Marketing Essentials – Flashcards

Marketing is: the activity, set of institutions, and processes for creating, communicationg, delivering, and exchanging offerings that have value for customers, clients, partners and society at large. Marketing derived from "market", which underlines the central role markets have for marketing.

Market is: an actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. Demands are objectively quantifiable and are associated with the willingness of customers to pay to fulfill their needs. Companies represent the supply side. They compete in the marktet with their products to win the favour of buyers. Marketing expect to meet customer expectations/demands.

Relationship Marketing is: a marketing strategy emphasizes building lasting relationships with customers and suppliers, instead of focusing on individual transactions with customers. Customer Relationship Management (CRM): organized methods that a company uses to build better information connections with clients, so that stronger compnay-client relationships are developed. While the marketing concept originally developed in the consumer market, marketing today exists in various forms. When the marketing concept was first applied to new industries (in addition to the end consumer market), existing marketing principles and tools had to be adapetd. This contributed to the further development of marketing.

Tasks of Marketing Management is distinguishes between: 1. Market-related 2. Company-relaated and 3. Environment-/society-related tasks

Market-related tasks: focus on the management of demand. This means that marketing attempts to influence the level, the timing and the nature of demand so taht the company objectives are achieved. Market-related tasks of marketing management are: 1. Definition and Identification of markets or target groups 2. Analysis and Stimulation of the motivation to buy 3. Design and Positioning of products 4. Communication with customers and stakeholders 5. Physical Distribution of goods 6. Initiation of purchase tansactions 7. Implementation of customer service.

Company-related tasks of marketing management are: Coordination of activities within the company. This involves the coordination of marketing activities with the company`s research and development strategy, with production and sourcing strategies and financial management. At the same time, marketing tools must be coordinated within the company regarding content and timing.

Environment- and society-related tasks of marketing management are: They underline the particular social resonsibility of marketing management. In addition to purely economic objectives, marketing management must pay attention to ecological and ethical standards. For example, marketing management has a special responsibility when needs are articially created through manipulative and misleading advertising or when unsafe and environmentally harmful products are marketed.

Marketing management has to be understood as an ongoing process that includes several stages: 1. Marketing analysis: with the help of suitable research efforts and instruments marketers must first gain a basic understanding of relevant internal and external factors. This analysis is prerequisite to develop targeted marketing concepts. 2. Strategic marketing subsequently, the actual marketing strategy is generated. Marketing objectives are derived from the company`s overall objectives. 3. Marketing mix in the third step, the marketing stategy is implemented through concrete measures of product policy, pricing policy, place (distribution) policy and promotion policy (marketing mix). 4. Implementation and control the fourth step includes decisions regarding the budget, the appropriate marketing organization and control measures (to verfy whether the marketing and corporate objectives have been achieved).

Marketers have paid more attention to Consumer Behaviour, i.e. to the study if the processes consumer go through when they choose, use (consume) and dispose of products and services The study of consumer behaviour incorporates ideas from several sciences including psychology, biology, chemistry and economics.

The five stages of the consumer buying process are: 1. Problem recognition First, the consumer must become aware of a specific need or problem, e. g. when hunger stimulates the need to eat. At this point there is a difference between the desired state and the actual condition. The problem recognition can also be stimulated by the marketer through product information. For example, when you see a TV commercial for a new shoe brand, this stimulates your recognition that you need a new pair of shoes. 2. Information seeking Once the consumer has recognized a specific need, more information is sought. This may take the form of an internal search, relying on the consumers` own memory. Depending on the product, the consumer may also consult an external search: by asking friends and relatives (word of mouth) or consulting public sources such as newspapers or websites. A successful information search leaves a buyer with possible alternatives, the evoked set. The evoked set is defined as a "group of products consumers will consider buying as a result of information serach." For example, when a student is hungry and wants to go our and eat, the evoked set might be Chinese food, Indian food and Burger King. 3. Evaluation of alternatives In the next step, the consumer establishes criteria for evaluation, i. e. features the consumer wants or doesn not want. Alternatives are ranked based on these criteria. For example, if the student decides he or she wants to eat something spicy, Indian food might get the highest rank. 4. Purchase decision Ultimately, consumers make purchase decisions. These decisions may be based on rational or emotional motives or a mixtures of both. Rational motives are "reasons for purchasing a product that are based on a logical evaluation of product attributes", e. g. cost and quality; emotional motives are "reasons for purchasing a product that are based on non-objective factors", e. g. imitation of others. The actual purchase may differ from the purchase decision, i. e. there mihgt be a time lapse, e. g. due to lacking product availability. 5. Postpurchase evaluation Marketing does not stop with the sale of a product; what happens after the purchase is also important. The purchase may result in satisfaction or dissatisfavtion of the consumer. In the latter case, the consuerm is not likely to purchase the same product again and is much more apt to broadcast this experience thatn is a satisfied consumer. ____________________________________________________ Note: The actual purchase is only one stage of the process. You should also note that not all decisions processes actually leat to a purchase. Besides, not all consumer decisions include all five stages.

