MAR 4803: Marketing Management – Flashcards

The activity, set of institutions, and processes for creating and communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Marketing Stakeholders: Includes any person or entity inside or outside a firm with whom marketing interacts, impacts, and is impacted by. Internal Stakeholders: Those inside the firm. Includes other organizational units that marketing interacts with in the course of business. (Ex. finance, accounting, production, and quality control) External Stakeholders: Those outside the firm. Includes customers, vendors, governmental bodies, labor unions, and many others.

Value: A ratio of the bundle of benefits a customer receives from an offering compared to the costs incurred by the customer in acquiring that bundle of benefits. Exchange: A concept in which a person gives up something of value to them for something else they desire to have. Usually facilitated by money, but sometimes people trade or barter non-monetary resources such as time, skill, expertise, intellectual capital, or more. 5 Conditions for an Exchange to Take Place: 1. There must be at least two parties. 2. Each party has something that might be of value to the other party. 3. Each party is capable of communication and delivery. 4. Each party is free to accept or reject the exchange offer. 5. Each party believes it is appropriate or desirable to deal with the other party. Creating, communicating, delivering, and exchanging offerings of value to various stakeholders.

At the broadest conceptual level, members of society at large can be viewed as a stakeholder for marketing. Ex. Environmentally friendly marketing/green marketing is a growing trend in socially responsible companies.

- Pre-Industrial Revolution - Focus on production and products: Focus on improving products and production efficiency without much regard for what was going on in the marketplace. Ex. Consumers snapped up reasonably priced goods even if the product didn't give much choice in style or function. Assumes that customers will buy just because one produces a good product. - Focus on selling: Suggests that to increase sales and consequently production capacity utilization, professional salespeople need to 'push' product into the hands of the customer, both business and end users. - Advent of the Marketing Concept: An organization-wide customer orientation with the objective of achieving long run profits. - Post marketing concept approaches (Differentiation orientation, market orientation, relationship orientation, one to one marketing)

Differentiation Orientation: What clearly distinguishes your products from those of your competitors in the minds of customers. Market Orientation: The implementation of the marketing concept. Customer Orientation: Placing the customer at the core of all aspects of the enterprise. Relationship Orientation: Driven by the realization that it is far more efficient to invest in keeping and cultivating profitable current customers than it is to constantly invest in gaining new customers. One-to-one Marketing: Advocates that firms should direct energy and resources into establishing a learning relationship with each customer and then connect that knowledge with the firm's production and service capabilities to fulfill that customer's needs. Ex. Mass customization

Five Areas of Shift: 1. Shift to product glut and customer shortage. Balance of power is shifting between marketers and their customers in both business to business (B2B) and business to consumer (B2C) markets. 'Six new market realities': Competitors proliferate, all secrets are open secrets, innovation is universal, information overwhelms and depreciates, easy growth makes hard times, and customers have less time than ever. 2. Shift in info power from marketer to customer. 3. Shift in generational values and preference. 4. Shift to demanding return on marketing investment. Marketing metrics must be designed to ID, track, evaluate, and provide key benchmarks for improvement just as various financial metrics guide the financial management of the firm. 5. Shift to distinguishing Marketing (Big 'M') from marketing (little 'm').

Big 'M': Serves as a core driver of business strategy. That is, an understanding of markets, competitors, and other external forces, coupled with attention to internal capabilities, allows firms to successfully develop strategies for the future. Often referred to as 'Strategic Marketing', which means a long-term, firm-level commitment to investing in marketing - supported at the highest organizational level - for the purpose of enhancing organizational performance. Action Elements Required for Successful Marketing (Big 'M'): - Make sure everyone in an org understands the concept of customer orientation. - Align all internal organization processes and systems around the customer. - Find somebody at the top of the firm to consistently champion this Marketing (Big 'M') business philosophy. - Forget the concept that the marketing department is where Marketing (Big 'M') takes place. - Create market-driving, not just market-driven, strategies. It is imperative to study the market and competition as part of the marketing planning process.

Serves the firm and its stakeholders at a functional or operational level. Often thought of as tactical marketing.

Utility: Is the want-satisfying power of a good or service. 4 Major Types of Utility: - Form: Created when the firm converts raw materials into finished products that are desired by the market. - Time, Place, Ownership: Created by marketing, when products are available to customers at a convenient location when they want to purchase them, and facilities of exchange are available that allow for transfer of the product ownership from seller to buyer.

