Marketing Principles and Concepts

4 Cs

1. Customer solution (product) 2. Customer cost (price) 3. Convenience (place) 4. Communication (promotion)

1. What customers will we serve (target market)? 2. How can we serve these customers best (value proposition)?

2 Important Questions Marketers must Ask

Generation X

49 million people born between 1965 and 1976 in the "birth dearth" following the baby boom

1. Production 2. Product 3. Selling 4. Marketing 5. Societal marketing concepts

5 Concepts under Which Organizations design & carry out marketing strategies

1. Needs/wants/demands 2. Market offerings 3. Value/Satisfaction 4. Exchanges and relationships 5. Markets

5 Core customer and marketplace concepts

1. Understand the marketplace and customer needs/wants 2. Design a customer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships & create customer delight 5. Capture value from customers to create profits & customer equity

5 Step Marketing Process

Millennials AKA Generation Y AKA Echo Boomers

83 million children of the baby boomers, born between 1977 and 2000

General Public

A company must be concerned about their attitude towards its products and activities. Their image of the company affect their buying

Citizen-Action Publics

A company's marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, & others. Its public relations department can help it stay in touch with consumer & citizen groups

Boston Consulting Group

A leading management consulting firm that developed the best-known portfolio planning method (Growth-share matrix)

Growth-Share Matrix (stars, cash cows, question marks, dogs)

A portfolio-planning method that evaluates a company's strategic business units (SBUs) in terms of its market growth rate and relative market share.

Product/Market Expansion Grid

A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification

Market Development

A strategy for company growth by identifying & developing new market segments for current company products

Market Penetration

A strategy for company growth by increasing sales of current products to current market segments without changing the product

Product Development

A strategy for company growth by offering modified or new products to current market segments

Diversification

A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets

Promotion

Activities that communicate the merits of the product and persuade target customers to buy it

Differentiation

Actually differentiating the market offering to create superior customer value

Price

Amount of money customers must pay to obtain the product

SWOT Analysis

An overall evaluation of the company's Strengths, Weaknesses, Opportunities, and Threats

Public (there are 7)

Any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. (Financial, Media, Government, Citizen-Action, Local, General, & Internal)

Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of your target consumers

Consumer-generated marketing

Brand exchanges created by consumers themselves-both invited and uninvited- by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers

Business Markets

Buy goods & services for further processing or for use in their production process

Reseller Markets

Buy goods and services to resell at a profit

International Markets

Buyers in other countries, including consumers, producers, resellers, and governments

Media Publics

Carries news, features, and editorial opinion. Includes newspapers, magazines, and radio & TV stations

Operating control

Checking on-going performance against the annual plan and taking corrective action when necessary

Strategic Business Units (SBUs)

Classified as stars, cash cows, question marks, or dogs.

1. Company Profits 2. Consumer Wants 3. Society's interests

Companies should balance 3 considerations in setting their marketing strategies:

-Consumer research -Product development -Communication -Distribution -Pricing -Service

Core marketing Activities

Resellers

Distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers

Market Segmentation

Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs

Economic Environment

Factors that affect consumer buying power & spending patterns

Marketing Intermediaries

Firms that help the company to promote, sell, & distribute its goods to final buyers. Includes resellers, physical distribution firms, marketing service agencies, & financial intermediaries

Attract new customers by promising superior value and keep & grow current customers by delivering satisfaction

Goal of marketing

Butterflies

Good fit between company's offerings and customer's needs; high profit potential

True Friends

Good fit between company's offerings and customer's needs; highest profit potential

Physical distribution firms

Help the company stock and move goods from their points of origin to their destinations

Stars

High-growth, high-share businesses or products. Often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows

Demands

Human wants that are backed by buying power

Financial intermediaries

Include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying & selling of goods

Place

Includes company activities that make the product available to target consumers

Local Publics

Includes neighborhood residents & community organizations. Large companies usually appoint a community relations officer to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes

Internal Publics

Includes workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate these.

