Marketing Review.docx

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Dalhousie University
COMM 2401
Jacqueline Gahagan

Marketing Review Chapter 1 Creating value for customers and build customer relationships 1. Understand marketplace and customer need & wants  Market offerings (combination of products, services, or information to satisfy a markets needs and wants) fulfill customer needs and wants  Marketing myopia is the mistake of paying more attention to the specific products a company offers instead of the benefits and experiences produced by these products  Customer value and satisfaction are the building blocs to developing and managing customer relationships  The goal here is to retain customers 2. Designing a consumer driven marketing strategy  Marketing management is the art of selecting target markets and building profitable relationships with them  Companies must divide the market into segments  Value positioning consists of answering questions such as “why should I buy your brand?”  Marketing management has designed 5 concepts under which organization design and carry out their marketing strategy i. Production Concept This concept holds that consumers will favor products that are available and highly affordable. This suggests that management must focus on operations in order to cut costs. This may cause marketing myopia because the focus has transferred from satisfying customer needs to cutting costs ii. Product Concept This concept states that consumers prefer products that offer innovative features, high performance and quality. Companies adopting the product concept may encounter marketing myopia because they are focusing on improving products even though consumers might not be looking for a better product. Example: A better mousetrap. Consumers want to rid their homes of mice but do not necessarily want a better mousetrap. They may substitute the product with an extermination service. iii. Selling concept Many companies follow this concept, which states that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. These industries, such as insurance, must be good at tracking down prospects and selling them on product benefit. iv. Marketing concept This holds that marketers should create products that respond to consumers needs. Unlike the selling concept, which is “produce and sell”, the marketing concept adopts the philosophy of “sense and respond”. v. Societal marketing concept The societal marketing concept wants to satisfy consumer short term wants, consumer long term welfare all while operating profitably. A triangle supports this idea Society (human welfare) Societal marketing Consumers (want satisfaction) Company (profits) 3. Construct a marketing program to deliver superior value  The firms marketing program builds customer relationships by transforming marketing strategy into action. It consists of the firms marketing mix (4 P’s: product, price, place, promotion) 4. Building profitable customer relationships  Must build customer value and customer satisfaction in order to be profitable. This is the customer relationship management philosophy  Build customer relationships through loyalty programs  Customer lifetime value is the entire stream of cash from customer to company  Building relationships with the right customers is very important way to maximize profits. There exist 4 different kind of customers i. Strangers – Low potential for profitability and loyalty. Companies should not invest in these customers ii. Butterflies - Potentially profitable not loyal however. Corporations should use promotions to attract them and capture all benefits but cease to invest after iii. True friends – Profitable & loyal true friends should receive a great deal of investment to delight these customers iv. Barnacles - Very loyal but not profitable. Fees should be raised for these consumers or services should be diminished. All these steps capture value from customers to create profit and customer equity!! Understand customer wants/needs Design a customer driven marketing strategy  Construct marketing plan that delivers superior value  Build profitable relationships = Captured value from customers to create profit Chapter 2 Mission statement: A statement outlining the organizations purpose. It answers the following questions – What is our business? Who is the customer? What do customers value? What should our business be? Business portfolio: The collection of a corporation businesses and products which make up the company. First a company must analyze its business portfolio in order to decide which businesses/product should receive more, less or no investment. Second it must shape the future portfolio by developing strategies for growth and downsizing. These businesses/products are called strategic business units (SBU’s) and are evaluated on 2 dimensions: The attractiveness of the SBU’s market and the strength of the SBU’s position. Boston consulting group approach: An SBU can hold 4 positions i. Stars (high growth rate, high market share) – These business units require heavy investment because of the high growth rate nature of the product. However eventually their growth will diminish and will turn into a cash cow ii. Cash cow (low growth rate, high market share) – These SBU’s require little to no investment and are the source of cash for a company iii. Question mark (high growth rate, low market share) – Require lots of investment and hold little market share. These investments require a lot of thought as to whether or not a company should cease production. iv. Dogs (low growth rate, low market share) – These products might supply enough cash to support themselves but should eventually be dropped Once the company has classified the position of their SBU’s, they must choose a strategy to pursue for each: Build the SBU by investing heavily into the business Hold the SBU by investing just enough to hold market share Harvest the SBU by milking its short-term cash flow Divest the SBU by selling it or phasing it out Problems with the Boston consulting group (BCG) approach – Management may find it difficult to define and measure and SBU’s market share and growth. They may also be very time consuming and costly to implement. In addition these approaches focus on classifying current businesses but provide little advice for future planning. After having evaluated the portfolio, companies must find businesses and products they should consider in the future. The company’s objective must be to manage “profitable growth”. Companies do this by implement the product/market expansion grid. Existing products New Products Market penetration Product development Existing markets Market development Diversification New markets Market penetration: A strategy for growth by increasing sales of current products to current market segments without changing the product Market development: A strategy for growth by identifying and developing new market segment for current company products Product development: A strategy for company growth by offering modified or new products to current market segments Diversification: A strategy for growth through starting up or acquiring businesses outside the company’s current products and markets (companies must be careful of diversification because if they extend themselves to unfamiliar markets they may lose their market focus) The aforementioned were all examples of growth within an organization but businesses must have strategies for downsizing as well. When a firm finds an SBU that are unprofitable or no longer fit its business strategy, it must carefully harvest or divest them. Marketing strategy & Marketing mix Marketing Strategy Marketing strategy is the logic by which a company hopes to create customer value and achieve profitable relationships. The company must decide which consumers it will serve (targeting & segmentation) as well as how it will serve them (differentiation & positioning) Market segment: A group of consumers who react similarly to a given set of marketing efforts Market targeting: Evaluating each market segment’s attractiveness and selecting one or more segments to enter Positioning: Arranging a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of target customers Differentiation: Actually differentiating the market offering to create superior consumer value Market segment & targeting – is a group of consumers who likely think similarly to a given set of marketing efforts. Once a company has finished segmenting the market, it evaluates which segment will be more profitable and enter the target market. Marketers then develop product positioning. A position is why a consumer will pay a little more for your product. The product must be differentiated in contrast to all other goods in the market place in order to deliver greater value. Marketing Mix After a firm has developed a solid marketing strategy it must form the marketing mix, which consists of the 4 P’s:  Product – Goods & services the company offers it’s target market  Price – The amount customer must pay to obtain the product  Place – Where the product is made available for the target market  Promotion – Activities that promote the mer
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