Chapter 1:
What is marketing? Managing profitable customer relationships.
Marketing goal: attract new customers and grow current customers
The 5-step marketing process
1.
2.
3.
4.
5.
Understand marketplace & customer needs/wants
Design customer driven strategy
Construct integrated marketing program
Build profitable relationships
Capture customer value and create profits
Share of customer: the share a company gets of customer’s
purchasing in their product categories
Customer equity: the total combined lifetime values of all the
company’s current and potential customers
Companies can classify customers according to their potential
profitability and manage relationships accordingly:
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True friends: long term customers & highest profitability
Butterflies: short term customers, yet high profit potential
Barnacles: long term customers, yet low profitability
Strangers: short term customers, and very little profitability
Core Concepts
Chapter 2-4
Needs: states of felt deprivation. Can be physical (clothing, food,
shelter), social (belonging, affection), individual (knowledge and selfexpression)
Marketing Strategy: marketing logic that businesses use to achieve
marketing objectives
Wants: needs influenced by culture & personality
Demands: wants that are backed by buying power
Marketing offering: product, service, information and experience
Marketing myopia: sellers paying too much attention to the specific
product and not enough to the benefits and experiences produced by
these products
Customer value: comparison between what’s gotten and what’s given
Customer satisfaction: a comparison between what the customer
expected to get and what they actual got
Marketing management: choosing target markets and building
profitable relationships with them
Market segmentation: dividing the market into segments of
customers based of their needs and behaviors
1. Target markets: calls for giving different degrees of emphasis to
various market segments. These segments differ in preferences,
responses to market effort and profitability.
2. Marketing mix – the company should attempt to develop a costeffective marketing mix for each target it pursues. The mix consists of
the four p’s: price, product, place and promotion.
3. Positioning (occupy desirable place in minds of target consumer),
Differentiation (create unique/superior customer value)
Marketing Mix: mix of marketing variables that firms uses to achieve
objectives in the target market
1.
2.
3.
4.
Product – qualities, features, options, styles, brand name, sizes,
warranties, returns
Price – list prices, discounts, allowances, payment period, credit
Promotion – advertising, personal sell, sales promotion, publicity
Place – channels, coverage, location, inventory, transport
Target marketing: choosing which segments to go after
4 C’s Buyers view: product (customer solution), price (customer
cost), place (convenience), promotion (communication)
Value proposition: set of benefits a company promises to deliver
SWOT:
5 alternative concepts organizations use to carry out their
marketing strategies:
1.Production concept: Focus on improving production and efficiency
2.Product concept: Focuses on the product and making continuous
product improvements
3. Selling concept: Typically aims to sell what company makes rather
than making what the market wants
4. Marketing concept: knowing the needs and wants of target market
and delivering desired value and satisfaction better than the
competition
5. Societal marketing concept: Questions if marketing concept
overlooks possible conflicts between customer short-run wants and
long-term welfare
Customer relationship management
Customer lifetime value: the entire stream of purchases a customer
makes from one company over a lifetime of patronage
Macro environment - the company and its marketing channel
members, customers, competitors and publics all operate in a larger
environment called the macro environment.
1. Demographic forces – main trends and developments in size and
character of population, age, marriage etc.
2. Economic forces – main trends in income and disposable income,
cost of living etc.
3. Ecological forces – main trends in supply and cost of natural
resources and energy, pollution and environment deterioration.
a.
b.
4. Technological forces – main trends in development of technology,
materials and products that will be impacting
c.
5. Political forces – main trends in legislation, government
enforcement and public interest groups
2. Developing the Research Plan
6. Cultural forces – major developments in values and lifestyles such
as physical activity and outdoor exercise
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Microenvironment - The micro-environment e.g. our external
customers, agents and distributors, suppliers, our competitors, etc
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1. The first force is the company itself and the role it plays in the
microenvironment. This could be deemed the internal environment.
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2. Suppliers are firms and individuals that provide the resources
needed by the company and its competitors to produce goods and
services. They are an important link in the company’s overall
customer value delivery system.
3. Marketing intermediaries are firms that help the company to
promote, sell, and distribute its goods to final buyers.
