Quiz 1 Marketing

LO 5.5: Explain how characteristics of the purchase situation influence consumer behavior.

INDIVIDUALS ARE AFFECTED BY THE PURCHASE SITUATION PURCHASE SITUATION--takes into account the purpose, time available, and location where a purchase is made. Consumers consider the purpose for the purchase Time affects what happens Surroundings affect buying too

LO9: Understand why strategies for opportunities in international markets should be considered.

INTERNATIONAL OPPORTUNITIES SHOULD BE CONSIDERED The world is getting smaller Develop a competitive advantage at home and abroad Get an early start in a new market Find better trends in variables Weigh the risks of going abroad

LO 1.2: Understand the difference between marketing and macro-marketing.

MACRO-MARKETING MACRO-MARKETING--a social process that directs an economy's flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society. Emphasis is on whole system Separation between producers and consumers (Exhibit 1-1) "Marketing Facilitates Production and Consumption" ECONOMIES OF SCALE--as a company produces larger numbers of a particular product, the cost of each unit of the product goes down.

LO 6.6: Know about the number and distribution of manufacturers and why they are an important customer group.

MANUFACTURERS ARE IMPORTANT CUSTOMERS There are not many big ones Customers cluster in geographic areas Business data often classify industries NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS) CODES--codes used to identify groups of firms in similar lines of business. (Exhibit 6-8) "Illustrative NAICS Code Breakdown for Apparel Manufacturers"

LO 4.2: Know what market segmentation is and how to segment product-markets into submarkets.

MARKET SEGMENTATION DEFINES POSSIBLE TARGET MARKETS Market segmentation is a two-step process MARKET SEGMENTATION--a two-step process of (1) naming broad product-markets and (2) segmenting those broad product-markets in order to select target markets and develop suitable marketing mixes. Naming broad product-markets is disaggregating (Exhibit 4-3) "Narrowing Down to Target Markets" Market grid is a visual aid to market segmentation (Exhibit 4-4) "A Market Grid Diagram with Submarkets" Segmenting is an aggregating process SEGMENTING--an aggregating process—clustering people with similar needs into a "market segment." MARKET SEGMENT--a (relatively) homogeneous group of customers who will respond to a marketing mix in a similar way. (Exhibit 4-5) "Every Individual Has His or Her Own Unique Position in a Market— Those with Similar Positions Can be Aggregated into Potential Target Markets" How far should the aggregating go? Criteria for segmenting a broad product-market

LO1: Understand what a marketing manager does.

MARKETING MANAGEMENT PROCESS--the process of (1) planning marketing activities, (2) directing the implementation of the plans, and (3) controlling these plans. (Exhibit 2-1) "The Marketing Management Process" Managers should seek new opportunities before customer interests pass them by Strategic management planning concerns the whole firm STRATEGIC (MANAGEMENT) PLANNING--the managerial process of developing and maintaining a match between an organizations' resources and its market opportunities.

LO 1.1: Know what marketing is and why you should learn about it

MARKETING--WHAT'S IT ALL ABOUT? Marketing is more than selling or advertising How did all those bicycles get here? PRODUCTION--actually making goods or performing services. CUSTOMER SATISFACTION--the extent to which a firm fulfills a consumer's needs, desires, and expectations. MARKETING IS IMPORTANT TO YOU Marketing is important to every consumer Marketing will be important to your job Use a marketing approach to get your next job Marketing affects innovation and standard of living INNOVATION--the development and spread of new ideas, goods, and services. HOW SHOULD WE DEFINE MARKETING? There are micro and macro views of marketing Marketing defined MARKETING--the performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producer to customer or client. Applies to profit and nonprofit organizations More than just persuading customers Begins with customer needs Does not do it alone Marketing involves exchanges PURE SUBSISTENCE ECONOMY—each family unit produces everything it consumes. Builds a relationship with the customer The focus of this text—management-oriented micro-marketing

LO 4.5: Recognize how some computer-aided methods are used in segmenting.

MORE SOPHISTICATED TECHNIQUES MAY HELP IN SEGMENTING AND TARGETING Clustering usually requires a computer CLUSTERING TECHNIQUES--approaches used to try to find similar patterns within sets of data. Marketing Analytics in Action: Cluster Analysis A customer database can focus the effort CUSTOMER RELATIONSHIP MANAGEMENT (CRM)--an approach where the seller fine-tunes the marketing effort with information from a detailed customer database. What's Next? Target Reads its Customers' Minds Targeting a segment of one Smartphones help target customers by current location

LO8: Know four broad types of marketing opportunities that help in identifying new strategies.

