Exam 1 lecture notes 02 10 2015 Marketing process of planning and executing the conception pricing promotion and distribution of ideas goods and services to create exchanges that satisfy individual and organizational objectives Scope of marketing is communication Marketing First task Discover consumer needs Second satisfy consumer needs o Find the right combo of the four P s Potential consumers the market info about needs discover needs satisfy needs through goods services What is the marketing mix Product place price promotion Benefits Functional benefits you get from doing something o Earning course credit for taking this class Social social benefits meeting friends business partners etc Personal Experiential anything that tastes good A sporting event Costs Monetary tuition book fees etc Temporal time spent in class and studying Psychological stress studying listening to the teacher Behavioral expending energy walking to class getting sick from lectures Analyzing the Marketing Environment Monitoring the external environment Adapt your strategy Identify an industry trend 40 billion diet industry o due to increased consumption of health and diet products Businesses respond in a variety of ways EX diet coke splenda coke protein smoothies organic gluten free products supplements Sara Lee whole wheat multigrain bread Hostess went bankrupt due to lack of performing these steps Marketing Environment Analysis Framework Consumers immediate environment macroenvironment Identify trends by using the internet and other media Consumers are heart of everything o EX Folgers coffee hurt by trend of people going out for coffee Economic boost would hurt Folgers b c folgers is cheap Economic downturn would hurt target Immediate environment o Competition company corporate partners Macroenvironmental factors o Culture demographics social trends technology economic political legal culture Athletic shoe industry health trend new technology trend toward lighter shoes NFL players in trouble Chinese restaurants more Chinese immigrants exposure Rising food costs healthy eating Entertainment industry peoples image is the product 3 phases of strategic marketing plan 1 Mission step 1 is defining mission and or vision 2 Environmental analysis 3 Segmentation targeting position Porter s Five Forces Model Corporate strategy decide which industries to compete in Tells us whether to enter new product category or stay in current Gives an idea of where opportunities or threats may come from Industry profitability dependent on Industry competitiveness o Low intensity higher profitability o Industry has low intensity when few firms are competing o Decide whether an industry is profitable NOT whether a company or firm is profitable o Affects pricing ability and therefor effects profitability o Low intensity example Commercial aircraft utility companies monopoly extreme form of low intensity Boeing and Airbus Profitable industry low competition Availability of substitutes o Customers can choose different products as substitutes Substitute different product category that performs the same function tea is sub for coffee o Few or no subs higher profitability o Ex Of few no subs gasoline stations cell phones o Ex Of many subs beer wine farmers markets Threat of potential entrants o Determines likelihood of profitability in the future o Pioneering new product category big advantage o High barriers to entry higher profitability for existing firms High barriers exist when High capital requirements economies of scale are present High product differentiation wrist watches niches Network externalities when addition of a person consumer to a network is profitable EX of network barrier word processing software Car industry and software high barrier industry Ebay Amazon online auction successful because they built barriers Supplier and Buyer Power o Lower bargaining power for suppliers buyers higher profitability o Lower bargaining power when high number low info Ex automobile industry Supplier tire manufacturer Favors bargaining power if high in numbers Buyers many of them high info Aircraft industry low number of buyers only weak spot o Low supplier power ex computer industry disc drive o Low buyer power ex medical services helps their profitability Sustainable competitive advantage SCA advantage that can be maintained overtime The holy grail to your strategy Apple ability to innovate both hardware and software McDonalds SCA dollar menu easily reachable many locations take away products then reintroduce o Operational efficiency faster service convenience Step 2 environmental analysis Conduct a situational analysis using SWOT Intensive growth strategies Ansoff s Product Market expansion grid 1 Market penetration existing products existing markets o when firm lowers price increases distribution or increases promotion try to grow sales of existing products in existing markets 2 Market development Existing products new markets o geographical or geographical market ex boone county bank aimed at college students McDonald s in new era 3 Product development New products existing markets o ex Apple smart watch new diet cherry coke 4 Diversification new products new markets o Kraft Foods Hypothetical Market Structure Strategies Market leader top 40 o Expand market strategy Expand market defend market share expand market share McDonalds Market Challenger next 30 after top 40 o Attack leader status quo Burger King Market Follower next 20 after first two groups o Imitate market leaders and challengers Wendys Market Nicher bottom 10 o Specialized o New companies usually start as market nicher in and out Market challengers followers and nichers all battle to grow market share Chile Vs China Chile o exports tons of fruit and copper o pop 17 2 million o democratic republic communist government advantage govt controls everything overproduction risk rebellion enterprise might not be as free people want to enter Chinese market o Chile s GDP is higher China s GDP is about half of what Chile s is Chile is growing China o economy has been growing towards middle class economy was weak in 2008 but still growing o pop 1 3 billion o more suppliers imports domestic production demand potential more diverse economy China s economy has a direct effect on Chile s economy Similarities import cars both have to import energy needs gas oil electricity for Chile Differences Market Segmentation process of dividing the total market for a good or service into several