BADM 320 exam 1 notes PDF

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notes for the first exam...

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Tuesday January 15, 2019 ● ● ● ●

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Syllabus can be found at www.woltersworld.com Office hours Tuesdays (9:30-11) by appointment 10 Wohlers Hall Email for badm questions is [email protected] Exams: 50 MC questions ○ Exam 1 28% Tuesday February 12 ○ Exam 2 28% Thursday March 26 ○ Exam 3 28% Thursday April 26 ○ Syllabus quiz 5% when are the exams, where is his office Participation/ Attendance/ Pop quizzes: 11% ○ There is a 3 attendance curve Grading Scale ○ A+ (96.45-100) ○ A (92.45-96.44) Extra credit ○ SONA ○ Counts 6 credits ○ Can add up to 3% of your final grade Studying for exams: ○ Read the chapters ○ Read class notes ○ Watch summary videos ○ Read summary blogs

Thursday January 17, 2019 ● What is marketing? ○ Marketing is the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large ■ Everything it takes to get a product to get a product from an idea to a client’s hand ○ Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return ○ VALUE is the underlying most important thing ○ Common language- marketing is a combination of all the processes buyers and sellers go through in order to exchange things of value to each other ● Core aspects of marketing ○ Satisfying the customers wants and needs ○ An exchange of g/s for money ○ Marketing mix: 4P’s (product, price, place, promotion)

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Can be performed by individuals or organizations - sales associate at Wal-Mart as well as industry wide like “got milk” ○ Marketing occurs everywhere- sold my website at my wedding ○ Marketing helps create value (especially helpful in the eye of the client) ○ It’s more than just selling and promoting Some general marketing tips ○ Product: ■ Marketing set up to move products (selling candy bars) ○ Service: ■ Marketing set up to move services (selling accounting services) ○ Person: ■ Marketing set up to get people to like or have a favorable opinion about someone (political campaigns) ○ Place: ■ Marketing geared to getting people to visit some place (tourism- ex. Come visit Chicago) ○ Cause: ■ Marketing set up to get people aware of a cause (pink ribbon for breast cancer awareness) ○ Organization: ■ Marketing set up to attract donors (donate to the red cross blood drive) Determine customer needs and wants & satisfy them! ○ First we need to determine who our clients should be ○ Then we figure out how the customers tick ■ What do they want from our product? What should it do? ■ What do they need from out product? Minimum musts ■ How do they decide on buying our product? ■ Why do they buy our product? Need? Desire? Pressure? ○ Find your niche and you can be a success ○ You need to target those who WANT your product as well as those who can AFFORD your product ○ Then deliver on those wants and needs with products that match them ○ Remember, we cannot sell our products to everyone in the world, and even if we could we may not want to ■ This is a mistake many new entrepreneurs make, if we focus on everyone, no one feels special, best to focus on those who will be the most satisfied with our product and then focus on others ■ Does porsche want to see a porsche in every garage? Or do they want it to be exclusive? ■ Mercedes benz hurt its brand by developing a cheaper model ● Does selling cheaper cars hurt their brand image? Needs vs. wants vs. demands ○ Need- a person is in a state of deprivation/lacking

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■ Hungry: lacking food/ sustenance ■ Tired: lacking enough rest/sleep ○ Wants- how needs are interpreted by people via influencers in culture in personality ○ Demands- wants that are backed by the ability to buy Value proposition ○ Why should people buy this from you???? ○ Value proposition: the reason why people will buy from you (listen to their needs and wants to develop) ■ The set of promised benefits or value that will be created by using said product or service ● The value proposition that your company/products have is what will inspire people to buy and be what you talk about when you sell them to people ○ Uiuc value proposition: ■ Uiuc selling: good education, professors, job placement, college experience ■ Students buying: good education, job at the end, 4 years of fun ○ McDonald’s value proposition: ■ McDonald’s sells: fast, friendly, affordable, family experience ■ Students buy: fast, no thinking, open late Basic segmentation, targeting and positioning (STP) model ○ Market segmentation ■ Segment up the market into smaller market (to find your niche) ■ Base submarkets on criteria- wants/needs, purchasing behavior, demographics, life cycle, psychographics, etc. ○ Target segmentation ■ Evaluate each market segment will research to determine attractiveness ■ Decide on which markets are best to invest in- who can afford your g/s/ idea and who can afford it ○ Positioning ■ Communicating sources of value and value propositions to customers, connect to needs and wants of specific market ■ Develop unique marketing mixes 4 P’s for specific groups Marketing entails an exchange ○ The exchange of things of value between a buyer and seller ■ Value a good burger, culvers values my $7 ○ You build relationships up via exchanges in order for people to come back for more ■ 1st heard it was good, visit was good but was it normal, 2nd time same experience and even friendly, 3rd time let’s go to culvers I’m hungry, so now I keep coming back

