Week 1 (Marketing Context and Overview)Definition of MarketingThe process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectivesMarketing’s first task: Discovering Consumer NeedsDiscover Consumer needs -> Information about needsIt is always easier to sell something people want.Marketing’s second task: Satisfying Consumer needsMarketing Mix (Four P’s)Product (Most Important because without it nothing else matters)PlaceEx. Bottled water in vending machines add convenience to the product.PricePromotionCan help differentiate similar products.The right combination of the 4 P’s help satisfy the consumers needs.Benefits and Costs CategoriesBenefitsFunctionalLearn about marketing, get course credit (It fulfills a need)Ex. A hammer provides a function, a car, pencilSocialMeet friends, business partners, etc.Ex. A cell phone, Facebook, SkypePersonalFeeling good about learningEx. Rock climbing, charity work, exercisingExperientialCollege, traveling, concertsCostsMonetaryEx. Tuition and book feesTemporalEx. Time spent in class and studyingThe time it takes to assemble something. (IKEA is a tradeoff between less monetary cost and more temporal cost)PsychologicalEx. Stress studying for exams, seeing a scary movieBehavioralEx. Having something delivered or going to pick it up.Marketing Strategy and Competitive AnalysisAnalyzing the Marketing Environment$40 Billion diet industryBusinesses responded to the demand in a variety of waysEx. Shake weight, shape ups, vitamin waterThe immediate environmentConsumersCompanyCompetitionCorporate PartnersMacroenvironmental FactorsCultureDemographicsSocial TrendsTechnologyEconomicPolitical/ legalThree Phases of a strategic Marketing PlanMissionEnvironmental Analysis (SWOT)Segmentations Targeting PositioningDefining the mission of VisionAnswers two questionsIn which industries do we operate in?What is our substantial competitive advantage?Porters Five Forces ModelIndustry Profitability depends on…Industry CompetivenessLower intensity = Higher ProfitabilityAn industry has low competiveness when few firms are competing.Ex. Commercial Aircraft Manufacturers (Boeing)Low competition = high profitsEx. Wristwatch makersHigh competition = lower profitsAvailability of Substitute productsA customer can choose a different product as a substitute.Few or no substitutes = High profitiabilityEx. Few or no substitutesGas, propriety drugs, toilet paper, electricityEx. Many substitutesFresh vegetables, technological products, soda.Sodas substitutes = coffee, tea, energy drinks.Substitutes and direct competitors are not always the same.Potential entrantsHigh barriers to entry = Higher ProfitiabilityHigh barriers exist when…High capital requirementsEconomies of scale are presentSoda Sales have to be very large.High product differentiationNetwork externalities (technological or learning curve)Ex. Phone service that allows you to talk to everyone on your network for free. More people = more valueEx. High barriersAutomobile industryEx. Low BarriersSoftware, on-line auctioneering, Lemonade standSupplier Power/ Buyer PowerLower bargaining power of supliers/buyers = Higher profitability.Lower bargaining power when…High numberLow informationLow supplier power exampleComputer industry (There are so many of them)Low buyer power exampleMedical ServicesThe internet has supplied buyers with more information which has lowered the prices of goods.Walmart has taken the buying power away from the consumers because they have so many consumers.Boston Consulting Group Growth-share matrixStarWhat every product strives to be. They have a high market growth rate and control a large percentage of the market.Ex. The IpodQuestion MarksGoods in a high market growth rate that need to attain a larger percentage of the market.Want to turn into StarsEx. Ford Escape HybridCash CowsHigh percentage of the market but the market is not growing quickly or at all.Ex. Tide Detergent, Ford F-150You want to take money from your cash cows and invest in your question marks.DogsLow market percentage and low growth rate.You want to get rid of these products.Sustainable Competitive AdvantageAn advantage versus the competition that can be maintained consistently overtime.Ex. McDonaldsLow PriceFast ServiceMacro Strategies for Developing Customer ValueProduct ExcellenceAchieving effective branding and positioningBMWNikeOperational ExcellenceEfficient operationsExcellent supply chainCustomer ExcellenceRetaining loyalty with excellent customer service.Ex. Apple, Zappos, Macy’sIntensive Growth Strategies: Ansoff’s Product/Market Expansion GridMarket PenetrationExisting Markets and Existing ProductsMarket DevelopmentNew Markets and Existing ProductsProduct DevelopmentExisting Markets and New ProductsEx. Ipod nanoDiversificationSatisfying new needsEx. Fedex buying KinkosMarket StructureMarket Leader40% of marketExpand marketDefend Market ShareExpand Market ShareMarket Challenger30%Attack leaderStatus quoMarket Follower20% ImitiateMarket Nicher10%SpecializeApple Inc.What is this firms subsainable competitive advantage?InnovationWhat would you say is the firms main type of growth strategy and macro strategy?Growth strategy = Product Development ( Existing market with new products)Macro Strategy = Product ExcellenceMarket SegmentationSteps in Market Segmentation, Targeting, and PositioningSegmentation1. Identify segmentation variables and segment the market.2. Develop profiles of resulting segmentsTargeting3. Evaluate attractiveness of each segmentSelect the target segment(s)Positioning5. Identify possible positioning concepts for each target segment.6. Select, develop, and communicate the chosen positioning concept.Market Segmentation DefinitionThe process of dividing the total market for a good or service into several smaller internationally homogenous groups.Why Segment?Segmentation is necessary because customers in a market have:Differences in buying habitsDifferences in the way the good or service is usedDifferent motives in buying (For themselves or a gift)Ex. Toothpaste has many different marketing segments even though the products are very similar.*** NEVER use Mass Marketing*** ALWAYS practice segmentationSegmentation ProcessIdentify current and potential needs/wants within a marketInvolves knowledge of consumer behavior and marketing research.Identify distinguishing