Marketing - Fifth Edition Notes PDF

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Summarized chapter notes for Marketing: Fifth Edition by Grewal and Levy....

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Marketing: Fifth Edition – Grewal and Levy Summarized Chapter Notes Summarized chapter notes for each chapter of “Marketing – Fifth Edition” by Grewal and Levy. Written in a bullet point format with bolded keywords. By Tony Quartarone for Marketing Principles at the University of Massachusetts Lowell

Tony Quartarone [email protected]

Section 1: Assessing the Marketplace Chapter 1: Overview of Marketing  

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Marketing: The activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society. Marketing Plans: A written document composed of an analysis of current marketing situations, opportunities and threats for the firm, marketing objectives (four P’s,) action programs, and projected income statements. Marketing is about satisfying customer needs and wants. Understanding one’s target consumer base and how to satisfy them is the core of marketing. Exchange: The trade of things of value between the buyer and the seller so that each is better off as a result. Four P’s (Also known as the Marketing Mix): o Product: Creating Value  The purpose of marketing is to create value by developing a variety of goods, services, and ideas to satisfy customer needs.  Goods: Items that can be physically touched.  Services: Intangible customer benefits that are produced by people or machines and cannot be separated from the producer. o Price: Capturing Value  Price is not strictly monetary. It can involve time and energy.  Ideas: Thoughts, concepts, and philosophies that can be marketed. o Place: Delivering Value  Business-to-consumer Marketing (B2C): The process of a business selling a product to consumer. McDonald’s to customer.  Business-to-business Marketing (B2B): The process of buying and selling goods or services to be used in the production of other goods and services, for consumption by the buying organization, or for resale by wholesalers and retailers.  Consumer-to-consumer Marketing (C2C): The process where consumers sell to other consumers, such as Craigslist. o Promotion: Communicating Value  Different marketing strategies were employed for several years.  Production-oriented Era: The 20th Century idea that good products would sell themselves. Producers were concerned with innovation, not satisfying individual consumers’ needs.  Sales-oriented Era: From 1920-1950 where the Great Depression and WWII stunted consumer activity, businesses were overproducing. They were then forced to depend on personal selling and advertising.  Marketing-oriented Era: After WWII, consumer activity skyrocketed, and businesses were able to focus on what consumers wanted and needed before they created products. Marketing was discovered in this era.  Value-based Marketing Era: The current era of marketing that focuses on creating and presenting more value to the customer than other firms. The strategy of value cocreation, where customers act as collaborators with a manufacturer or

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retailer to create the product or service, allows customers to directly tell firms what they want and need. Firms become value driven by focusing on the following activities: o Sharing information about their customers and competitors across their organization and other firms and distributors. o Balancing customer benefits and costs. o Concentrating on building relationships with customers.  Relational orientation: A method of building a relationship with customers based on philosophy that buyers and sellers should build a long-term relationship.  Customer relationship management (CRM): A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers. o Taking advantage of new technologies and connect with customers using social media.

Chapter 2: Developing Marketing Strategies and a Marketing Plan  

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Marketing Strategy: A firm’s target market, marketing mix, and method of obtaining a sustainable competitive advantage. Sustainable Competitive Advantage: Something the firm can persistently do better than competitors. There are four ideas that are used to create a sustainable competitive advantage and customer value: o Customer excellence: Focuses on retaining loyal customers and excellent customer service. o Operational excellence: Achieved through efficient operations and excellent supply chain and human resource management. o Product excellence: Having products with high perceived value and effective branding and positioning. o Locational excellence: Having a good physical location and internet presence. o Having well rounded excellences is required to be successful. Only one is not enough. Marketing Plan: A written document composed of an analysis of current marketing situations, opportunities and threats for the firm, marketing objectives (four P’s,) action programs, and projected income statements. o Planning Phase: The part of the marketing planning process where marketing executive, in conjunction with the top managers define the mission or vision of the business and evaluate the situation by assessing how various players in and out of the organization affect the firm’s potential for success. o Implementation Phase: The part of the marketing planning process when marketing managers identify and evaluate different opportunities by engaging in segmentation, targeting, and positioning (STP) and implement the four P’s. o Control Phase: The part of the marketing planning process when managers evaluate the performance of the marketing strategy and take necessary corrective measures. The steps to developing a marketing plan are as follows: o Step 1: Mission Statement: A broad description of a firm’s objectives and the scope of activities it plans to undertake. It attempts to answer the questions; what type of business is it and what does it need to do to accomplish its goals?