Market penetration MARKET PENETRATION--trying to increase sales of a firm's present products in its present markets—probably through a more aggressive marketing mix. Market development MARKET DEVELOPMENT--trying to increase sales by selling present products in new markets. Product development PRODUCT DEVELOPMENT--offering new or improved products for present markets. Diversification DIVERSIFICATION--moving into totally different lines of business—perhaps entirely unfamiliar products, markets, or even levels in the production-marketing system. Which opportunities come first?

LO2: Understand why company objectives are important in guiding marketing strategy planning.

OBJECTIVES SHOULD SET FIRM'S COURSE A mission statement helps set the course MISSION STATEMENT--sets out the organizations basic purpose for being. The whole firm must work toward the same objectives Company objectives should lead to marketing objectives (Exhibit 3-2) "A Hierarchy of Objectives"

LO 4.3: Know three approaches to market-oriented strategy planning

Target marketers aim at specific targets SINGLE TARGET MARKET APPROACH--segmenting the market and picking one of the homogeneous segments as the firm's target market. MULTIPLE TARGET MARKET APPROACH--segmenting the market and choosing two or more segments, and then treating each as a separate target market needing a different marketing mix. COMBINED TARGET MARKET APPROACH--combining two or more submarkets into one larger target market as a basis for one strategy. (Exhibit 4-6) "Segmenters and Combiners Aim at Specific Target Markets" Combiners try to satisfy "pretty well" COMBINERS--firms that try to increase the size of their target markets by combining two or more segments. Segmenters try to satisfy "very well" SEGMENTERS--aim at one or more homogeneous segments and try to develop a different marketing mix for each segment. Segmenting may produce bigger sales Should you segment or combine? Profit is the balancing point

LO 6.3: Describe each step in the model of organizational/business buying.

A MODEL OF BUSINESS AND ORGANIZATIONAL BUYING (Exhibit 6-4) "A Model of Organizational Buying" STEP 1: DEFINING THE PROBLEM From recognizing problems to describing needs Specifications describe the product PURCHASING SPECIFICATIONS--a written description of what the firm wants to buy.

LO4: Know how to conduct a competitor analysis and how different types of competition affect strategy planning.

ANALYZING COMPETITORS AND THE COMPETITIVE ENVIRONMENT Avoid head-on competition COMPETITIVE ENVIRONMENT--the number and types of competitors the marketing manager faces and how they may behave. Kinds of competitive situations Competitor-free environments are rare Pure competition and oligopoly when there is little or no differentiation Monopolistic competition is typical and a challenge SUSTAINABLE COMPETITIVE ADVANTAGE--a marketing mix that customers see as better than a competitor's mix and cannot be quickly or easily copied. Analyze competitors to find competitive advantage COMPETITOR ANALYSIS--an organized approach for evaluating the strengths and weaknesses of current or potential competitors' marketing strategies. Keep a closer eye on competitive rivals COMPETITIVE RIVALS--a firm's closest competitors. MARKET SHARE--the portion of total sales in a product category accounted for by a particular brand. Marketing Analytics in Action: Market Share Actively seek information about competitors Ethical issues may arise

LO 6.1: Name and give examples of the different types of business and organizational buyers.

BUSINESS AND ORGANIZATIONAL CUSTOMERS—A BIG OPPORTUNITY BUSINESS AND ORGANIZATIONAL CUSTOMERS--any buyers who buy for resale or to produce other goods and services. (Exhibit 6-1) "Understanding Business and Organizational Customers for Marketing Strategy Planning"

LO3: See how the resources of a firm affect the search for opportunities.

COMPANY RESOURCES MAY LIMIT SEARCH FOR OPPORTUNITIES Financial resources determine opportunities What and how many can be produced? At what cost? Marketing strategies often build on existing marketing resources

LO 5.4: Describe how culture and ethnicity influence consumer buying behavior.

