Intro to Marketing Exam #1

Generation X

--49 million (1965 to 1976) --Most educated generation to date --Less materialistic than other groups --Skeptical of marketing --Careful spenders --Family-oriented *The Generation Xers are a sometimes overlooked consumer group. Although they seek success, they are less materialistic than the other groups; they prize experience, not acquisition. For many of the Gen Xers who are parents, family comes first—both children and their aging parents—and career second. From a marketing standpoint, the Gen Xers are a more skeptical bunch. They tend to research products before they consider a purchase, prefer quality to quantity, and tend to be less receptive to overt marketing pitches. They are increasingly displacing the lifestyles, culture, and values of the baby boomers. They are moving up in their careers, and many are proud homeowners with young, growing families. They are the most educated generation to date, and they possess hefty annual purchasing power.

Millennials (Gen Y)

--83 million (1977 and 2000) --$733 billion in purchasing power --Fluent with digital technology --Personalization and product customization are key to marketing success One thing that all Millennials have in common is their utter fluency and comfort with digital technology. They don't just embrace technology; it's a way of life. The Millennials were the first generation to grow up in a world filled with computers, mobile phones, satellite TV, iPods and iPads, and online social networks. As a result, they engage with brands in an entirely new way, such as with mobile or social media.

Competitors

--A company must provide greater customer value and satisfaction than its competitors do --The company must position its offerings strongly against competitors' offerings in the minds of consumers *The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors' offerings in the minds of consumers. Audi struggling with this

Economic Environment

--Economic factors that affect consumer purchasing power and spending patterns >>1990s—consumption frenzy, record debt >>Economic crisis leads to consumer frugality --Value Marketing is key to success

Cultural Environment

--Institutions and other forces that affect society's basic values, perceptions, preferences, and behaviors --Core beliefs and values >Passed on from parents to children >Reinforced by schools, churches, business, and government --Secondary beliefs and values >More open to change than core beliefs

Generation Z

--Kids, tweens, and teens (born after 2000) --20 million tweens spend $30 billion and influence $150 billion of their parents' spending. --Even more fluent with digital technologies They don't want products; they want experiences...

Company

--Marketing decisions are made within the broader strategies made by top management --All departments are responsible for understanding customer needs and creating value *Marketing managers must work closely with other company departments. With marketing taking the lead, all departments—from manufacturing and finance to legal and human resources—share the responsibility for understanding customer needs and creating customer value.

A More White-Collar Population

--U.S. population becoming better educated --Workforce becoming more white-collar --Job growth strongest for professional workers and weakest for manufacturing workers --Number of professional workers expected to increase

The Production Concept

-Consumers will favor products that are available and highly affordable -The organization should focus on improving production and distribution efficiency An example of companies who follow the production concept are personal computer maker Lenovo and home appliance maker Haier, which dominate the highly competitive, price-sensitive Chinese market through low labor costs, high production efficiency, and mass distribution. However, although useful in some situations, the production concept can lead to marketing myopia.

The Product Concept

-Consumers will favor products that offer the most quality, performance, and features -The organization should devote its energy to making continuous product improvements ex: iPhone 3 > iPhone 8

Markets

-The set of all actual and potential buyers of a product or service. -Market is different from marketplace.

The Societal Marketing Concept

A company's marketing decisions should consider consumer's wants, the company's desires, consumers' long-run interests and society's long-run interests. UPS as a good example of a company that follows the societal marketing concept. UPS proactively seeks opportunities to act responsibly. For example, UPS employees have volunteered millions of hours to United Way's Live United campaign to improve the education, income, and health of the nation's communities. UPS knows that doing what's right benefits both consumers and the company.

Actors in the Microenvironment

1. Company 2. Suppliers 3. Marketing intermediaries 4. Competitors 5. Publics 6. Customers *Marketers must work in harmony with other company departments to create customer value and relationships. For example, Walmart's marketers can't promise low prices unless its operations department delivers low costs. In creating value for customers, marketers must partner with other firms in the company's value delivery network. For example, Lexus can't create a high-quality ownership experience for its customers unless its suppliers provide quality parts and its dealers provide high sales and service quality. Customers are the most important actors in the company's microenvironment. *The aim of the entire value delivery system is to serve target customers and create strong relationships with them.

