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MK 3010: TEST 1
What Is Marketing?
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Simple definition:
Marketing is managing profitable customer relationships.
–
Goals:
1.Attract new customers by promising superior value.
Keep and grow current customers by delivering satisfaction
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Marketing Defined
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§Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
old view of marketing- making a sale "telling and selling"
new view- satisfying customer needs
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A Simple Model of the Marketing Process
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1-understand the marketplace and customer needs and wants
2-design a customer driven marketing strategy
3-construct an integrated marketing program that delivers superior value
4-build profitable relationships and create customer delight
5-capture values from customers to create profits and customer equity
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Core Concepts
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Marketers must understand five core customer and marketplace concepts:
–Needs, wants, and demands.
–Market offerings.
–Value and satisfaction.
–Exchanges and relationships.
–Markets |
Needs, Wants, and Demands
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Need:
State of felt deprivation including physical, social, and individual needs.
–Physical, social, and individual needs.
Wants:
Form that a human need takes, as shaped by culture and individual personality.
Wants + Buying Power = Demand
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Needs, Wants, and Demands
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Types of Needs:
–Physical needs:
•Food, clothing,
shelter, safety.
–Social needs:
•Belonging, affection.
–Individual needs:
•Learning, knowledge,
self-expression |
Market Offerings
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Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.
Marketing offers fulfill needs and wants
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Marketing in Action
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Market offerings are not limited to physical products.
UNCF powerfully markets the idea that “A mind is a terrible thing to waste.”
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Marketing Myopia
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Marketing myopia:
–Occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products.
–They focus on the “wants” and lose sight of the “needs.”
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Fuel for Thought
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The music industry provides an excellent example of marketing myopia, as firms were initially very reluctant to adapt to consumers’ desires for digital music downloads.
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Customer Value and Satisfaction
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Care must be taken when setting expectations for market offerings:
–If performance is lower than
expectations, satisfaction is low.
–If performance is higher than expectations, satisfaction is high.
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Exchanges and Relationships
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Exchange:
–Act of obtaining a desired object from someone by offering something in return.
What would be exchanged for a vacation?
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Exchanges and Relationships
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Relationships:
–Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object.
–Marketers build strong relationships by consistently delivering superior customer value.
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What Is a Market?
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A market:
–Is the set of actual and potential buyers of a product.
•These people share a need or want that can be satisfied through exchange relationships.
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A Modern Marketing System
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-company -------------------------------------------------------------------------/
/suppliers marketing intermediaries--consumers--/
-competitors-
/---------------------major environmental forces------------------------------------/
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Marketing Management
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The art and science of choosing target markets and building profitable relationships with them.
–Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value.
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Marketing Management
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Designing a winning marketing strategy requires answers to the following questions:
1. What customers will we serve?
— What is our target market?
2. How can we best serve these
customers?
— What is our value proposition?
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Selecting Customers to Serve
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Market segmentation:
–Dividing the market into segments of customers.
Target marketing:
–Selecting one or
more segments to cultivate.
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Choosing a Value Proposition
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The set of benefits or values a company promises to deliver to consumers to satisfy their needs.
–Value propositions dictate how firms will differentiate and position their brands in the marketplace.
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Marketing in Action
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Many firms are emphasizing the “value” in their value proposition during tough economic times.
picture of walmart with big sign in store saying "expect more pay less"
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Marketing Management Orientations
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Organizations design and carry out their marketing strategies under five alternate concepts:
–Production Concept.
–Product Concept.
–Selling Concept.
–Marketing Concept.
–Societal Marketing Concept.
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The Selling and Marketing Concepts Contrasted
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The Integrated Marketing Plan
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Transforms the marketing strategy into action.
Includes the marketing mix and 4 Ps of marketing:
–Product.
–Price.
–Place (Distribution).
–Promotion.
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Customer Relationship Management
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The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
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Building Customer Relationships
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Customer relationship management (CRM):
–Deals with all aspects of acquiring, keeping, and growing customers.
–Customer value and satisfaction are key.
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Customer Perceived Value
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Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.
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Customer Perceived Value
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Customer perceived value:
–Perceptions may be subjective.
–To some customers “value” might mean paying more to get more.
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Customer Satisfaction
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Extent to which the product’s perceived performance matches
a buyer’s expectations.
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Customer Satisfaction
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Customer satisfaction:
–High levels of customer satisfaction often leads to consumer loyalty.
–Some firms seek to DELIGHT customers by exceeding expectations.
–Profitability must be considered.
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Customer Relationships
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Firms may choose to build relationships at different levels.
Loyalty and retention programs build relationships and may include:
–Frequency marketing programs.
–Club marketing programs.
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Changing Nature of Relationships
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Customer profitability analysis eliminates losing customers and selects profitable ones with whom relationships should be developed.
