Ch. 1-3 Marketing
Sustainable Customer Behavior
A sustainability approach doesn't end with an improvement in the manufacturing process. Marketers need to motivate customers. Consumers can be a part of sustainable marketing practices.
The Competitive Microenvironment
Competition in the microenvironment involves consumer decision making at three levels. Competition for discretionary income Product competition Brand competition Marketers also need to understand the big picture—the overall structure of their industry. Monopoly Oligopoly Monopolistic competition Perfect competition
Direct Investment
Direct investment is when a firm expands internationally through ownership. Often when it buys a business in the host country outright
Distribution Strategies
Distribution strategies (the place component) outline when, how, and where the firm will make the product available to targeted customers. Sell directly to the final customer or work through wholesalers and retailers? Choosing the right distribution strategy depends on product, pricing, and promotion decisions.
Ethical Norms
Do no harm Foster trust in the marketing system Embrace ethical values
Sales Era
Dominated by selling orientation A managerial view of marketing as a sales function, or a way to move products out of warehouses to reduce inventory Emphasis on aggressive promotional activities Post WWII, production capacity exceeded demand Led businesses to focus on one-time sales of goods rather than repeat business
4: Implement and Control the Marketing Plan
During implementation process, firms follow formal process to determine progress toward marketing objectives. Measure actual performance Compare performance to established objectives Make adjustments to objectives or strategies based on this analysis
Strategic Business Units (SBUs)
Large, multiproduct firms may have separate divisions, called strategic business units (SBUs). SBUs operate like a separate business. Strategic planning is conducted at both the corporate and SBU level.
Levels of Development
Least Developed Country (LDC) Economic base is often agricultural Developing countries Economy shifts emphasis from agriculture to industry Developed countries Offer wide range of opportunities for international marketers
steps in the value chain
Make marketing value decisions Understand consumers value needs Create the value proposition Communication the value promotion Deliver the value proposition
Triple Bottom-Line Era
Management seeks to maximize financial, environmental, and social bottom lines. Emergence of societal marketing concept Emphasis on ROI measurement across all three areas
Marketing is a Process
Marketing planning is a major portion of the process and involves: Analyzing the marketing environment Developing the marketing plan Deciding on a market segment Choosing the marketing mix - product, price, promotion place
Value from Society's Perspective
Marketing transactions may add or subtract value from society Stressing socially responsible and ethical decisions is good for business Marketing often faces criticisms "Dark side" marketing and consumption issues
Tweaking the Global Marketing Mix: Product Strategies
Product decisions Straight extension Product adaptation Product invention Backward invention Promotion decisions Price decisions Free trade zones Gray markets Dumping Place/Distribution decisions
Product Strategies
Product strategies include decisions on: Product design Packaging Branding Support services and maintenance Upgrades Product variations
5: Develop Growth Strategies
Product-market growth matrix Characterizes different types of growth strategies based on market and product types. Market penetration Market development Product development Diversification
Marketing product
Product: any good, service, or idea Consumer goods/services Business-to-business goods/services Not-for-profit marketing Idea, place, and people marketing
Evolution of the Marketing Concept
Production era Selling era Relationship era Triple bottom-line era
Promotional Strategies
Promotional strategy is how marketers communicate a product's value proposition to the target market. Advertising Sales promotion Public relations Direct marketing Personal selling
Sustainability
Sustainability is about creating products that meet present needs while ensuring future generations can have their needs met Green marketing is one type of sustainable business practice
Developing a Sustainable Marketing Mix
Target marketing strategies Green customers Product strategies Fair trade suppliers Price strategies Place/Distribution strategies Locavorism Promotion strategies
Product-Market Growth Matrix
market penetration strategy - seek to increase sales of existing products to existing markets Product development strategy - create growth by selling new products in existing markets diversification strategy -emphasize both new products and new markets to achieve growth. Market development strategy -introduce existing products to new markets.
