Marketing CH. 1: An Overview of Strategic Marketing – Flashcards

-Marketing is the process of creating, distributing, promoting, and pricing goods, services, and ideas -facilitate satisfying exchange relationships with customers - to develop and maintain favorable relationships with stakeholders in a dynamic environment. This definition is consistent with the American Marketing Association definition of marketing.

A. As the purchasers of the products that organizations develop, promote, distribute, and price, customers are the focal point of all marketing activities. B. The essence of marketing is to develop satisfying exchanges from which both customers and marketers benefit. Both customer and marketer expect to gain something of value from the exchange.

-The purchasers of organizations' products -The focal point of all marketing activities

-Organizations generally focus their marketing efforts on a specific group of customers, or target market. -A specific group of customers on whom an organization focuses its marketing efforts

-Four marketing activities a firm can control to meet the needs of customers in its target market: 1) Product 2) Distribution 3) Promotion 4) Price -Marketing mix variables are often viewed as controllable but have their limits

1. Marketing is more than simply advertising or selling a product; it involves developing and managing a product, making the product available in the right place and at a price acceptable to buyers, and communicating information to help customers determine if the product will satisfy their needs. 2. These activities—product, distribution, promotion, and pricing—are known as the marketing mix because marketers decide what type of each element to use and in what amounts. a. Marketers must aim to create and maintain the right mix of elements to satisfy customers in the target market. b. Marketers must collect detailed and up-to-date information on their target market, consumer preferences, and competitors in order to develop the marketing mix.

-The Product Variable: a. The product variable of the marketing mix deals with researching customers' needs and wants and designing a product that satisfies them. b. A product can be a good, a service, or an idea. (1) Good—a physical entity that you can touch (2) Service—the application of human and mechanical efforts to people or objects to provide intangible benefits to customers (3) Idea—concept, philosophy, image, or issue c. The product variable involves creation/modification of brand names and packaging; also may include decisions regarding warranty and repair services. d. Product variable decisions and activities are very important because they directly impact the creation of products that meet customers' needs and wants.

The Distribution Variable: a. Distribution helps a marketing manager make products available in the quantities desired to as many target market customers as possible b. Must minimize these three total costs: inventory, transportation, and storage costs -To satisfy customers, products must be available at the right time and in convenient locations: c. Marketing managers may: Must select/ motivate intermediaries (wholesalers and retailers), establish/maintain inventory control procedures and develop/manage transportation and storage. d. The Internet and electronic commerce influenced the distribution variable by making it faster and more wide-spread

The Promotion Variable: a. The promotion variable relates to activities used to inform individuals or groups about an organization and its products; can be aimed at increasing public awareness of an organization and new or existing products. b. Promotional activities can: (1) Educate customers about product features (2) Urge people to take a stance on a political or social issue (3) Can help sustain interest in established products

The Price Variable: a. The price variable relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices. b. Prices a critical component of the marketing mix because customers are concerned about the value obtained in an exchange. c. Price is a competitive tool but can lead to intense price competition, sometimes leads to price wars. d. Marketing mix variables are often viewed as controllable because they can be modified; however, economic conditions, competitive structure, or government regulations may limit a marketing manager's influence.

1. Value is a customer's subjective assessment of benefits relative to costs in determining the worth of a product Customer Value = Customer Benefits - Customer Costs -Marketing has the ability to increase consumers' perceptions of a product's quality and social approval a. Customer benefits include anything a buyer receives in an exchange. b. Customer costs include anything a buyer must give up to obtain the benefits provided by the product. Costs include the monetary price of the product as well as less obvious nonmonetary costs, such as time, effort, and risk 2. The process people use to determine value is not scientific. 3. In developing marketing activities, it is important to recognize that customers receive benefits based on their experiences. 4. The marketing mix, especially promotional activities and extra services or features, can be used to enhance perceptions of value.

1. Individuals and organizations engage in marketing to facilitate exchanges—the provision or transfer of goods, services, or ideas in return for something of value. 2. Four conditions must exist for an exchange to occur: a. Two or more individuals, groups, or organizations must participate, and each must possess something of value desired by the other party. b. The exchange should provide a benefit or satisfaction to both parties involved in the transaction. c. Each party must have confidence in the promise of the "something of value" held by the other. d. To build trust, the parties to the exchange must meet expectations. 3. An exchange will not necessarily take place just because these conditions exist; marketing activities can occur even without an actual transaction or sale. (Figure 1.2 depicts the exchange process). 4. Marketing activities should attempt to create and maintain satisfying exchange relationships.