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Customer service goes into marketing, good service = returning customer = more $$$$ Product offerings- the mix of products, services, information, experiences that are available to customers ○ You’re hungry? There are many product offerings many places. Where do you go? Marketing myopia- where the best made products can lose ○ When firms pay more attention to the actual products/services/experiences they produce than to the benefits, values or experiences that their products actually create for customers Decisions on the 4 P’s of marketing ○ The marketing mix is the KEY part of determining your product/services delivery and perception to customers ○ Product- creates value ■ Variety, quality, design, brand, packaging, sixe, features ○ Price- captures the value of the product ■ List peise, MSRP, terms and conditions, allowances, discounts ○ Place- delivers that vale to the customer ■ Marketing channels, locations, retail, online, websites, inventory, logistics ○ Promotion- communicates the value ■ Advertising, sales, selling, PR 4 P’s - Price: capturing value ○ Price- all things a customer gives up to obtain your product/service/idea ○ All depends on the perception of “value” ○ What’s cheap to me may not be cheap to you ○ We should know the customer’s perception on prices ■ Historical prices- paid 1300 last year, so 900 in 2015 seems high ■ Substitute prices- the QEII is about 10000 ■ Ability to pay- price doesn’t matter because I’m broke! ■ Quantity- quality- layover? First class? ■ BOGO 4 P’s - Place: Delivering a value proposition ○ All the things that must be done in order to get the prod/serv/idea to the customer to purchase and obtain its value ■ Websites: clear and concise website, easy to navigate, makes it easier ■ Supply chain: correct delivery, timely delivery, stocked stores, etc ■ Going into a messy fast food restaurant does not establish “a good value” in my mind 4 P’s- Promotion: Communicating the value proposition- if they don’t know its there ○ Best product’s don’t get the sales they deserve but we don’t know about it ○ Promotion is the most common idea people have about marketing about where advertising come in

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Marketing is done by individuals and firms ○ B2B marketing- selling products from a business to another business ○ B2C marketing- selling products from a business to a consumer ○ B2C marketing- selling their products to customers Marketing impacts various stakeholders ○ Marketing is not directed at the end customers, but to various entities throughout the supply chain ■ Employment marketing- firm wow you with fancy dinners and parties so you want to work there ■ Industry marketing- avocados everywhere ■ Retailers- black friday deals are set up with people in the supply chain Value based marketing ○ What people perceive as value changes consistently ○ Value is relative, each customer/client will have their own criteria ○ How do firms become more value driven and become closer to their customers? ■ Share information ● Share trends throughout the supply chain to find new ways to create value ■ Balance benefits with cost ● Make sure you are keeping up with customer needs, wants, and desires ■ Build relationships with customers ● Develop a customer relationship management database on your customers so you can give the highest value to them Marketing is important because ○ It helps is expand our business around the world ■ Firms understand their business and local customers and can use that knowledge to move into new markets and take advantages there ○ Marketing is found throughout the supply chain Why marketers fail ○ Not enough research/ having product offerings people want or need ○ Underestimating the competition and what they may be able to do ○ Don’t keep up with social, cultural, and political change ○ Don’t keep up with the competition (nokia and smartphones) ○ Rose colored glasses- think that product will be a great success (new Coke) ○ Messed up pricing- charging too high or too low ○ Did not use the right channels to get customers- walmart may not be the best channel! Questions to think about ○ what is the difference between a need/want/desire ○ 4 P’s and explain with examples ○ Laptop, desktop, tablet- how are the 4 P’s different and similar ○ Difference between B2B, B2C, C2C marketing