CULTURE, ETHNICITY, AND CONSUMER BEHAVIOR Culture surrounds the other influences CULTURE--the whole set of beliefs, attitudes, and ways of doing things of a reasonably homogeneous set of people. Do ethnic groups buy differently? Ethnic markets are increasingly important Hispanic market is large and growing African Americans appreciate cultural traditions Asian Americans are smaller in number, higher in income Stereotypes are common and misleading Customer behavior differs across international markets

LO4: Be familiar with the Four Ps in a marketing mix.

DEVELOPING MAREKTING MIXES FOR TARGET MARKETS There are many marketing mix decisions The "Four Ps" make up a marketing mix (Exhibit 2-4) "A Marketing Strategy—Showing the Four Ps of a Marketing Mix" (Exhibit 2-5) "Strategy Decision Areas Organized by the Four Ps" Product - the good or service for the target's needs Place - reaching the target CHANEL OF DISTRIBUTION--any series of firms (or individuals) that participate in the flow of products from producer to final user or consumer. (Exhibit 2-6) "Four Examples of Basic Channels of Distribution for Consumer Products" Promotion—telling and selling the customer PERSONAL SELLING--involves direct spoken communication between sellers and potential customers. CUSTOMER SERVICE--a personal communication between a seller and a customer who wants the seller to resolve a problem with a purchase. MASS SELLING--communicating with large numbers of customers at the same time. ADVERTISING--any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor. PUBLICITY--any unpaid form of nonpersonal presentation of ideas, goods, or services. SALES PROMOTION--promotional activities—other than advertising, publicity, and personal selling—that stimulate interest, trial, or purchase by final customers or others in the channel. Price—making it right The Four Ps deliver value Each of the Four Ps contributes to the whole Strategy jobs must be done together Understanding target markets leads to good strategies

LO 4.6: Know what positioning is and why it is useful.

DIFFERENTIATION AND POSITIONING TAKE THE CUSTOMER POINT OF VIEW Differentiate the marketing mix—to serve customers better Positioning is based on customers' views POSITIONING--refers to how customers think about proposed or present brands in a market. (Exhibit 4-11) "'Product Space' Representing Consumers' Perceptions for Different Brands of Bar Soap" Each segment may have its own preferences Positioning as part of broader analysis Sometimes repositioning is needed Positioning statement provides direction for marketing strategy POSITIONING STATEMENT--concisely identifies the firm's desired target market.

LO 5.1: Describe how economic needs influence the buyer decision process.

ECONOMIC NEEDS AFFECT MOST BUYING DECISIONS Economic buyers seek the best uses of time and money ECONOMIC BUYERS--people who know all the facts and logically compare choices to get the greatest satisfaction from spending their time and money. ECONOMIC NEEDS--needs concerned with making the best use of a consumer's time and money—as the consumer judges it. Income affects needs DISCRETIONARY INCOME--what is left of income after paying taxes and paying for necessities. Consumer confidence affects spending

LO 1.3: Know the marketing functions and why marketing specialists—including intermediaries and collaborators—develop to perform them.

Marketing functions help narrow the gap UNIVERSAL FUNCTIONS OF MARKETING--buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information. BUYING FUNCTION--looking for and evaluating goods and services. SELLING FUNCTION--promoting the product. TRANSPORTING FUNCTION--the movement of goods from one place to another. STORING FUNCTION--holding goods until customers need them. STANDARDIZATION AND GRADING--sorting products according to size and quality. FINANCING--provides the necessary cash and credit to produce, transport, store, promote, sell, and buy products. RISK TAKING--bearing the uncertainties that are part of the marketing process. MARKET INFORMATION FUNCTION--the collection, analysis, and distribution of all the information needed to plan, carry out, and control marketing activities. Producers, consumers, and marketing specialists perform functions INTERMEDIARY--someone who specializes in trade rather than production. COLLABORATORS--firms that facilitate or provide one or more of the marketing functions other than buying or selling. New specialists develop to fill market needs E-COMMERCE--exchanges between individuals or organizations--and activities that facilitate those exchanges--based on applications of information technology. Functions can be shifted and shared

LO 6.2: Describe how organizational and business markets differ from consumer markets.

ORGANIZATIONAL CUSTOMERS ARE DIFFERENT (Exhibit 6-2) "Differences between Organizational Customers and Final Consumers" Customers are fewer in number but each spends more dollars Economic needs are primary Behavioral needs still matter (Exhibit 6-3) "Overlapping Needs of Individual Influencers and the Customer Organization" Ethical conflicts may arise Purchasing managers are specialists PURCHASING MANAGERS--buying specialists for their employers. Multiple buying influence in a buying center MULTIPLE BUYING INFLUENCE--several people share in making a purchase decision—perhaps even top management. BUYING CENTER--all the people who participate in (or influence) a purchase. Buying procedures are standardized REQUISITION--a request to buy something.

