Marketing Ch.2

Market Segment

Consisting of consumers who respond similarly to a firm's marketing efforts.

Step 2 (Planning Phase): Conduct a Situation Analysis

After developing its mission, a firm would perform a situation analysis using a SWOT analysis. In addition, it should assess the opportunities and uncertainties of the marketplace due to changes in Cultural, Demographic, Social, Technological, Economic, and Political forces (CDSTEP).

Sustainable competitive advantage

An advantage over the competition that is not easily copied and can be maintained over a long period of time. It is a key to long-term financial performance.

Marketing Plan (Control Phase): Step 5

Entails evaluating the performance of the marketing strategy using marketing metrics and taking any necessary corrective actions

Operational Efficiency

Generates good value for customers and improves profitability for the firm by keeping costs down

Price and Value Capture (4 P's)

Value-based marketing requires that firms charge a price that customers perceive as giving them a good value for the product they receive.Pricing is the only activity that actually brings in money and therefore influences revenues. If a price is set too high, it will not generate much volume. If a price is set too low, it may result in lower-than-optimal margins and profits

Positioning (STP)

When the firm decides which segments to pursue, it must determine how it wants to be positioned within those segments. Market positioning involves the process of defining the marketing mix (4 P's) variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products.

Step 3 (Implementation Phase): Identify and Evaluate Opportunities Using STP (Segmentation, Targeting, and Positioning)

With STP, the firm first divides the marketplace into subgroups or segments, determines which of those segments it should pursue or target, and finally decides how it should position its products and services to best meet the needs of those chosen targets

Segmentation (STP)

[Market Segmentation] The process of dividing the market into groups of customers with different needs, wants, or characteristics—who therefore might appreciate products or services geared especially for them

Targeting (STP)

[Target Marketing] After a firm has identified the various market segments it might pursue, it evaluates each segment's attractiveness and decides which to pursue

Market Penetration (Growth Strategies)

employs the existing marketing mix and focuses the firm's efforts on existing customers. Such a growth strategy might be achieved by attracting new consumers to the firm's current target market or encouraging current customers to patronize the firm more often or buy more merchandise on each visit. A market penetration strategy generally requires greater marketing efforts, such as increased advertising and additional sales and promotions, or intensified distribution efforts in geographic areas in which the product or service already is sold.

Market Development (Growth Strategy)

employs the existing marketing offering to reach new market segments, whether domestic or international

Marketing Strategy

identifies (1) a firm's target market(s), (2) a related marketing mix (its four Ps), and (3) the bases on which the firm plans to build a sustainable competitive advantage

Diversification (Growth Strategy)

introduces a new product or service to a market segment that currently is not served.

Step 4 (Implementation Phase): Implement Marketing Mix (4 P's) and Allocate Resources

Marketers implement the actual marketing mix—product, price, promotion, and place—for each product and service on the basis of what they believe their target markets will value. At the same time, marketers make important decisions about how they will allocate their scarce resources to their various products and services.

Weaknesses (SWOT)

Negative attributes of the firm

Marketing Plan (Planning Phase): Step 1 and 2

Step 1: When marketing executives, in conjunction with other top managers, define the mission and/or vision of the business. Step 2: they evaluate the situation by assessing how various players, both in and outside the organization, affect the firm's potential for success. (Using SWOT)

Marketing Plan (Implementation Phase): Step 3 and 4

Step 4: Marketing managers identify and evaluate different opportunities by engaging in a process known as Segmentation, Targeting, and Positioning (STP) Step 5: They then are responsible for implementing the marketing mix using the four Ps (Product, Price, Place, and Promotion)

Value Proposition

The unique value that a product or service provides to its customers and how it is better than and different from those of competitors.

Small, Privately held firms

Their objective is to achieve a specific level of income and avoiding risks

Product and Value Creation Products (4 P's)

These products include services and constitute the first of the four Ps. Because the key to the success of any marketing program is the creation of value, firms attempt to develop products and services that customers perceive as valuable enough to buy.

Market Growth Rate

the annual rate of growth of the specific market in which the product competes. Market growth rate thus measures how attractive a particular market is

Market Share

the percentage of a market accounted for by a specific entity, and is used to establish the product's strength in a particular market. It is usually discussed in units, revenue, or sales.