Markets and Marketplaces
A market consists of all consumers who share a common need that can be satisfied by a specific product, and who have resources, willingness and authority to purchase. A marketplace is any location or medium used to facilitate an exchange.
steps in the decision process to enter global markets
1. whether to go global 2. which markets to enter 3. lvl of commitment 4. how to adapt marketing mix strategies localize standardize
Steps in Strategic Planning
1: Define the Mission 2: Evaluate the Environment 3: Set Organizational or SBU Objectives 4: Establish Business Portfolio
Steps in Market Planning
1: Perform a Situation Analysis 2: Set Marketing Objectives 3: Develop Marketing Strategies 4: Implement and Control the Marketing Plan
4: Establish Business Portfolio
A business portfolio represents the range of different businesses that a large firm operates. Disney operates multiple lines of business, including movie studios, theme parks, cruises, etc. Portfolio analysis Assesses the growth potential for a firms SBUs and product lines BCG Growth-Share Matrix
1: Perform a Situation Analysis
Analyze the marketing environment Conduct SWOT analysis
Marketing on the Global Stage
Arguments for a single marketplace Greenhouse effect Global warming Arab Spring
Marketing: What is it?
As consumers, you all know a lot about it! Marketing is first and foremost about satisfying customer needs in a profitable manner Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large.
Bottom of Pyramid Markets
Bottom of the Pyramid (BOP) markets present big opportunities and challenges. 4 billion+ consumers, living on less than $2 daily $5 billion+ in collective spending power
Importance of Ethical Marketing Practices
Business ethics are basic values that guide a firm's behavior. What constitutes ethical behavior is often different for different people. Ethical philosophies guide how people make such decisions. A code of ethics is a written standard to which everyone in the organization must subscribe.
Business planning
Business planning is an ongoing process that guides short- and long-term decisions. Helps identify and build on firm strengths Improves managerial decision making Develops objectives and provides a means of charting progress toward goals
Collaborative Consumption
Consumers increasingly would rather rent than purchase the products they use. Traditional marketers are also looking to take advantage of this trend.
Value from the Customer's Perspective
Customer perspective: Value is the ratio of perceived benefits to perceived costs Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product itself
External Environment
External environment consists of factors outside the firm which that could positively or negatively impact operations. Largely beyond direct management control, so planning is critical Economy Competition Technology trends Sociocultural trends Legal/political/ethical trends
Creating Action Plan Timelines
Each action plan requires a time line needed to accomplish the various tasks. Often portrayed in flowchart form to help managers and employees visualize sequence of tasks Gantt charts PERT charts
Setting a Budget
Each cost element of the action plan should link to a budget item. Increases accountability for all parties involved with implementing the marketing plan Accuracy in estimating individual action plan expenditures helps overall marketing budget forecasting.
2: Evaluate the Environment
Examination of internal and external environments Managers often synthesize environmental analysis of into a format known as SWOT analysis. SWOT analysis catalogs firms' internal strengths and weaknesses and external opportunities and threats.
Marketing Facilitates Exchange
Exchange occurs when one party gives up something and in return for receiving something else Conditions for Exchange At least two people or organizations must be willing to make a trade. Have something the other party wants Agree on value of exchange and terms Each party free to accept or reject exchange
Operational Planning
First-line managers focus on day-to-day execution of functional plan. For marketers, this typically includes Annual, semi-annual, or even quarterly action plans to guide marketing plan implementation Use of marketing metrics to monitor performance Cover a shorter period of time than strategic and functional plans Often falls to lower level managers Include detailed instructions for activities, specifies responsibilities, and provides time lines Many key marketing metrics actually are used at the operational level of planning.
Relationship Era
Focused upon a consumer orientation A management philosophy that emphasizes satisfying customers' needs and wants Marketing plays a more central role Emergence of the marketing concept Total Quality Management (TQM) and other quality initiatives gains wide acceptance
Functional Planning
Functional - Planning done by top functional level management Market planning includes: Situation analysis Broad 3- 5 year plan to support the strategic plan Annual plan
Ethical Values
Honesty Responsibility Fairness Respect Transparency Citizenship
3: Develop Marketing Strategies
Identify target market(s) Adjust marketing mix for each target market Product Price Promotion Place (Distribution)
Contractual Agreements
In a licensing agreement, one firm (the licensor) gives another (the licensee) the right to produce and market its product in a specific country. Franchising is a form of licensing in which the franchisee obtains the right to adopt an entire way of doing business. McDonalds in India
Overall Economic Health
Indicators of economic health Gross Domestic Product (GDP) Foreign Exchange Rates (Forex) Economic Infrastructure
Action Plans
Individual support plans included in a marketing plan that provide guidance for implementation and control of the various marketing strategies within the plan. Sometimes referred to as marketing programs Managers create actions plans for key elements involved in implementing the marketing strategy.
