Marketing Management Exam 1 Notes (CH 1, 3-6) PDF

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Exam lecture notes for chapters 1, 3-6. Professor Zach Oppenheimer...

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CH 1: Intro ● Marketing is advertising, selling, and distribution ● Marketing is the process of creating value to satisfy customer needs ● Customer = consumers, businesses (users, manufacturers, resellers), govts, and non-profit organizations ● Need: difference between actual and desired state; can be physiological or psychological ● Want: 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 ● In order to satisfy customers’ needs and create value, you need to effectively manage all components of a marketing mix (4 P’s of Marketing): ○ Product: any good, service, or idea ■ Consumer goods/services ■ Business-to-business goods/services ■ Not-for-profit marketing ■ Idea, place and people marketing ■ Collaborative consumption ● Consumers increasingly would rather rent than purchase the products they use ● Traditional marketers are also looking to take advantage of this trend ○ Price: ■ Price reflects the amount a customer is expected to pay for a product ■ exchange ○ Place: ■ Place or placement ties to how the product will be provided to the customer ■ A market consists of all consumers who share a common need that can be satisfied by a specific product ... ■ A market place is any location ... ○ Promotion: ■ Marketing communication strategies and techniques ■ They may include advertising, sales promotions, special offers and public relations ■ promoting corporate identity of company - walmart chair ad ● 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 ○ Customer perspective:

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The value 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 ■ Classification of luxury good relies on opinion of each consumer ○ Seller perspective: ■ Can take many forms ■ It is critically important for marketers to recognize the value of customers as they create a value proposition ○ Triple bottom line orientation - companies try to beat their competition + add value ■ The financial bottom line: financial profits to stakeholders ■ The social bottom line: contributing to the communities in which the company operates ■ The environmental bottom line: creating sustainable business practices that minimize damage to environment Utility: represents the sum of benefits a consumer receives from use of a products ○ Form utility - raw materials to finished goods ○ Place utility - where goods are available ○ Time utility - when products/services are available ○ Possession utility - the value of owning/using/enjoying a product

CH 2 - planning is a continuous process ● Marketing is a process ● Business planning is an ongoing process that guides short and long term goals ○ Helps identify and build on firm strengths ○ Improves managerial decision making ○ Develops objectives and provides a means of charting progress toward goals Three levels of business planning ● Strategic planning is the managerial process that matches firm's resources and capabilities to market opportunities ○ Top management defines firm’s purpose and sets objectives ○ Many large firms have separate SBU ■ Large multiproduct firms may have separate division, called strategic business units ● SBU’s operate like a separate business ■ Strategic planning is conducted at both the corporate and SBU level ● Functional planning - planning done by top functional level management ○ Market planning includes ■ Situation analysis ■ Broad 3-4 yr plan to support the strategic plan ■ Annual plan ● Operational planning - first-line managers focus on day-to-day execution of functional plan

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Annual, semi-annual, or even quarterly action plan to guide marketing plan implementation ○ Use of marketing metrics to monitor performance All business planning is an integrated activity ● Strategic, functional, 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” mind ○ Big picture = mission statement Strategic planning: frame the picture ● Strategic planning plays an important role in the modern corp ○ Optimize rev 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 Steps in strategic planning ● Step 1: Define the mission ○ What business are we in ○ What customers should we serve ○ How should we develop the firm’s capabilities and focus its efforts ○ 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 ■ Talks about idea, inspires, doesn’t talk about the product ■ Ideal mission statement is not too broad, narrow, shortsighted ● Step 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 firm’s internal strengths and weaknesses and external opportunities and threats ■ Strengths & Weaknesses (internal factors), Opportunities & Threats (external) ○ Internal environment consists of controllable elements within firm ■ Key tech, patents, financial stability, reputation, human capital ○ External environment consists of factors outside the firm which could positively or negatively impact operations ■ Largely beyond direct management control, so planning is critical ● Economy ● Competition ● Technological trends ● Sociocultural trends ● legal/political/ethical trends ● Step 3: Set organizational of SBU Objectives

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Organizational goals and objectives should be direct outgrowth of the mission statement ■ Taking into account internal and external environment factors ○ Objectives should be specific, measureable, attainable, and sustainable ■ May be directed towards financial, operational, or customer-based criteria Step 4: Establish Business Portfolio ○ A business portfolio represents the range of different businesses that a large firm operates ○ Portfolio analysis ■ Assess the growth potential for a firm’s SBUs and product lines ■ BCG growth-share matrix

● Step 5: develop growth strategies ○ Product-market growth matrix: characterizes different types of growth strategies based on market and product types

■ 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 the environment ○ Set objectives ○ Establish business portfolio ○ Develop growth strategies Market planning: develop and execute marketing strategy ● Effective implementation of the 4 P’s requires a great deal of planning ● Steps are similar to those in strategic planning ○ Key difference relates to focus on issues relating to marketing mix ○ Product strategies ○ Pricing strategies ○ Promotional strategies ○ Distribution strategies Occupational planning ● Focuses on day-to-day execution of the marketing plan ○ Cover 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 are used at the operational level of planning ● 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

