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Marketing: definition, concept, objectives
Marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit the organization, its stakeholders,and society at large.
Discover Needs and Wants of Customers and Satisfy Them
Know the definition of a market.
Potential consumers make up a market, which is people with both the desire and the ability to buy a specific offering.
Know the five environmental forces that act upon markets.
Social, economic, technological, competitive, regulatory
How do marketing personnel acquire information about market wants and needs?
Marketing seeks to discover consumer needs through research and then satisfy them with a marketing program
Know the difference between the different marketing eras.
- Production era - up until 1920s, goods were scarce and buyers were willing to accept virtually any goods that wree available and make do with them.
- Sales era - 1920-1960s, manufacturers found they could produce more goods than buyers could consume.
- Marketing era - 1950s, 1. strive to satisfy the needs of consumers 2. while also trying to achieve the organization's goals
- Customer Relationship era - 1980s, firms seek continuously to satisfy the high expectations of customers.
Know the definition of a target market.
consists of one or more specific groups of potential consumers toward which an organization directs its marketing program
Know what a marketing mix is.
consists of the marketing manager's controllable factors (4 P's)-product, price, promotion, and place - that can be used to solve a marketing problem.
Know the definition of the 4P's.
- Product - a good, service, or idea to satisfy the consumer's needs.
- Price - what is exchanged for the product.
- Promotion - a means of communication between the seller and buyer.
- Place - a means of getting the product to the consumer.
Understand what a “marketing program” means.
a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.
Know the four utilities provided by marketing (hint one of them is form).
- Utility consists of the benefits or customer value received by users of the product.
- Form utility - the production of a good or service
- Place utility - having the offering available where consumers need it
- Time utility - having it available when needed
- Possession utility - is the value of making an item easy to purchase through the provision of credit cards or financial arrangements
Marketing creates its utilities by bridging space (place) and hours (time) to provide products (form) for consumers to own and use (possession).
Know the definition of an industry.
Industry (automobile, computer, etc). Each player in industry has market Offering.
Know the definition of market share.
is the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
ie. iPhone sales rev / total industry sales rev = market share
Know the types of business organizations; monopoly etc.
- Pure competition - many sellers and they each have a similar product
- Monopolistic compet. - many sellers compete with substitutable products within a price range.
- Oligopoly - a few companies control the majority of industry sales (ie. ATT, Verizon, Sprint).
- Pure monopoly - only one firm sells the poduct; usually produces goods considered essential to a community like PG&E
Understand the purpose of a mission statement and what it is.
a statement of the organization's function in society that often identifies its customers, markets, products, and technologies. The term is often used interchangeably with vision.
Know what a marketing dashboard is.
is the visual computer display of the essential information related to achieving a marketing objective.
Understand what it means to have a competitive advantage.
is an unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation.
Understand what is meant by a business code of ethics.
Know what strategic business units are (SBUs).
is a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers.
at the SBU level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities.
Understand what is meant by market penetration, market development, product development, and diversification
market penetration - to increase sales of current products in current markets. There is no change either the basic product line or the markets served.
market development - to sell current products to new markets.
product development - selling new products to current markets. ie. Ben&Jerrys selling clothing to kids, not just ice cream, risky.
diversification - developing new products and selling them in new markets.
Understand the definition of Product Differentiation.
is the process of distinguishing a product or service from others, to make it more attractive to a particular target market.
Understand The Boston Consulting Group (BCG) method of SBU analysis.
- Vertical axis - market growth rate, which is the annual rate of growth of the SBU's industry.
- Horizontal axis - relative market share, defined as the sales of the SBU divided by the sales of the largest firm in the industry.
- Cash Cows - bottom left (low growth rate, high market share), generate large amount of cash, far more than they can invest profitably in themselves. they have dominant shares of slow-growth markets and provide cash to cover the organiz.'s overhead and to invest in other SBU's.
- Stars - top left (high growth rate, high market share), SBUs with high share of high-growth markets that may need extra cash to finance their own rapid future growth. when their growth slows, they are likely to become cash cows.
- Question Marks - top right (high growth rate, low market share) SBUs with a low share of high-growth markets. they require large injections of cash just to maintain their market share, much less increase it. They pose a problem to mgmt since they must choose which to invest in and phase out others.
- Dogs - bottom right (low growth rate, low market share) SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners for the organiz. Dropping SBUs that are dogs may be required, except when they provide a benefit to other SBUs.
Know what a SWOT analysis is.
describes an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats.
Know what is meant by: Generation X., baby boomers, Etc.
- Baby Boomers - 1946-1964, retiring at 10k/day, wealthiest gen. making up 50% of consumer spending.
- Gen X - 1965-1976, 15 percent of the population also called baby bust because number of children each year was declining; largest segment of business travelers
- Gen Y - 1977-1994, 72 million Americans also called echo-boom or baby boomlet.
- Millenials - 1995+
Know what is meant by Discretionary income
is the money that remains after paying for taxes and necessities.
