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Marketing

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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.

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Creating

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The process of collaborating with suppliers and customers to create offerings that have value.

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Communicating

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Broadly, describing those offerings, as well as learning from customers.

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Delivering

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Getting those offerings to the consumer in a way that optimizes value.

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Exchanging

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Trading value for those offerings

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Four P's

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Product, Promotion, Place, Price

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Product

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Goods and services (creating offerings).

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Promotion

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Communication

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Place

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Getting the product to a point at which the customer can purchase it (delivering). (or physical distribution.

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Price

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The monetary amount charged for the product (exchanging).

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Personal value equation

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value = benefits received - [price + hassle]

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Marketing concept

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a philosophy underlying all that marketers do, requires that marketers seek to satisfy customer wants and needs.

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market oriented

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Firms operating under the marketing concept philosophy, recognize exchange must be profitable.

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production orientation

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Reducing production costs, when companies think the product will sell itself

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selling orientation

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pushing products by heavily emphasizing advertising and selling (popular 1920s to World War II)

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service-dominant logic

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an approach to business that recognizes that consumers want value no matter how it is delivered, whether it's via a product, a service, or a combination of the two.

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Offering

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A company's entire bundle consisting of the tangible good, the intangible service, and the price.

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Communicating

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a broad term in marketing that means describing the offering and its value to your potential and current customers, as well as learning from customers what it is they want and like.

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Delivering

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an offering that has value is much more than simply getting the product into the hands of the user; it is also making sure that the user understands how to get the most out of the product and is taken care of if he or she requires service later.

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supply chain

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a number of organizations and functions that mine, make, assemble, or deliver materials and products from a manufacturer to consumers.

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Logistics

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the actual transportation and storage of materials and products, is the primary component of supply chain management.

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Exchange

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cash for products and services (could also be reward points, etc, not just cash)

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Social marketing

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Marketing conducted in an effort to achieve certain social objectives can be done by government agencies, nonprofit institutions, religious organizations, and others.

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Marketing Plan

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the strategy for implementing the components of marketing: creating, communicating, delivering, and exchanging value.

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Social Responsibility

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requires that you must actively seek to improve the lot of others.

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Ethics

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require that you only do no harm

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Sustainability

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an example of social responsibility and involves engaging in practices that do not diminish the earth's resources.

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Value Proposition

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a thirty-second "elevator speech" stating the specific benefits a product or service offering provides a buyer. It shows why the product or service is superior to competing offers. (why should I buy from you or why should I hire you)

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Strategic planning process

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conducting a situation analysis and developing the organization's mission statement, objectives, value proposition, and strategies.

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Situation Analysis

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involves analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments.

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SWOT Analysis

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organizations analyze their strengths, weaknesses, opportunities, and threats.

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Elements of a SWOT Analysis

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Internal Factors: Strengths (firm's brand name, resources), Weakness (Low product awareness, location), External Factors: Opportunities (demand, market size), Threats (Economy, competition).

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Competitive Analysis

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involves looking at any information (annual reports, financial statements, news stories, observation details obtained on visits, etc.) available on competitors.

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Objectives

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what organizations want to accomplish—the end results they want to achieve—in a given time frame.

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Strategies

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the game plan, or what a firm is going to do to achieve its objectives.

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Tactics

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specific actions, such as coupons, television commercials, banner ads, and so on, taken to execute the strategy.

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Market penetration strategies

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focus on increasing a firm's sales of its existing products to its existing customers.

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Product development strategies

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creating new products for existing customers. (A new product can be a totally new innovation, an improved product, or a product with enhanced value, such as one with a new feature).

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Market development strategies

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entering new markets with existing products.

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Contract manufacturing

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allows companies to hire manufacturers to produce their products in another country.

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Direct investment

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(owning a company or facility overseas) is another way to enter a foreign market, providing the most control but also having the most risk.

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Diversification strategies

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Offering products that are unrelated to existing products produced by an organization.

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strategic business unit (SBU)

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a business or product line within an organization that has its own competitors, customers, and profit center for accounting purposes.

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Strategic Planning Levels

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Corporate Level, Business Level, Functional Level

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portfolio

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group of business units owned by single firm

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portfolio planning approach

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analyzing a firm's entire collection of businesses relative to one another. Two of the most widely used portfolio planning approaches include the Boston Consulting Group (BCG) matrix and the General Electric (GE) approach.

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The Boston Consulting Group Matrix

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helps companies evaluate each of its strategic business units based on two factors: (1) the SBU's market growth rate (i.e., how fast the unit is growing compared to the industry in which it competes) and (2) the SBU's relative market share (i.e., how the unit's share of the market compares to the market share of its competitors).