1. Psychological influences: motivations, perceptions, attitudes 2. Personal influences: lifestyle, personality, economic status 3. Social influences: family, reference groups such as friends and coworkers 4. Cultural influences: groups with shared values including national culture, social class, subcultures

Marketing depends on the overall situation Marketers must take into account outside forces The first step of the marketing process consists of an analysis of internal and external factors: 1. the situtation of the company itself (current market share) 2. the market (customers, suppliers, competitors) 3. the wider environment (society, politics, economics, environment, technology) Ideally, the marketer combines the insights on these factors in a SWOT analysis that gives an overview of the company`s overall: strengths, weaknesses, opportunities and threats. Strengths: include positive internal factos that may help the company serve its customers and achieve its objectives. Weaknesses: include internal limitations and negative factors. Opportunities: are positive factors or tends in the external environment. Threats: are negative factos in the external environment.

Market Research: is a specific area of marketing that informs businesses about the tings consumers need, how best to design products to answer those needs and hot to advertise those products to consumers. Market research goes beyond finding out what consumers are thinking today. It can identify what consumers might want in the future. In this way market research helps a business to make more informed choices. It increases the likelihood that products will be well received by consumers when they are launched. Market research adds value to businesses by identifying consumers`s needs. It helps to plan ahead, for example, looking at what products or extensions it should develop and for whom. It focuses the business on the needs of its consumers. An organization taking into account these facts can improve its competitive advantage. There are generally two sources of information: 1. Primary data Primary data is collected fisthand and specifically for a given purpose, i. e. a project. Although primary research is often time-consuming and expensive, it is considered as a reliable source of information bevause it is directly from the consuer and is specifically designed to meet the objectives of a project. There are a number of different ways of collecting primary data. Sometimes agencies are emplyed to collect data using, for example, street interviews or a questionnaire. 2. Secondary data Secondary data already is there but then is analyzed in the context of the new product development. Soruces for secondary data are official statistics or any kind of publication. These sources are then analyzed and form valuable input for the product decision.

Marketing Objectives: Marketing objectives must be determined based on the company`s overall objectives. Marketing objectives define what marketing intends to accomplish in the future and set the stage for everything that follows. Often the focus is on maintaining or increasing the company`s future competitive position in its target markets. For example, in the case of Starbucks, the overall business objective could be being the world`s leading retailer of specialty coffee. On that basis, the following marketing objectives could be derived: - a 5-percent increade in its global market share by 2017 OR - being the leading retailer of specialty coffee in China by 2019 Marketing Strategy: Strategy is the overall plan of action regarding how a company wishes to achieve its marketing objectives. The strategy is used as a center point aorund which all marketing activities must revolve.