Understand copyright law and patent law as we discussed in class.
Copyright Law - Digital Millennium Copyright Act 1998, intellectual property rights.
Patent Law - gives investors the right to exclude others from making, using, or selling products that infringe the patented invention.
Know what is meant by multicultural marketing.
consists of combinations of the marketing mix that reflect the unique attitudes, ancestry, communication preferences, and lifestyles of different races.
Understand the purpose of the Sherman antitrust act.
Sherman Antitrust act of 1890, lobbying by farmers in the Midwest against fixed railroad shipping prices led to the passage of this act, which forbids 1. contracts, combinations, or conspiracies in the restraint of trade and 2. actual monopolies or attempts to monopolize any part of the trade or commerce.
Vague wording and gov't inactivity led to Clayton Act 1914 to supplement Sherman.
Know what is meant by consumerism.
is a grassroots movement started in the 1960s to increase the influence, power, and rights of consumers in dealing with institutions.
Know the stages consumers may go through during a purchase decision.
- Problem recognition - perceiving a difference between a person's ideal and actual situations.
- Information search - seeking value as internal search from memory, ext. search,
- Alternative evaluation - assessing value, what to base purchase on.
- Purchase decision - buying value, from who and when to buy.
- Post-purchase behavior - value in consumption or use, after buying the consumer compares it with his or her expectations and is either satisfied or dissatisfied.
Understand what is meant by the temporal effect as it relates to consumer purchases.
Temporal effects such as time of day or the amount of time available will influence where consumers have breakfast and lunch and what is ordered. 1 of 5 situational influences.
Know what is meant by cognitive dissonance.
is the feeling of postpurchase psychological tension or anxiety consumers may experience when faced with two or more highly attractive alternatives.
Know what a doppelganger is.
image and video editing software and the internet have made distribution of unauthorized changes to teamwork.
Understand the terms: routine problem solving, extended problem-solving
- Routine problem solving - for products such as table salt, milk and consumers recognize and spend little effort seeking external info and evaluating alternatives.
- Extended - each of the 5 stages of the consumer purchase decision process is used and considerable time and effort are devoted to the search for external info. and identification and evaluation of alternatives (ie. automobiles and audio systems)
Know Maslow's five hierarchies of needs and their order on his pyramid.
- Physiological Needs (bottom, 5th) - are basic to survival and must be satisfied first.
- Safety Needs (4th) - involve self-preservation as well as physical and financial well-being.
- Social Needs (3rd) - are concerned with love and friendship. ie. Match and eHarmony.com
- Personal Needs (2nd) - need for achievement, status, prestige, and self-respect.
- Self-Actualization Needs (top, 1st) - personal fulfillment, ie. long-running US Army recruiting: "Be all you can be."
Understand what is meant by drive, cue and response.
Behavioral learning - drive (hunger), cue (sign, McD's), response (buy food), reinforcement (everytime hungry auto buy food)
Know what is meant by brand loyalty.
is a favorable attitude toward and consistent purchase of a single brand over time.
Know the definition of psychographics.
The analysis of consumer lifestyles called psychographics, provides insights into consumer needs and wants. The practice of combining psychology, lifestyle, and demographics is often used to uncover consumer motivations for buying and using products and services. ie. VALS from Strategic Business Insights (SBI) is a psychographic system.
Know what a reference group is.
consists of people to whom an individual looks as a basis for self-appraisal or as a source of personal standards.
Know the definition of ethics as we discussed in class.
are the moral principles and values that govern the actions and decisions of an individual or group.
Know the definition of laws as we discussed in class.
are society’s values and standards that are enforceable in the courts.
Know what is meant by “culture” as we discussed in class.
culture refers to the set of values, ideas, and attitudes that are learned and shared among the members of the group.
Know what caveat emptor means and how it relates to changes in our society related to marketing and manufacturing.
is the legal concept of “let the buyer beware” that was pervasive in the American business culture prior to the 1960s.
Understand what is meant by economic espionage and the various forms it can take.
is the clandestine collection of trade secrets or proprietary information about a company’s competitors. ie. Spy trying to sell Coke's marketing plan to Pepsi but Pepsi turned the person in.
Understand what is meant by code of ethics.
is a formal statement of ethical principles and rules of conduct. 86% of US companies have some sort of code. Ethic codes typically address contributions to gov't officials and political parties, customer and supplier relations conflicts of interest, and accurate record-keeping.
Understand what a whistleblower is.
are employees who report unethical or illegal actions of their employers.
Be familiar with and understand the concept of moral idealism.
is a personal moral philosophy that considers certain individual rights or duties as universal, regardless of the outcome. Embodied in the Consumer Bill of Rights. ie. right to know applies to probable defects in an automobile that relate to safety.
Know what utilitarianism is.
is a personal moral philosophy that focuses on the “greatest good for the greatest number” by assessing the costs and benefits of the consequences of ethical behavior.