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SBU Categories

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Question Marks, Stars, Dogs, Cash Cows

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Question Marks

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Also called a Problem Child, low market share, high market growth, companies must decide if they should invest in them

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Stars

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a product with high growth and a high market share. To maintain the growth of their star products, a company may have to invest money to improve them and how they are distributed as well as promote them.

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Cash Cows

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a product with low growth and a high market share. Cash cows have a large share of a shrinking market. Although they generate a lot of cash, they do not have a long-term future.

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Dogs

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a product with low growth and low market share. Dogs do not make much money and do not have a promising future.

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harvest

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When a company decides to lower its investment in a product.

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Divest

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when a company decides to drop or sell a product

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General Electric Approach

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The GE approach examines a business's strengths and the attractiveness of the industry in which it competes.

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Consumer behavior

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The study of when and why people shop for products, buy and use them, sometimes become loyal customers, and then dispose of them.

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Search advertising

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ads that appear on the Web pages you pull up after doing an online search.

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Atmospherics

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Physical factors that firms can control, such as the layout of a store, music played at stores, the lighting, temperature, and even the smells you experience.

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Psychographics

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Measuring the attitudes, values, lifestyles, and opinions of consumers using demographics.

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VALS

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Values, Attitudes, and Lifestyles (combines psychographics with demographic info).

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operant or instrumental conditioning

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behavior that is repeated when rewarded

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classical conditioning

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a learning process where consumers associate a response with a condition not previously associated with the response.

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Reference Groups

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groups (social groups, work groups, family, or close friends) a consumer identifies with and may want to join. They influence consumers' attitudes and behavior.

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dissociative groups

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groups where a consumer does not want to be associated.

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Opinion leaders

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people with expertise in certain areas. Consumers respect these people and often ask their opinions before they buy goods and services

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routine response behavior

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automatic purchase decisions based on limited information or information they have gathered in the past.

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Low-involvement decisions

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Products that carry low risk of failure or have a low price tag.

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High-involvement decisions

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carry a higher risk to buyers if they fail, are complex, and/or have high price tags. A car, a house, and an insurance policy are examples. These items are not purchased often but are relevant and important to the buyer.

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Stages in Buying Process

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1. Need recognition, 2. Search for Product Info, 3. Product evaluation, 4. Product choice and purchase, 5. Postpurchase use and evaluation, 6. Disposal of product

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Postpurchase dissonance

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Buyer's remorse. Typically, dissonance occurs when a product or service does not meet your expectations.

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Planned obsolescence

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a deliberate effort by companies to make their products obsolete, or unusable, after a period of time.

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Derived demand

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demand that springs from, or is derived from, a source other than the primary buyer of a product.

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Fluctuating demand

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a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it.

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Producers

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companies that purchase goods and services that they transform into other products.

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Institutional markets

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non profit institutions

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Buying centers

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groups of people within organizations who make purchasing decisions.

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Initiators

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people within the organization who first see the need for the product.

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Users

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people or groups within the organization that actually use the product.

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Influencers

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people who may or may not use the product but have experience or expertise that can help improve the buying decision.

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Gatekeepers

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people who will decide if and when you get access to members of the buying center.

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Deciders

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the person who makes the final purchasing decision.

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Stages in the B2B Buying Process

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1. A need is recognized, 2. Need is described and quantified, 3. Potential suppliers searched for, 4. Qualified suppliers asked to complete RFP. 5. Proposals evaluated and supplier selected.

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straight rebuy

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a situation in which a purchaser buys the same product in the same quantities from the same vendor. Nothing changes.

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new-buy

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when a firm purchases a product for the first time.

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modified rebuy

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when a company wants to buy the same type of product it has in the past but make some modifications to it. Maybe the buyer wants different quantities, packaging, or delivery, or the product customized slightly differently.

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sell-side site

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a site in which a single seller sells products to many different buyers.

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buy-side site

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a site where a business buys products from multiple sellers that go there to do business with the firm.

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B2B exchanges

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e-commerce sites where multiple buyers and sellers go to find and do business with one another.

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Market segmentation

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Process of breaking down all consumers into groups of potential buyers with similar characteristics.

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target market

answer

Targeted marketing, or differentiated marketing, means that you may differentiate some aspect of marketing (offering, promotion, price) for different groups of customers selected.

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Mass Marketing

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also called undifferentiated marketing, involves selling the same product to everybody.

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one-to-one marketing

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Steps companies take to target their best customers, form close, personal relationships with them, and give them what they want.

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Steps in One-to-One Marketing

answer

1. Establish short-term measures to evaluate your efforts, 2. Identify your customers, 3. Differentiate among your customers, 4. Interact with your customers, targeting your best ones., 5. Customize your products and marketing messages to meet their needs.

