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Marketing-
- The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
- (Creating and communicating VALUE to customers and satisfying their needs.)
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Conditions for Exchange to occur:
- -At least 2 parties.
- -Something of value.
- -Communication and delivery.
- -Freedom to accept or reject.
- -Desire to deal with other party.
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A _____ may not take place even if conditions are met but no agreement is reached, but ______ occurs regardless.
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Common exchanges:
- -$ for food.
- -$ for place to live.
- -Time and $ for learning.
- -Privacy for apps.
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Marketing Management Orientations:
- -Production: What can we make efficiently?
- -Sales: Aggressive sales techniques and belief that high sales result in high profits.
- -Market: Satisfying customer needs and wants while meeting objectives.
- -Societal: Satisfying customer needs and wants while enhancing individual and societal well-being.
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Differences between Sales and Market orientations' focus:
- Sales: Inward looking, emphasizes what the firm makes.
- Market: Outward looking, emphasizes what the market wants.
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Customer value requirements:
- -Offer products that perform.-Earn trust.
- -Avoid Unrealistic pricing.
- -Give the buyer facts.
- -Offer oragnization-wide commitment in service and after-sales support.
- -Co-Creation with customers.
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Perceived Value=
Perceived Benefits - Perceived Costs.
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Customer Satisfaction-
Customer's evaluation of a good/service in terms of whether that good or service is valuable.
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A market-oriented firm will use ______ rather than ______ to describe what business they are in.
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Marketing Plan
Business Mission Statement:
Attempts to succinctly define a firm's business.
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What do Marketing people need to know how to do?
- 1. Assess the wants and satisfaction of customers.
- 2. Design and manage product offerings.
- 3. Determine prices and pricing policies.
- 4. Develop distribution strategies.
- 5. Communicate with the present and potential customers.
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Strategic Planning-
The managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities.
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A Strategic Business Unit (SBU) has...
- -A distinct mission and specific target market.
- -Control over its resources.
- -Its own competitors.
- -A single business or a collection of related businesses.
- -Plans independent of other SBUs.
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Ansoff's Opportunity Matrix:
- -Market Penetration: Increases market share among existing customers.
- -Market Development: Attract new customers to existing products.
- -Product Development: Create new products for present markets.
- -Diversification: Introduce new products to new markets.
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Boston Consulting Group (BCG) Matrix is used to...
- Help managers evaluate and manage business units within the company and help determine what should be done with them in the long run.
- Suggests appropriate cash flow patterns between units. (What market to get into).
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The BCG Matrix:
- -Stars: High market share of a fast-growing market. (must invest a lot)
- -Cash Cows: High market share in a slow-growing market. (Don't need to invest much)
- -Dogs: Low share of a low-growth market. (Probably shouldn't invest, but can serve a purpose)
- -Problem Child: Low market share in a high growth market. (Will take a lot of $ to make star. Maybe will work out, maybe not.)
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Marketing Plan
Situational Analysis:
- -Strengths: Things the company does well.
- -Weaknesses: Things the company does not do well.
- -Oppurtunities: Conditions in the external environment that favor strengths.
- -Threats: Conditions in the external environment that do not relate to existing strengths or favor areas of current weaknesses.
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Which components of the SWOT analysis are internal or external?
- Strengths and Weaknesses: Internal
- Opportunities and Threats: External
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Environmental Scanning-
Continually monitoring the external environment for opportunities and threats.
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Competitive Advantage-
A set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition.
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Cost Competitive Advantage-
Being the low-cost competitor in an industry while maintaining satisfactory profit margins.
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Product/Service Differentiation-
A firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.
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Niche Competitive Advantage-
Target and effectively serve a single segment of the market.
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Sustainable Competitive Advantage-
An advantage that cannot be copied by the competition.
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Marketing Objectives should be...
- -Realistic
- -Measurable
- -Time specific
- -Compared to a benchmark
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Types of Target Market Strategy:
- -Undifferentiated (Mass) Marketing: Appeal to the entire market with one marketing mix.
- -Concentrated Targeting: Concentrate on one marketing segment.
- -Differentiated Targeting: Appeal to multiple markets with multiple mixes.
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The Marketing Mix (The Four P's):
- -Product-Place: Product Availability (where and when customers want the product.)
- -Promotion: Role is to bring about exchanges with target markets by educating, persuading, and reminding.