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Managers create action plans for key elements involved in implementing the marketing strategy Creating action plan timelines ○ Each action plan requires a timeline needed to accomplish the various tasks ○ Often portrayed in flowchart form to help managers and employees visualize sequences of task ■ Gantt charts ■ PERT charts Creating a budget - each element of the action plan should line 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

CH 4: Market Research Knowledge is power ● Successful market planning depends upon informed decision making ○ Developing marketing objectives ○ Selecting target markets ○ Positioning products ○ Developing 4 P’s strategies ● Information is the fuel that runs the marketing engine ● “Those who can best leverage customer data will be the most successful” Marketing information system 4 sources of company data

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Internal company data ■ Information generated from within the company ● Used to produce reports on sales and marketing activities ● Commonly accessed via secure intranets

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Marketing intelligence ■ Gathered via monitoring of everyday data sources, observations, and discussions with sales representatives ■ Market intelligence system ■ Information may come from mystery shoppers, speaking with buyers, trade shows, purchasing or even reverse engineering ■ Ex: trade publications, competitive data, regulatory changes, gov’t publications, news ○ Marketing research ■ Refers to the process of collecting, analyzing, and interpreting data about customers, rivals, and the business environment ● Syndicated research - generally collected by specialized firms (broad but shallow) and sold to other firms ● Custom research reports - research conducted by a firm for specific information (answers specific questions) ○ Acquired databases ■ Externally sourced databases can be used to collect various types of useful information ● Noncompeting businesses ● Gov’t databases ■ Misuse of databases can be problematic and has led to “do not call” lists and anti-spamming laws Steps in Market Research Process

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Step 1: define the research problem ■ Specify the research objectives ■ Identify the consumer population of interest ■ Place the problem in an environmental context Step 2: determine the research design

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Once the problem is isolated, the next step is to determine a plan of attack ● A research design is a plan that specifies what information marketers will collect and what type of study they will do ○ Secondary data - magazines, data already exists ■ Trade associations compile data ■ Secondary data can save time and money ○ Primary data - originated by the researcher for the specific purpose of addressing the problem ■ May include demographics, awareness, attitudes ■ Exploratory ● Useful for: ○ Gaining better understanding of problem ○ Identifying new opportunities ● Often qualitative ○ Focus ○ MROC ○ Case studies ○ ethnographies ■ Descriptive ● Systematically investigate marketing problem ● Results expressed in quantitative terms ● Cross sectional vs longitudinal designs ■ Casual research ● Attempts to identify cause-and-effect ● Often involves experiments ● Independent and dependent variables

○ Step 3: choose the method to collect primary data ■ Primary data collection falls into two broad categories ● Survey methods - used to interview respondents

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○ Mail questionnaires ○ Telephones interviews ○ Face to face interviews ○ Online questionnaires ● Observation ○ Data collection approach in which researcher records consumer behaviors, often without their knowledge ■ Personal observation ■ Unobtrusive measures ■ Mechanical systems ● Use of new technologies ○ Neuromarketing ○ Virtual stores ■ Online research ● Two major types of research ○ Gathering info from online surfing (cookies) ○ Gathering info from online sources (hashtag searches) ● Predictive technology uses shopping patterns of large numbers of people to determine which products are likely to be purchased if others are Step 4: design the sample ■ Sample - a small part or quantity intended to reflect what the whole is like ● Probability sampling: each member of the population has the same chance of being included ○ Simple random sample ○ Systematic sampling procedure ● Nonprobability sampling: a sample in which personal judgement is used to select respondents (example surveying random individuals at your favorite restaurant) uses judgement ○ Convenience sample ○ Quota sample ○ (women who live in raining locations) Step 5: collect the data ■ The quality of research conclusions is only as good as the data used to generate them ■ Challenges to gathering in foreign countries ● Cultural issues ● Language issues Step 6: analyze and interpret the data ■ Data must be analyzed and interpreted to be meaningful ■ Tabulation ● Arranging data in a table or other summary form to get a broad picture of overall response

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Cross-tabulation ● Exploring data by sub-groups in order to see how results vary across categories

■ ■ Data are raw unorganized facts ■ Information is interpreted and useful data Step 7: prepare the research report ■ Research report typically include: ● Executive summary ● Description of research methods ● Discussion of study results ● Limitations of study ● Conclusions and recommendations

CH 5: MARKETING ANALYTICS ● Amazon uses big data to influence our shopping behavior A key decision tool for marketers ● Customer relationship management (CRM) involves systematic way of tracking customers preferences and behaviors overtime in order to tailor individualized value propositions ○ Allows firms to get “up close and personal” ○ A process by which firms enact their customer orientation ○ Capture information at each customer touch point ■ Pre-purchase experience ■ purchase experience ■ Post-purchase experience ○ Designed to create a one to one experience (which includes 4 steps) ■ Identify customers and get to know them in as much detail as possible ■ Differentiate among these customers in terms of both their needs and their value to the company