Leading and managing the facets of marketing to improve individual, unit, and organizational performance. It is a core business activity.

Marketing planning: The on-going process of developing and implementing market driven strategies for an organization - and the resulting document that records the marketing planning process in a useful framework is the MARKETING PLAN.

Views SBUs (strategic business units) and sometimes even product lines as a series of investments from which it expects maximization of returns, is one tool that can contribute to strategic planning in a multi-business corporation.

'Boston Consulting Group Growth-Share Matrix' Within the BCG Matrix, you find 4 cells, each representing a strategy recommendation: - Stars (high share, high growth): Important to building the future of the business and deserving any needed investment. - Cash Cows (high share, low growth): Key sources of internal cash generation for the firm. - Dogs (low share, low growth): Potential high cash users and prime candidates for liquidation. - Problem Children or Question Marks (low share, high growth): High cash needs that, if properly nurtured, can convert into stars.

Target Market Advantages Low Cost Product/Service Uniqueness Broad (Industry-Wide): Cost Leadership Differentiation Narrow (Market Segment): Focus Low Cost Focus Differentitation

Marketing manager must perform a situation analysis of the environment within which the marketing plan is being developed. It includes elements of the macro level external environment within which the firm operates, its industry or competitive environment, and its internal environment.

- Political, Legal, and Ethical: All firms operate within certain rules, laws, and norms of operating behavior. - Sociocultural/Demographic: Trends among consumers and in society as a whole impact marketing planning greatly. - Technological: Constantly emerging and evolving technologies impact business in many ways. The goal is to try to understand the future impact of technological change so a firm's products will continue to be fresh and viable. - Economic: Plays a role in all marketing planning. Part of a market plan is a forecast and accompanying budget, and forecasts are impacted by the degree to which predicted economic conditions actually materialize. - Natural: Ex. green marketing and sustainability

- Firm structure and systems: To what degree does the present organizational structure facilitate or impede successful market-driven strategic planning? Are the firm's internal systems set up and properly aligned to effectively serve customers? - Firm culture: If a firm's culture does not value and support a customer orientation and customer-centric approach to overall business, marketing planning will likely disappoint. - Firm leadership: The CEO must believe in and continually support, financially and otherwise, the structure, systems, and culture necessary for market driven strategic planning. - Firm resources: Internal analysis involves taking an honest look at all aspects of a firm'c functional/operational level resources and capabilities and how they play into the ability to develop and execute market driven strategies. (Key resources: marketing, financial, R&D and technological, operations and production, human, and info systems)

Upon completion of the situation analysis, a convenient way to summarize key findings is into a matrix of strength, weakness, opportunities, and threats. Useful in beginning to brainstorm marketing strategies.

Ex. When introducing a new product, research is conducted, it is released in select cities, and if it is successful there then the product will eventually be released to be available in more cities.

An understanding of marketing beyond home markets develops over time as a company gets more international business experience. Moves companies through 4 distinct stages: no foreign marketing, foreign marketing, international marketing, and global marketing. This process is not always linear.

Many companies with no direct foreign marketing still do business with international customers through intermediaries or limited direct contact. In these cases, there are no formal international channel relationship or global marketing strategies targeted at international customers. Companies are typically small with limited range of products.

Involves developing local distribution and service representation in a foreign market in one of two ways. One method is to ID local intermediaries in appropriate international markets and create a formal relationship. The second approach is for the company to establish its own direct sales force in major markets, thereby expanding the company's direct market reach.

- Economic: An accurate understanding of the current economic environment, such as gross domestic product growth, inflation, strength of the currency, and business cycle trends, is essential. - Culture/Societal Trends: Understanding a global market's culture and social trends is fundamental for consumer products and helpful for business to business marketers. Cultural values, symbols, rituals, cultural differences affect people's perception of products. - Business Environment: Knowledge of the business environment is essential for companies moving into foreign markets where they will invest significant resources. Ethical standards, management styles, degree of formality, and gender or other biases are all critical factors that management needs to know before entering a new market. - Political and Legal: Local political change can create significant uncertainties for a business. Learning the landscape is fundamental before committing resources in a foreign market. - Specific Market Conditions: Before entering a foreign market, a company has some understanding of the specific market conditions for its own products as a result of business knowledge.

Global Marketing: A global marketing company realizes that all world markets, including the company's own domestic market, are in reality, a single market with many different segments. This frequently happens when a company generates more than half its revenue in international markets. International Marketing: When a firm makes the commitment to produce products outside its domestic market, it is engaged in international marketing. The decision to produce outside its home market marks a significant shift toward an integrated international marketing strategy.