o Step 2: Situation Analysis: Using SWOT Analysis, the firm assesses its internal environment with regard to its Strengths and Weaknesses and its external environment with respect to its Opportunities and Threats. o Step 3: STP: Evaluate opportunities using Segmentation, Targeting, and Positioning.  Market Segment: A group of customers who respond similarly to a firm’s marketing.  Market Segmentation: The process of dividing the market into groups of customers with different wants, needs, or characteristics.  Market Targeting: The process of evaluating the attractiveness of various segments and deciding which to pursue as a market.  Market Positioning: The process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product dos or represents in comparison with its competing products. o Step 4: Implement marketing mix and allocate resources using the four P’s.  Product (value creation)  Firms must make products that can create value.  Price (value capture)  Firms must ensure their pricing gives consumers the impression that they are getting a good value for the products they buy.  Place (value delivery)  Firms must make their product readily accessible when are where the customer wants it.  Promotion (value communication)  Integrated Marketing Communications (IMC): A variety of communication disciplines, such as general advertising, personal selling, sales promotion, public relations, direct marketing, and electronic media. This provides clarity, consistency, and maximum communicative impact. o Step 5: Evaluate performance using marketing Metrics: A measuring system that quantifies a trend, dynamic, or characteristic.  It is not always evident who is responsible for performance. Is it the manager? The product creators? The salespeople?  Financial performance metrics are useful to assess sales, revenue, and profits. This includes total metrics over the course of a lifetime and relative measurements that compare two different fiscal periods.  Portfolio analysis is important to evaluate the firm’s various products and businesses and allocate resources according to which products are expected to be the most profitable for the firm.  Strategic Business Unit (SBU): A division of a firm that can be managed and operated somewhat independently from other division and may have different missions or objectives. This is where portfolio analysis is often done.  Product Line: Groups of associated items, such as items that consumers use together or think of as part of a group of similar products. Portfolio analysis is often done here.  Marketing Share: The percentage of a market accounted for by a specific entity. This is used to establish the products strength in a particular market.

Relative Marketing Share: A measure of the product’s strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry.  Market Growth Rate: The annual rate of growth of the specific market in which the product competes. It is essential that firms consider their growth strategies to ensure long term success. The four main growth strategies are: o Market Penetration: A growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers.  An example of this would be attracting new consumers to the firm’s current target market using ads and promotions. o Market Development: A growth strategy that employs the existing marketing offering to reach new market segments, whether it be domestic or international.  An example of this would be MTV trying to attract younger viewers by producing game shows, such as America’s Best Dance Crew. o Product Development: A growth strategy that offers a new product or service to a firm’s current target market. o Diversification Strategy: A growth strategy where a firm introduces a new product or service to a market segment that it does not currently serve.  Related Diversification: A growth strategy where the current target market and/or marketing mix shares something in common with the new segment that the firm is pursuing.  Unrelated Diversification: A growth strategy where the new business lacks any common elements with the present business. 

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Chapter 3: Social and Mobile Marketing 

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4E Framework for Social Media: o Excite customers with relevant offers o Educate them about the offering o Let them experience the product directly or indirectly o Give them a chance to engage with their social network Types of blogs: o Blog: A web page that contains periodic posts. o Corporate Blog: A website created by a company, often used to educate customers. o Professional Blog: A site written by a person who reviews and gives recommendations on products and services. o Personal Blog: A site written by a person who receives no products or remuneration for it. o Microblog: A blog that consists of short sentences, videos, or individual images, like Twitter. Showrooming: Customers visit a store to touch, feel, and even discuss a product’s features with a salesperson, and then purchase it online from another retailer at a lower price. There are several types of app pricing models. Ad-supported, freemium, paid apps, and paid apps with in-app purchases. Methods to engage with customers on social media: o Listen:

Sentiment Analysis: Allows marketers to analyze data from social media sites to collect consumer comments about companies and their products. o Analyze:  Hit: A request for a file made by web browsers and search engines. Hits are usually higher than website visits and can be misleading.  Page View: Number of times a page is viewed.  Bounce Rate: Percentage of times a visitor leaves the website immediately.  Click Path: Shows how users proceed through pages on a site.  Conversion Rate: Percentage of customers who buy a product.  Keyword Analysis: Evaluation of which words people use to search on the internet. o Do: Set up a social media marketing campaign  Identify strategy and goals.  Identify target audience.  Develop the campaign through experimentation and engagement.  Develop the budget.  Monitor and improvement. 

Chapter 4: Marketing Ethics    

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Business Ethics: Ethics that examines ethical rules and principles within a commercial context, business context, and special obligations that apply to people engaged in commerce. Marketing Ethics: Refers to ethical problems that are specific to marketing. Deceptive Advertising: A representation, omission, act, or practice in an ad that is used to mislead consumers acting reasonably under the circumstances. Corporate Social Responsibility (CSR): Refers to the voluntary actions taken by a company to the address ethical, social, and environmental impacts of its business operations and concerns of its stakeholders. o Key stakeholders:  Employees and their families  Customers, current and potential  Society, community, and environment  Marketplace, partners and competitors Steps for ethical decision making: o Identify issues o Gather information and identify stakeholders o Brainstorm and evaluate alternatives o Choose a course of action

Chapter 5: Analyzing the Marketing Environment 

The marketing environment is centered around consumers. The different levels surrounding them are: o The immediate environment and its factors:  Competition  Firms must always consider their competition and try to outdo them.  Corporate partners  Firms often interact with each other, often collaborating to maximize profits.