LO8: Understand how to screen and evaluate marketing strategy opportunities.

PLANNING GRIDS HELP EVALUATE A PORTFOLIO OF OPPRTUNITIES General Electric looks for green positions (Exhibit 3-7) "General Electric's Strategic Planning Grid" EVALUATING OPPORTUNITIES IN INTERNATIONAL MARKETS Evaluate the risks Risks vary with environmental sensitivity (Exhibit 3-8) "Continuum of Environmental Sensitivity" What if risks are still hard to judge?

LO 6.7: Know how buying by service firms, retailers, wholesalers, and governments is similar to—and different from—buying by manufacturers

PRODUCERS OF SERVICES—SMALLER AND MORE SPREAD OUT Buying may not be as formal Small service customers like Internet buying RETAILERS AND WHOLESALERS BUY FOR THEIR CUSTOMERS Committee buying is impersonal Buyers watch computer output closely Reorders are straight rebuys THE GOVERNMENT MARKET Size and diversity Competitive bids may be required The approved supplier list Learning what government wants Dealing with foreign governments Is it unethical to buy help"? FOREIGN CORRUPT PRACTICES ACT--a law passed by the U.S. Congress in 1977 that prohibits U.S. firms from paying bribes to foreign officials.

LO 5.2: Understand how psychological variables affect an individual's buying behavior.

PSYCHOLOGICAL INFLUENCES WITHIN AN INDIVIDUAL Needs motivate consumers NEEDS--the basic forces that motivate a person to do something. WANTS--"needs" that are learned during a person's life. DRIVE--a strong stimulus that encourages action to reduce a need. Consumers seek benefits to meet needs (Exhibit 5-3) "Possible Needs Motivating a Person to Some Action" Marketing managers appeal to customer needs (Exhibit 5-4) "The PSSP Hierarchy of Needs" PHYSIOLOGICAL NEEDS--biological needs such as the need for food, drink, rest, and sex. SAFETY NEEDS--needs concerned with protection and physical well-being. SOCIAL NEEDS--needs concerned with love, friendship, status, and esteem—things that involve a person's interaction with others. PERSONAL NEEDS--An individual's need for personal satisfaction unrelated to what others think or do. Perception determines what consumers see and feel PERCEPTION--how we gather and interpret information from the world around us. SELECTIVE EXPOSURE--our eyes and minds seek out and notice only information that interests us. SELECTIVE PERCEPTION--people screen out or modify ideas, messages, and information that conflict with previously learned attitudes and beliefs. SELECTIVE RETENTION--people remember only what they want to remember. Learning determines what response is likely LEARNING--a change in a person's thought processes caused by prior experience. CUES--products, signs, ads, and other stimuli in the environment. RESPONSE--an effort to satisfy a drive. REINFORCEMENT--occurs in the learning process when the consumer's response is followed by satisfaction—that is, reduction in the drive. (Exhibit 5-5) "The Learning Process" Sales take off after Febreze learns a lesson Many needs are culturally learned Ethics question: do consumers learn needs from marketing? Attitudes relate to buying ATTITUDE--a person's point of view towards something. "Green" attitudes and beliefs change marketing mixes Follow changing attitudes What's Next? Will Sharing Replace Owning? It is not easy to change existing consumer attitudes Ethical issues may arise Meeting expectations is important EXPECTATION--an outcome or event that a person anticipates or looks forward to. Building trust builds sales TRUST--the confidence a person has in the promises or actions of another person, brand, or company. Psychographics focus on activities, interests, and opinions PSYCHOGRAPHICS or LIFESTYLE ANALYSIS--the analysis of a person's day-to-day pattern of living as expressed in that person's Activities, Interests, and Opinions. (Exhibit 5-6 "Lifestyle Dimensions [and Some Related Demographic Dimensions])

LO6: Understand what customer lifetime value and customer equity are and why marketing strategy planners seek to increase them.