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Changing Nature of Relationships
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Firms now relate more deeply and interactively via blogs, social network Web sites, email, and video sharing.
Embracing customer-managed relationships requires marketing via attraction rather than intrusion.
Consumer-generated marketing has become a significant marketing force.
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Partner Relationship Marketing
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Marketing partners help create customer value and assist in building customer relationships.
Partners inside the firm:
–Cross-functional customer teams.
Partners outside the firm:
–Supply chain management.
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Capturing Value From Customers
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Value is captured from customers via current and future sales, market share and profit.
–Superior customer value leads to highly satisfied loyal customers who buy more.
–Key outcomes of customer value include customer loyalty and retention, share of market, share of customer, and customer equity.
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Capturing Value From Customers
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Customer lifetime value
–The value of the entire stream of purchases that the customer would make over a lifetime of patronage.
Share of customer
–The portion of the customer’s purchasing that a company gets in their product categories.
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Customer Equity
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The total combined customer lifetime values of all the company’s current and potential customers.
Manage equity by:
–Classifying customers by projected loyalty and potential profitability.
Manage each group accordingly.
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Customer Relationship Groups
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null
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Changing Marketing Landscape
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The uncertain
economic
environment.
The digital age.
Rapid globalization.
Sustainable marketing – call for more social responsibility.
Growth of not-for-profit marketing.
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An Expanded Model of the Marketing Process
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Marketing Strategy and the Marketing Mix
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Customer Driven Marketing Strategy
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Market segmentation is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs
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Customer Driven Marketing Strategy
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Market targeting
involves evaluating each
market segment’s
attractiveness
and selecting
one or more
to enter
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Customer Driven Marketing Strategy
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Positioning is arranging for a product to occupy a clear
distinctive,
and desirable
place relative to
competing
products in the
minds of the
customer.
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Developing an Integrated Marketing Mix
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Managing the Marketing Effort Marketing Analysis
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Marketing Analysis
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Marketing Planning
Elements of a Marketing Plan
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-Executive summary
-current marketing situation
-threats and opportunity analysis
-objectives and issues
-marketing strategy
-action programs
-budgets
-controls
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Marketing Control
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set marketing goals---measures performance---evaluates causes of differences------
take corrective actions
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Measuring and Managing Return on Marketing Investment
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Return on marketing investment (marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment.
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Return on Marketing Investment
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Porter’s Five Forces Model
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•Used to assess industry attractiveness
•Used to assess and indentify macro-environmental threats
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Porter’s Five Forces Model
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Porters 5 Forces
Apply to Opportunities and Threats
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Entry – What barriers to entry exist (scale and deterrence)
Rivalry – How heated is the rivalry (cost, price, product differentiation, cooperation, diversification)
Substitutes – Improvements & Switching
Supplier – Who holds the power? What Type(s) of Power?
Manufacturer Wholesaler Retailer Customer
Buyer – Who holds the power? What Type(s) of Power?
Manufacturer Wholesaler Retailer Customer
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Barriers to Entry
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•Economies of Scale
•Product Differentiation
•Cost Advantages Independent of Scale
–Proprietary Technology
–Know-how
–Favorable Access to Raw Materials
–Favorable Geographic Locations
•Contrived Deterrence
•Government Regulation of Entry
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Threat of New Entrants
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Do large firms have a cost or performance advantage in your segment of the industry?
•Are there proprietary product differences in your industry?
•Are there any established brand identities in your industry?
•Do your customers encounter significant switching costs?
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Indicators of the Threat of Buyers in an Industry
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•The number of buyers is small
•Products sold to buyers are undifferentiated and standard
•Products sold to buyers are a significant proportion of buyers’ final costs
•Buyers are not earning significant economic profit
•Buyers threaten backward vertical integration
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Bargaining Power of Buyers
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•Is there a large number of buyers relative to the number of firms in the business?
•Do you have a large number of customers each with relatively small purchases?
•Does the customer face any significant costs in switching suppliers?
•Does the buyer need a lot of important information?
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Threat of Substitutes
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•Substitutes have performance limitations which do not completely offset their lowest price of their performance advantage is not justified by their higher price.
•The customer will incur costs in switching to a substitute.
•Your customer has no real substitute.
•Your customer is not likely to substitute.
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Indicators of the Threat of Suppliers in an Industry
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•Suppliers’ industry dominated by a small number of firms
•Suppliers sell unique or highly differentiated products
•Suppliers are not threatened by substitutes
•Suppliers threaten forward integration
•Firms are not important customers for suppliers
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Bargaining Power of Suppliers
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•My inputs (materials, labor, supplies, services, etc.) are standard rather than unique or differentiated.
•I can switch between suppliers quickly and cheaply.
•My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function in-house.