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Interact with customers and find ways to improve cost efficiency and the effectiveness of the interaction ■ Customize some aspect of goods or services offered to each customer Ex of CRM in action: USAA, Amazon, Tommy Bahama, Disney’s MyMagic Characteristics of CRM: ■ lifetime value of a customer is how much profit a firm will make on a customer ● Crm increases this ● Customer equity is a financial value of a customer relationship ○ Takes into account monetary investments to acquire and maintain relationship ■ Share of customer is the % of a given customers’ purchases in a category overtime ● Enables company to grow sales and profits at a lower cost ● It is easier and less expensive to keep a current customer than it is to acquire a new one ○ Many firms look to increase share of customer instead of share of market ■ Customer prioritization: not all customers are equal ● CRM systems enable marketers to identify priority customers and customize communications and special offers accordingly

What is big data ● Big data is a popular term to describe the exponential growth of structured and unstructured data ○ Internet data can be hard to analyze using traditional approaches ○ Internet of things ● Sources of big data: ○ Social media sources of data ■ Web scraping (using software to extract data from websites ■ Sentiment analysis ● Measuring brand attitude by assessing the context or emotion of online comments ■ Brand mapping (analyzes consumer conversations and plots words and phrases that relate to a brand) ○ Corporate IT data sources ■ CRM databases ■ Backend website databases ■ Web analytics databases ■ ERP databases

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Government and NGO Data ■ Increased types and amounts of gov’t generated data are accessible to enterprising marketers ● Ex: US Census ○ Commercial entities ■ Collect data in large quantities to sell to other organizations ● Credit card purchase data ● Supermarket scanner data ■ Data sold in aggregate form ■ May be a primary or secondary source of revenue for the firm ○ Partner database ■ Two way information exchange between purchasing organization and suppliers ■ Provides benefits to buyers and sellers ● Real-time demand signals ● Replace inventory with information ● fewer stock-outs Structured data: very easy to capture and use (date, time, census data, facebook “likes” Unstructured data: must determine meaning (body of emails, tweets, facebook status update messages, video transcripts) ○ Data analysts have traditionally focused on structured ■ More readily obtainable ■ Computers today can easily analyze a large number of data points ○ Deriving meaning from unstructured data is more difficult, but potentially more valuable ■ New technologies are making this process easier Data mining: looking for data most important to you ○ The biggest data challenge from many firms is determining what to do with it all ○ Data mining refers to the process by which analysts sift through big data to identify unique patterns of behavior ■ Data warehouses ■ Data brokers ○ Uses: ■ Customer acquisition ■ Market basket analysis ■ Customer retention and loyalty ■ Customer abandonment Marketing analytics comprises technologies and processes that enable marketers to collect, measure, analyze, and assess marketing effectiveness Predictive analytics uses large quantities of data to more accurately predict future outcomes

CH 6: UNDERSTAND CONSUMER AND BUSINESS MARKETS

You need to know customers and understand how they make their buying decisions The business markets ● B2C market: used to promote products and services among consumers ● B2B: manufactures and other product producers, resellers, gov’t and not for profit institutions Consumer decision-making process ● Consumer behavior is the process individuals or groups go through to select, purchase, use and dispose of products in order to satisfy their wants and needs ● Decision-making behaviors are influenced by a variety of factors ○ Internal, situation … ● Not all decisions are the same ○ Amount of effort expended in decision-making varies according to the ■ Level of involvement (time and energy invested in a decision) ■ Perceived risk (high risk? Low risk?) ○ Consumers us different approaches depending on the amount of effort ■ Habitual problem-solving ● Lower risk: Buying a cup of coffee ■ Extended problem-solving ● Higher risk: deciding to buy a car ■ Limited problem-solving ● Medium risk: buying athletic shoes ● The process: ○ Step 1: problem (need) recognition ■ Occurs whenever a consumer sees a difference between current state and desired/ideal state ● Marketers can develop ads that stimulate problem recognition ● Ex: Decide that you want to go to college ○ Step 2: information search ■ Consumers need adequate information to make good decisions ■ Consumers search memory and environment for information ● If information is inadequate, consumers seek out additions sources ● Ex: deciding where you want to go to college ○ Step 3: evaluation of alternatives ■ Identifying a small number of products for closer consideration ● Determinant attributes (most important features ● Evaluative criteria ● Ex: pick about 4 schools (advantages/disadvantages) ○ Step 4: product choice ■ Consumers often rely on mental shortcuts, or heuristics in making decisions ■ Heuristics are rules of thumb used by individuals to arrive at good decision with less mental effort:

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● Price equals quality ● Brand loyalty ● Country of origin ● Ex: deciding to go to temple ○ Step 5: post purchase evaluation ■ Consumer satisfaction/dissatisfaction following purchase of product s critical ● Level of satisfaction is influenced by w...