RECOGNIZING CUSTOMER LIFETIME VALUE AND CUSTOMER EQUITY Relationships increase lifetime customer value CUSTOMER LIFETIME VALUE (CLV)--the total stream of purchases that a customer could contribute to the company over the length of the relationship. Customer equity estimates profitability CUSTOMER EQUITY--the expected earnings stream (profitability) of a firm's current and prospective customers over some period of time. Customer equity focuses on the revenues and costs of acquiring, retaining, and enhancing customers Customer equity and customer lifetime value are important marketing metrics RETENTION RATE--the percentage of customers retained as compared to the total number of customers. ACQUISITION COST--the expense required to acquire a new customer.

LO 4.1: Define and describe generic markets and product-markets

SEARCH FOR OPPORTUNITIES CAN BEGIN BY UNDERSTANDING MARKETS Strategy planning is a narrowing-down process (Exhibit 4-1) "Focusing Marketing Strategy with Segmentation and Positioning" What is a company's market? MARKET--a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services. Don't just focus on the product From generic markets to product-markets GENERIC MARKET--a market with broadly similar needs and sellers offering various, often diverse, ways of satisfying those needs. PRODUCT-MARKET-- a market with very similar needs and sellers offering various close substitute ways of satisfying those needs. Broaden market definitions to find opportunities NAMING PRODUCT-MARKETS AND GENERIC MARKETS Product market definition Product-market boundaries provide focus No product type in generic market names (Exhibit 4-2) "Relationship between Generic and Product-Market Definitions"

LO3: Understand target marketing.

SELECTING A MARKET-ORIENTED STRATEGY IS TARGET MARKETING Target marketing is not mass marketing TARGET MARKETING--a marketing mix is tailored to fit some specific target customers. MASS MARKETING--the typical production-oriented approach - vaguely aims at "everyone" with the same marketing mix. (Exhibit 2-3) "Production-Oriented and Marketing-Oriented Managers Have Different Views of the Market" Mass marketers may do target marketing Target marketing can mean big markets and profits

LO 5.3: Understand how social influences affect an individual's buying behavior.

SOCIAL INFLUENCES AFFECT CONSUMER BEHAVIOR Family life cycle influences needs (Exhibit 5-7) "Stages in Modern Family Life Cycles" Young people and families accept new ideas Reallocation for teenagers Selling to the empty nesters EMPTY NESTERS--people whose children are grown and who are now able to spend their money in other ways. Who is the real decision maker in family purchases? Social class affects attitudes, values, and buying SOCIAL CLASS--a group of people who have approximately equal social position as viewed by others in the society. What do these classes mean? Reference groups help people form attitudes REFERENCE GROUP--the people to whom an individual looks when forming attitudes about a particular topic. Opinion leaders influence buyers OPINION LEADER--a person who influences others. Social media boosts social influence Websites use artificial intelligence to make recommendations

LO 6.4: Explain the different types of buying processes.

STEP 2: THE DECISION-MAKING PROCESS (Exhibit 6-5) "Organizational Buying Processes" Three kinds of buying processes are useful NEW-TASK BUYING--occurs when a customer organization has a new need and wants a great deal of information. STRAIGHT REBUY--a routine repurchase that may have been made many times before. MODIFIED REBUY--the in-between process where some review of the buying situation is done—though not as much as in new-task buying. Straight rebuys often use e-commerce order systems New-task buying requires the most information (Exhibit 6-6) "Major Sources of Information Used by Organizational Buyers" Search engines—a first step to gathering information Buyers want sites with useful content WHITE PAPERS--an authoritative report or guide that addresses important issues in an industry and offers solutions. Buyers share experiences in online communities Solicit proposals from suppliers What's Next? Millennials Take on Organizational Buying Buyers ask for competitive bids to compare offerings COMPETITIVE BID--the terms of sale offered by the supplier in response to the purchase specifications posted by a buyer. Evaluating and selecting suppliers VENDOR ANALYSIS--a formal rating of suppliers on all relevant areas of performance. Sustainability matters, too Buying procedures can vary

LO 6.5: Understand the different types of buyer-seller relationships and their benefits and limitations.