- Stage One: The Traditional Society (Ex. Sudan) Dependent on agriculture as the primary driver of the economy, these economies lack the capabilities to industrialize. Illiteracy is high, which hinders advances in technology. - Stage Two: Preconditions for Take-Off (Ex. Romania) In these economies, new investments in infrastructure (transportation, communication, education, healthcare) create the foundation for growth and encourage industrial expansion. Often these changes are driven by investments from private organizations. Global companies target countries at this stage for production and other facilities because the cost of entry is very low. Moreover, it is possible to build a strong market position before the economy enters the next stage. - Stage Three: Take-Off (Ex. The Czech Republic) The investments in infrastructure yield sustainable economic growth, which makes an economy look much more attractive to foreign investors. It transitioned from agricultural to industrial. - Stage Four: Maturity (Ex. China) The economy, through private and public investments, seeks to maintain growth rates. As the economy grows, investments focus on expanding infrastructure to attract additional industrial investment. - Stage Five: High Mass Consumption (Ex. Germany) Consumption patterns shift as consumers demand higher levels of service and more durable goods. Income levels rise, creating a large population with discretionary income. Products are not needed but wanted.

Consists of a group of countries that create formal relationships for mutual economic benefit through lower tariffs and reduced trade barriers. In some cases, such as the European Union, their influences extends beyond economic concerns to political and social issues. Generally form because of four forces: Economic, geographic proximity, political, and culture similarities.

Key Characteristics: -Exporting - Contractual Agreements - Strategic Alliances - Ownership Advantages: - Minimal investment and low risks Disadvantages: - Potential return on investment and profitability are low - Company has little control over the process

The most common method for entering a foreign market and accounts for 10 percent of all global economic activity. Primary advantages include the ability to penetrate foreign markets with minimal investment and little risk. Considered an initial entry strategy and not a long-term approach. Exporter and Distributor: The next level of exporting involves having country representation, which takes several forms. - Exporters: Are international market specialists that help companies bu acting as the export marketing department. Generally do not have much contact with the company, but provide valuable service with their knowledge of policies and procedures for shipping to foreign markets. - Distributors: Represent the company and often many others in foreign markets. These orgs become the face of the company in that country, servicing customers, selling products, and receiving payments. In many cases, they take the title of goods and resell them. Advantage is that they know the local markets and offer the company physical representation in a global market. Disadvantages are lack of control and lower profitability resulting from distributor mark-up.

Allow a company to expand participation in a market by creating enduring, non-equity relationships with another company, often a local company in that market. Most often these agreements transmit something of value in return for financial compensation such as licensing or percentage of sales. - Licensing: Companies choose this when local partnerships are required by law, legal restrictions prohibit direct importing of the product, or the company's limited financial resources limit more active foreign participation. Companies seeking to establish greater presence in a market without committing significant resources can choose to license their key asset to another company, giving that company the right to use that asset in that market. Advantage is limited direct risk to the company. Disadvantage is that it does not offer high profit potential and can limit long-term opportunities if a company awards an extended licensing contract. - Franchising: As a global market entry strategy, it has been the first point of entry for many retailers looking to expand international operations.

Have grown in importance over the years in an effort to spread risk to other partners. Now dominate some competitive landscapes. - International Joint Venture: A specific type of strategic alliance called joint venture enables many companies to enter a market that would otherwise be closed because of legal restrictions or cultural barriers. Joint ventures are a partnership with two or more participating companies and differ from strategic alliance in that: management duties are shared and structure is defined, other companies or legal entities, not individuals, formed the venture, and every partner holds an equity position.

Has the greatest long term implications. Risks go up substantially when a company moves manufacturing into a foreign market. Must consider following factors: - Timing: Unknown political or social events, competitor activity. - Legal Issues: Growing complexity of international contracts, asset protection. - Transaction Costs: Production and other costs stated in various currencies. - Technology Transfer: Key technologies are more easily copied in foreign markets. - Product Differentiation: Differentiating a product without increasing cost. - Marketing Communication Barriers: Local marketing practices vary a great deal.

