Lecture notes - Introduction to Marketing - complete PDF

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Introduction to Marketing - complete...

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Chapter 1: Marketing (Lecture 1 and 2) -

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Marketing: the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return Process of marketing o Understanding markets (customers, competition, trends, environment) o Marketing strategy (segments, target markets, positioning) o Marketing programmes (products, pricing, distribution, promotion, people, process, environment) o Implementation and control (budgets and schedules, personnel and responsibilities, benchmarking and monitoring progress) Process of marketing (textbook) o Understand the marketplace and customer’s needs and wants o Design a customer-driven marketing strategy o Construct an integrated marketing program that delivers superior value o Build profitable relationships and create customer delight o Capture value from customers to create profits and customer equity Marketing is about facilitating and maintaining exchange o Must be at least two parties o Each must have something of value to the other o Must be a means for them to communicate with each other o Each must be free to accept or decline the offer Value = benefits – costs Customer satisfaction is the difference between expectation and performance Loyal – neutral – detractors Marketplace (different philosophies for exchange) o Production concept: idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency o Product concept: idea that consumers will favor products that offer the most quality, performance and features and that the organization should therefore devote its energy to making continuous product improvements o Marketing concept (focuses on customer needs and wishes): holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do o Selling concept: idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort o Societal concept: idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s longrun interests Marketing applies internally (employees) and externally (customers)

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Market offerings: some combination of products, services, information, or experiences offered to a market to satisfy a need or want Market myopia: the mistake of paying more attention to the specific products of a company offers than to the benefits ad experiences produced by these products Exchange: the act of obtaining a desired object from someone by offering something in return Market: the set of all actual and potential buyers of a product or a service Marketing management: art and science of choosing target markets and building profitable relationships with them Customer relationship management: overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Customer-perceived value: customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers Customer satisfaction: the extent to which a product’s perceived performance matches a buyer’s expectations Customer managed relationships: marketing relationships in which customers, empowered by today’s new digital technologies, interact with companies and with each other to shape their relationships with brands Consumer-generated marketing: brand exchanges created by consumers themselves – both invited and uninvited – by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers Partner relationship management – working closely with partners in other company departments and outside the company to jointly bring greater value to customers Customer lifetime value: the value of the entire stream of purchases that the customer would make over a lifetime of patronage Share of customer: the portion of the customer’s purchasing that a company gets in its product categories Customer equity: total combined lifetime values of all the company’s customers Butterflies, true friends, strangers, barnacles Five core marketplace concepts o Needs, wants, demands o Market offerings o Values and satisfaction o o

Exchange and relationships Markets

Chapter 2: Marketing Strategy (Lecture 4) -

Strategy: a means to some end Where are we? Where could we be? How do we get there? Are we getting there? Planning: process of anticipating future events and conditions and of determining the best way to achieve organizational objectives

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Strategic planning: process of determining an organization’s primary objectives and adopting courses of action that will achieve these objectives Tactical planning: planning that guides the implementation of activities specified in the strategic planning Strategic thinking: future orientated, look for unmet needs in the marketplace, “strategic window”, less “crisis management” Strategic innovation: thinking of new ways to compete Strategy begins with organization’s mission and values, then setting goals The “thin edge” hypothesis Market penetration (present, present) – product/service expansion (new products, present markets) – market expansion (present products, new markets) – diversification (new, new) Integrative growth: expanding the scope of the business (horizontal or vertical) Strategic planning: the process of developing and maintain a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities Mission statement: a statement of the organization’s purpose – what it wants to accomplish Steps in strategic planning o Defining the mission o Setting the objectives and goals o Designing the business portfolio o Planning marketing and other functional strategies Business portfolio: the collection of businesses and products that make up the company Portfolio analysis: the process by which management evaluates the products and businesses that makeup the company Growth-share matrix: a portfolio-planning method that evaluates a company’s strategic business units in terms of its market growth rate and relative market share (stars, cash cows, dog, question mark) Product/market expansion grid: a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification Value chain: series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products Value delivery network: the network made up of the company, suppliers, distributors, and ultimately, customers who partner with each other to improve the performance of the entire system Marketing strategy: the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships Market target: the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers Four p’s (product, price, place, promotion)