- -Price
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Modes of Social Control:
- -Ethics
- -Laws
- -Formal and informal groups
- -self-regulation
- -the media
- -an active civil society
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Ethical Development Levels:
- -Preconventional Morality: Based on what will be punished or rewarded.
- -Conventional Morality: Moves toward the expectations of society. Concerned over legality and opinion of others.
- -Postconventional Morality: Concern about how they judge themselves. (Right or wrong).
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A Code of Ethics:
- -Helps identify acceptable business practices.
- -Helps control behavior internally.
- -Avoids confusion in decision making.
- -Facilitates discussion about right and wrong.
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Foreign Corrupt Practices Act (FCPA)-
Prohibits U.S. corporations from making illegal payments to foreign officials.
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Corporate Social Responsibility-
- A business' concern for society's welfare.
- Paying attention to the interest of every affected stakeholder in every aspect of a firm's operation.
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Corporate Social Responsibility Pyramid:
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Sustainability-
Socially responsible companies will outperform their peers.
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Green Marketing-
- The development and marketing of products designed to minimize negative effects on the environment or improve the environment.
- Environmentally aware customers are willing to pay more.
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Cause-Related Marketing-
Customer Cause Fatigue-
- Happens when For-profit and non-profit organizations cooperate to generate funds.
- Generates about $7 billion annually.
Too many causes lead to customer cause fatigue.
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Environmental Management-
When a company implements strategies that attempt to shape the external environment.
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6 areas making up the External Marketing Environment:
- -Social factors
- -Demographic Factors (including growing ethnic markets)
- -Economic Factors
- -Technological Factors
- -Political and Legal Factors
- -Competitive Factors
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External Marketing Environment
Social Factors
Core American Values:
- -Upward Mobility
- -Conformity
- -Self-sufficiency
- -Work ethic
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External Marketing Environment
Social Factors
Emerging Value Trends:
- -Getting off the grid.
- -Meaningful green.
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External Marketing Environment
Demographic Factors
Tweens (8-12)
- -Population of 20 million.
- -Directly spend about $30 billion annually.
- -Parents spend $180 billion on tweens annually.
- -Respond very favorably to having control over their own experiences.
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External Marketing Environment
Demographic Factors
Teens:
- -Population of about 25 million.
- -95% of U.S. teens are on the internet.
- -View shopping as a social sport.
- -75% of teens are into social networks.
- -On average, just over $156 is spent on or by every American teen each week.
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External Marketing Environment
Demographic Factors
Generation Y (Born between 1979-1994):
- -Surpassed population of baby boomers.
- -Two stages: 1.) those born in 1994 fit closer to the teen cohort. 2.) Those born in 1979 have established careers and started families.
- -Purchasing power of $200 billion annually.
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External Marketing Environment
Demographic Factors
Generation X (born between 1965-1978):
- -Population of 50 million.
- -Independent, resilient, adaptable, cautious, and skeptical
- -Face a 59% decline in net worth from 2005 to 2010.
- -Spend 62% more on housing, 50% more on apparel, and 27% more on entertainment.
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External Marketing Environment
Demographic Factors
Baby Boomers (born between 1946-1964):
- -Carry substantial financial burdens, including their children's educations, mortgages, and health care.
- -Spend $1.8 trillion annually on food, cars, personal care, and other personal products.
- -Willing to change brands and try new things.
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External Marketing Environment
Demographic Factors
Growing Ethnic Markets:
Hispanic:
African American:
Asian American:
-About 1/3 U.S. residents is a member of a minority group.
- -The U.S. Hispanic consumer market is now larger than all but 13 world economies.
- Nearly 60% of Hispanics in U.S. are of Mexican descent.
- -African American buying power increased 73% between 2000 and 2012.
- 47% are between 18-49 years old.
- -Asian American buying power increased 165% between 2000 and 2012.
- Fastest growing minority group.
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External Marketing Environment
Economic Factors
Consumers' Income:
- -Median U.S. Household income in 2012 was approx. $50,000.
- -Average family incomes, when adjusted for inflation, fell around 8% between 2007 and 2011.
- -Education is the primary determinant of earning potential.
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External Marketing Environment
Economic Factors
Purchasing Power-
Inflation-
-A measure comparing income relative to the cost of living in different geographic areas.
-A measure of the decreasing value of money compared to the previous year.