Companies usually adopt one of three organizational structures in building their international operations: - Global Product Lines: Work well for companies with a broad, diverse range of products. This model is based on the global functionality and appeal of the products and enables companies to target similar products to customers around the world. - Geographic Regions: Divides international markets by geography, building autonomous regional organizations that perform business functions in the geographic area. Works well when local government relationships are critical to the success of international operations as it affords company management a closer connection to local customers. - Matrix Structure: Is a hybrid of the first two. Used by most companies. Encourages regional autonomy while building product competence in key areas around the world.

3 Types and Examples: - Direct Product Extension: Intro a product produced in the company's home market into international market with no product changes. Advantages are that there are no R&D or manufacturing costs. Disadvantages are that it may not fit local needs or tastes. - Product Adaptation: Alter an existing product to fit local needs and legal requirements. Adaptations can range from regional levels to city level differences. (Ex. McDonald's hot dog for British market) - Product Invention: Create new product specifically for an international market. Sometimes old product discontinued in one market can be reintroduced into a new market, process called backwards invention. (Ex. Cell phone companies taking phones that have been replaced in European or Asian market and introducing them in Latin America) Forward invention is creating new product to meet demand in a specific country or region.

- Consumers: Tastes, needs, preferences vary widely. - Culture: Cultural differences exert heavy influence on consumer product choices and are critical in international markets. Brand names and product colors and features are heavily influenced. - Country of Origin: The influence of the country of manufacture, assembly, or design on a customer's positive or negative perception of the product. Customers infer that a product has a certain quality based on this. - Brand Strategy: As companies acquire local brands, one of the first decisions is whether to fold a local brand into a global brand. Companies must consider local conditions, but when possible, companies are harmonizing brands to build brand awareness and extend marketing communication dollars. - Global Advertising Strategy: Global marketing themes (adjusting only the color and language to local market conditions. The basic ad template remains unchanged throughout the world.), Global marketing with local content (keeps the same global marketing theme as the home market but adapts with local content.), Basket of global advertising themes (related but distinct ads built around several marketing messages are generated and local marketers select the ones they see best fit their market situation.), Local market ad generation (marketers have the authorization to create local ads that do not necessarily coordinate with global messages. However their strategy still requires coordination at higher levels in the company to ensure consistent quality.) - Global Pricing Strategy: One world price (one price is assigned for its products in every global market.), Local market conditions price (assigns price based on local market conditions with minimal consideration for the actual cost of putting the product into the market.), Cost based price (considers cost plus mark up to arrive at a final price. Does not consider actual market conditions.), Price escalation (when cost of doing business globally is higher than in their home market due to export costs, tariffs and import fees, exchange rate fluctuation, middlemen and transportation costs.)

Definition: A comprehensive business model for increasing revenues and profits by focusing on customers. Objective: - Customer Acquisition: Acquisition of the right customers based on known or learned characteristics that will drive growth and increase margins. - Customer Retention: Retention of satisfied and loyal profitable customers and channels, thus to grow the business profitability over the long run. - Customer Profitability: Increased individual customer margins, while offering the right products at the right time. Metrics: Customer satisfaction, customer loyalty, lifetime value of a customer, ROCI (return on customer investment) Process Cycle: - Knowledge Discovery: Process of analyzing the customer info acquired through various customer touch points/contact and access points. - Marketing Planning: Represents a key use of the output form the knowledge discovery phase. The info enables the capability to develop marketing and customer strategies and programs. - Customer Interaction: Represents the actual implementation of the customer strategies and programs. Includes the personal selling effort, as well as all other customer directed interactions. -Analysis and Refinement: Where organizational learning occurs based on customer response to the implemented strategies and programs. Continuous adjustments made to the firm's overall customer initiatives result in more efficient investment of resources. Advantages: Helps the company connect with customers. Disadvantages: Touch points raise ethical and legal issues with privacy.

Consumer Marketing: Marketing to big groups of like minded buyers. Customer Marketing: A focus on developing relationships with individuals. Advantages are reduce promotional costs, improved targeting of specific customers, improved capability to track the effectiveness of a given promotional campaign, increased effectiveness in competing on value-adding properties such as customization and service, increased sensitivity to the differing levels of potential across customers, increased speed in the time it takes to develop and market a product, improved use of the customer channel.

Why did it suddenly become so important? It is the measurement of important business success factors related to long term relationships with customers. It is possible to calculate an estimate of the projected financial returns from a customer (ROCI: return on customer investment) over the long run. ROCI raises the prospect of 'firing a customer'.

How to Calculate: px = vx + FC + Profit Where, p is the price per unit, x is the number of units, v is variable cost per unit and FC is total fixed cost.