If the benefits exceed the costs, then the behavior is ethical. If not, then it is unethical. Embodied in capitalism and embraced by business execs and students. ie. Nestle baby formula defended claim for hypo-allergenic as in less allergic not allergy-free when parents complained label misleading.
What does it mean to be socially responsible.
is the idea that organizations are part of a larger society and are accountable to that society for their actions. Three concepts include:
Profit responsibility - maximize profits for owners/stockholders.
Stakeholder responsibility - focuses on the obligations an organiz. has to those who can afffect achievement of its objectives like consumers, employees, suppliers, and distributors.
Societal responsibility - obligations that organizations have 1. to the preservation of the ecological environment and 2. to the general public
Understand the concept of green marketing.
consists of marketing efforts to produce, promote, and reclaim environmentally sensitive products.
ie. 3M, product dev. opportunities emanate both from consumer research and its "Pollution Prevention Pays" program. The program solicits employee suggestions on how to reduce pollution and recycle materials.
Understand what is meant by cause marketing and how it is implemented.
occurs when the charitable contributions of a firm are tied directly to the customer revenues produced through the promotion of one of its products.
This is different from a firm's standard charitable contributions, which are donations.
ie. Blizzard selling digital pets to raise money for cancer research.
Understand what is meant by protectionism and make sure you understand the perceived pros and cons.
is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas.
Protectionism hinders/decreases world trade when countries raise/increase prices and limit supply through tariff and quota policies.
- Four trends in global marketing landscape:
- 1. Gradual decline of economic protectionism by countries
- 2. Formal economic integration and free trade (EU, etc.)
- 3. Global competition among global companies for global consumers.
- 4. Development of a networked global market space.
Understand what import quotas are.
Import quotas seek to guarantee domestic industries access to a certain percentage of their domestic market.
ie. India limits import of Chinese dairy products sold
China has import quotas on corn, cotton, rice, and wheat... U.S. import quota on sugar for the past 70 years -- leads to Americans paying $3 billion annually in extra food costs because of this quota.
Understand what the European Union is and the purpose for its existence.
The European Union in mid-2012 consists of 27 countries with more than 500 million consumers. They have eliminated most barriers to the free flow of goods, services, capital, and labor across their borders. Also, 16 countries have adopted a common currency, the euro.
Understand what the North American Free Trade Agreement is and why it was implemented.
NAFTA lifted many trade barriers between Canada, Mexico, and the U.S. and created a marketplace with more than 450 million consumers. It has stimulated trade flows among member nations as well as cross-border retailing, manufacturing, and investment.
ie. it has paved the way for Walmart to move to Mexico, Target to enter Canada and Mexican supermarket Gigante to the U.S.
Know what a global marketing strategy is.
involves transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.
Know what global brands are.
is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.
Global brands have the same product formulation or service concept, deliver the same benefits to consumers, and use consistent advertising across multiple countries and cultures. Adaptation is used only when necessary to better connect the brand to consumers in different markets.
ie. McD's adapted its proven formula of "food, fun, and families" across 123 countries on 6 continents. Arches and Ronald McDonald appear worldwide.
Know what customs duties are.
are what is considered normal and expected about the way people do things in a specific country.
ie. US business negotiator kept increasing the deal because the Japanese negotiator responded in silence until 3rd deal was offered and Japanese accepted. Japanese executives prefer to wait and listen and the higher up position they are the more they listen.
Know what is meant by cultural symbols.
are things that represent ideas and concepts.
Symbols and symbolism play an important role in cross-cultural analysis because different cultures attach different meanings to things. So important is the role of symbols that a field of study, called semiotics, has emerged that examines the correspondence between symbols and their role in the assignment of meaning for people.
Know what back translation is and what it is used for.
is the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.
ie. IBM's mesage: Solution for a small planet, translated in Japanese to: Answers that make people smaller.
Know what is meant by economic infrastructure and its relationship to international marketing.
economic infrastructure - a country's communications, transportation, financial, and distribution system - is a critical consideration in determining whether to try to market to a country's consumers and organizations.
The same communications, transportation, financial, and distribution system in a foreign country may not be adequate to serve a company's needs. They will need to make do with what is available.
ie. China has narrow road or not available in 80% where population lives so transp. is by bicycle.
Understand what the term licensing means.
a company offers the right to a trademark, patent, trade secret, or other similarly valued item of intellectual property in return for a royalty or a fee.
The advantages to the company granting the license are low risk and capital-free entry into a foreign country. Serious drawbacks include: licensor forgoes control of its product and reduce the potential profits gained
Know what is meant by product adaptation.
changing a product in some way to make it more appropriate for a country's climate or consumer preferences is a product adaptation strategy.
ie. Exxon sells different gasoline blends based on each country's climate.
Know what the terms “dumping” refers to in international trade.
occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost.
This is often done to build a company's share of the market by pricing at a competitive level. Another reason is that the products being sold may be surplus or cannot be sold domestically and company would be happy to get rid of.