MAR3023 – Basic Marketing Concepts – EXAM #1- Objective 1: What is marketing? o Formal Definition: 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 developmento Brady’s Definition: Product: - Product Development is a core marketing function. Firms don’t getfar without good products to sell- Develop products people want and need Price: - Price the product at a level that maximizes profits- Explains how marketing, economics and finance are related Place: - Distribute the product to where consumers are- Channels/Distribution/Logistics Promotion : - If marketers hit their mark with the product, price and distribution, there’s little need to advertiseo 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 : Over time, competitors force firms to promote their products in order to differentiate them from close competitors The market reacts with competitor products that have similar benefits and this causes the dominant firm to convince customers its product is superioro Advertising & Branding: are very powerful Consumers don’t buy unfamiliar products; even if the unfamiliar one isobjectively better- Objective 2: Marketing Strategies o History of Marketing Simple Trade Era (Pre-1860s)- Products were made by hand, grown or traded in small quantitieso This lasted up until the Industrial Revolution Production Era (Pre-1920s)- “As long as it’s black.”o Inward focuso Technical developmento Condition: Seller’s market; Demand Exceeded Supply Sales Era (1920s)- “Changing their minds”- At this time, marketers were focused on:o Selling what we makeo Aggressive promotiono 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 retentiono 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 mixo Corporate social responsibility o Firm now serves three entitieso Marketing Orientation Marketing orientation is linked to new-product innovation by developing astrategic focus to explore and develop new products to serve target markets- Competitor Orientation- Inter-Functional Orientation- Customer 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 concernso 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 relationshipso 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 informationabout customers to develop and sustain desirable customer relationships - The Four Ps/Marketing Mixo Products Goods Services Ideaso Price Decisions & actions associated with establishing pricing objectives & policies Determining product prices Determines the value of the exchangeo Place/Distribution Make products available in quantities desired Minimize costs: - Inventory- Transportation- Storageo 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 Strategieso Creating value & relationships Examples- Some small banks serve Starbuck’s Coffee- Offer free babysitting while talking to loan counselor- Sheraton 5 Points in LA offers 24 hour check-ino 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 thiso 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 Environmentso Companies/People You Should Know People- Warren Buffeto 3rd wealthiest person in the world; worth $53 billiono Pays himself $175,000 a year & still lives in the same house he bought in 1958 – worth $700ko Pledged 99% of his wealth to charityo Met with 27 COB students a few years agoo “It takes 20 years to build a reputation and 5 minutes to ruin it.” Firms- Berkshire Hathawayo A conglomerate
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