements have made it easier for firms to analyze actual performance.

Strategic planning process

1. The process begins with the establishment or revision of an organization's mission and goals. 2. The corporation and individual business units then develop strategies to achieve these goals. 3. The company then analyzes its strengths and weaknesses and identifies opportunities and threats within the external marketing environment. 4. Each functional area of the organization establishes its own objectives and develops strategies to achieve them, which must support the organization's overall goals and mission and should be focused on market orientation.

Socially Responsible Marketing Can Promote the Welfare of Customers and Stakeholders

1. The success of our economic system depends on marketers whose values promote trust and cooperative relationships in which customers are treated with respect. 2. Green marketing is a strategic process involving stakeholder assessment to create long-term relationships with customers while maintaining, supporting, and enhancing the natural environment. 3. By addressing concern about the impact of marketing on society, a firm can protect the interests of the general public and the natural environment.

Implementing the Marketing Concept

A market-oriented organization must accept some general conditions and recognize and deal with several problems. Management must establish an information system to discover customers' real needs and then use the information to create satisfying products. Information systems can be expensive and time-consuming. a. A company must also coordinate all its activities. This may require restructuring internal operations, including production, marketing, and other business functions. b. Requires the firm to adapt to a changing external environment and predict major changes.

Consumerism refers to the efforts of independent individuals, groups, and organizations working to protect the rights of consumers.

A number of interest groups and individuals have taken action against companies they consider irresponsible by lobbying government officials and agencies, engaging in letter-writing campaigns and boycotts, making public service announcements, and interacting with companies via social media and other websites

Distribution Variable

Helps a marketing manager make products available in the quantities desired to as many target market customers as possible. Keep inventory, transportation, and storage costs as low as possible. Select and motivate intermediaries, establish inventory control procedures and manage transportation and storage. Internet was good for this.

marketing plan

The strategic planning process ultimately yields a marketing strategy that is the framework for a marketing plan, a written document that specifies the marketing activities to be performed to implement and evaluate the organization's marketing strategies.

The marketing concept stresses that marketing begins and ends with customers.

There is a positive correlation between customer satisfaction and shareholder value.

Social Responsibility Issues

To be successful, a business must determine the social expectations of customers, government regulators, competitors, and society in general. There are three major categories of social responsibility issues

The Strategic Planning Process

With competition increasing, firms must spend more time planning—determining how to use resources and capabilities to achieve objectives and satisfy customers

Analysis of the marketing environment also includes identifying opportunities in the marketplace, which requires a solid understanding of the company's industry.

a. A market opportunity exists when the right combination of circumstances and timing permits an organization to take action to reach a particular target market. b. Strategic windows are temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a firm competing in that market.

Strategic planning must assess an organization's available financial and human resources and capabilities and how these resources are likely to change over time. Resources can include:

a. Customer satisfaction and loyalty b. Goodwill c. Reputation d. Brand names e. Core competencies, things a firm does extremely well—sometimes so well that they can give the company an advantage over its competition.

Establishing an implementation timetable involves several steps:

a. Identifying the activities to be performed b. Determining the time required to complete each activity c. Separating the activities to be performed in sequence from those to be performed simultaneously d. Organizing the activities in the proper order e. Assigning responsibility for completing each activity to one or more employees, teams, or managers

In pricing, common ethical issues are price fixing, predatory pricing, and failure to disclose the full price of a purchase.

a. Price gouging occurs when a product is priced at an exorbitant level. b. Various forms of bait and switch pricing schemes attempt to gain consumer interest with a low-priced product, but then switch the buyer to a more expensive product or add-on service.

Product-related ethical issues generally arise when marketers fail to disclose risks associated with a product or information regarding the function, value, or use of a product.

a. Product recalls occur when companies ask customers to return products found to be defective. b. Failure to maintain product quality and integrity in production is a significant ethical issue.

Selecting the Target Market

a. Selecting an appropriate target market may be the most important decision a company makes in the strategic planning process and is crucial for strategic success. b. The target market must be chosen before the organization can adapt its marketing mix to meet the customers' needs and preferences. c. When exploring possible target markets, marketing managers try to evaluate how entry could affect the company's sales, costs, and profits. d. Marketers should determine whether a selected target market aligns with the company's overall mission and objectives. e. 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. The size and number of competitors is also a concern.

Marketing concept

an organization should try to provide products that satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals.

Marketing implementation

the process of putting marketing strategies into action.