Defining target markets is a central point for a strategy. TArget markets are the particular groups on which a company`s marketing efforts are focuse. Target marketing requires three steps (linar process): 1. Segmenting is the process of dividing an entire market up into relatively discrete units (or segments). Segmenting can be explained with running shoes as an example. The sum of all people who are interested in buying running shoes comprise the entire market for that product category. However, people buy running shoes for different reasons. Some people buy them for comfort, some for aesthectics or looks. What segmentation attempts to do is to divide the overall market, to identify groups of users that share certain core characteristics regarding who they are and why they are buying those shoes. The advantage of segmentation is that the company can tailor its marketing policies to the needs of each specific segemtn, and hence gets more favourable responses compared to a uniform strategy aimed at the entire market. - The more a market is segmented, the more precise is the marketer`s understanding of it. - However, the more segmented the market becomes, the fewer consumers there are in it. - Marketers must consider whether the target segment is substantail enough to support individualized strategies. There are four main approaches to segmentations: 1. Demographics approaches consider: gender, age, ethnicity, education, income 2. Geography approaches consider: culture, people, climate, people in different places, rural populations 3. Psychographics approaches consider: focus on developing a psychological profile of different market segments. Known as "lifestyle marketing", psychographics use a person`s values (activities, interests, opinions). 4. Behavioral Characteristics Behavioral segmentation includes looking at usage rate, benefits, time-of-year, brand loyalty. ------------------------------------------- 2. Targeting is a process of choosing which segments are the most likely to enable success and maximum profitability. This should depend on a number of factors including the size of the market, the amount of competition and most importantly the company`s competitive advantage in the market. Competitive advantages can be established in a number of ways but are often linked to the main source of the company`s brand equity and value. Some companies look towards optimization of distribution, low cost leadership, technological innovation, serving smaller niche market etc. A company is weill-advised to serve a market that matches its own capabilities, identity and core competencies in order to achieve success. 3. Positioning this entails using marketing in order to position the product or service in a way that resonates with the target market. A clearly articulated positioning statement involves a company articulating concisely who a company`s target market is, what the source of its competitive advantage is and how it wishes to deliver this to its market. _____________________________________________________ Four elements should be included in the positioning statement: 1. Target Audience 2. Frame of Reference: the category in which the brand competes; the context that gives the brand relevance to the customer 3. Benefit: the most compelling and motivating benefit that the brand can own in the hearts and minds of its target audience relative to its competitors 4. Reason to Believe: the most convincing proof that the brand delivers what it promises. By following this format, companies are able to communicate both internally and externally why their target markets should believe in their ability to deliver on their promises.

Overall goal: the marketing mix consists of everything the company can do to influence the demand. The Marketing tools consists of the four P's: 1. Product policy 2. Pricing policy 3. Place (distribution) 4. Promotion policy

Marketing is only effective when the company considers what customers really want Products should satisfy a specific need or want of customers A product can be defined as a good, service or idea

Products can be classified according different criteria Consumer products are commonly divided into three categories that reflect buyer behavior: 1. convenience goods and services e.g. Milk, Newspaper, Fast Food 2. shopping goods and services e.g. Television, Tires, Car Insurance 3. specialty goods and services e.g. Jewerly, Wedding Gown, Catering

Product Mix is a group of products that a company makes available for sale to customers.

A product line refers to a group of products that are closely related because of similar function, are sold to the same customer group who will use them in similar way of fall in similar price range.

The width of the product mix refers to the number of different product lines, while the length of the product mix refers to the total number of all types of products.

The depth of product mix means the number of product variants. For example, coffee filters may be available in three different sizes and different package contents.

Innovation is the most important factor for economic growth of nations Generally speaking, innovation implies a good or service is newly created and subsequently in introduced in the market. Product innovations have tremendous growth opportunities. However, innovation also comes with high risks. Primarily due to the enormous investments that are needed for its development and launch of innovative products. MEDDERT has identified four dimensions to better describe the degree if novelty: 1. Subject dimension: New for whom? 2. Intensity dimension: To what extent new? 3. Time dimension: When does an innovation begin and end? 4. Space dimension: In which area new?

When a new product enters the market, it is expected to progress through a sequence of stages know as the product life cycle. The product cycle stages are as follows: 1. Introduction is the stage, where the product reaches the marketplace. The company seeks to build product awareness and develop a market for the product. All profits are erased. 2. Growth is the stage, where the company seeks to build brand preference and increase market share. Marketers often lower price slightly and continue to invest in promotion. The product starts to show a profit as revenues surpass costs. 3. Maturity is the stage, where sales growth starts to diminish. Competition may appear, respectively increase. At maturity, the company aims to defend market share while maximizing profit. 4. Decline is the stage, when sales and profits continue to fall. The company has several options: It can maintain the product and possibly rejuvenate it by adding new features. It can harvest the product by reducing costs and continue to offer it. Or it may have to decide to liquidate remaining inventory.

Pricing entails determining what a company receives in exchange for a product and service

Globalization has enabled market entry by manufactures from low-wage countries. In stagnating market, massive overcapacity can prevail. This leads to predatory competion so that in many industries price has become the main focus. In many markets, the possibilities for product differentiation have become very limited. Therefore, price competition plays an important role.

Pricing decisions in the consumer goods sector have to be taken mainly on the following occasions: