Summary foundations of marketing chapter 1 18 PDF

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Summary Foundations of Marketing Chapter 1-18 Inleiding in de bedrijfskunde 2 (Radboud Universiteit Nijmegen)

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Summary Foundations of Marketing (John Fahy & David Jobber) Chapter 1 Marketing is about identifying and meeting human and social needs. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Selling is not the most important part of marketing. Marketers market 10 main types of entities: 1. Goods 2. Services 3. Events 4. Experiences 5. Persons 6. Places 7. Properties 8. Organizations 9. Information 10. Ideas A marketer is someone who seeks a response, attention, a purchase, a vote, a donation from another party, called the prospect. Marketers must have quantitative and qualitative skills, entrepreneurial attitudes, and a keen understanding of how marketing creates value within the organization. A customer touch point is where a customer directly or indirectly interacts with the company in some form. Marketers use the term market to cover groupings of customers. They view sellers as constituting the industry and buyers as constituting the market. The marketplace is physical and the marketspace is digital. A metamarket is a cluster of complementary products and services closely related in the minds of consumers, but spread across a diverse set of industries. Needs are the basic human requirements for air, food, water, clothing, and shelter. These needs become wants when they are directed to specific objects that might satisfy the need. Demands are wants for specific products backed by an ability to pay.

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The marketer decides which groups present the greatest opportunities, which are its target markets. For each, the firm develops a market offering that it positions in the minds of the target buyers as delivering some central benefit(s). A value proposition is a set of benefits that satisfy needs. A brand is an offering from a known source. Value is the sum of the tangible and intangible benefits and costs to customers. Value is primarily a combination of quality, service, and price, called the customer value triad. Marketing can be seen as the identification, creation, communication, delivery, and monitoring of customer value. Satisfaction reflects a person's judgement of a product's perceived performance in relationship to expectations. To reach a target market, the marketer uses three kinds of marketing channels: 1. Communication channels deliver and receive messages from target buyers. 2. Distribution channels to display, sell, or deliver the physical product or service to the buyer or user. 3. Service channels. The supply chain is a longer channel stretching from raw materials to components to finished products carried to final buyers. Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. The marketing environment consists of the task environment and the broad environment. The task environment includes the actors engaged in producing, distributing, and promoting the offering. The broad environment consists of six components: 1. 2. 3. 4. 5. 6.

Demographic environment Economic environment Sociocultural environment Natural environment Technological environment Political-legal environment

Marketers should keep the following eight factors in mind as they create strategies to deal with turbulence: 1. 2. 3. 4. 5. 6. 7. 8.

Secure your core segments against competitive moves. Push aggressively to take market share from weakened competitors. Conduct more research while customers' needs and wants are in flux. Rather than cutting the marketing budget, maintain or even increase it. Emphasize core values and the safety and security of your firm and your offerings. Act quickly to drop programs that aren't working. Don't discount your best brands. Save the strongest brands and products; lose the weakest.

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The production concepts holds that consumers prefer products that are widely available and inexpensive. The product concept proposes that consumers favor products offering the most quality, performance, or innovative features. The selling concept holds that consumers and businesses, if left alone, won't buy enough of the organization's products, so the organization must undertake an aggressive selling effort. The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your target markets. The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing acknowledges that everything matters in marketing and that a broad, integrated perspective is often necessary. Thus, holistic marketing recognizes and reconciles the scope and complexities of marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. The ultimate outcome of relationship marketing is a unique company asset called a marketing network, consisting of the company and its supporting stakeolders with whom it has built mutually profitable business relationships. Integrated marketing occurs when the marketer devises marketing activities and assembles marketing to create, communicate, and deliver value for consumers such that the whole is greater than the sum of its parts. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Performance marketing requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Marketing mix four Ps: Product, place, promotion, price. Modern marketing management four Ps: People, processes, programs, performance. With holistic marketing as a backdrop, we can identify a specific set of tasks that make up successful marketing management and marketing leadership: • • • • • • • •

Developing marketing strategies and plans Capturing marketing insights Connecting with customers Building strong brands Shaping the market offerings Delivering value Communicating value Creating successful long-term growth

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Chapter 2 The value creation and delivery sequence consists of three phases. In the first phase, choosing the value, marketers segment the market, select the appropriate target, and develop the offering's value positioning. The formula segmentation, targeting, positioning (STP) is the essence of strategic marketing. The second phase is providing the value through specific product features, prices, and distribution. The third phase is communicating the value through the sales force, internet, advertising, and other communication tools to announce and promote the product. The value chain is a tool for identifying ways to create more customer value. The value chain identifies nine strategically relevant activities, five primary and four support activities, that create value and cost in a specific business: Primary activities: 1. 2. 3. 4. 5.