- Marketers are also concerned with building relationships with relevant stakeholders -Stakeholders: are constituents who have a "stake," or claim, in some aspect of a company's products, operations, markets, industry, and outcomes -Stakeholders include: customers, employees, investors and shareholders, suppliers, governments, communities, and many others.

1. The marketing environment: the ME is dynamic and includes: competitive, economic, legal, regulatory, technological, and socio-cultural forces, -The ME forces surround the customer and affects the marketing mix. 2.The forces of the marketing environment affect marketers' abilities to facilitate exchanges in three ways: a. They affect customers' lifestyles, standards of living, and preferences and needs for products. b. They help determine whether and how a marketing manager can perform certain marketing activities. c. They affect a marketing manager's decisions and actions by influencing buyers' reactions to the organization's marketing mix. 3.Marketing environment forces can fluctuate quickly and dramatically; Effects of these forces on buyers/sellers can be dramatic and difficult to predict 4. Changes in the marketing environment produce uncertainty for marketers and at times hurt marketing efforts, but they also create opportunities. Marketers who are alert can adjust and capitalize on opportunities provided by change; The impact on value can be extensive as market changes can easily impact how stakeholders perceive certain products 5. Marketing mix elements—product, distribution, promotion, and price—are factors over which an organization has control; the forces of the environment, however, are subject to far less control; Unlike marketing-mix variables, an organization has little to no control over marketing environment forces

-Marketing Concept: According to the marketing concept, an organization should try to provide products that satisfy customers' needs through a coordinated set of activities that also allows the organization to achieve its goals. -The marketing concept is a management philosophy guiding an organization's overall activities -A firm that adopts the marketing concept must satisfy not only its customers' objectives but also its own objectives 1. Customer satisfaction is the major focus of the marketing concept. a. An organization should focus on customer analysis, competitor analysis, and integration of the organization's resources to provide customer value and satisfaction, as well as long-term profits. b. The organization must continue to alter, adapt, and develop products to keep pace with customers' changing desires and preferences. 2.The marketing concept stresses that marketing begins and ends with customers. There is a positive correlation between customer satisfaction and shareholder value. 3. The marketing concept is not: a. A second definition of marketing. It is a management philosophy guiding an organization's overall activities b. A philanthropic philosophy aimed at helping customers at the expense of the organization 4.It is important for marketers to consider the long-term needs of society.

1. The Production Orientation: a. The Industrial Revolution took place in the second half of the 19th century in the United States. b. As a result of new technology and new ways of using labor, large increase in availability of products entering into the marketplace and consumer demand/response was strong.

2. The Sales Orientation: a. During the first half of the twentieth century, competition increased and businesspeople viewed sales as the major means of increasing profits; focus shifted to selling products to buyers b. During this era, the major marketing activities were personal selling, advertising, and distribution. -Marketers were able to learn that many products did not meet consumers needs -Businesses viewed sales and selling as the main means of increasing profits

3. The Market Orientation: a. Emerged in the mid-20th century; By the early 1950s, some businesspeople recognized they must produce what consumers want, rather than make products and try to persuade customers that they need what is produced. b. A market orientation requires the "organization-wide generation of market intelligence pertaining/commitment to researching and responding to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it." c. Today, businesses want to satisfy customers and build meaningful, long-term buyer-seller relationships. -New-product innovation by developing a strategic focus to explore and develop new products to serve target markets -Involves being responsive to ever-changing customer needs and wants

-To implement the marketing concept, a market-oriented organization must accept some general conditions and recognize and deal with several problems. 1. Management must establish an information system to discover customers' real needs and then use the information to create satisfying products. Information systems can be expensive and time-consuming. a. A company must also coordinate all its activities to satisfy customers' objectives as well as its own objective. This may require restructuring internal operations, including production, marketing, and other business functions. b. Requires the firm to adapt to a changing external environment and predict major changes. -Listening and responding to consumers frustrations and appreciation is the key in implementing the marketing concept

A.Customer relationship management (CRM) focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships. 1. Achieving the full profit potential of each customer relationship should be the fundamental goal of every marketing strategy; Marketing relationships with customers are the lifeline of all businesses 2. At the most basic level, profits can be obtained through relationships in the following ways: a. By acquiring new customers b. By enhancing the profitability of existing customers c. By extending the duration of customer relationships 3. Implementing the marketing concept means optimizing the exchange relationship—the relationship between a company's financial investment in customer relationships and the return generated by customers responding to that investment.