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Four c’s (customer solution, customer cost, convenience, communication) Marketing implementation: the process that turns marketing strategies and plans into marketing actions to accomplish strategic marketing objectives Contents of a marketing plan o Executive summary o Current marketing situation o Threats and opportunities analysis o Objectives and issues o Marketing strategy o Action programs o Budgets o Costs Marketing control: the process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved Return on marketing investment: the net return from a marketing investment divided by the costs of the marketing investment

Chapter 3: Sustainable Marketing -

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Sustainable marketing: socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs Marketing concept, societal marketing concept, strategic planning concept, sustainable marketing concept Consumerism: an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers Environmentalism: an organized movement of concerned citizens, businesses, and government agencies to protect and improve peoples’ current and future living environment Environmental sustainability: a management approach that involves developing strategies that both sustain the environment and produce profits for the company o Pollution prevention, new clean technology, product stewardship, sustainability vision Consumer oriented marketing: the philosophy of sustainable marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view Customer-value marketing: a principle of sustainable marketing that holds that a company should put most of its resources into customer-value-building marketing investments Innovative marketing: a principle of sustainable marketing that requires that a company seek real product and marketing improvements Sense of mission marketing: a principle of sustainable marketing that holds that a company should define its mission in broad social terms rather than narrow product terms Societal marketing: a principle of sustainable marketing that holds that a company should make marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests

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Deficient product: products that have neither immediate appeal nor long-run benefits Pleasing products: products that give high immediate satisfaction but may hurt consumers in the long-run Salutary products: products that have low appeal but may benefit consumers in the long run Desirable products: products that give both high immediate satisfaction and high long-run benefits Social criticisms of marketing o High prices o Deceptive practices o o o o o o o o

High-pressure selling Shoddy or unsafe products Planned obsolescence Poor service to disadvantaged customers Cultural pollution False wants Unfair competition Barriers to entry

Chapter 4: Analyzing the Marketing Environment (Lecture 3) -

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Environmental scanning: collection and evaluation of information from the wider marketing environment that might affect the organization and its strategic marketing activities Elements of the marketing environment o Political and regulatory o Economic o Competitive o Technological o Social and cultural o Natural SWOT o Strengths: characteristics of the business that give it an advantage over others in the indust-ry o Weaknesses: characteristics that place the business at a disadvantage relative to others o Opportunities: external chances to make greater profits or sales o Threats: External elements in the environment that can cause trouble for the business PESTLE o Political o Economic: factors that affect consumer buying power and spending patterns o o o

Social Technological Legal

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o Environmental What? So what? Now what? o What are the realities and trends in the environment? What opportunities and threats do they present? o How are these realities and trends, opportunities and threats likely to affect our business? o How should/could we respond to them? Demographic environment: study of human populations in terms of size, density, location, age, sex, race, occupation and statistics Sociocultural environment: society’s basic values, perceptions, preferences, and behaviors Natural environment: natural resources needed as inputs are affected by marketing activities Technological environment: forces that create new technologies, creating new product and market opportunities 6 forces (demographic, economic, natural, technological, political, sociocultural, competitive) Selling concept: push the product Production concept: make the best product Marketing environment: the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers Marketing intermediaries: firms that help the company to promote, sell, and distribute its goods to final buyers Public: any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives Economic environment: factor that affect consumer buying power and spending patterns Environment sustainability: developing strategies and practices that create a world economy that the planet can support indefinitely Technology environment: forces that create new technologies, creating new products and market opportunities Political environment: laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society Cultural environment: institutions and other forces that affect society’s basic values, perception, preferences, and behaviors Five types of customer markets o Consumer, business, reseller, government, international markets Fix forces that make up the macroenvironment o Demographic, economic, natural, technological, political, cultural Trends of natural environment o Shortages of certain raw materials o Higher pollution levels o More government intervention in natural resource management

Chapter 5: Managing Marketing Information (Lecture 5)

