BSB126 - Marketing Full Sets of Notes

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Department
Management and Human Resources
Course
BSB126
Professor
All Professors
Semester
Spring

Description
Lecture 1 Marketing must get the following right  Product  Price  Place  Promotion  People (target market & staff)  Time Marketing has evolved through 5 stages (orientations or philosophy)  The production concept  The product concept  The selling concept  The marketing concept  The societal marketing concept Production orientation  Assumes consumers will buy if: Product availability, low price.  Efficiency focus  Great when D>S  1930‟s Japan quality – TQM/Deming  1970‟s Japanese competition Product Orientation  Assumes consumers favor products that offer the most quality for the price, but the risk is too much focus on product and not on customer  Customers like high quality products and are willing pay more for a product  Egs, railways, MGM, Better technology (VHS & Apple), internal focus v. customer need: traps Selling Orientation  Selling Orientation – producing a product and then trying to persuade the customer to purchase it – in effect, trying to alter consumer demand. It is internally focused  Firm objective is to sell what they can make rather than make new things that can sell to the consumer  “There will always, one can assumer, be need for some selling. But the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Marketing Orientation  Determining customer needs and wants and then developing a product to satisfy that need and still yield a satisfactory profit.  It is externally focused (on customer need)  Aim is customer satisfaction  Compare Disney to MGM 1970s  Focus on customer need begins with the basic question: What business are we in? Customer Satisfaction  S=P-E  96% Unhappy customers never complain  But every unhappy customer tells 15-30 others compared to each happy customer who tells 6 others  95% of customers who have complaint handled efficiently and promptly become more brand loyal The marketing concept  Quality o Quality is defined by customers o TQM – Total quality management  Relationships o An attempt to build personal, long-term bonds with customers  Mass customization o An attempt to provide affordable products customized to come as close a possible to meeting the needs of individual customers o Enabled by advances in I.T. (eg Dell PC‟s)  Internal Marketing o Must precede external marketing, since all in company must be customer oriented The societal marketing concept  Extends the marketing concept by adding social responsibility and ethical considerations to its concerns.  The company must balance the conflicting demands of company profits Importance of marketing  Marketing is the only revenue-producing activity for the firm  Return on marketing investment o Traditionally the cost of marketing has been treated as an expense o Since marketing can represent at least 50% of all corporate costs, it is now being looked at as an investment Lecture 2 Linking Marketing and Corporate Strategies  There are 3 levels of strategy in organizations, corporate, business unit, and functional Why strategic planning is important Advantages:  Guidance to management “what it is we are trying to do”  Recognizing/responding to change/opportunities/threats  Rationale to evaluate competing requests for staff/equipment  Coordinates strategy related decision making  Proactive, not reactive posture Mission Statement  Why the organization exists  What it seeks to achieve  Identify stakeholders/their needs  Incorporate core competence/competitive strategy  Identify what business the organization is in?  Consistent with values/culture?  Brief and memorable A mission is a statement of the organization‟s scope, often identifying its customers, markets, products, technology, and values. It often has an inspirational theme. In contrast, a culture is a system of shared values, attitudes and behaviors that distinguish the organization from others. Abell suggests defining a business in 3 dimensions  Customer groups, or who is being satisfied  Customer needs, or what is being satisfied  Technologies, or how customers needs are satisfied Stages in strategic and marketing planning  Mission  Situation analysis  Goals or objectives convert the mission into targeted levels of performance to be achieved  Strategies are how goals will be achieved  Budgets  Controls are early warning signs or checks plan is on target A situation analysis assesses where a firm or products has been, where it is now, and where it is headed Examples of goals or objectives  Profit / shareholder value / sales  Customer satisfaction or quality  Employee welfare or social responsibility  For a non-profit organization: Serving consumers with the greatest efficiency and least costs A marketing strategy is the means by which a marketing goal is to be achieved It includes  Segmentation  Positioning  Marketing program or mix The Marketing Process Step 1 – Situation analysis  Understanding the marketing environment  SWOT  Points of difference  Business portfolio analysis  Market-product analysis  Porter‟s 5 forces Understanding the marketing environment  Customers  Competencies, an organization‟s special capabilities, including skills, technologies, and resources  A competitive advantage, a unique