B. Relationship marketing refers to "long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges." 1. Continually deepens the buyer's trust in the company, and as the customer's confidence grows and this increases the organization's understanding of the customer's needs. 2. Relationship marketing strives to build satisfying exchange relationships between buyers and sellers by gathering useful data at all customer-contact points and analyzing that data to better understand customers' needs, desires, and habits. 3. Marketers are increasingly turning to marketing research and information technology to improve CRM. 4. By increasing customer value over time, organizations try to retain and increase long-term profitability through customer loyalty. 5. Through the use of Internet-based marketing strategies (e-marketing), companies can personalize customer relationships on a nearly one-on-one basis.

Customer Lifetime Value: (CLV) is the worth of individual customers and estimates their lifetime value to the company 1. Increasing customer lifetime value requires identifying patterns of buying behavior and using that information to focus on the most promising and profitable customers. -Companies must establish communication to build customer trust and loyalty 2. The ability to identify individual customers allows marketers to shift their focus from targeting groups of similar customers to increasing their share of an individual customer's purchases; Emphasis changes from share of market to share of customer a. Focusing on share of customer requires recognizing that all customers have different needs and that not all customers weigh the value of a company equally. b. The concept of customer lifetime value (CLV) may include not only an individual's tendency to engage in purchases but also his or her strong word-of-mouth communication about the company's products. 3. CLV is a key measurement that forecasts a customer's lifetime economic contribution based on continued relationship marketing efforts. a. It can be calculated by taking the sum of the customer's present value contributions to profit margins over a specific time frame. b. CLV can help marketers determine how best to allocate resources to marketing strategies to sustain that customer over a lifetime.

Marketing Costs Consume a Sizable Portion of Buyers' Dollars: 1. About one-half of a buyer's dollars goes to the costs of marketing. 2. It is important to know how this money is used. -Marketing helps produce profits essential to the survival of individual businesses: ~Those profits supply jobs ~Marketing helps create a successful economy and contributes to the well-being of society

1. Marketing is also important in organizations working to achieve goals other than ordinary business objectives such as profit. 2. Government agencies at all levels engage in marketing activities to fulfill missions and goals. 3. In the private sector, nonprofit organizations also employ marketing activities to create, distribute, promote, and even price programs that benefit particular segments of society.

1. Businesses must engage in marketing to survive and grow, and marketing activities are needed to reach customers and provide products. 2. Marketing activities help produce profits which are essential to the survival of individual businesses, help create a successful economy and contribute to the well-being of society.

1. Marketing is necessary to advance a global economy. 2. Advances in technology, falling political and economic barriers, and the universal desire for a higher standard of living, have made international marketing commonplace while stimulating global economic growth.

1. Marketing improves quality of life for customers. 2. Studying marketing allows us to understand the importance of marketing to customers, organizations, and our economy and make better purchasing decisions. -Today, the customer has more power from information available through websites, social media, and required disclosure than at any other time in history -Understanding marketing can help you be a better consumer and increase your ability to maximize value from purchases

1. Technology (Computers and telecommunications) helps marketers understand and satisfy more customers than ever before. 2. The Internet allows marketers to disseminate information about products and interact with target markets. -As more consumers adopt smartphones, mobile marketing is also becoming a major trend

1. The success of our economic system depends on marketers whose values promote trust and cooperative relationships in which customers are treated with respect. 2. Green marketing is a strategic process involving stakeholder assessment to create long-term relationships with customers while maintaining, supporting, and enhancing the natural environment. 3. By addressing concern about the impact of marketing on society, a firm can protect the interests of the general public and the natural environment -Market orientation combined with social responsibility improves overall business performance

- Promoting the welfare of customers and stakeholders

1. Around 25 to 33 percent of all civilian workers in the United States perform marketing activities. 2. Marketing knowledge and skills are valuable assets no matter what the field. -All organizations engage in some kind of marketing -The field offers interesting and challenging career opportunities throughout the world -25-33% of civilian workers in the U.S. perform marketing activities -Marketing skills are valuable in every field