Internal Environment
Internal environment consists of controllable elements within firm. Key technologies Patents Financial stability Supplier relationships Reputation Human capital
Marketing Defined: Value for Society
Is it possible to make profits and contribute to society and the planet in a positive way? Corporate responsibility at Target In 2012, Target set goals for all seafood sold in stores to be sustainable and traceable. Reusable bag program saves consumers $7 million 50+% of apparel is labeled "machine wash cold" to help reduce energy consumption.
1: Define the Mission
Key questions in determining mission. A mission statement is a formal document that describes the firm's overall purpose and what it hopes to achieve in terms of its customers, products, and resources.(The ideal mission statement is not too... Broad, Narrow, Shortsighted)
Sustainability: Marketers Do Well by Doing Good
Many believe sustainability is no longer an option. Firms must focus on the triple bottom line. Sustainability is often sensible business. Many believe sustainability is no longer an option. Firms must focus on the triple bottom line. Sustainability is often sensible business.
Marketing as a Process
Marketers ask questions related to: Product benefits Capabilities Additional customer groups Changes in technology Changes in social and cultural values Environmental issues Legal and regulatory issues Marketing plan Mass market Market segment Target market Positioning
The Economic Environment
Marketers need to understand the state of the economy from different perspectives Overall economic health (e.g., GDP, Forex Rate) Current stage of the business cycle
Ethics is Job One in Marketing Planning
Marketing action cannot establish long-term relationships if it is shown to be unethical. Consequences of low ethical standards can be damaging to firms and managers. Stockholders may lose investment. Jobs may be lost. Confidence in the economy suffers.
Value of Marketing
Marketing activities facilitate exchanges that create, communicate, and deliver value to customers. Sellers and society at large also derive value from these exchanges. But marketing is sometimes misused
Marketing Defined: Meeting Stakeholder Needs
Marketing concept Modern marketers practice the marketing concept: identifying and satisfying the needs of consumers to ensure profitability. Marketing meets the needs of diverse stakeholders Stakeholders include consumers, business buyers, sellers, investors, and community residents.
Marketing Defined: Value for Customers
Marketing concept Modern marketers practice the marketing concept: identifying and satisfying the needs of consumers to ensure profitability. Practicing the marketing concept is complex
Deciding on Measurements and Controls
Marketing control is a formal process for: Measuring performance Comparing performance to established marketing and strategy objectives Making adjustments to the objectives or strategies based on this analysis Selecting the right metrics should account for short-term objectives balanced against firm's long-term sustainability.
Production Era
Marketing dominated by a production orientation A management philosophy that emphasizes the most efficient ways to produce and distribute products Marketing promotions played a minor role Henry Ford's Model T and Ivory soap are examples of products that were created under a production orientation
Summary: Marketing Defined
Marketing encompasses activities and process that create, communicate, deliver value-based exchanges. Benefits to stakeholders beyond just businesses and consumers
Needs, Wants, and Benefits
Needs Difference between actual and desired state Can by physiological or psychological Wants Desire to satisfy a need in a particular way Influenced by history, past experience, and culture Benefits Consumer received benefit when need satisfied Demand Customers' desires for products coupled with the resources needed to obtain them
3: Set Organizational or SBU Objectives
Organizational goals and objectives should be direct outgrowth of the mission statement. Taking into account internal and external environmental factors Objectives should be specific, measureable, attainable, and sustainable. May be directed toward financial- , operational- , or customer-based criteria
4 things that create a marketing mix
Product Strategies Place Strategies Price Strategies Promotion Strategies
Political and Regulatory Constraints on Trade
Political actions of a government may constrain business Economic Sanctions Nationalization Expropriation
Pricing Strategies
Pricing strategy determines how much a firm charges for a product. A firm may base its pricing strategy on costs, demand, price of competing products. Debundling
Sociocultural Environment
Refers to characteristics of a society, its people, and its cultural values and beliefs Demographics Cultural Values Social norms Language Consumer Ethnocentrism
Political and Legal Environment
Refers to local, state, national, and global laws and regulations that affect business U.S. business laws generally have two purposes Fair competition Consumer protection from unfair practices
Regulatory Constraints on Trade
Regulatory constraints on trade often restrict the marketing of goods. Local content rules Human rights issues may limit foreign countries' business opportunities. U.S. Generalized System of Preferences (GSP)
Return on Marketing Investment (ROMI)
Return on marketing investment Revenue (or profit) generated by investment in a given marketing program divided by the cost of the program at a given level of risk For instance, if: Revenue from Marketing Investment = $150,000 Cost of Marketing Program = $30,000 ROMI = 5.0
Exporting
Should the company sell products on its own or rely on local business partners? Export merchants are intermediaries a firm uses to represent it in other countries. Understand local market, know prospective buyers, and may be better able to negotiate terms
2: Set Marketing Objectives
Specific to the firm's marketing mix-related elements Marketing objectives help achieve the overall business objectives
Strategic Alliances
Strategic alliances allow companies to pool resources for common goals. Joint ventures often allow easier access to new markets.