•I can substitute inputs readily.
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Attributes of an Industry that Increase the Threat of Rivalry
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•Large number of competing firms
•Competing firms are the same size and have the same influence
•Slow Industry Growth
•Lack of product differentiation
•Productive capacity added in large increments
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Threat of Rivalry
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•The Industry is growing rapidly.
•The industry is not cyclical with intermittent over-capacity.
•The fixed costs of the business are a relatively low portion of total costs.
•There are significant product differences and brand identities between the competitors.
•The competitors are diversified rather than specialized.
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Overall Industry Rating
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•Assign an assessment such as Favorable, Unfavorable or Moderate to each of the FIVE FORCES.
–Threat of New Entrants.
–Bargaining Power of Buyers.
–Threat of Substitutes.
–Bargaining Power of Suppliers.
Intensity of Rivalry Among Competitors
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VRIO Framework
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•Resource Categories:
–Assets
–Capabilities
–Competencies
–Organizational Processes
–Firm Attributes
–Information and Knowledge
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VRIO Framework
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•Resource Categories:
–Financial Capital
•Retained Earnings, Assets, Liabilities, Cash
–Physical Capital
•Plant Equipment, Geographic Location, Access to Raw Materials, Computer Hardware & Software
–Human Capital
•Training, Experience, Judgment, Intelligence, Relationships
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VRIO Framework
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–Organizational Capital
•Administrative Framework, Formal & Informal Planning, Reporting Structure, Controlling Systems, Coordinating Systems, Organizational Culture, Organizational Processes, Supply Chain Access
–Market-Based
•Information, Knowledge, Brand Name, Relationships, Organizational Reputation
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Assessment of Resources
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1.The question of value:do firms resources and capabilities enable the firm to respond to envirnomental treats or opportunities?
2.The question of Rarity:is a resource currently controlled by only a small number of competing firms?
3.The question of Imitability:do firms w/o a resource face a cost disadvantage in obtaining or developing it?
4.The question of Organization: are the firms other policies org. to exploit 1,2,3,4
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Marketing Information and
Customer Insights
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Fresh understandings of customers… from
customer insights…
That become the basis for creating customer value and relationships
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Marketing Information System
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The MIS begins and ends with information users—marketing managers, internal and external partners, and others who need marketing information. First, it interacts with these information users to assess information needs. Next, it interacts with the marketing environment to develop needed information through internal company databases, marketing intelligence activities, and marketing research.
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Marketing Information System
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. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.
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Assessing Marketing
Information Needs
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Customer company
wants
needs resources
____________________________
balance scale
A company must balance what the users would LIKE to have against what they really NEED and what is FEASIBLE for a firm to offer.
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Developing Marketing Information
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•Internal Databases
•Competitive marketing intelligence
•Marketing research
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Marketing Research
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The systematic design, collection, analysis, and reporting
of data relevant to a specific marketing situation facing an organization
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The Marketing Research Process
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define the problem and research objectives-----developing the research plan for collecting information-----implementing the research plan-collecting and anaylazing the data------intrepreting and reporting the findings
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Defining the Problem and
Research Objectives
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The objective of exploratory research is to gather preliminary information that will help define the problem and suggest hypotheses.
The objective of descriptive research is to describe things, such as the market potential for a product or the demographics and attitudes of consumers who buy the product.
The objective of causal research is to test hypotheses about cause and effect relationships.
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Developing the Research Plan
Marketer’s Questions
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What information do we need?
How will we get it?
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Types of Data
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secondary-- •Information that already exists somewhere, having been collected for another purpose
Primary-- •Information collected for the specific purpose at hand
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Gathering Secondary Data
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Factiva
Arbitron
Information
CNN
Lexis Nexis
Nielsen
Resources
Simmons
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Primary Data
Research Approaches
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observational
survey
experimental
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Primary Data--online research
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internet surveys
web-based experiments
online focus groups
tracking online behavior
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Primary Research
Sampling Plan
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simple random sample
stratified random sample
Cluster(area) sample
-Non probability sample
convenience sample
judgment sample
quota sample
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Research Instruments
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•Questionnaires- most common flexible
•Mechanical Instruments-Neilsen people meters, physical response, Neuromarketing
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Implementing the Research Plan
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Collecting
processing
analyzing
All three of these steps can be done internally or through a market research firm.
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Interpreting and Reporting Findings
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The research should present IMPORTANT findings that are related to decision making.
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Analyzing and Using Marketing Information
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Customer Relationship Management (CRM) involves
managing
customer
“touch points”
in order to
maximize
customer
loyalty
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Analyzing and Using Marketing Information
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Distribution of Marketing Information through: company internet, extranets
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Other Marketing Information Considerations
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small business
nonprofit
international
public policy and ethics: privacy, misuses of findings
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