strength relative to competitors  Benchmarking, discovering how others do something better than your own firm so you can imitate or leapfrog competition  Competitors Business portfolio analysis  Studies a firm‟s business unites as though they were a collection of separate investments (eg, BCG analysis or growth share matrix)  4 categories in BCG o Star o Cash cow o Question mark or problem child o Dog  4 strategies for BCG o Invest to build o Invest to hold o Harvest o Divest Market product analysis  Market penetration  Market development  Product development  Diversification Porter‟s 5 Forces  Rivalry  Threat of new entry  Threat of substitutes  Power of buyers  Power of suppliers Lecture 3 The Marketing Environment External/Uncontrollable forces Macro  Demographics  Economic conditions  Culture  Laws  Technology Micro  Suppliers  Marketing intermediaries  Customers Target market groups  DINKS – double income no kids  SKIPPIES – school kids with income and purchasing power  MOBYS – Mother older, baby younger  DEWKS – dual earners with kids  YUPPIES – young upwardly mobile professionals  PUPPIES – poor urban professionals  WOOFS – well-off older folks  SILKS – Single income, lots of kids Target Markets by generation  Baby boomers – born between 1946 and 1964 o Cherish youth, convenience and individuality  Gen X – born between 1965 and 1978 o Savvy and cynical  Gen Y – born between 1979 and 1994 o More at ease to ethnic diversity Marketing strategies for global warming  Some businesses opportunity to grow rapidly by changing product line or emphasizing environmental benefit  Water tanks, water saving devices, hybrid fuel cars, energy efficient light bulbs, solar cells, alternative energy  Air travel – high CO2 outputs Marketing environments  Natural – Green consumers (not homogenous) o True-blue green – Change their personal behavior and purchases to aid the environment o Greenback greens – Support environmental political candidates and donate money to environmental causes but will not change their habits o Sprouts – Make a few environmental friendly purchases o Grousers – Grudgingly acknowledge environmental mandates o Basic browns – Most apathetic and their ranks are growing  Economic o Changing consumer spending patterns: income elasticity of demand, food v entertainment o Low savings and high debt o Low inflation, low interest environment  Technical o New technology: creating new product and marketing opportunities o Current technological forces include the impact of the internet and digital technology o Rate of change requires frequent re-skilling: most will have server careers in lifetime Competitor analysis  Often too narrow (industry analysis and current)  Who are real competitors (4 levels)? o Brand competition o Industry competition o Form competition o Generic competition  Political o Protectionism v Globalization o Legislation regulating business o Growth of public interest groups: how should marketers respond? Internal/Controllable Forces  Activities of the organization  Marketing concept requires whole organization focused on customer Services marketing  4 I‟s of Services o Intangibility – cannot be touched, seen, tasted, heard, or felt o Inconsistency – less standardized o Inseparability – produced and consumed simultaneously o Inventory – characteristics of services that prevent them from being stored, warehoused, or inventoried  Service continuum - a range from the tangible to the intangible or good-dominate to service-dominate offerings available in the marketplace  How product qualities affect ease of evaluation o Search qualities – the attributes of color, shape, price, fit o Experience qualities – can only be discerned after purchase or during consumption, as with taste, wear ability, ease of handling, quietness and personal treatment o Credence qualities – characteristics that customers find hard or impossible to evaluate even after consumption for example surgery  Managing the marketing of services o Internal marketing o Product (service)  Exclusivity  Branding  Capacity management o Pricing  Off peak pricing  Internal marketing – the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers  Capacity management – integrating the service component of the marketing mix with efforts to influence consumer demand  Off-peak pricing – charging different prices during different time of the day or days of the week to reflect variations in demand for the service Lecture 4 Consumer Behavior Decision Making process  Need recognition Internal and external stimuli 5 senses  Information search o Evoked set: groups of brands, resulting from an information search, from which a buyer can choose o Sources: internal and external, such as choice magazine or consumer reports  Evaluation of alternative  Purchase  Post purchase behavior Post purchase behavior  Cognitive dissonance: post purchase anxiety or inner tension that a consumer experiences after recognizing an inconsistency between behavior and value or opinions Psychological influences on consumer behavior  Motivation  Perception  Lifestyle  Personality Perception  Selective exposure/attention – consumer notices certain stimuli and ignores others o Notice messages consistent with attitudes and beliefs  Selective comprehension/distortion – consumer changes or distorts information that conflicts