Financial Publics

Influences the company's ability to obtain funds. Banks, investment houses & stockholders are the major financial publics

Barnacles

Limited fit between company's offerings and customer needs- low profit potential

Strangers

Little fit between company's offerings and company's needs; lowest profit potential

Strategic Control

Looking at whether the company's basic strategies are well-matched to its opportunities

Cash Cows

Low-growth, high-share businesses or products. These established & successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment

Dogs

Low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

Question Marks

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

Government Publics

Management must take government developments into account. Marketers must often consult the company's lawyers on issues of product safety, truth in advertising, & other matters.

Customer-managed relationships

Marketing relationships in which customers, empowered by today's new digital technologies, interact with companies and with each other to shape their relationships with brands

Marketing Service Agencies

Marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

Club Marketing Programs

Offer members special benefits and create member communities (i.e., Harley Owners Group)

Downsizing

Reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company's overall strategy

Market Offerings

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

Mission Statement

Statement of the organization's purpose- what it wants to accomplish in the larger environment

Needs

States of felt deprivation. Includes food, clothing, warmth, safety, belonging & affection, knowledge, and self expression

Baby Boomers

The 78 million people born during the baby boom following World War II and lasting until 1964 (1946-1964). Wealthiest generation in US history. Often split into 3 groups by marketers: leading edge-boomers, core boomers, & trailing edge boomers

Exchange

The act of obtaining a desired object from someone by offering something in return

Marketing Environment

The actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers

Microenvironment

The actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customer markets, competitors, and publics

Marketing management

The art and science of choosing target markets and building profitable relationships with them

Business Portfolio

The collection of businesses and products that make up the company

Customer perceived value

The customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers

Customer satisfaction

The extent to which a product's perceived performance matches a buyer's expectations

Wants

The form human needs take as they are shaped by culture and individual personality. Shaped by one's society and are described in terms of objects that will satisfy needs. When backed by buying power, these become demands.

Value proposition

The full positioning of a brand- the full mix of benefits upon which it is positioned. Answers customer's question, "Why should I buy your brand rather than a competitor's?"

Product

The goods-and-services combination the company offers to the target market

Societal Marketing concept

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

Production concept

The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency. **Can lead to marketing myopia

Product concept

The idea that consumers will favor products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements

Selling concept

The idea that consumers will not buy enough of the firm's products unless undertakes a large-scale selling and promotion effort

Macroenvironment (often considered uncontrollable)

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

Market Strategy

The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships

Marketing concept

The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do

Marketing myopia

The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products

Return on Investment

The net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities.

Value Delivery Network

The network made up of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system

Customer relationship management

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

Share of market/Share of customer

The portion of the customer's purchasing that a company gets in its product categories. Banks: "Share of wallet" Supermarkets and restaurants: "Share of stomach" Car companies "Share of garage." Airlines: "Share of travel"

Marketing

The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return (managing profitable customer relationships)

Portfolio Analysis

The process by which management evaluates the products & businesses that make up the company

Strategic Planning

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

Market Targeting

The process of evaluating each market segment's attractiveness and selecting one or more segments to enter

Marketing Control

The process of measuring and evaluating the results of marketing strategies & plans & taking corrective action to ensure that objectives are achieved

Marketing Implementation

The process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives

Value Chain

The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products

Market

The set of all actual and potential buyers of a product or service

Marketing Mix

The set of controllable tactical marketing tools- product, price, place, and promotion- that the firm blends to produce the response it wants in the target market

Demography

The study of human populations in terms of size, density, location, age, gender, race, occupation & other statistics

Customer equity

The total combined customer lifetime values of all of the company's customers

Customer lifetime value

The value of the entire stream of purchases that the customer would make over a lifetime of patronage

Industrial Economies

These economies constitute rich markets for many different kinds of goods

Subsistence Economies

These economies consume most of their own agricultural and industrial output and offer few market opportunities

Partner relationships management

Working closely with partners in other company departments and outside the company to jointly bring greater value to customers

Consumer Markets

individuals & households that buy goods & services for personal consumption

Government markets

made up of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them