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Core aspects of marketing and how they affect a service based company vs manufacturer Why could marketing create value for customers

Tuesday January 22, 2019 Strategic Marketing and marketing plans ●

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What is a marketing strategy? ○ It identifies a firm's target markets ■ Who would you be selling to/ why selling to them? ■ Determine who you sell to and who you won’t ■ Are there distinct groups of products or markets? ● Business- corporate partners that buy a lot if phones (at&t) ● Professional- tailored for business use ● Personal- your own ● Internet phone use- skype/whatsapp are competitors ■ What is our niche/specific market? What is a marketing strategy? ○ It identifies a market mix for solid product/niche ■ Product: what will be offered in order to satisfy each of our target market wants and needs? ■ Price: determine the value that the target market puts on our product. How do they determine the value of our products? ■ Place: the best locations and ways to get our product or service to our customers so they can purchase our product. ■ Promotion: determine the best way to communicate the value proposition to the customers so they see the value. ○ Our marketing strategy helps us identify areas where we can focus in order to develop a sustainable competitive advantage over our competition, so how will we beat the competition day in and day out. Sustainable competitive advantage Sustainable competitive advantage ○ A SCA is an advantage that a firm has over their competition that is not easily irritable/copied and therefore firms are able to maintain their competitive advantage over a long period of time ○ SCA helps firms to fight off their competition in or at least keep them at arms length ○ SCA do weaken over time as a competition can develop similar technologies, backward integration, brand name, bad press, changes in the industry environment ■ Nokia was THE mobile phone company … Now how many have it here? ○ Firms need to continually monitor and work on their SCAs to maintain them,

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SCA are the key to long term financial stability. Coke is not worried about RC cola taking over the market Sustainable Competitive Advantages Come From four Main Areas ○ 1. Customer excellence: treating your customers in a way that creates long-term value for them so they return again and again ○ 2. Operational Excellence: running your company exceptionally well and better than the competition ○ 3. Product excellence: developing a product ○ 4. Locational Excellence: think real estate … location location location … if you have the right place. Customer excellence ○ Developing and retaining loyal customers as well as having excellent customer service ○ Customer service: consistent attention that adds value, the entire team needs to be on board ○ SCA from customer loyalty helps firms fight off competition because our customers do not want them to shop anywhere else ○ How do we develop loyal customers? ■ Having a strong brand ■ Unique merch ■ Superior customer service How to create loyalty ○ Clear and precise positioning: your product was “designed” for them, they identify with the product/service ○ Loyalty programs: to get free stuff → mileage plus (star alliance), delta airlines skyteam, max card from county market ○ Focus on “lifetime” customers and not one time customers Why you should treat your customers better ○ Customer lifetime value: how much money a firm can make off of a customer in their lifetime ■ Used car salesman (buy from there once- spend $1000, mean to you) VS car dealership salesman (nice to you and makes you want to come backspend $100,000 over lifetime) The value of long term loyal customers ○ It is a lot cheaper to keep a customer than to attract a new one ○ Loyal customers tend to purchase more product and services from you ○ Loyal customers tend to be willing to pay more for what they want from the firm ○ Loyal customers know how the firm works so they require less time and energy asking questions Customers vs. clients ○ Customers ■ Nameless rabble of people ■ Mass marketing the same spiel to everyone