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The planning, collection, and analysis of data relevant to marketing decision making Information empowers intelligent decision making (but does not supplant good judgement) Information is also used to monitor performance Basic data sources o Management information systems o Intelligence gathering o Formal research projects Management information systems: the regular, planned collection, analysis, and presentation of information for use in making management decisions Intelligence gathering: procedures and sources used to obtain everyday information about pertinent developments in the relevant environment Intelligence data o White information: open-source information (newspapers, databases) o Grey information: private domain information (trade shows, visiting competitors firms) o Black information: illegally obtained data Formal research process o Need for information o Problem definition o Research design o Sampling o Data collection and analysis o Interpretation and reporting Qualitative data (“soft data”) – undertaken to define problems, develop a research approach, or to provide deeper insights and understanding into the topic of interest Qualitative methods: research the produces data that can be reduced to stats or otherwise analyzed numerically Survey research, observational research, human observation, machine observation, experimental research Customer insights: fresh understandings of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships Marketing information system (MIS): people and procedures for assessing information needs, developing the needed information and helping decision makers to use the information to generate and validate actionable customer and market insights Internal databases: electronic collections of consumer and market information obtained from data sources within the company network Competitive marketing intelligence: the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environments Marketing research: the systematic collection, design, analysis, and reporting of data relevant to specific marketing situation facing an organization Exploratory, descriptive and causal research Primary and secondary data

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Commercial online databases Observational research, ethnographic research, survey research, experimental research, focus group interviewing, online marketing research, online focus groups, sample Consumer relationship management: managing detailed information about individual customers and carefully managing customers touch points to maximize customer loyalty

Chapter 7: Segmentation, Targeting and Positioning (Lecture 6, 7 and 8) -

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Market: set of actual and potential buyers of a market offering STP o Segmenting: dividing a market into distinct groups with distinct needs, characteristics, or behaviors that might require a separate marketing mix o Targeting: evaluating segments and selecting one or more to serve o Positioning: designing a marketing mix so the product is perceived to be different from he competition Why segment markets? o Changes in population makeup o Ability of business to reach and serve these markets o Increase in sophistication of and demands made by consumers o Increasing competition o Because we can’t be all things to all people Levels of segmentation o Mass marketing (ex. WD-40) o Differentiated marketing (marketing mix a – marketing segment a, marketing mix b – marketing segment b) o Niche marketing (appeal to a narrow segment (ex. Ethnic grocery stores, kosher products, organic food)) o Micromarketing: local marketing, individual marketing Marketing mix: price, product, place, promotion Consumer segmentation variables o Demographic o Geographic o Psychographic o Behavior (product usage)

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5 segments o Price conscious o Life stage o Lifestyle choices o Tendency to entertain o Type of shopping trip

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Market segmentation must be

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o Actionable Which segment should be targeted o Size and growth rate o Attractiveness o Fit with company objectives and resources Positioning: the way consumers perceive a product as compared with competing products o What makes you different o Stand out from the others Customer touch points o Employees o Physical location o Name and logo o Products and services o Advertising o Word of mouth Differentiation tools o Product (features, performance, durability, style, design) o Services (ordering ease, delivery, installation, consulting, repair) o Personnel (competence, courtesy, credibility, reliability, communication, responsiveness) o Brand image Types of segmentation o Geographic o o o o o o o o o o

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Measurable Substantial Accessible Differentiable

Demographic Age and life-cycle Gender Household income Psychographic Behavioural Occasion Benefit User Usage

o Loyalty Intermarket segmentation: forming segments of consumers who have similar needs and buying behaviour even though they are located in different countries Segmentation, targeting, differentiation, positioning

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Effectiveness of segmentation analysis depends on finding segments that are o Measureable, accessible, substantial, differentiable, actionable

Midterm 2 Chapter 6 (Lecture 9 and 10) -

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Two types of buyers o Ultimate buyer : buy for own purpose o Business to business, industrial buyer: buy for a business Saskatoon’s Industrial area o More complex buying decisions o More formalized buying process o Buyers and sellers more dependent on each other “Black Box” o Marketing and other factors = buyer’s response (choice of product, brand, dealer, timing, amount) o “brain of the ...