Chapter 5 Marketing Information and Customer Insights
Customer Relationship Management: Building and maintaining
profitable customer relationships by delivering superior customer
value and customer satisfaction – deals with acquiring, keeping and
increasing customers & loyalty
Customer insights: understand buyers and marketplace, develop
competitive advantage
Marketing information system (MIS): people who assess information
needs, develop them, and analyze them (expensive)
Assessing Marketing Information Needs:
Exploratory research – gather preliminary information
Descriptive research – to describe things such as market
potential
Causal research – to test hypotheses (cause and effect
relationships)
Objectives must be translated into specific information needs
Written proposal: problems, objectives, needed information and
helpfulness
Could call for primary data, secondary data or both
3. Implementing the Research Plan
Put marketing research into a plan of action
Involves collecting, processing and analyzing the information
Isolate important findings
4. Interpreting and Reporting Findings: Market researcher must now
interpret the findings, draw conclusions and report them to
management
Chapter 6
Factors Affecting Consumer Behavior
Cultural Factors: (culture, subculture and social class)
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Culture: Most basic cause of a person’s wants and behavior
Subculture: groups with shared value systems based on
experiences
Social Class: society’s relatively permanent and ordered
divisions whose members share similar values, interests and
behaviors
Social Factors: (reference groups: external influence behavior),
(membership groups: direct influence such as friends&fam),
(aspirational groups: word2mouth, social media)
A good MIS balances the information users would like to have
against what is feasible to offer
Personal Factors: - Age and Life-Cycle Stage, Occupation, Economic
Situation, Lifestyle, Personality and Self- Concept (refers to unique
psychological self, brands etc)
MIS must monitor the marketing environment to provide decision
makers with information they should have to make marketing
decisions
Psychological factors
Developing Marketing Information: obtain needed information from
internal data, marketing intelligence and marketing research
Freud: buying habits are affected by subconscious motives that are
not fully understood
Internal Data: Electronic collections of consumer and market
information obtained from data sources within the company’s network
Maslow: arranged in hierarchy (Physiological needs > safety needs >
social needs > esteem needs > selfactualization needs)
Marketing Intelligence: - The systematic collection and analysis of
publicly available information about consumers, competitors, and
developments in the market place
The Buyer Decision Process
Marketing research is the systematic design, collection, analysis
and reporting of data relevant to a specific marketing situation facing
an organization
Marketing research process has 4 steps:
Motivation: motive to seek satisfaction
1. Need Recognition: Buyer recognizes a problem or need, Can be
triggered by internal stimuli or external stimuli
2. Information Search: Amount of searching depends on the strength
of your drive - Most effective source is personal
1- Defining the Problem and Research Objectives
3. Evaluation of Alternatives: How the consumer processes
information to arrive at brand choices
- After the problem has been defined the research objectives must be
set. 3 types of objectives:
4. Purchase Decision: To buy the most preferred brand Influenced by
1. attitude of others 2. unexpected situational factors
5. Post-purchase Behavior: After purchasing the product the
consumer will be satisfied or dissatisfied and will engage in postpurchase behavior of interest to the marketer -cognitive dissonance
Individual differences in innovativeness
1.
2.
3.
4.
5.
Innovators are adventurous – try new ideas at some risk
Early adopters are opinion leaders in their communities and
adopt new ideas early but carefully
Early majority deliberate – rarely leaders but adopt new ideas
before the average person
Late majority are skeptical – they adopt an innovation only after
a majority of people have tried it
Laggers are tradition bound –suspicious of changes and adopt
the innovation only after it has become some what of a tradition
Advantage base: 1 unique selling proposition (USP), multiple
differences
Positioning statement:
Format: “To (target segment and need)
(our brand) is (a concept) that (point of difference).”
Ex: of DIFFERENTIATION CASE STUDY
“To busy, mobile professionals who need to always be in the loop,
BlackBerry is a wireless connectivity solution that gives you an
easier, more reliable way to stay connected to data, people, and
resources while on the go.”
Chapter 9
Characteristics of influencing rate of adoption
Brand: name, symbol, icon that identifies a product
Relative Advantage: Superior to existing products?
Trademark: consumers trust trademarks because it assures them of
the attributes linked to the product – creates brand relationship
Compatibility: Aligned with values of the market?
Complexity: Degree of difficulty to use?
4 ways of Brand development:
Divisibility: Integrated into regular use?
Line extension: existing brand line of products – ex: nike run & nike
ACG
Communicability: Benefits easily described?
Brand extension: peanut brand towards peanut butter brand
Chapter 7
Multibranding: different brands by the same producer
Bases for segmentation
New brands: brand decides to adopt new strategy
1. Geographic: global regions, countries, cities, neighborhoods
Branding Strategy
2. Demographic: age & life cycles, household income, ethnic group
1.
