MAR3023 Basic Marketing Concepts EXAM 1 Objective 1 What is marketing o Formal Definition o Brady s Definition Product Marketing is the process by which companies determine what products or services may be of interest to customers and the strategy to use in sales communications and business development Product Development is a core marketing function Firms don t get far without good products to sell Develop products people want and need Price the product at a level that maximizes profits Explains how marketing economics and finance are related Distribute the product to where consumers are Channels Distribution Logistics Price Place Promotion If marketers hit their mark with the product price and distribution there s little need to advertise o Ex Rolls Royce Asics Costco etc First Goal of Marketing Identify unmet consumer needs and then develop products that fill those needs People who give marketing a bad name o folks who call themselves marketers but in fact are enterprising opportunists hawking the latest fad Not actual marketers spur of the moment fad trend opportunists Why is marketing needed so prominent o Time Reality order to differentiate them from close competitors Over time competitors force firms to promote their products in The market reacts with competitor products that have similar benefits and this causes the dominant firm to convince customers its product is superior o Advertising Branding are very powerful Consumers don t buy unfamiliar products even if the unfamiliar one is objectively better Objective 2 Marketing Strategies o History of Marketing Simple Trade Era Pre 1860s Products were made by hand grown or traded in small quantities o This lasted up until the Industrial Revolution Production Era Pre 1920s As long as it s black o Inward focus o Technical development o Condition Seller s market Demand Exceeded Supply Sales Era 1920s Changing their minds At this time marketers were focused on o Selling what we make o Aggressive promotion o Short term profit maximization The Marketing Era 1940s 1990s The Great Awakening where customers became the central focus of the organization Began with the development of marketing departments 1940 1960 and then transferred to the rest of the firm 1960 1990 Marketers were focused on o Customer is the key delight o Make what we sell Relationship Marketing Era 1990s 2010 The focus is on long term relationships and customer retention o A 5 increase in customer retention yields up to a 95 improvement in NPV delivered by customers o Repeat customers generate over twice as much revenue as new customers o Engages customers generate 1 7 times more revenue that non engaged customers Societal Marketing Era 1960s present Green Marketing Marketers focused on o Adds society s best interest to the mix o Corporate social responsibility o Firm now serves three entities o Marketing Orientation Marketing orientation is linked to new product innovation by developing a strategic focus to explore and develop new products to serve target markets Competitor Orientation Customer Orientation Inter Functional Orientation Stakeholders Constituents who have a stake claim or share in some aspect of a company s products operations markets industry and outcomes Clues to Market Orientation Customer Centric Marketing developing collaborative relationships with customers bases on focusing on their individual needs and concerns o This adopts the view that customers buy offerings that provide value and prefer relationship rather than a transactional orientation Relationship Marketing establishing long term mutually satisfying buyer seller relationships o This continually deepens the buyer s trust in the company which as the customer s confidence grows in turn increases the firm s understanding of the customer s needs Customer Relationship Management CRM Using information about customers to develop and sustain desirable customer relationships The Four Ps Marketing Mix o Products Goods Services Ideas o Price policies Decisions actions associated with establishing pricing objectives Determining product prices Determines the value of the exchange o Place Distribution Make products available in quantities desired Minimize costs Inventory Transportation Storage o Promotion Inform individuals or groups about the organization and its products services Advertising Public Relations Personal Selling Promotions Street Teams Guerrilla Marketing Viral Marketing Popular Macro Marketing Strategies o Creating value relationships Examples Offer free babysitting while talking to loan counselor Sheraton 5 Points in LA offers 24 hour check in Some small banks serve Starbuck s Coffee o Segmenting markets customers Example Best Buy In an effort to compete with Wal Mart Dell Best Buy separate their customers into two groups Angels Devils o Devils these customers apply for rebates return purchases only to buy them discounted buy severely discounted merchandise designed to boost store traffic and then sells them for profit on eBay o Best Buy now has a 15 re shelving fee because of this o To separate angels from devils store clerks are given training to identify desirable angel customers such as High Income Men aka Barry s Suburban Moms aka Jills Male early adopters aka Buzzes o Identifying Market Opportunities Market Opportunity where circumstance and timing meet to create strategic windows Core competencies things a firm does well Competitive advantage opportunity competency Through the process of strategic planning a firm establishes an organizational mission and goals corporate strategy marketing objectives marketing strategy and finally a marketing plan Objective 3 Assessing the Internal External Environments o Companies People You Should Know People Warren Buffet o 3rd wealthiest person in the world worth 53 billion o Pays himself 175 000 a year still lives in the same house he bought in 1958 worth 700k o Pledged 99 of his wealth to charity o Met with 27 COB students a few years ago o It takes 20 years to build a reputation and 5 minutes to ruin it Firms Berkshire Hathaway o A conglomerate holding company with a diverse portfolio of businesses o Based in Omaha o Best known for insurance o Started out as a textile company in Massachusetts then Buffet took over Hence the Berkshire name Pepsi o Created by Caleb Bradham to be sold in his drug store in New Bern NC o Originally called Brad s Drink o Named after the digestive enzyme pepsin o Coca Cola was offered the opportunity to buy
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