Company  Firms have the most control over what they do themselves. o Macroenvironmental factors:  Economic Situation: A macroeconomic factor that affects the way consumers spend money.  Inflation: The persistent increase in the price of goods and services.  Foreign currency fluctuations: Changes in the value of a nation’s currency relative to other nations’ currencies. Can influence consumer spending.  Interest rates: The cost of borrowing money.  Technological Advances: Macroenvironmental factor that has greatly contributed to the improvement of the value of both products and services in the past few decades.  Social Trends  Health and wellness concerns o Concerns of health, especially children’s health, has been prevalent for the past 20 years due to the obesity crisis.  Green consumers o Green marketing: A marketing strategy that supplies customers with environmentally friendly and sustainable goods and services. o Greenwashing: Exploiting consumers by marketing products as environmentally friendly only with the intent to gain public approval and sales.  Privacy concerns o Privacy has become more of an issue for consumers.  Demographics: Information about the characteristics of human populations and segments, especially those used to identify consumer markets such as by age, gender, income, and education.  Generational cohorts: A group of people of the same generation. These generations often have the same purchasing behaviors. o Generation Z (Digital Natives) 2001-2014.  First generation to be surrounded by technology. o Generation Y (Millennials) 1977-2000.  The biggest group besides Boomers. Extremely diverse. o Generation X 1965-1976.  First generation to grow up in households with two working parents. Parents have a 50% divorce rate. o Baby Boomers 1946-1964.  Sharp increase in birth rate after WWII gave them this name.  Income o Although wealth has been increasingly top heavy, the overall wealth of the US has risen due to the maturation of the general population, greater education, and dual-income households. o Companies often try to market towards one group of income, such as places like Bargain Mart.  Education 

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o Higher education leads to higher employment and income.  Gender o Typical sexual trends have been turned on their head recently. For instance, women are better scholastically than men. o Companies attempt to remain gender neutral to appeal to as many people as possible.  Ethnicity o Different groups of immigrants and natives in the US have different buying habits and purchasing power. Culture: The set of values, beliefs, understandings, and ways of doing things shared by a society. Exists on two levels. Visible artifacts: behavior, dress, symbols, setting, etc. and underlying values: thoughts, beliefs, assumptions.  Country culture: Easily identifiable nuances that are particular to a country, such as dress, symbols, language, etc. and subtle aspects, which are harder to find.  Regional culture: The influence of an area within a country in which people live. Political and Regulatory Environment: The political parties, government organizations, and legislation that affect firms.

Section 2: Understanding the Marketplace Chapter 6: Consumer Behavior 

The Consumer Decision Process: o Need Recognition: When consumers recognize they have an unsatisfied need and wapeoplnt. Occurs when they want to change from their current state to a satisfied state.  Functional Needs: Pertain to the performance of a product or service. Example: valuing processing power in a PC over a laptop.  Psychological Needs: Pertain to the personal gratification consumers associate with a product or service. o Search for Information:  Internal Search for Information: When the buyer examines their own memory and knowledge about the product or service, gathered through past experiences.  External Search for Information: When the buyer seeks information outside their personal knowledge base to make informed decision.  Factors affecting consumer search processes:  Internal Locus of Control: When consumers think they have some control over the outcome of their actions. They engage in more search activities.  External Locus of Control: Refers to when consumers believe that fate or other external factors control their outcomes. They engage in less search activities.  Performance Risk: Perceived danger in a poorly performing product or service  Financial Risk: Risk associated with monetary outlay, including initial costs, as well as costs of using the item.  Psychological Risk: Fear of an actual harm should a product not work properly.  Safety Risk: Same as above. o Evaluation of Alternatives

Attribute Sets  Universal Sets: Include all possible choices for a product category.  Retrieval Sets: Include brands or stores that the consumer can bring forth from memory easily.  Evoked Set: The alternative brands or stores that a consumer would consider when making a purchase decision.  Evaluative Criteria: The set of important attributes about a particular product.  Determinant Attributes: Product or service features that are important to the buyer and how different brands are interpreted as a result.  Consumer Decision Rules: Set of criteria that consumers use consciously or subconsciously to quickly select from different alternatives.  Compensatory Decision Rules: When the consumer is evaluating alternatives and trades off one characteristic against another, such that good characteristics compensate for bad ones.  Multi-attribute Model: A compensatory model of decision making based on the notion that customers see a product as a collect of attributes or characteristics. Uses a weighted average score based on the importance of various attributes and performance on those issues.  Non-compensatory Decision Rule: When consumers choose a product or service on the basis of a subset of its characteristics, regardless of the values of its other attributes. o Purchase and Consumption:  Conversion Rate: The percentage of consumers who buy a product after viewing it. o Post-purchase:  Customer satisfaction can be ensured by  Building realistic expectations, not too high or low.  Demonstrate correct product use.  Stand behind the product or service by providing a money-back guarantee and warrantees.  Encourage customer feedback  Occasionally contact customers and thank them for their support.  Build customer loyalty.  Post-purchase Cognitive Disson...