■ Not much reason for loyalty or relationship building felt by the customer Clients ■ They have actual names ■ We deal with them on a one to one basis ■ We keep individual databases on these clients ■ Clients get personal care from a specific sales rep ■ We build strong relationships with clients Customers Matter and so do these terms ○ Share of Customer: the amount of consumer’s purchasing that a firm gets in all of their product and service categories. ■ Firmas want to for customers to buy as much stuff from them as possible ■ Share of wallet: banks want to be your checking acct, savings acct, manage holder, finance your business ■ Share of travel: airlines sell plane tickets & travel insurance, hotels, etc. This gives them the possibility to make more money on part of your trips ○ Consumer Equity: the value of all of our customers’ lifetime values Customer relationship groups ○ Butterflies- clients who are potentially profitable but are not loyal. Short term. ○ True friends - clients who are profitable AND loyal. Long term. ○ Strangers- don't even bother- no potential loyalty or profitability. Short term. ○ Barnacles- highly loyal but not very profitable. Long term. ■ Student checking accounts at banks SCA: Operational Experience ○ SCA firms develop by having efficient and effective operations throughout the firm. Supply chain, HR, and accounting. ■ Having efficient operations set up so customers get the products they want, when they want it ○ Supply Chain management & Strong Relationships with Suppliers ■ Exclusive territorial rights ■ Favorable terms ■ Receive products in short supply first ○ HR SCA: having recruiters who are able to find the best employees Product excellence ○ Develop products with high perceived value ○ Branding and product positioning ○ Extremely hard to develop product based SCAs id your product is easily copied or imitated, many company then focus on brand name instead SCA: product excellence ○ Companies tend to focus on developing their brand image in order to build the perceived value of products ■ Clear product positioning ■ Deductive brand image ■ Building up a brand image can take up a lot of position ○

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Constant innovation: remember SCA can erode over time so firms are constantly working to keep them up ■ Customers are inspired by nre products Location Excellence ○ Having a shop across from the dorm makes it easy to attract customers ○ Having an easy and convenient website makes it easier for people to shop with you and keep shopping with you ○ It is very difficult to beat convenience, think toilets on the highway... ○ Retailers and service providers will locate nearer to their customers (walgreens on green st) ○ Sometimes you have to buy and over buy to keep your customers Sustainable competitive advantages you see everyday ○ Speed and time ○ Superior data management and data analysis ○ A strong research and development team (operational) ○ Brand popularity ○ High volume Production ○ Low pricing (through operational) SCAs you have heard of ○ Barriers to entry ○ Superior product or customer service ○ Exclusive distribution rights ○ Access to working capital ○ Ownership of capital equipment The marketing plan ○ What is a marketing plan ■ Showing people what we are planning on doing, gives us direction and shows what we are getting ourselves into ○ Why do we need a marketing plan? ■ Direct and explanation ■ It helps us assess our progress and goals for the future The makeup of a marketing plan ○ Executive summary: the most important part of the project. This will entice the higher ups to read what you have ■ Covers the main goals and recommendations ○ Current Market Situation: Understanding the marketplace ■ Information on the market ■ Describe the market ■ Describe the product and its values ■ A thorough review of the competition and their product offerings ■ An overview of the distribution needed for the product The makeup of a marketing plan SWOT

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SWOT analysis: do a situation analysis of the strengths and weaknesses of the company/products and the opportunities and threats that lay outside of the company’s control ■ Not just listing the issue but giving advice to improve it ■ Strengths- what the company does well ■ Weakness- what the company does poorly and how they recommend to change it ■ Opportunities ■ Threats The makeup of a marketing plan ○ Objectives and goals of the marketing plan: what is it ○ Overall marketing strategy: what is your logic and thinking behind the marketing push ○ Action plan: what will actually be done

Thursday January 24, 2019 ●

BCG Matrix ○

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High market share

Low market share

High growth

Star

Question mark

Low growth

Cash cow

Dog

Stars ■ High growth market where the firm has a huge market share ● Heavy investments of resources in this segment in order to maintain high growth and keep market share ● Stard so eventually fade, but are typically new products in fast moving industries Cash cows ■ Low or slow growth industries where the firm has a dominant market share or at least a high market share ● The cash generated from cash cows is used to finance other ventures such as the stars and question marks. Monies generated by the flagship Pepsi-Cola brand are used to finance new drinks and snacks. Question marks ■ High market growth with a low market share ● The future of a question mark is a question- could be a star or a dog ● If it's a small player in a fast growing industry and with the right nurturing it could take off, or if not it cou...