MAR3023 Exam 1 Study Guide STUDY FOR EXAM TOPIC 1 MARKETING BASICS What is Marketing o Marketing is the answer to the question of why you buy a product unnecessary o The aim of marketing is to make selling o The aim of marketing is to know and understand customers so well the product or service fits them and sells itself foundation of every business o Marketing is the o Product development to satisfy unmet consumer needs o 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 Marketing s Core Strategies o Creation of Value reward cards value menu babysitting Relationships establish long term mutually satisfying buyer seller relationships o Segmenting Markets Based on Gender Age Race Education Income Early adopters Good Products and Identifying Opportunities o Product Development is a core marketing function Firms don t get very far without good products to sell This warrants repeating There would be no firms without marketing o The first goal of marketing is to identify unmet consumer needs and then develop products that fill those needs o Identifying the price that maximizes revenue is also part of marketing Explains how marketing economics and finance are related Marketing o Develop products that people want or need o Price them at a level that maximizes profits o Distribute them to where consumers are o If marketers hit their mark with the product price and distribution there s little need to advertise Misconceptions of Marketing o So why the misconception Marketing vs Advertising Promotion is what most people think about when it comes to marketing Hollistic View Marketing is COMPLEX Strategic Quantitative and Multi faceted Page 1 of 13 o Real marketing is how Apple Cisco and Texas Instruments make great products and position them to be leaders in ridiculously crowded and hypercompetitive global markets Marketing must invent complete products and drive them to commanding positions in defensible market segments o So what about Promotion Why is it needed and so prominent 1 Time Reality Companies like apple make hundreds of millions of dollars from products like the IPhone and IPad and then other companies produce similar knock off products that may be just as good o Example Samsung Galaxy vs IPhone In this case Samsung is doing it better than Apple o Redbox vs Blockbuster Over time the market reacts with competitor products that have similar benefits o Now the dominant firm has to convince customers its product is superior 2 3 It s powerful It works really well Advertising and Branding o Are VERY powerful o So what s the REAL difference between Coke OK and Celo whatever brands Why do cash strapped students routinely pay a 100 mark up on soda How can Bud Light outsell a brand that s objectively better by such a huge margin Advertising branding are VERY powerful Coca Cola spent close to 3 billion on advertising last year Anheuser Busch spent 1 47 billion Consumers don t buy unfamiliar products o Even if the unfamiliar one is objectively better Summary o The primary goal of marketing is to develop good PRODUCTS that people want and need They also have to be priced appropriately and delivered to where consumers are o If firms do marketing correctly they don t need to advertise much for a while anyway Over time competitors imitate great ideas o Over time competitors force firms to promote their products in order to differentiate them from close Our product is different better and more socially respectable than other similar products o In reality firms need to perform all 4 Ps well in order to drive profits and everything else competitors The 4 P s Are Product Price Place Promotion o The aim of marketing is to make selling unnecessary o Brands and marketing are powerful Page 2 of 13 TOPIC 2 AN INTRODUCTION TO MARKETING STRATEGY The History Of Marketing o Simple Trade Era Pre 1860s o Products were made by hand grown or traded in small quantities o Production Era Pre 1920s o Firms produced what they could make Black Model T s o Sales Era 1920s o Changing their minds o Firms pushed products using aggressive sales tactics o Focus on Selling what we make Aggressive promotion vacuum cleaners Short term profit maximization o The Marketing Era 1940s 1990s o The great awakening where customers became the central focus of the organization o Began with the development of marketing departments 1940 1960 and then transferred to the rest of the firm 1960 1990 o Focus on Customer Orientation Customer is the key delight Make what we sell o Relationship Marketing Era 1990s 2010 o The focus is on long term relationships and customer retention A 5 increase in customer retention yields up to a 95 improvement in NPV delivered by customers Repeat customers generate over twice as much revenue as new customers Engaged customers generate 1 7 times more revenue than normal customers o Today s Example Customer Reward Cards and loyalty programs o Societal Marketing Era 1960s present o Green Marketing Focus on Adds society s best interest to the mix Corporate social responsibility Firm now serves three entities Customers Shareholders and Society Serve 3 entities Clues to a Market Orientation o Customer Centric Marketing Developing collaborative relationships with customers based on focusing on their individual needs and concerns Page 3 of 13 o Relationship Marketing Establishing long term mutually satisfying buyer seller relationships o Customer Relationship Management Using information about customers to develop and sustain desirable customer relationships o Green Marketing creating meaningful long term relationships with customers while maintaining supporting and enhancing the natural environment Stakeholders Who are they o Stakeholders are people groups or organizations that have interest or concern in an organization The 4 P s of Marketing Marketing Mix 1 Product Most Important 2 Place 3 Promotion 4 Price 1 Products o Products are not just things or stuff Products can include goods services and ideas 80 of U S GDP is tied to services o Best Products Ford MyKey Parents can control Top speed Maximum audio Earlier chimes for running out of gas A more obnoxious seat belt reminder Speed warnings at 45 55 and 65 mph 2 Place Distribution o Make products available in quantities desired Convenience o Minimize Costs Inventory Transportation Storage Advertising Public relations Personal
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