3. Psychographic: social class, lifestyle, personality
4. Behavioral: occasion-based purchase, usage rate, loyalty
2.
3.
Intermarket segmentation: segmenting consumers with similar
needs/buying behaviors despite being in different locations
To be effectively segmented, market has to be:
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Chapter 10
Measurable
Accessible
Substantial
Differentiable
Actionable
Pricing Strategies:
1.
Choosing target strategy, factors: company resource, product
variability, product’s life-cycle, market variability
Social responsibility: trumps profitability if efforts are seen as
exploitative or irresponsible
Services
Channels
People
Image
2.
3.
Customer value-based: pricing based on buyer perception
a. Considers customer needs – benefits buyer value
Cost-based: pricing based on seller cost
a. Strategy: break-even pricing – total cost sets minimum
price range
Competition based: pricing based on competitors
a. Above or below competitors
Types of market competition:
Ways to differentiate:
Product
Brand name selection: distinctive, pronounceable, extendable,
product related
Brand Positioning: standout through uniqueness
Brand Sponsorship:
a. National brands: created&owned by producer – ex:
Samsung galaxy/ kellogg’s frosted flakes
b. Private brands: owned by the reseller of a product –
ex: shopper’s life brand/ Kirkland of Costco
Features, performance, style,
design
Expedient, convenient,
cautious
Coverage, expertise
Training, culture, morale
Intangible benefits
1.
2.
3.
4.
Pure competition: many firms against each other where no one
has an advantage
Monopolistic competition: many firms against each other, but
sell similar, but different differentiated products
Oligopolistic competition: large number of firms competing, but
has a small amount that dominates = strong market power
Pure monopoly: single firm controls entire market
Chapter 11
Market Channel: set of organizations that help make a product
available to use and consume
5.
Products come via supply chain:
1.
2.
Upstream: producer supply raw materials to create product
Downstream: marketing channel partners link producers &
customers
Direct Marketing channel: deliver products to consumers directly
from a producer
Direct marketing
Pros: communicates directly, interactivity
Cons: consider as spam mail
Advertising budget methods:
1.
2.
3.
4.
Affordable methods
Percentage-of-sales method
Competitive-parity method
Objective and task method
Types of channel partners: Retailers, Wholesalers, Brokers, Agents,
Public Relations: building strong relations with company’s
stakeholders (employees, investors etc) by favourable publicity,
communication – They are used to promote products, people, places,
ideas, activities and nations
Vertical Marketing System: channel structure act as unified system
Chapter 3
Types of VMS:
Marketing Criticism:
1.
2.
1.
2.
3.
4.
5.
6.
Indirect Marketing channel: involvement of intermediaries to link
consumer with producer
3.
Corporate: combines stage of producting under 1 owner
Contractual: independent firms contract each other to obtain
better economy
Administered: Walmart for example, they dictate other small
companies
Horizontal Marketing system: 2 or more companies join together
1.
Multichannel marketing system: a single firm sets multiple
marketing channels to reach multiple customers (hybrid)
Chapter 8
Product life cycle:
Chapter 4: digital marketing
1.
e-business: conducting online transactions with customers by
collecting business information
2.
Types:
3.
1.
2.
3.
4.
5.
E-tailing: virtual storefront on websites
B2B transactions/exchange of data
B2C (digital marketing)
Email, blogs, podcast
Gathering information
Successful site development: establish goal/content, implementation,
pricing/maintenance
Social media tools: sharing services, blogs, apps, QR codes
Chapter 13-14
Integrated Marketing Communication (IMC) uses promotion mix:
1.
2.
3.
4.
Advertising:
Pros: low cost, message repeated a lot
Cons: cost high for some media, impersonal
Sales promotion
Pros: quick response
Cons: short-lived
Public relations
Pros: believable, saves money
Cons: used as an afterthought
Personal Selling
Pros: two-way communication, relationship building
Cons: long-term commitment, expensive
High Prices: cost of distribution, advertising/promotion
Deceptive practices: pricing, promotion, packaging
Greenwashing (promoted to be environment friendly – but is not
Unsafe products
Creating cultural pollution
Unfair practices like predatory pricing
4.
Introduction stage: low sales, high cost for production, negative
profits, targeted by innovators, which results in few competitors
Growth: rapid increase in sales, average cost of production,
rising profits, targeted by early adopters, which results in
growing competition
Maturity: peak sales, low cost, high profits, middle majority –
most competitive time
Decline: decline in sales, low cost per customer, decline in
profits, customers become laggards