BUAD 332 1st EditionExam # 1 Study Guide Chapters 1-6Chapter 1: Marketing: Creating and Capturing Customer ValueWhat is marketing? Marketing is managing profitable customer relationships.-or-A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. - Goals:o Attract new customers by promising superior valueo Keep and grow current customers by delivering customer satisfaction- It is cheaper and more effective to keep customers instead of get new ones. KEEP CUSTOMERS SATISFIED. Steps of the marketing process:1. Understand the marketplace and customer needs and wants2. Design a customer driven marketing strategy 3. Construct a marketing program that delivers superior value4. Build profitable relationships and create customer delight5. Capture value from customers to create profits and customer equitya. Customer Equity- loyal and trust whatever company offersWhat do we mean by Consumer Needs, Wants, and Demands?- A NEED is a state a felt deprivationo Physicalo Social o Individual - A WANT is a form that a human need takes, as shaped by culture, individual personality, and marketing activity.- Wants + Buying Power = DEMANDo Not all wants represent real demandWhat does this have to do with Marketing?Needs and wants are fulfilled through a Marketing Offer.- Some combination of product, services, ideas, or experiences offered to a market to satisfy a need or want What is a Market?- The set of actual or potential buyers of a product or service- These people share a need or want that can be satisfied through an exchangeWhat 2 fundamental questions must marketing managers answer?1. What customers will we serve? 2. How can we best serve these customers? These questions are answered through:- Market segmentation (Divide market into segments of customers)- Targeting (Select the segment to cultivate)Value Proposition: The set of benefits that are offered to consumers to satisfy their needs What else do marketing managers do?- Once they’ve decided who the target market is, and what the value proposition should be, they have to figure out how to execute their marketing strategy.- They execute this marketing strategy through set of tools known as the marketing mix.o Marketing mix- actual day to day activities that managers do to execute strategies THE FOURS P’s: (The Marketing Mix)- PRODUCT- PRICE- PROMOTION- PLACEChapter 2: Company and Marketing Strategy: Partnering to Build Customer RelationshipsStrategic Planning- Process of developing and maintaining a strategic fit between the organization’s goals and capabilities and it changing marketing opportunities - Maintaining what the company is good at and the environment Organizations have to know a lot about:- Cultures- Trends- Customers - Externalities- Core competencies What is the term used to describe customer value? Satisfaction.Steps in Strategic Planning (Corporate Level):1. Defining the company mission 2. Setting the company objectives and goals 3. Designing the business portfolio4. Planning marketing and other functional strategies (business unit, product, and market levels)Defining the company mission: - Questions the mission statement answer include:o What is our business?o What is our customer?o What do our customers value?o What should our business be?- Should influence not only the market but employees also. Setting the company objectives and goals:- Mission statement should be translated into supporting objectives for each level of management.o Everything needs to be in harmony - Creates a hierarchy of objectives that are consistent with one another.o Example: Overall objective might be: increase profits. Marketing objective might be: increase market share of more profitable product lines. Designing the business portfolio:- The business portfolio (diversify) is the collection of businesses and products that make up a company - The company must:o Analyze it’s current business portfolio or Strategic Business Units (SBU’s)o Decide which SBU’s should receive more, less, or no investment o Develop strategies for growth or downsizing Strategic business unit (SBU)- A unit of a company that has a separate mission and objectives and that can be planned independently from other company businesseso EX: General Electric (GE)- Can be a company division, a product line within a division, or sometime a single product or brandPortfolio Analysis- An evaluation of the products and businesses making up the company - Resources are directed to business units that help the company as a whole to be more successful - Business units that don’t contribute to the portfolio might be phase down or droppedTHE BCG (Boston Consulting Group) Growth- Share matrix:HIGH LOW- Better have cash cows to generate resources for stars and question marksA company must also think about growth strategies:- Market Penetration (least risky)o Make more sales to current customers without changing producto How? Add new stores, improve ads, pricing and services- Product Development o Identify and develop new markets for current productso How? Pursue demographics customer group; expand to different geographic regions(global expansion)- Market Developmento Offer modified or new products to current markets- Diversification (most risky)o Start up or buy businesses outside of current products and markets What role does marketing play?- Provides a guiding philosophyo Representing the customer and the demand side of the business Want to steal marketshare from whoeveris dominating Question Marks• Low share SBUs in high growth markets• Require cash to hold market share• Build into Stars or phase out Stars• High growth & share• May need heavy investment to grow• Eventually, growth will slow• Not attractivemarket to be in Dogs• Low growth, low share• Generate cash to sustain self• Do not promise to be cash sourceCash Cows• Low growth, high share• Established, successful SBU’s• Produce cash• Doesn’t require investment- Provides inputs to strategic plannerso Estimates of market size, customer trends, etc- Designs strategies to achieve corporate objectives The Marketing Mix: - The set of controllable, tactical tools that marketers blend to produce the response it wants from target market. - Consists of the four p’s:o Priceo Promotiono Placeo ProductChapter 3: Analyzing the