Inboud logistics, or bringing materials into the business Operations, or converting materials into final products Outbound logistics, or shipping out final products Marketing, which includes sales Service

Support activities: 1. 2. 3. 4.

Procurement Technology development Human resource management Firm infrastructure

Five core business processes: 1. The market-sensing process - All the activities in gathering and acting upon market information 2. The new-offering realization process - All the activities in researching, developing, and launching new high-quality offerings quickly and within budget 3. The customer acquisition process - All the activities in defining target markets and prospecting for new customers 4. The customer relationship management process - All the activities in building deeper understanding of, relationships with, and offerings for individual customers 5. The fulfillment management process - All the activities in receiving and approving orders, shipping the goods on time, and collecting payment Many companies have partnered with specific suppliers and distributors to create a superior value delivery network, also called a supply chain. A core competency has three characteristics: 1. It is a source of competitive advantage and makes a significant contribution to perceived customer benefits. 2. It has applications in a wide variety of markets. 3. It is difficult for competitors to imitate.

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Holistic marketers address three key management questions to create, maintain and renew customer value: 1. Value exploration 2. Value creation 3. Value delivery To ensure they select and execute the right activities, marketers must give priority to strategic planning in three key areas: 1. Managing a company's businesses as an investment portfolio 2. Assessing each business's strength by considering the market's growth rate and the company's position and fit in that market 3. Establishing a strategy The marketing plan is the central instrument for directing and coordinating the marketing effort, operating at both the strategic and the tactical levels. The strategic marketing plan lays out the target markets and the firm's value proposition, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels and service. All corporate headquarters undertake four planning activities: 1. 2. 3. 4.

Defining the corporate mission Establishing strategic business units Assigning resources to each unit Assessing growth opportunities

Key competitive dimensions for mission statements include: • • • • • •

Industry Products and applications Competence Market segment Vertical Geographical

Market definitions of a business describe the business as a customer-satisfying process. A target market definition tends to focus on selling a product or service to a current market. A strategic market definition also focuses on the potential market. A strategic business unit (SBU) has three characteristics: 1. It is a single business, or a collection of related businesses, that can be planned separately from the rest of the company. 2. It has its own set of competitors.

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3. It has a manager responsible for strategic planning and profit performance who controls most of the factors affecting profit. Three options for increasing sales and profits are intensive growth opportunities, integrative growth opportunities and diversification growth opportunities. The company first considers whether it could gain more market share with its current products in their current markets, using a market-penetration strategy. Next it considers whether it can find or develop new markets for its current products, in a market-development strategy. Then it considers whether it can develop new products of potential interest to its current markets with a product-development strategy. Later the firm will also review opportunities to develop new products for new markets in a diversification strategy. A business can increase sales and profits through backward integration (acquiring a supplier), forward integration (acquiring a distributor) or horizontal integration (acquiring a competitor). Corporate culture has been defined as the shared experiences, stories, beliefs, and norms that characterize an organization. Scenario analysis develops plausible representations of a firm's possible future using assumptions about forces driving the market and different uncertainties. The overall evaluation of a company's strengths, weaknesses, opportunities, and threats is called SWOT analysis. A marketing opportunity is an area of buyer need and interest that a company has a high probability of profitably satisfying. There are three main sources of market opportunities. The first is to offer something that is in short supply. The second is to supply an existing product or service in a new or superior way. How? The problem detection method asks consumers for their suggestions, the ideal method has them imagine an ideal version of the product or service, and the consumption chain method asks them to chart their steps in acquiring, using, and disposing of a product. The third is that the company applies market opportunity analysis (MOA) to evaluate opportunities. An environmental threat is a challenge posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to lower sales or profit. For an management by objectives (MBO) system to work, the unit's objectives must be: 1. 2. 3. 4.

