MKTG 321 Chapter 1 Textbook Notes PDF

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This is a summary of Chapter 1 of the Marketing 321 textbook. This chapter was included in exam 1 in the 2018-2019 semester....

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Chapter 1: An Overview of Strategic Marketing Marketing: The process of creating, distributing, promoting, and pricing goods, services and ideas to facilitate satisfying exchange relationships with stakeholders in a dynamic environment. -The marketing mix variables- product, distribution (place), promotion and price- are viewed as controllable because they can be modified. -Competitive forces, economic conditions, political forces, etc. shape the decision-making environment for controllable variables. Marketing Focuses on Customers Customers: the purchasers of organizations’ products; the focal point of all marketing activities -Define their products as what they do to satisfy customers. Target Market: a specific group of customers on whom an organization focuses its marketing efforts. -Ex: Macy’s increasing bilingual signage in stores (target more hispanic consumers) Marketing Deals with Products, Distribution, Promotion, and Price Marketing Mix: Four marketing activities- product, distribution (place), promotion, and pricingthat a firm can control to meet the needs of customer within its target market -Built around the customer -Marketing managers strive to develop a marketing mix that matches the needs of customers in the target market -To develop a marketing mix, must first collect info about customer needs ex: age, gender, income, ethnicity, educational level, etc. -Limits to how much they can be controlled. Economic condition and regulations for example may prevent managers from adjusting prices frequently or significantly The Product Variable Product: a good, a service, or an idea. -Deals with researching customer needs and wants and designing a product that satisfies them -Also involves creating or modifying brand names and packaging and may include decisions regarding warranty and repair services. Ex- adapting product packaging to provide a healthier and “greener” offering -Imp because they directly relate to customer needs and wants The Distribution Variable (place) -To satisfy customers, products must be available at the right time and place -Marketing manager makes products available in the quantity desired to as many target customers as possible keeping total inventory, transportation and storage costs as efficient as possible -This variable has been influenced dramatically by internet and electronic commerce The Promotion Variable -Relates to activities to inform and persuade to create a desired response -Can also help sustain interest in established products The Price Variable

-Relates to decisions and actions associated with pricing objectives and policies and actual product prices -Often used as a competitive tool Marketing Creates Value Value: a customer’s subjective assessment of benefits relative to costs in determining the worth of a product -Customer Value = Customer benefits - Customer costs -Customer costs can be nonmonetary ex: time and effort c ustomers expend to find and purchase desired products; company can increase product availability to reduce this. Ex: risk; company can reduce this by offering warranties, etc. “100% satisfaction guaranteed” p 10 -Customers receive benefits based on their experiences -Many people are looking for the fastest and easiest way to achieve a goal and become more insensitive to pricing; therefore some products with the greatest convenience may be perceived as having the greatest value ex: prepared meals at grocery store Marketing Builds Relationships with Customers and other Stakeholders Exchanges: the provision or transfer of goods, services or ideas in return for something of value 1. 2 or more individuals, groups or organizations must participate and each must possess something of value that the other party desires 2. Exchange must provide benefit or satisfaction to both parties 3. Each party must have confidence in the “something of value” held by the other 4. To build trust, exchange must meet expectations -Marketing also creates value through the building of stakeholder relationships -Marketing activities should create and maintain satisfying exchange relationships not only with customers but relevant stakeholders -Stakeholders: constituents who have stake or claim in some aspect of a company’s products, operations, markets, etc. (include customers, employees, investors, suppliers) -Customers and competitors are often considered to be core stakeholders in developing a marketing strategy. Marketing Occurs in a Dynamic Environment Marketing Environment: includes competitive, economic, political, technological (etc) force; surrounds the customer and affects the marketing mix. -Effects can be dramatic and difficult to predict. Forces Effects 1. Influence customers by affecting their lifestyles, standards of living, and preferences and needs for products. 2. Can determine whether and how a marketing manager can perform certain marketing activities.

3. Environmental forces may shape a marketing manager’s decisions and actions by influencing buyers’ reactions to the firm’s marketing mix Understanding the Marketing Concept Marketing Concept: a managerial philosophy that an organization should try to satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals -Customer satisfaction is the major focus; strive to understand what the customers want -This is not a second definition of marketing; management philosophy guiding activities of the entire organization, not just marketing -Must also consider the long term needs of society Evolution of the Marketing Concept The evolution of marketing has gone through three time periods: production, sales, and market orientation. The Product Orientation Industrial revolution was in full swing and with the new tech and ways of using labor, products were pouring into the marketplace. Firms were developing the ability to produce more products and competition was becoming more intense. The Sales Orientation During the second half of the 20th century competition inc and businesses realized they needed to focus more on selling products to many buyers. Businesses viewed sales as the major means of inc profits. Some people still use a sales orientation and some people incorrectly equate marketing with this. The Market Orientation By 1950s this approach became more accepted as necessary for organizational success. Marketers first need to determine what customers want and then produce those products rather than making the product first and then persuading customers to purchase it. Market Orientation: an organization wide commitment to researching and responding to customer needs. Implementing the Marketing Concept -Management must establish an info system to discover customers’ real needs and then use this info to make satisfying products -SAP offers enterprise software to help clients manage customer relationships -Information system is expensive but necessary for an organization to be market oriented -Must coordinate all of its activities -Implementing the marketing concept demands the support not only of top management, but staff of all levels Customer Relationship Management

Customer Relationship Management (CRM): Using information about customers to create marketing strategies that develop and sustain desirable customer relationships -Want to achieve full profit potential of every customer Profits can be obtained through relationships in the following ways: 1. By acquiring new customers 2. By enhancing the profitability of existing customers 3. By extending the duration of customer relationships -Must also focus on regaining customers that have abandoned the firm -Must optimize the exchange relationship (relation between the firms financial investment and return generated from customers. Relationship Marketing Relationship Marketing: Establishing long-term, mutually satisfying buyer-seller relationships -Must gather useful data at all customer exchange points and analyze the data to understand the customer better -Customer dissatisfaction will only lead to defection -Marketers are increasingly turning to marketing research and IT -Airline industry is key player in CRM efforts with its frequent flyer programs Customer Lifetime Value Customer Lifetime Value: a key measurement that forecasts a customer’s lifetime economic contribution based on continued relationship marketing efforts -Must use info to focus on the most promising and profitable customers -Allows marketers to shift from targeting groups of similar customers to inc their share of an individual customer’s purchases. -Emphasis changes from share of market to share of customer -Can be calc by taking the sum of the customer’s present value contributions to profit margin over a specific time frame -80/20 rule: 80% of business profits come from 20% of the customers The Importance of Marketing in our Global Economy Marketing Costs Consume a Sizeable Portion of Buyers’ Dollars -About ½ of a buyer’s dollars goes toward marketing costs -Marketing costs have an impact on the economy and the standard of living for consumers Marketing is Used in Nonprofit Organizations -Marketing activities are necessary to create effective exchange relationships with donors and those served by the nonprofit Marketing is Important to Businesses and the Economy -Marketing activities help to produce the profits essential to the survival of businesses Socially Responsible Marketing -Firms recognize that trust is built on ethical conduct

Green Marketing: a strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment Marketing Offers Many Exciting Career Prospects -25-33% of all civilian workers in the US perform marketing activities -Marketing positions are among the most secure because of the need to manage customer relationships...