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External Marketing Environment
Economic Factors
Gross Income-
Disposable Income-
Discretionary Income-
-Total $ earned during year.
-Income after taxes.
-Income left after paying taxes/expenses.
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External Marketing Environment
Technological Factors
Research (Basic vs. Applied):
Basic- Pure research.
Applied- Develop new/improved products.
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External Marketing Environment
Political and Legal Factors
In the U.S., laws and regulations are designed to protect:
- -New tech.
- -Society
- -Business
- -Consumers
- -Corporations
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External Marketing Environment
Political and Legal Factors
Consumer Privacy Acts:
- -CAN-SPAM Act
- -Children's Online Privacy Protection Act
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External Marketing Environment
Competitive Factors
Pure Competition:
- a.) Many buyers, many sellers.
- b.) Homogeneous
- c.) Assumes perfect information
- D.) Price competition is fierce
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External Marketing Environment
Competitive Factors
Monopolistic Competition:
Has many buyers and sellers, but each seller's offering is somewhat different in the consumer's mind.
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External Marketing Environment
Competitive Factors
Oligopoly-
Monopoly-
-Few large, interdependent firms account for the bulk of sales in market. Cooperate on price to avoid price wars.
-One firm sells product for which there are no substitutes.
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Importance of Global Marketing to the U.S.:
-The United states derives ___% of gross domestic product (GDP) from world trade.
-More than ______ Americans hold jobs that are supported by exports.
-U.S. businesses export over $______ in goods and services annually.
-14%
-10 million
-$2.1 trillion
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Stages of Global Business Development:
- 1.) Companies operate in one country and sell into others.
- 2.) Set up foreign subsidiaries to handle sales.
- 3.) Operate an entire line of business in another country.
- 4.) Virtual operation.
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Are Multinationals Beneficial?
Pros:
-Account for ___% of U.S. private jobs.
-Provide ___% of private wages.
-___% of R&D spending
-___% percent of total exports.
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Are Multinationals Beneficial?
Cons:
- -Technology is capital intensive and does not necessarily increase employment.
- -Support governments that benefit the company, not necessarily the country and its people.
- -May take away more wealth than they generate from developing countries.
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Global Marketing Standardization-
Production of uniform products that can be sold the same way all over the world.
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Multi-domestic Strategy-
Subsidiaries of multi-national firms are allowed to compete independently in domestic markets.
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Developed Countries vs. Developing Countries:
- Developed- Complex, sophisticated industries.
- Developing- Basic industries.
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Tariff-
Quota-
Boycott-
Exchange Control-
Market Control-
Trade Agreement-
-A tax on imports.
-Limit on the amount of a product entering a country
-Exclusion of products from a country.
-Foreign exchange must be sold to a control agency.
-Common trade alliance.
-An agreement to stimulate international trade.
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Trade agreements include:
NAFTA, CAFTA, and EU.
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Entering the Global Marketplace- Possible modes of entry:
- -Export: Sell domestically produced products to buyers in other countries.
- -Licensing and Franchising:
Legal process allowing use of manufacturing/patents/knowledge.- -Contract Manufacturing:
Private-label manufacturing by a foreign country.
-Joint Venture: Domestic firm buys/joins a foreign company to create new entity.
-Direct Investment: Active ownership of a foreign company/manufacturing facility.
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Risk/Reward levels for 5 methods of entering the international marketplace (Low to Hgih)
- -Exporting: Low risk/low return
- -Licensing/Franchising
- -Contract Manufactoring
- -Joint Venture
- -Direct Investment:
High risk/high return
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Licensing-
Allows a company in the foreign country to use your brand name, trademarks, patents, proprietary, tech., etc... in exchange for a royalty.
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Export Intermediaries
Buyer For Export-
Export Broker-
Export Agent-
-Assumes all ownership risks and sells globally for its own account
-Plays the traditional brokers role by bringing buyer and seller together.
-Acts like a manufacturer's agent for the export.
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Product and Promotion strategic options:
-One Product, One Message:
-Product Adaptation:
-Promotion Adaptation:
-Product Invention:
- -Same product, same message
- -Change product, same message
- -Same Product, change message
- -Change product, change message
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Dumping-
The sale of an exported product at a lower price than its price at home.
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Counter-trade-
All or part of the payment for goods or services is in the form of other goods/services.
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