STEP 3: MANAGING BUYER-SELLER RELATIONSHIPS IN BUSINESS MARKETS Close relationships may produce mutual benefits Relationships can involve many from both sides Relationships may not make sense Relationships have many dimensions (Exhibit 6-7) "Key Dimensions of Relationships in Business Markets" Cooperation treats problems as joint responsibilities Operational linkages share functions between firms JUST-IN-TIME-DELIVERY--reliably getting products there just before the customer needs them. Contracts spell out obligations NEGOTIATED CONTRACT BUYING--agreeing to contracts that allow for changes in the purchase arrangements. Specific adaptations invest in the relationship OUTSOURCE--contract with an outside firm to produce goods or services rather than to produce them internally. A powerful customer may control the relationship Buyers usually use several sources to spread their risk Buyers monitor supplier performance Marketing Analytics in Action: Supplier Scorecards Variations in buying by customer type

LO 5.6: Explain the process by which consumers make buying decisions.

THE CONSUMER DECISION PROCESS (Exhibit 5-8) "An Expanded Model of Consumer Behavior" Recognizing a need creates a problem for the consumer Steps in consumer problem solving (Exhibit 5-9) "Consumer Problem Solving" Three levels of problem solving are useful (Exhibit 5-10) "Problem-Solving Continuum" EXTENSIVE PROBLEM SOLVING--when consumers put much effort into deciding how to satisfy a need. LIMITED PROBLEM SOLVING--when a consumer is willing to put some effort into deciding the best way to satisfy a need. ROUTINIZED RESPONSE BEHAVIOR--when consumers regularly select a particular way of satisfying a need when it occurs. LOW-INVOLVEMENT PURCHASES--purchases that have little importance or relevance for the customer. Buying isn't always rational To buy or not to buy Consumers can have second thoughts after a purchase DISSONANCE--a feeling of uncertainty about whether the correct decision was made. Post-purchase regret is a bigger problem Some consumers spread the word after they buy Predictive analytics and the consumer decision process PREDICTIVE ANALYTICS--a process to analyze data to make predictions about unknown future events. New concepts require an adoption process Marketing analytics can monitor adoption

LO7: Understand the cultural and social environment and how demographic trends affect strategy planning.

THE CULTURAL AND SOCIAL ENVIRONMENT CULTURAL AND SOCIAL ENVIRONMENT--how and why people live and behave as they do—which affects customer buying behavior and eventually the economic, political, and legal environments. Social cultural trends today Where people are around the world (Exhibit 3-4) "Demographic Dimensions and Characteristics for Selected Countries" A shift from rural to urban areas There's no market when there's no income GROSS DOMESTIC PRODUCT (GDP)--the total market value of all goods and services provided in a country's economy in a year by both residents and nonresidents of that country. GROSS NATIONAL INCOME (GNI)--a measure that is similar to GDP, but GNI does not include income earned by foreigners who own resources in that nation. Reading, writing, and marketing problems Technology adoption races across continents Population trends in the U.S. consumer market (Exhibit 3-5) "2010 Population (in millions) and Projected Percentage Change by State 2010-2020" Boomers drive the graying of America (Exhibit 3-6) "Population Distribution by Age Group in 2005, 2015, and 2025" SENIOR CITIZENS--people older than 65. BABY BOOMERS--people born between 1946 and 1964. Generation X—fewer in number GENERATION X (GEN X) --people born between 1965 and 1977. Generation Y—techno savvy GENERATION Y (GEN Y) --people born between 1978 and 1994. Sometimes called Millennials. Generation Z—more cautious GENERATION Z (GEN Z) -- people born since 1995. Don't generalize too much about generations Social and cultural changes come slowly USING SCREENING CRITERIA TO NARROW DOWN TO STRATEGIES Developing and applying screening criteria Sustainability matters SUSTAINABILITY--the idea that it's important to meet present needs without compromising the ability of future generations to meet their own needs. Whole plans should be evaluated

LO5: Understand how the economic and technological environments can affect strategy planning

THE ECONOMIC ENVIRONMENT ECONOMIC ENVIRONMENT--macro-economic factors, including national income, economic growth, and inflation, that affect patterns of consumer and business spending. Economic conditions change rapidly Interest rates and inflation affect buying THE TECHNOLOGICAL ENVIRONMENT Technology affects opportunities TECHNOLOGY--the application of science to convert an economy's resources to output. Anticipate technologies and plan for the future Artificial intelligence changes marketing processes ARTIFICIAL INTELLIGENCE (AI)--having machines operate like humans with respect to learning and decision making. INTELLIGENT AGENT--a device that observes an environment and acts to achieve a goal. What's Next? Intelligent Agents Learn to Create and Deliver Customer Value Technology changes marketing processes Technology comes with challenges Technology can pose ethical dilemmas

LO1: Know the variables that shape the environment of marketing strategy planning.