Marketing Process

1. Understand the marketplace and customer needs and wants 2. Design a costumer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture value from customers to create profits and customer equity In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value.

Marketing Management Process

In addition to being good at the marketing in marketing management, companies also need to pay attention to the management. Managing the marketing process requires the four marketing management functions — analysis , planning , implementation, and control .

Actors in the Macroenvironment

1. demographic 2. economic 3. natural 4. technological 5. political 6. cultural all in relation to the company and not marketing like microenvt

Suppliers - Example

100+ suppliers for chevy car parts

Baby Boomers

>78 million people (born 1946 and 1964) Wealthiest generation in history! --Account for 50% of consumer spending --Hold ¾ of the nation's financial assets --Control 70% of the nation's disposable income >Represent strong targets for financial services *Today's baby boomers account for about 25 percent of the U.S. population but control an estimated 80 percent of the nation's personal wealth. The 50-plus consumer segment now accounts for nearly half of all discretionary consumer spending. As they reach their peak earning and spending years, the boomers will continue to constitute a lucrative market for financial services, new housing and home remodeling, new cars, travel and entertainment, eating out, health and fitness products, and just about everything else. It would be a mistake to think of the older boomers as phasing out or slowing down. Today's boomers think young no matter how old they are. One study showed that boomers, on average, see themselves 12 years younger than they actually are. And rather than viewing themselves as phasing out, they see themselves as entering new life phases.

Technological Environment

>Forces that create new technologies, creating new product and market opportunities >Companies that do not keep up with technological changes will soon find their products outdated

Natural Environment

>Involves natural resources that are needed as inputs by marketers or that are affected by marketing activities >Key trends include: --Shortages of raw materials --Increased pollution --Increased government intervention

Mission Statement

A statement of the organization's purpose—what it wants to accomplish in the larger environment Questions the mission statement should answer: -What is our business? -Who is our customer? -What do consumers value? -What should our business be? Mission statements should be market- oriented, not product-oriented

What Is Marketing?

The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return Goals >Attract new customers by promising superior value >Keep and grow current customers by delivering satisfaction

Strategic Planning

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

The Marketing Concept

Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do

Promotion

Advertising Personal Selling Sales Promotion PR

Chapter 3

Analyzing the Marketing Environment

Publics

Any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives ex: internal publics, financial publics, media publics, government publics, citizen-action publics, local publics, and general publics

Market Targeting

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

Consumer-Generated Marketing

Brand exchanges created by consumers by which consumers play an increasing role in shaping their own brand experiences and those of other consumers

Customer Lifetime Value vs. Share of Customer

CLV: The value of the entire stream of purchases that the customer would make over a lifetime of patronage SOC: The portion of the customer's purchasing that a company gets in its product categories

Place

Channels Coverage Locations Inventor Transportation Logistics

Marketing Management Orientations

Organizations design and carry out their marketing strategies under five alternate concepts (philosophies): -Production concept -Product concept -Selling concept -Marketing concept -Societal Marketing concept

Product/Market Expansion Grid

Companies can grow by better penetrating current markets with current products. Through diversification, companies can grow by starting up or buying businesses outside their current product/markets.

Chapter 2

Company and Marketing Strategy - Partnering to Build Customer Relationships

Macroenvironment

Consists of the broader forces that affect the actors in the microenvironment

Customers

Consumer Markets: buy for personal consumption Business markets: buy for use in production processes Reseller markets: buy to resell at a profit Government markets: buy for public purposes International markets: buyers in other countries *Customers are the most important actors in the company's microenvironment. The aim of the entire value delivery network is to serve target customers and create strong relationships with them.

The Selling Concept

Consumers will not buy enough of the firm's products unless the firm undertakes a large-scale selling and promotion effort.

Strategic Planning Process

Corporate level: 1. Defining the company mission 2. Setting company objectives and goals 3. Designing the business portfolio Business unit, product, and market level: 4. Planning marketing and other functional strategies

Factors Influencing Consumer Behavior 2

Cultural factors: Many brands now target specific subcultures—such as Hispanic American, African American, and Asian American consumers—with marketing programs tailored to their specific needs and preferences. For example, P&G's CoverGirl Queen cosmetics line was inspired by Queen Latifah to "celebrate the beauty of women of color." Personal factors: People's buying decisions reflect and contribute to their lifestyles—their whole pattern of acting and interacting in the world. For example, Pottery Barn sells more than just home furnishings. It sells an upscale yet casual, family- and friend-focused lifestyle. >An individual's buying decisions are affected by an incredibly complex combination of external and internal influences.