with feelings or beliefs o Interpret information so consistent with attitudes and beliefs  Selective retention – consumer remembers only that information that supports personal beliefs o Selectively remember o Why marketers use repetition and drama Lifestyle  Lifestyle is a mode of living that is identified by how people spend their time and resources (activities), what they consider important in their environment (interests), and what they think of themselves and the world around them (self-concept). Sociocultural influences on consumer behavior  Personal influences (WOM/celebrity ad)  Cultural  Reference groups  Family  Sub culture  Social class Lecture 5 Marketing research  Step 1 - Define the problem  Step 2 - Develop the research plan  Step 3 - Collect relevant information  Step 4 - Deliver the final report Probability Sample  Simple random sample - Every member of the population has a known and equal chance of selection  Stratified random sample – the population is divided into mutually exclusive groups  Cluster (area) sample – the population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample of the groups to interview Nonprobability sample  Convenience sample – the researcher selects the most accessible population members from which to obtain information  Judgment sample – the researcher uses judgment to select population member who are good prospects for accurate information  Quota sample – the researcher finds and interviews a prescribed number of people in each of several categories Lecture 6 Reaching Global Markets  Free trade principles o Specialization Protectionism  The practice of shielding one or more industries within a country‟s economy from foreign competition, usually through the use of tariffs or quotas  A tariff is a tax on goods or services entering a country (raise the price of imported product)  A quota is a restriction place on the amount of a product allowed to enter or leave a country Global Companies  International firms – markets its existing products and services in other countries the same way it does at home  Multinational firms – views the world as consisting of unique parts and markets to each part differently. They use a multidomestic marketing strategy, which means they have as many different product variations, brand names, and advertising programs as countries in which they do business.  Transnational firms – views the world as one market and emphasizes universal consumer needs and wants more than differences among cultures. Transnational firms employ a global marketing strategy – the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.  All three employ different countries, and may have administrative, marketing and manufacturing operations (divisions or subsidiaries) around the world  However a firm‟s strategy for global markets and marketing defines the type of company it is Key factors in international marketing  Cultural diversity  Values  Customs (the normal)  Cultural symbols  Language Economic considerations  Global marketing is also affected by economic considerations  A scan of the global marketplace should include o An assessment of the economic infrastructure in different countries o Measurement of consumer income in different countries o Recognition of a country‟s currency exchange rates  A cross cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies Marketing entry strategies  Four options exist (see ppt 6 Slide 29+) o Exporting – producing goods in one country and selling them in another country o Licensing – offering the right to trademark, patent, trade secret in return for a royalty or a fee o Joint venture/franchising – a company contracts with an individual to set up an operation to provide products or services under the company‟s established brand name, is one of the fastest-growing market-entry strategies  Joint venture – when a foreign company and a local firm invest together to create a local business (share ownership, control and profits) o Direct investment – the biggest commitment a company can make when entering the global market, entails a domestic firm actually investing in and owning a foreign subsidiary or division Product and promotion strategies  Global companies have five strategies for matching products and their promotion efforts to global markets  A product may be sold globally in one of three ways o Product extension – selling virtually the same product in other countries o 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 o Product invention – alternatively, companies can invent totally new products designed to satisfy common needs across countries Pricing strategy  Individual countries, even those with free trade agreements, may place considerable competitive, political and legal constraints on the pricing flexibility of global companies  Pricing too low of too high can have dire consequences. When prices appear too low in one country, companies can be charged with ‟dumping‟ a practice subject to severe penalties and fines  Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost  When companies price their products very high in some countries but competitively in others, they face a grey market problem  A grey market, also called parallel importing is a situation where products are sold through unauthorized channels of distribution Lecture 7 Market