THE MARKET ENVIRONMENT (Exhibit 3-1) "Marketing Strategy Planning, Competitors, Company, and External Market Environment"

LO 1.6: Understand what customer value is and why it is important to customer satisfaction.

THE MARKETING CONCEPT AND CUSTOMER VALUE Take the customer's point of view Customer value reflects benefits and costs CUSTOMER VALUE--the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits. (Exhibit 1-5) "Customer Value Equals Benefits Minus Costs" Customers may not think about it very much Where does competition fit? Build relationships with customer value REI's value delivers satisfied customers—again and again (Exhibit 1-6) "Satisfying Customers with Superior Customer Value to Build Profitable Relationships" THE MARKETING CONCEPT APPLIES IN NONPROFIT ORGANIZATIONS Newcomers to marketing thinking Support may not come from satisfied "customers" What is the "bottom line"? May not be organized for marketing "Nonprofit Organizations and the Marketing Concept"

LO 1.7 Know how social responsibility and marketing ethics relate to the marketing concept.

THE MARKETING CONCEPT, SOCIAL RESPONSIBILITY, AND MARKETING ETHICS Society's needs must be considered MICRO-MACRO DILEMMA--what is "good" for some producers and consumers may not be good for society as a whole. SOCIAL RESPONSIBILITY--a firm's obligation to improve its positive effects on society and reduce its negative effects. Should all consumer needs be satisfied? Do all marketers act responsibly? What if it cuts into profits? The marketing concept guides marketing ethics MARKETING ETHICS—the moral standards that guide marketing decisions and actions. (Exhibit 1-7) "Summary of American Marketing Association Statement of Ethics" Marketing has its critics (Exhibit 1-8) "Sample Criticisms of Marketing

LO5: Know the difference between a marketing strategy, a marketing plan, and a marketing program.

THE MARKETING PLAN IS A GUIDE TO IMPLEMENTATION AND CONTROL Marketing plan fills out marketing strategy MARKETING PLAN--a written statement of a marketing strategy and the time-related details for carrying out the strategy. Implementation puts plans into operation IMPLEMENTATION--putting marketing plans into operation OPERATIONAL DECISIONS--short-run decisions to help implement strategies (Exhibit 2-7) "Relation of Strategy Policies to Operational Decisions for a Baby Shoe Company" Analytical tools provide control Marketing analytics—measure, manage, and analyze marketing performance MARKETING ANALYTICS--the practice of measuring, managing, and analyzing marketing performance to maximize its efficiency and effectiveness. Several plans make a whole marketing program MARKETING PROGRAM--blends all of the firm's marketing plans into one "big" plan. (Exhibit 2-8) "Elements of a Firm's Marketing Program"

LO6: Know how elements of the political and legal environment affect marketing strategy planning.

THE POLITCAL ENVIRONMENT Nationalism can be limiting in international markets Trade agreements lower costs of trade FREE TRADE--agreements between countries to not restrict imports and exports. The unification of European markets THE LEGAL ENVIRONMENT Trying to encourage competition (Exhibit 3-3) "Focus (Mostly Prohibitions) of Federal Antimonopoly Laws on the Four Ps" Antimonopoly law and marketing mix planning Prosecution is serious—you can go to jail Consumer laws are not new Foods and drugs are controlled Product safety is controlled State and local laws vary

LO 1.4: Understand what a market-driven economy is and how it adjusts the macro-marketing system.

THE ROLE OF MARKETING IN ECONOMIC SYSTEMS ECONOMIC SYSTEM--the way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in the society. Government officials may make the decisions COMMAND ECONOMY--government officials decide what and how much is to be produced and distributed by whom, when, to whom, and why. A market-directed economy adjusts itself MARKET-DIRECTED ECONOMY--individual decisions of the many producers and consumers make the macro-level decisions for the whole economy. -Price is a measure of value -Greatest freedom of choice -The role of government -Public interest groups and consumers spread the news Is a macro-marketing system effective and fair? (Exhibit 1-2) "Model of a Market-Directed Macro-Marketing System" MARKETING'S ROLE HAS CHANGED A LOT OVER THE YEARS "Stages of Marketing Evolution" Simple trade era to production era SIMPLE TRADE ERA--a time when families traded or sold their "surplus" output to local distributors, who resold the goods to other consumers or other distributors. From the production to the sales era PRODUCTION ERA--a time when a company focuses on production of a few specific products--perhaps because few of these products are available in the market. SALES ERA--a time when a company emphasizes selling because of increased competition. To the marketing department era MARKETING DEPARTMENT ERA--a time when all marketing activities are brought under the control of one department to improve short-run policy planning and to try to integrate the firm's activities. To the marketing company era MARKETING COMPANY ERA--a time when in addition to short-run marketing planning, marketing people develop long range plans--sometimes five or more years ahead--and the whole company effort is guided by the marketing concept.