Factors Influencing Consumer Behavior

Cultural: culture, subculture, social class Social: reference groups, family, roles and status personal: age and life-cycle stages, occupation, economic situation, lifestyle, personality and self-concept psychological: motivation, perception, learning, beliefs and attitudes

Culture

Culture is the most basic cause of a person's wants and behavior >>Culture is learned from the society, family, and other institutions >>Culture reflects basic values, perceptions, wants, and behaviors

Nature of Customer Relationships

Customer profitability analysis eliminates losing customers and selects profitable ones with whom relationships should be developed

Chart again

Potential profitability high and projected loyalty short-term -- butterflies Potential profitability high and projected loyalty long-term -- true friends Potential profitability low and projected loyalty short-term -- strangers Potential profitability low and projected loyalty long-term -- barnacles

4Ps of the Marketing Mix: Product

Product: Variety Quality Design Features Brand name Packaging Services

Demographic Environment

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

Customer-Driven Marketing Strategy

Designing a winning marketing strategy requires answers to the following questions: -What customers will we serve (what's our target market)? -How can we serve these customers best (what's our value proposition)?

Customer Relationship Groups

Each of the four customer relationship groups requires a different relationship management strategy. The company will not gain anything by investing time and resources in developing relationships with strangers. For butterflies, the company should create satisfying and profitable transactions, capturing as much of their business as possible in the short time during which they buy from the company. Efforts to convert butterflies into loyal customers are rarely successful. True friends have the potential to generate good profit for the company. The firm should make continuous relationship investments to delight these customers and nurture, retain, and grow them. The company may be able to improve the profitability of barnacles by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be "fired."

Business portfolio

The collection of businesses and products that make up the company ex: The Walt Disney Company > ABC, ESPN, Pixar, Disneyland, disney world, disney cruise, disney resort, etc. ex: PepsiCo > pepsi, 7 up, cheetos, mountain dew, lays, gatorade, etc.

Marketing: The Idea of Exchange

Exchange: Trade of things of value between the buyer and the seller so that each is better off after the trade.

Product/Market Expansion Grid again

Existing products and existing markets -- market penetration ex: selling more b&j ice cream to americans New products and existing markets -- product development ex: selling childrens clothes under b&j to americans Existing products and new markets -- Market development ex: selling b&j ice cream to Brazilians for first time New products and new markets -- diversification ex: selling children's clothing under b&j to Brazilians for first time

Marketing Intermediaries

Firms that help the company promote, sell, and distribute its goods to final buyers 1. Resellers 2. Physical distibution firms 3. Marketing services agencies 4. Financial intermediaries

Again...

First 4- create value FOR COSTUMERS and build customer relationships Last 1- Capture value FROM CUSTOMERS in return

Marketing Department Organization (5)

Functional organization >>Each marketing activity is headed by a functional specialist Geographic organization >>Sales and marketing people are assigned to specific countries, regions, and/or districts Product management organization >>One person is given responsibility for complete strategy and marketing program for a single product Market or customer organization >>Manager responsible for particular market or type of customer (e.g., government buyers) Combination organization >>Uses some combination of the previous four approaches

Examples of Mission

Google: "To organize the world's information and make it universally accessible and useful" Facebook: "To give people the power to share and make the world more open and connected"

Demands

Human wants that are backed up by buying power

Political and Social Environment

Includes laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society >To protect companies from each other >To protect consumers from unfair business practices >To protect the interests of society against unrestrained business behavior ex: Due to complicated broadcast regulations, Neil Patrick Harris is not allowed to drink Heineken Light

Price

List price Discounts Allowances Payment period credit terms

Market Segmentation vs. Market Segment

MSegmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs MSegment: A group of consumers who respond in a similar way to a given set of marketing efforts

Selecting Customers to Serve

Market Segmentation - Dividing the market into segments of customers Target Marketing - Selecting one or more segments to cultivate

BCG Chart again

Market growth rate low and relative market share high -- cash cow Market growth rate high and relative market share high -- star Market growth rate low and relative market share low -- dog Market growth rate high and relative market share low-- ?

