Marketing: "Study of exchange"; academic def: learning about marketing from the perspectives of the business and the customer; functional def: facilitation of exchange; long def: the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy the individual and organizational objectivesGiven exchange definition, what are the requirements that define the scope of marketing?CommunicationMarketing's first task Discovering consumer needsThe marketing concept Before you provide an offering, you have to determine where thereare unmet needs. "Make what's desired".Marketing's second task Satisfying consumer needs with the marketing mix (4 P's).4 P's The marketing mix: = set of decisions marketing managers need to make. This mix is designed for each target group1. Product (play place at McD's)2. Price (values meals and happy meals)3. Promotion (ads with kids)4. Place (put in places with lots of young parents)Original marketing philosophy Revolved around the product. "If we build it, they will come". Known as product-orientation philosophy. Best for situations where demand exceeds supply. Based on idea: product will sell itself through either a low price or high quality.Sales orientation philosophy Sell what is made. Internally driven (just like the previous product-orientation philosophy). This introduced the concept of communication, ONE-WAY communication to the customer. "Just sell the damn product"Marketing orientation philosophyCharacterized by? Requires information about the market (potential customers, trends, competitors) be collected prior to making decisions that involve the selling process. Depends on two-way relationship with customer. Characterized by: customer focus, coordinated marketing effort (all departments in the firm sharein the effort to satisfy customer needs), and long-term success.Relationship marketing conceptWhy? Emphasizes the creation and maintenance of long-term relationships with all participants (customers, suppliers, retailers) in the exchange process. Why? The cost of attracting new customers is much greater than the cost of keeping customers.Service after the sale must be a consideration. Customers tend to stick with products due to this when there is not a large price difference amount alternatives.4 types of benefits you get from products 1. Functional: ceiling fan, hammer, car, pen2. Social: social media, cell phones, bars, restaurants, dandriff shampoo, deodorant3. Personal: mountain climbing, exercise, education (college)4. Experiential: vacation, football games, Truman, concerts, massages, amusement parksSoap: functional and social4 Types of costs 1. Monetary2. Temporal 3. Psychological 4. BehavioralMonetary Costs Tuition and book fees... What you payTemporal Costs Time spent in class and studying.... The time you spendPsychological costs Stress studying for exams... The toll is takes on your mental stateBehavioral Costs Expending energy walking to class or getting sick from lecturesPorter's Five Forces Model Decides in which industries we want to compete. Industry profitability depends on: -industry competitiveness -availability of substitute products-potential entrants (threat of new comp)-supplier power-buyer powerIndustry Competitiveness Intensity of current competitors-Low intensity=high profitability -industry has low intensity when: few firms competing -Ex: commercial aircraftAvailability of substitutes -few of no subs= higher profitability -ex of few/no subs: gasoline (electric may be the only sub)-Ex of many subs= fresh veggies (canned, frozen, vitamins) soft drinks (Gatorade, bottled water)Threat of Potential Entrants High barriers to entry= high profitability High barriers to entry exist when:-high capital requirements-economies of scale are present-high product differentiation-network externalities Ex of network barrier: word processing softwareSupplier and buyer power Low bargaining power of suppliers/ buyers= higher profitability-Low bargaining power when1. High # of suppliers2. Low info: they don't know eachother's bidsLow supplier power ex: CDs, airplanes (not many bought each year)Low buyer power ex: medical services (we have no info about docs, hospitals, pricing, until afterwe leave the ER).Sustainable Competitive Advantage An advantage over competition that can be maintained consistently over timeMarket development Change market but not productProduct development Change product, not marketIntensive Growth Strategies: Ansoff's Product/ Market Expansion GridStrategic Planning Developing a strategy to ensure long-term survival and growth. Process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities. 1. Develop a company mission 2. Objectives and goals3. Choose organizational strategies4. Develop a portfolio planA firm's success depends on: It's ability to adapt to the changes occurring outside the firmEnvironmental analysis Called monitoring or scanning: ongoing process of identifying external forces, analyzing them, and predicting their potential impactDemographics Characteristics of a population (ethnicity, income, gender)Economic trends Business cycles is an example: periods of prosperous growth or declineSubstitute competition A threat that often comes under the radar of monitoring. Often preceded by a change in consumer taste related to sociocultural trends (low carb trend)Substitute product One from a different product category that can be substituted or used instead of another productTechnology Needs to be monitored and analyzed This can also be used for developments. The discovery of trans fat started a whole trend against it.Marketing objectives specific, measurable, attainableMarket segmentation Process of dividing the market up into different groups of potential customers who share a common characteristic that differentiates them from another group. Ex: foot locket and lady foot lockerSegment must be large enough to to generate enough demand to be profitablePositioning A product's image in relation to competing products. Based on the differential advantage or unique selling proposition. Ex: it could be the healthiest burger shop compared to othersDifferential advantageSomething special about a product that gives it a better positionTarget market Selected group of customers (intended target of a particular marketing mix)Product Both physical products