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Segmentation Bases

answer

criteria to classify buyers, to get a fuller picture of its customers and create real value for them.

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Behavioral segmentation

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divides people and organization into groups according to how they behave with or act toward products.

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demographic segmentation

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Segmenting buyers by personal characteristics such as age, income, ethnicity and nationality, education, occupation, religion, social class, and family size.

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Geographic segmentation

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divides the market into areas based on location and explains why the checkout clerks at stores sometimes ask for your zip code.

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Geocoding

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a process that takes data such as this and plots it on a map.

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Geodemographics

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Combining both demographic and geographic information

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Proximity marketing

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to segment and target buyers geographically within a few hundred feet of their businesses using wireless technology.

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Innovators

answer

successful, sophisticated, take-charge people with high self-esteem. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life.

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Thinkers

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motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process.

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Achievers

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Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work.

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Experiencers

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motivated by self-expression. As young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic about new possibilities but are equally quick to cool.

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Believers

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motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation.

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Strivers

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trendy and fun loving. Because they are motivated by achievement, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it to meet their desires.

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Makers

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motivated by self-expression. They express themselves and experience the world by working on it—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to carry out their projects successfully.

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Survivors

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live narrowly focused lives. With few resources with which to cope, they often believe that the world is changing too quickly. They are comfortable with the familiar and are primarily concerned with safety and security. Because they must focus on meeting needs rather than fulfilling desires, Survivors do not show a strong primary motivation.

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price-focused segment

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composed of small companies that have low profit margins and regard the good or service being sold as not being strategically important to their operations.

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quality and brand-focused segment

answer

composed of firms that want the best possible products and are prepared to pay for them.

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service-focused segment

answer

composed of firms that demand high-quality products and have top-notch delivery and service requirements.

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partnership-focused segment

answer

composed of firms that seek trust and reliability on the part of their suppliers and see them as strategic partners.

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multisegment marketing

answer

targets multiple groups of consumers

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Concentrated marketing

answer

targets a very select group of customers

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Niche marketing

answer

targets an extremely select group of customers

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Microtargeting

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gathering multiple sources of data on people

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Positioning

answer

how consumers perceive a product relative to the competition. Companies want to have a distinctive image and offering that stands out from the competition in the minds of consumers.

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perceptual map

answer

a two-dimensional graph that visually shows where your product stands, or should stand, relative to your competitors, based on criteria important to buyers.

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product-dominant

answer

an approach to products and offerings that clearly separates the physical product from the service and price.

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service-dominant

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integrates the product, price, and service dimensions of an offering.

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augmented product

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services and accessories that improve the core product's ability to deliver benefits.

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line depth

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number of variations in a single product line

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line extension

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When new but similar products are added to the product line

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Line breadth

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a function of how many different, or distinct, product lines a company has.

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Convenience offerings

answer

products and services consumers generally don't want to put much effort into shopping for because they see little difference between competing brands.

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shopping offering

answer

one for which the consumer will make an effort to compare and select a brand. Consumers

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Specialty Offerings

answer

highly differentiated offerings, and the brands under which they are marketed are very different across companies, too.

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Unsought offerings

answer

those that buyers do not generally want to have to shop for until they need them. Towing services and funeral services are generally considered unsought offerings.

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Branding

answer

set of activities designed to create a brand and position it in the minds of consumers.

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Primary packaging

answer

holds a single retail unit of a product.

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Secondary packaging

answer

holds a single wholesale unit of a product.

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Tertiary packaging

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packaging designed specifically for shipping and efficiently handling large quantities.

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vertical market

answer

B2B customers who compose a particular industry.

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New Offering Development Process steps:

answer

1. Idea Generation, 2. Idea Screening, 3. Feature Specification, 4. Development, 5. Testing, 6. Launch (commercialization), 7. Evaluation

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Process feasibility

answer

the degree to which the company can actually make and service the product.

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financial feasibility

answer

a new offerings ability to make money

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investment risk

answer

the possibility that the company will fail to earn the appropriate return on the money and effort (the investment) it puts into the new product.

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opportunity risk

answer

the risk that there is a better idea that gets ignored because the firm has invested in the idea at hand.

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Quality function deployment (QFD)

answer

process whereby a company begins with the customer's desired benefits and then designs an offering that delivers those benefits.

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Alpha testing

answer

lab testing

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Beta testing

answer

testing by actual customers

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Rolling Launch

answer

the offering is made available to certain markets first and then other markets later.

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skimming pricing strategy

answer

setting a high initial price for a product, to more quickly recoup the investment related to its development and marketing.

BUS203: Principles of Marketing – Saylor Academy – Flashcards

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