Creating Customer Value

Marketers must practice partner relationship management >>Working with partners internally within the company can create an effective value chain >>Working with external partners in the marketing system helps to form a superior value delivery network

Chapter 1

Marketing - Creating and Capturing Customer Value

Integrated Marketing Program

Marketing Mix tools: -Product -Price -Place (Distribution) -Promotion CONTROLLABLE! *The firm must blend each marketing mix tool into a comprehensive integrated marketing program

Return on Marketing Investment

Marketing expenditures are viewed as investments that produce returns in the form of more profitable customer relationships. Marketing investments result in improved customer value and satisfaction, which in turn increases customer attraction and retention. This increases individual customer lifetime values and the firm's overall customer equity. Increased customer equity, in relation to the cost of the marketing investments, determines return on marketing investment.

Marketing Control

Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved

Old vs. New Marketing

OLD view of marketing: Making a sale—"telling and selling" NEW view of marketing: Satisfying customer needs—"sensing and responding"

BCG Growth-Share Matrix

On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. Under the classic BCG portfolio planning approach, the company invests funds from mature, successful products and businesses (cash cows) to support promising products and businesses in faster-growing markets (stars and question marks), hoping to turn them into future cash cows. The company must decide how much it will invest in each product or business (SBU). For each SBU, it must decide whether to build, hold, harvest, or divest.

Positioning vs. Differentiation

P: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers D: Actually differentiating the market offering to create superior costumer value

Different Types of Needs

Physical Needs >Food, clothing, warmth, and safety Social Needs >Belonging and affection Individual Needs >Learning, knowledge, and self-expression

Suppliers

Provide resources needed to produce goods and services *Suppliers form an important link in the company's overall customer value delivery network. They provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability and costs. Supply shortages or delays, labor strikes, natural disasters, and other events can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company's sales volume.

Business Portfolio Analysis

Purpose >To direct resources toward more profitable businesses while phasing out or dropping weaker ones Basis of Evaluation >Market (Industry) Attractiveness: Market Growth Rate >Strength of SBU's Position: Relative Market Share

Downsizing

Reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company's overall strategy When a firm finds brands or businesses that are unprofitable or that no longer fit its overall strategy, it must carefully prune, harvest, or divest them. For example, in recent years, GM has pruned several underperforming brands from its portfolio, including the Oldsmobile, Pontiac, Saturn, and Hummer car brands and the Goodwrench parts line. Similarly, Ford recently shed its Mercury brand and sold off Jaguar, Land Rover, and Volvo. Weak businesses usually require a disproportionate amount of management attention. Managers should focus on promising growth opportunities, not fritter away energy trying to salvage fading ones.

def of each

Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Physical distribution firms help the company stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

Market Offerings

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

Needs

States of felt deprivation

BCG Growth-Share Matrix strategies

Strategies for categories of the BCG Matrix >Stars need heavy investments to finance their rapid growth >Cash cows need less investment to hold their market share >Question marks require a lot of cash to hold their share, let alone increase it >Dogs do not promise to be large sources of cash

Capturing Value From Customers

Superior customer value leads to highly satisfied loyal customers who buy more >Stew Leonard's customer service policy emphasizes the importance of bringing customers back to the stores for repeat sales >losing a customer means losing more than a single sale. It means losing the entire stream of purchases that the customer would make over a lifetime of patronage. For example, the average customer at Stew Leonard's spends about $100 a week, shops 50 weeks a year, and remains in the area for about 10 years. If this customer has an unhappy experience and switches to another supermarket, Stew Leonard's has lost $50,000 in lifetime revenue. The loss can be much greater if the disappointed customer shares the bad experience with other customers and causes them to defect. In fact, a company can lose money on a specific transaction but still benefit greatly from a long-term relationship. This means that companies must aim high in building customer relationships.

Marketing Environment

The actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers >focus on opportunities and threats in SWOT

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's job is to build relationships with customers by creating customer value and satisfaction. However, marketing managers cannot do this alone. Marketing success requires building relationships with other company departments, suppliers, marketing intermediaries, competitors, various publics, and customers, which combine to make up the company's value delivery network.