LO7: Be familiar with the text's framework for marketing strategy planning.

WHAT ARE ATTRACTIVE OPPORTUNITIES? Breakthrough opportunities are best BREAKTHROUGH OPPORTUNITIES--opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time. Competitive advantage is needed—at least COMPETITIVE ADVANTAGE--a firm has a marketing mix that the target market sees as better than a competitor's mix. Avoid hit-or-miss marketing with a logical process (Exhibit 2-9) "Overview of Marketing Strategy Planning Process" MARKETING STRATEGY PLANNING PROCESS HIGHLIGHTS OPPORTUNITIES Process narrows down from broad opportunities to specific strategy Screening criteria make it clear why you select a strategy S.W.O.T. analysis highlights advantages and disadvantages S.W.O.T. ANALYSIS--identifies and lists the firm's strengths, weaknesses, opportunities, and threats. Segmentation helps pinpoint the target Customers want something different DIFFERENTIATION--the marketing mix is distinct from what is available from a competitor. Narrowing down to a superior marketing mix

LO 4.4: Know dimensions that may be useful for segmenting markets.

WHAT DIMENSIONS ARE USED TO SEGMENT MARKETS? Segmenting dimensions guide marketing mix planning (Exhibit 4-7) "Relation of Potential Target Market Dimensions to Marketing Strategy Decision Areas" Segmenting draws on why, what, and who Many segmenting dimensions may be considered (Exhibit 4-8) "Possible Segmenting Dimensions and Typical Breakdowns for Consumer Markets" (Exhibit 4-9) "Possible Segmenting Dimensions for Business/Organizational Markets" What are the qualifying and determining dimensions? QUALIFYING DIMENSIONS--those relevant to including a customer type in a product-market. DETERMINING DIMENSIONS--those that actually affect the customer's purchase of a specific product or brand in a product-market. Determining dimensions may be very specific (Exhibit 4-10) "Finding the Relevant Segmenting Dimensions" Qualifying dimensions are important too Different dimensions needed for different submarkets Personas give segments life International marketing requires even more segmenting Smart segmenters win in international markets Ethical issues in selecting segmenting dimensions

LO 1.5: Know what the marketing concept is—and how it should guide a firm or nonprofit organization.

WHAT DOES THE MARKETING CONCEPT MEAN? MARKETING CONCEPT--an organization aims all its efforts at satisfying its customers—at a profit. PRODUCTION ORIENTATION--making whatever products are easy to produce and then trying to sell them. MARKETING ORIENTATION--trying to carry out the marketing concept. Customer satisfaction guides the whole system (Exhibit 1-3) "Organizations with a Marketing Orientation Carry Out the Marketing Concept" The whole company works together to satisfy customers MARKETING METRICS—which refer to numeric data that allow marketing managers to evaluate performance, often against a target or goal. Marketing Analytics in Action: Revenue, Cost, Profit Survival and success require a profit Many organizations go beyond profit TRIPLE BOTTOM LINE—measures an organization's economic, social, and environmental outcomes—as a measure of long-term success. Adoption of the marketing concept is not universal (Exhibit 1-4) "Some Differences in Outlook between Adopters of the Marketing Concept and the Typical Production-Oriented Managers"

LO2: Know what marketing strategy planning is - and why it is the focus of this book

WHAT IS A MARKETING STRATEGY? MARKETING STRATEGY--specifies a target market and a related marketing mix. TARGET MARKET-- a fairly homogeneous (similar) group of customers to whom a company wishes to appeal. MARKETING MIX--the controllable variables the company puts together to satisfy this target group. (Exhibit 2-2) "A Marketing Strategy"