Arranged hierarchically, from most to least important Quantitative whenever possible Realistic Consistent

Every business must design a strategy for achieving its goals, consisting of a marketing strategy and a compatible technology strategy and sourcing strategy. The following three generic strategies provide a good starting point for strategic thinking: Overall cost leadership, differentiation and focus. Firms directing the same strategy to the same target market constitute a strategic group.

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To keep their strategic alliances thriving, corporations have begun to develop organizational structures to support them, and many have come to view the ability to form and manage mutually satisfying long-term partnerships as core skills called partner relationship management (PRM). There are seven Sses in successful business practice: 1. The hardware of success - strategy, structure and systems. 2. The software of success - style, skills, staff and shared values. A marketing plan summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. A marketing plan usually contains the following sections: • • • • •

Executive summary and table of contents. Situation analysis. Marketing strategy Financial projections Implementation controls

Marketing metrics is the set of measures that helps organizations quantify, compare, and interpret their marketing performance. Evaluation can be split into two parts: 1. Short-term results 2. Changes in brand equity Management can assemble a summary set of relevant internal and external measures in a marketing dashboard for synthesis and interpretation. A customer-performance scorecard records how well the company is doing year after year on such customer-based measures as the percentage of customers who say they would repurchase the product. A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the company's performance. Four ways to measure key aspects of the marketing plan's performance are sales analysis, market share analysis, marketing expense-to-sales analysis and financial analysis. Sales analysis measures and evaluates actual sales in relationship to goals. Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Microsales analysis looks at specific products, territories and other factors that failed to produce expected sales. Overall market share expresses the company's sales as a percentage of total market sales.

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Served market share is sales as a percentage of the total sales in the market. The served market is all the buyers able and willing to buy the product, and served market share is always larger than overall market share. Relative market share is market share in relationship to the largest competitor. To be sure the company isn't overspending to achieve sales goals, management must monitor the marketing expense-to-sales ratio and investigate fluctuations outside the normal range. Management can use financial analysis to identify factors that affect the company's rate of return on net worth. The return on net worth is the product of two ratios, the company's return on assets and its financial leverage. The return on assets is the product of two ratios, the profit margin and the asset turnover. The marketing executive can seek to improve performance in two ways: 1. Increasing the profit margin by increasing sales or cutting costs 2. Increasing the asset turnover by increasing sales or reducing assets held against a given level of sales. Chapter 3 A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. This system draws from data based on internal company records, marketing intelligence and marketing research. The heart of the internal records system is the order-to-payment cycle. Sales information systems. Databases, Data Warehousing and Data Mining. A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. The internal records system supplies results data, but the marketing intelligence system supplies happenings data. Marketing insights provide diagnostic information about how and why we observe certain effects in the marketplace, and what that means to marketers. Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Syndicated-service research firms gather consumer and trade information, which they sell for a fee. Custom marketing research firms design studies, carry them out, and report the findings. Specialty-line marketing research firms provide specific services such as field interviewing. The marketing research process consists of six steps:

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1. 2. 3. 4. 5. 6.

Define the problem and research objectives Develop the research plan Collect the information Analyze the information Present the findings Make the decision

Some research is exploratory, to shed light on the nature of the problem and suggest possible solutions or new ideas. Some research is descriptive, to quantify demand. Some research is causal, to test a cause-and-effect relationship. Secondary data are data that were collected for another purpose and already exist somewhere. Primary data are freshly gathered for a specific purpose or for a specific research project. Marketers collect primary data in five main ways: 1. Observational research - Ethnographic research is an observational research approach that uses concepts and tools from anthropology and other social science disciplines to provide deep cultural understanding of how people live and work. 2. Focus group research 3. Survey research 4. Behavioral data 5. Experimental research - Experimental research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. Marketing researchers have a choice of three main research instruments in collecting primary data: 1. Questionnaires 2. Qualitative measures 3. Technological devices Closed-end questions ...