Consumer buying behavior

The buying behavior of individuals and households who buy goods and services for personal consumption

Customer Perceived Value

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

Customer Satisfaction

The extent to which the product's perceived performance matches a buyer's expectations Performance Expectations 1. P<E = Dissatisfaction 2. P=E = Satisfaction 3. P>E = Delight

Wants

The form human needs take as they are shaped by culture and individual personality

SWOT Analysis

The goal of SWOT analysis is to match the company's strengths to attractive opportunities in the environment, while eliminating or overcoming the weaknesses and minimizing the threats.

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

Value Delivery Network

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

Selling & Marketing Concepts Contrasted

The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company's existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses primarily on customer conquest—getting short-term sales with little concern about who buys or why. In contrast, the marketing concept takes an outside-in perspective. The marketing concept starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers. In turn, it yields profits by creating relationships with the right customers based on customer value and satisfaction.

Value Chain

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

Customer Equity

The total combined customer lifetime values of all the company's current and potential customers Ex: Though Cadillac had a huge share of the luxury car market, most of its buyers were in the older age brackets and average customer lifetime value was falling. In recent years, Cadillac has struggled to make the Caddy cool again by targeting a younger generation of consumers, in order to maximize the customer lifetime value of these customers.

McDonald's Story

The turnaround >From "being the world's best quick-service restaurant" to "being our customers' favorite place and way to eat" >Increase in share price, sales, and profits In the mid-1990s, McDonald's was struggling to find its identity amid a flurry of new competitors and changing consumer tastes. It experimented with its menu and expanded into non-burger products, all the while opening new restaurants. Customer service and cleanliness declined because the company couldn't hire and train good workers fast enough. McDonald's increasingly became a target for nutritionists and social activists, who accused the chain of contributing to the nation's obesity epidemic. Sales growth slumped, and its market share fell by more than 3 percent between 1997 and 2003. To turn the company around, the company's mission was changed from "being the world's best quick service restaurant" to "being our customers' favorite place and way to eat." The company halted rapid expansion and instead poured money back into improving the food, the service, the atmosphere, and marketing at existing outlets. A reworked menu provides more choice and variety, including healthier options. McDonald's rediscovered dedication to customer value sparked a remarkable turnaround.

Income Distribution

To capture India's growing middle class, Tata Motors introduced the small, affordable Tata Nano

Cause-Related Marketing

To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes >>Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving—that "cause-related" marketing is really "cause-exploitative" marketing.

Marketing Implementation

Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives

Chapter 5

Understanding Consumer and Business Buyer Behavior

Choosing a Value Proposition

Value proposition: The set of benefits or values a company promises to deliver to consumers to satisfy their needs A company must decide how it will serve targeted customers—how it will differentiate and position itself in the marketplace. A brand's value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. For instance, BMW promises "the ultimate driving machine," whereas the diminutive Smart car suggests that you "Open your mind to the car that challenges the status quo." Such value propositions differentiate one brand from another. They answer the customer's question, "Why should I buy your brand rather than a competitor's?"

General about all 3

Wants are the form human needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac, french fries, and a soft drink. A person in Papua, New Guinea, needs food but wants taro, rice, yams, and pork. Wants are shaped by one's society and are described in terms of objects that will satisfy those needs.

SWOT again

internal is positive: strengths-- internal capabilities that may help a company reach its objectives internal is negative: weakness-- internal limitations that may interfere with a company's ability to achieve its objectives external is postive: opportunities-- external factors that the company may be able to exploit to its advantages external is negative: threats-- current and emerging external factors that may challenge the company's performances

more thorough

planning: develop strategic plans > develop marketing plans implementation: carry out the plans control: measure results > evaluate results > take corrective action

All 4

target customers through intended positioning

Model of Buyer Behavior

the envt > buyers black box > buyer responses the envt: 4 marketing stimuli/p's and other: economic /tech/social/cultural buyer's black box: buyers characteristics and buyers decision process buyer responses: buying attitudes and preferences, purchase behavior: what the buyer buys, when, where, and how much, brand and company relationship behavior We can measure the whats, wheres, and whens of consumer buying behavior. But it's very difficult to "see" inside the consumer's head and figure out the whys of buying behavior (that's why it's called the black box). Marketers spend a lot of time and dollars trying to figure out what makes customers tick.