Growth Strategies

(1) Market Penetration, (2) Product Development, (3) Market Development, (4) Diversification

Macro Strategies for Developing Customer Value

1. Customer excellence: Focuses on retaining loyal customers and excellent customer service. 2. Operational excellence: Achieved through efficient operations and excellent supply chain and human resource management. 3. Product excellence: Having products with high perceived value and effective branding and positioning. 4. Locational excellence: Having a good physical location and Internet presence.

Mission Statement

A broad description of a firm's objectives and the scope of activities it plans to undertake

Strategic Business Unit (SBU)

A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.

Relative Market Share

A measure of the product's strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry

SWOT Analysis

A method of conducting a situational analysis within a marketing plan in which both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats.

Marketing Plan

A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected or pro forma income (and other financial) statements. The three major phases of the marketing plan are planning, implementation, and control.

4. Locational Excellence

Important for retailers and service providers. Many say, "The three most important things in retailing are location, location, location." For example, most people will not walk or drive very far when looking to buy a cup of coffee.

Portfolio Analysis

In portfolio analysis, management evaluates the firm's various products and businesses—its "portfolio"—and allocates resources according to which products are expected to be the most profitable for the firm in the future. Portfolio analysis is typically performed at the strategic business unit (SBU) or product line level of the firm, though managers also can use it to analyze brands or even individual items.

Promotion and Value Communication (4 P's)

Integrated marketing communications (IMC) represents the promotion dimension of the four Ps; encompasses a variety of communication disciplines—general advertising, personal selling, sales promotion, public relations, direct marketing, and electronic media—in combination to provide clarity, consistency, and maximum communicative impact. Using the various disciplines of its IMC program, marketers communicate a value proposition

2. Operational Excellence

Involves a firm's focus on efficient operations, excellent supply chain management, and strong relationships with their suppliers. All marketers strive for efficient operations to get their customers the merchandise they want, when they want it, in the required quantities, and at a delivered cost that is lower than that of their competitors.

3. Product Excellence

Involves a focus on achieving products with high perceived value and effective branding and positioning. However, others have been able to maintain their sustainable competitive advantage by investing in their brand itself; positioning their product or service using a clear, distinctive brand image; and constantly reinforcing that image through their merchandise, service, and promotion

1. Customer Excellence: Retaining loyal customers

It means that customers are reluctant to patronize competitive firms. Loyal customers drink Pepsi even if Coca-Cola goes on sale. Using that purchase information, analysts determine which types of merchandise certain groups of customers are buying and thereby tailor their offering to better meet the needs of their loyal customers.

Relative Metric of Sales and Profits

Its increase or decrease over the prior year. In addition, a firm may compare its growth in sales or profits relative to other benchmark companies (e.g., Coke may compare itself to Pepsi).

1. Customer Excellence: Providing Customer Service

Marketers also may build sustainable competitive advantage by offering excellent customer service, though consistency in this area can prove difficult. Firms that offer good customer service must instill its importance in their employees over a long period of time so that it becomes part of the organizational culture. Customer service is virtually unparalleled

Opportunities (SWOT)

Pertain to positive aspects of the external environment

Strengths (SWOT)

Refers to the positive internal attributes of the firm

Threats (SWOT)

Represents the negative aspects of the company's external environment

Step 5 (Control Phase): Evaluate Performance Using Marketing Metrics

The final step in the planning process includes evaluating the results of the strategy and implementation program using marketing metrics.

Place and Value Delivery (4 P's)

The firm must be able, after it has created value through a product and/or service, to make the product or service readily accessible when and where the customer wants it

Step 1 (Planning Phase): Define the Business Mission

The mission statement attempts to answer two main questions: What type of business are we? What do we need to do to accomplish our goals and objectives? These fundamental business questions must be answered at the highest corporate levels before marketing executives can get involved.

Product Line

a group of products that consumers may use together or perceive as similar in some way. One line of product for Goodyear could be car, van, sport-utility vehicle (SUV), and light truck tires; another line could be high-performance tires or aviation tires

Metric

a measuring system that quantifies a trend, dynamic, or characteristic. Metrics are used to explain why things happened and also project the future. They make it possible to compare results across regions, strategic business units (SBUs), product lines, and time periods.

Product Development (Growth Strategy)

offers a new product or service to a firm's current target market. For example, Marvel has launched several Page 52successful series on Netflix, including Jessica Jones, Daredevil, Iron Fist, and Luke Cage.