Is a prediction of the net profit attributed to the entire future relationship with a customer.

Is not a software package but a continuing process of ID-ing, collecting, analyzing, accumulating, and dispersing critical info to marketing decision makers. A company needs to evaluate three factors when considering creating an MIS: - What info should the system collect? In evaluating internal and external info sources, companies need to consider not only what info is important, but also the source of the data. - What are the info needs of each decision maker? Not all managers need the same info. A good MIS is flexible enough for managers to customize the info they receive and, in some cases, the format they receive it in. - How does the system maintain the privacy and confidentiality of sensitive info? Company databases hold a great deal of confidential data on customers, suppliers, and employees. By limiting access to the data to those with a need to know, companies protect relationships and build trust.

Examples and Key Differences: Internal Info: Ex. Internal information sources: Customer orders (CRM operations documents), customer payments (financial documents and databases), market plans (management documents), salesperson info system (salesperson generated data), customer inquiries (marketing documents and databases) External Info: Ex. External information sources: ----- Demographics: Defined as the statistical characteristics of human population, such as age or income, used to ID markets. Defines a market and IDs new opportunities. - Populations of Interest: Marketers are not interested in all groups, just populations of interest. They must separate relevant demographic data from the irrelevant. - Ethnic Groups: Many countries are becoming more ethnically diverse. The challenge then becomes developing effective marketing strategies accross different ethnicities living in the same area. - Geographic Changes: People are moving all over the world. This presents opportunities and challenges. ----- Economic Conditions: - Microeconomics: The study of individual economic activity. (firm, household, or prices) - Macroeconomics: Refers to the study of economic activity in terms of broad measures of output (gross national product or GNP) and input as well as the interaction among various sectors of an entire economy. ----- Technology Transformation: Marketing managers need to know the role of technology in their business and its role in the future. ----- Natural World: Two key issues drive marketers need to know about the natural world: - Individuals, governments, and businesses all recognize the need to manage the available resources well. - Regarding the world's pollution. In some parts of the world, pollution takes a significant toll on quality of life and economic growth. ----- Political and Legal Environment: Political judgments and, more broadly, the legal environment significantly affect company decisions and sometimes an entire industry. ----- Competition Companies want to know as much as possible about competitors products and strategies.

Definition: The methodical identification, collection, analysis, and distribution of data related to discovering then solving marketing problems or opportunities and enhancing good decision making. Process: - Define the research problem - Establish the research design - Search secondary sources - Collect the data - Analyze the data - Report the findings

Given that management often does not have a clear understanding of the problem, defining the research problem involved two distinct steps. First management working with researchers and marketing decision makers define the management research deliverable. (what does management want to do with this research?) Once that has been identified, the next step is to define the research problem. (what info is needed to help management in this situation?)

(Characteristics and when to use each) - Exploratory Research: All about discovery. Used to clarify the research problem, develop hypothesis for testing, gain additional insight to help in survey development or to ID other research variables for study, answer the research question. - Descriptive Research: Seeks to describe or explain some phenomenon. Often involves something going on in the marketplace that can include issues such as ID-ing the characteristics of our target market, assess competitor actions in the marketplace, determine how customers use a product, discover differences across demographic characteristics (age, education, income) with respect to the use of products or competitor products. Uses many different methods including secondary data, surveys, and observation. - Causal Research: Tried to discover the cause and effect between variables.

Differences: - Primary Data: Data collected specifically for this research question. Advantage: specific and accurate. Disadvantage: Unwillingness to respond, unreliable sampling procedures, inaccurate language translation and insufficient comprehension. Uses one of two approaches. * Qualitative research is less structured and can employ methods such as surveys and interviews to collect data. Employs small samples and is not meant to be used for statistical analyses. (Ex. focus groups, in-depth interviews) * Quantitative research is used to develop a more measured understanding using statistical analysis to assess and quantify the results. (Ex. surveys) - Secondary Data: Data collected for some other reason than the problem currently being considered. (Ex. government sources, market research orgs, the internet) Advantages: always available. Disadvantages: limited data accessibility, data dependability, data comparability.

Census: A comprehensive record of each individual in a population of interest. Sample: A subgroup of the population selected for participation in research. - Probability: Uses specific set of procedures to ID individuals from the population to be included in the research. - Non-probability: The probability of everyone in the population being included in the sample is not identified. The chance of being selected may be zero or not known. This type of sampling is done when there are time or financial constraints.