Segmentation  Market segmentation is the process of dividing the total market for a good or service into several smaller, internally homogeneous groups  In its ultimate form, marketer designs a unique product and marketing program for each buyer  Markets are segmented by o Intuition based on experience and judgment o Mimicking competitors and earlier market entrants o Performing a structured analysis that includes  Identifying the current and potential wants that exist within a market  Identifying the characteristics that distinguish segments  Determining who has each want A useful segmentation process must meet 5 criteria  Potential for increased profit  Similarity of needs of buyers within a segment  Difference of need of buyers among segments  Potential of a marketing action to reach a segment  Simplicity and cost of identifying and assigning buyers to segments The most basic (first cut) segmentation divides prospects into  Ultimate consumers who buy goods or services for their own personal or household use  Business users who buy goods or services to use in their businesses, to make other products, or to resell to other business users or consumers Consumer markets are commonly further segmented on the basis of  Geography - divides the market based upon the geographic distribution of the population o Regional distribution because people within a give region tend to share the same values, attitudes and style preferences o Urban, suburban, and rural distribution  Demographics – uses the vital statistics that describe a population o Age o Social class – a measure made up of a combination of characteristics such as level of education, occupation, and the type of neighborhood one lives in o Ethnicity  Psychographics – involves examining attributes related to how a person thinks, feels, and behaves o Personality characteristics o Lifestyles, including activities, interest, and opinions o Values, representing a reflection of our needs adjusted for the realities of the world in which we live o A composite psychographic measure is Values and lifestyles (VALS)  Buying behavior – is used to segment the market based upon products-related behavior o Benefits desired from the products o Product usage rate from consumers  Nonusers  Light users  Medium users  Heavy users In targeting, when selecting a segment to pursue, a company can follow one of the three broad strategies  Market aggregation – treat the total market as a single segment. Employ product differentiation  Single segment concentration – focus on one segment, the niche market  Multiple segment segmentation – select two or more segments and devise different marketing mixes for each Guidelines in selecting a target market  Market size  Expected growth  Markets should be sought where the number and size of competitors are minimal  Cost of reaching the segment  The market opportunity must be compatible with the company‟s resources and objectives Roy Morgan values: Young optimism – Optimistic and seeking to improve prospects in life  More likely to be found among young people into image and style  Conscious of the image they project and want to make the right one  Long-term thinkers, busy planning careers, attending uni, thinking about the future  Want to experience all life has to offer: travel, a career, friends, family – still idealistic enough to believe can have it all  Innovation and interested in technology Roy Morgan Values – Visible Achievement  Have made it in whatever field involved in and confident of abilities  Despite success retain traditional values about home, work and society  Family is very important  Work for financial reward and job stimulation  Highly individualistic, do not need to prove themselves to anyone nor impress anyone. Make an art of understatement  Can afford to buy the best of everything, but look for quality and value for money  Born negotiators always looking for a deal Positioning  A position is the way a firm‟s product, brand or organization is viewed relative to the competition. There are three steps in the positioning process  Select the positioning concept  Design the feature that most effectively conveys the position  Coordinate the marketing mix components to convey a consistent position Lecture 8  Product o Definition  A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas  Core, Tangible and Augmented Product o 3 levels of products o Core: What is the buyer really buying?  Product is packaging of problem solving service: cosmetics and drills o Tangible must have 5 characteristics  Quality level  Features Styling  Brand name and packaging o Augmented Product  Look at buyer total consumption system  “The new competition is not between what companies produce in their factory output in the form of packaging, services, advertising customer advice, financing, delivery arrangements, and other things that people value”  Augmented becomes expected: hotels  Convenience product – a relatively inexpensive item that merits little shopping effort  Shopping product – a product that requires comparison shopping, because it is usually more expensive and found in fewer stores  Specialty product – a particular item that consumers search extensively for and are reluctant to accept substitutes  Unsought product – a product u
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