Strategic Planning
Strategic planning is the managerial process that matches firms resources and capabilities to market opportunities. Top management defines firm's purpose and sets objectives. Many large firms have separate SBUs (strategic business units).
Strategic Planning: Frame the Picture
Strategic planning plays an important role in the modern corporation. Optimize revenues across multiple lines of business. Minimize risk in a complex and changing global environment. Includes a series of steps that results in development of growth strategies.
All Business Planning is an Integrated Activity
Strategic, functional, and operational plans must be in harmony for firm to succeed. Planning at all levels flows from organizational mission. Planners at all levels must keep the "big picture" in mind.
SWOT Analysis
Strengths Weaknesses Opportunities Threats
Strategic Planning Summary
Successful executives understand strategic planning as an ongoing process. One that proceeds from defining a shared purpose, leading to business growth Define the mission Evaluate environment Set objectives Establish business portfolio Develop growth strategies
Technological Environment
Technology: Provides firms with important competitive advantages Profoundly affects marketing activities Can transform industries Patent: Legal document giving inventors exclusive rights to produce/sell a particular invention in that country
What's Next in the Evolution of Marketing?
The Attention Economy In the Internet Era, success measured by share of mind rather than simply share of market. Big Data Ford employs 200+ data scientists to generate insights leading to valuable auto innovations
Business Cycles
The business cycle describes the overall pattern of changes or fluctuations in an economy. Prosperity Recession Recovery Depression Inflation
Marketing Creates Utility
Utility represents the sum of benefits a consumer receives from use of a product Form utility Place utility Time utility Possession utility
Value
Value is benefits received by the consumer from a product relative to total costs Marketing activities lead to value creation through innovations that enhance customer benefits and reduce costs Marketing promotional activities communicate the value proposition
When is a Bribe Not a Bribe? Ethical Issues for Global Business
Vast differences in what people around the world consider ethical business behavior In many LDCs and developing countries, payment in exchange for "favors" is a way of life. U.S. federal law bans payment to influence decisions by foreign officials to award business contracts. Bribery occurs when someone voluntarily offers payment to get an illegal advantage. Extortion occurs when someone in authority extracts payment under duress.
Assigning Responsibility in the Action Plan
Who will be responsible for carrying out each part of the marketing plan? Not everybody involved will be marketers Sales Production Quality control Shipping Customer service Finance IT
World Trade
World trade refers to the flow of goods and services among different countries. Not all countries participate equally Requires flexibility in order to serve needs of remote markets Countertrade
BCG Matrix
stars: SBUs whose products have a dominant market share in high-growth markets. high market share in high growth markets. question: SBUs whose products have a low market share in high growth markets. dogs: SBUs nobody wants low market share in low growth markets. cash cow: SBUs whose products have a dominant market share in a low growth-market
Three Levels of Business Planning
strategic planning functional (market) planning operational planning
Elements of the Marketing Environment
technological environment economic environment competitive environment social culture environment political and legal environment
