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Midterm

MKT 702 Midterm 1 review.docx

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Department
Marketing
Course Code
MKT 702
Professor
Margaret Yap

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MKT 702 Midterm 1 CH1 Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders. “AMA definition” “Managerial definition” Marketing is about identifying and meeting human and social needs. "Meeting needs profitably” Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Marketing Management Tasks − Develop market strategies and plans − Capture marketing insights − Connect with customers − Build strong brands − Shape market offerings − Deliver value − Communicate value − Create long-term growth Functions of CMOs − Strengthening the brands − Measuring marketing effectiveness − Driving new product development based on customer needs − Gathering meaningful customer insights − Utilizing new marketing technology New Consumer Capabilities − A substantial increase in buying power − A greater variety of available goods and services − A great amount of information about practically anything − Greater ease in interacting and placing and receiving orders − An ability to compare notes on products and services − An amplified voice to influence public opinion Many companies have now created a Chief Marketing Officer, or CMO, position to put marketing on a more equal footing with other C-Ievel executives, such as the Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Marketing managers must decide what features to design into a new product, what prices to offer customers, where to sell products, and how much to spend on advertising, sales, or the Internet. They must also decide on details such as the exact wording or color for new packaging. A social definition shows the role marketing plays in society. E.g. one marketer has said that marketing's role is to "deliver a higher standard of living." Social definition: Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Managerial definition - Managers sometimes think of marketing as "the art of selling products," but many people are surprised when they hear that selling is not the most important part of marketing! Selling is only the tip of the marketing iceberg Marketing people market 10 types of entities: Goods, services, events, experiences, persons, places, properties, organizations, information and ideas. A marketer is someone who seeks a response-attention, a purchase, a vote, a donation-from another party, called the prospect. If two parties are seeking to sell something to each other, we call them both marketers. Production and logistics professionals are responsible for supply management, marketers are responsible for demand management. Eight demand states are possible: 1. Negative demand - Consumers dislikes the product and may even pay a price to avoid it. 2. Nonexistent demand - Consumers may be unaware of or uninterested in the product. 3. Latent demand-Consumers may share a strong need that cannot be satisfied by an existing product. 4. Declining demand-Consumers begin to buy the product less frequently or not at all. 5. Irregular demand-Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis. 6. Full demand-Consumers are adequately buying all products put into the marketplace. 7. Overfull demand-More consumers would like to buy the product than can be satisfied. 8. Unwholesome demand-Consumers may be attracted to products that have undesirable social consequences. Five types of needs: 1. Stated needs (The customer wants an inexpensive car) 2. Real needs (The customer wants a car whose operating cost, not its initial price, is low.) 3. Unstated needs (The customer expects good service from the dealer) 4. Delight needs (The customer would like the dealer to include an onboard navigation system.) 5. Secret needs (The customer wants friends to see him as a savvy consumer.) "Market" was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. The product concept proposes that consumers favor products that offer the most quality, performance, or innovative features. The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. Four key constituents for relationship marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and members of the financial community (shareholders, investors, analysts). A marketing network consists of the company and its supporting stakeholders-customers, employees, suppliers, distributors, retailers, ad agencies, university scientists, and others-with whom it has built mutually profitable business relationships. (Unique company asset) Four dimensions (SIVA) and the corresponding customer questions these are designed to answer are:48 1. Solution: How can I solve my problem? 2. Information: Where can I learn more about it? 3. Value: What is my total sacrifice to get this solution? 4. Access: Where can I find it? Quiz 1. Many companies have created a _CMO_ position to put marketing on a more equal footing with other C-level executives. 2. Which of the following is NOT a major decision made by marketing managers? a. Packaging decisions competitors should make 3. The marketing of Walt Disney's Magic Kingdom is a good example of ________ marketing. a. Experience 4. What percent of the U.S. economy consists of services (vs. goods)? a. 70 % 5. ________ are wants for specific products backed by an ability to pay. a. Demands 6. To reach a target market the marketer uses various marketing channels. Which of the following choices is NOT one of the channels discussed in the text? a. internet channel 7. Building mutually satisfying long-term relations with key parties in order to earn and retain their business is called ________. a. relationship marketing 8. Which of the following is NOT one of marketing's "four P's"? a. performance 9. Internal marketing is the task of ________. a. hiring, training, and motivating able employees who want to serve customers well 10. According to the textbook, the societal marketing concept holds that the organization's task is to ________. a. deliver the desired satisfactions in a way that preserves or enhances the consumer's and society's well being 11. Marketing is more "art" than "science." a. False 12. Marketing deals with identifying and meeting human and social needs. a. True 13. Marketing management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value. a. True 14. Many market offerings consists of a mix of goods and services. a. True 15. A prospect is someone seeking a response from another party, called the marketer. a. False (opposite) 16. Wants are basic human requirements. a. False (Needs) 17. Value reflects the perceived tangible and intangible benefits and costs to customers. a. True 18. The product concept holds that consumers will prefer products that are widely available and inexpensive. a. False (this is the production concept.) 19. The marketing concept holds that the key to achieving organizational goals consists of a company being more effective than competitors in creating, delivering and communicating superior customer value to its chosen target markets. a. True 20. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. a. True 21. Describe the difference between the managerial and societal definitions of marketing. The managerial definition of marketing describes marketing as an organizational function. Here, marketing is defined as "an organizational function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders." The societal definition focuses on the societal process of marketing. Here, marketing is defined as "the societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others." 22. Distinguish between the five types of needs humans require. We can distinguish among five types of needs: 1. Stated needs (the customer wants an inexpensive car) 2. Real needs (the customer wants a car whose operating cost, not its initial price, is low) 3. Unstated needs (the customer expects good service from the dealer) 4. Delight needs (the customer would like the dealer to include an onboard navigation system) 5. Secret needs (the customer wants to be seen by friends as a savvy consumer) CH2 pg.68 A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level. Levels of a Marketing Plan Strategic − Target marketing decisions − Value proposition − Analysis of marketing opportunities Tactical − Product features − Promotion − Merchandising − Pricing − Sales channels − Service Corporate Headquarters’ Planning Activities − Define the corporate mission − Establish strategic business units (SBUs) − Assign resources to each SBU − Assess growth opportunities Good Mission Statements − Focus on a limited number of goals − Stress major policies and values − Define major competitive spheres − Take a long-term view − Short, memorable, meaningful − Organizations develop mission statements to share with managers, employees, and (in many cases) customers. A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and opportunity Major Competitive Spheres − Industry − Products − Competence − Market segment − Vertical channels − Geographic Dimensions that Define a Business − Customer groups − Customer needs − Technology Characteristics of SBUs − It is a single business or collection of related businesses − It has its own set of competitors − It has a leader responsible for strategic planning and profitability Value creation and delivery sequence can be divided into three phases First phase, choosing the value, represents the "homework" marketing must do before any product exists. Segment the market, select the appropriate market target. and develop the offering's value positioning. Second phase is providing the value. Marketing must determine specific product features, prices and distribution. Third phase is communicating the value by utilizing the sales force, sales promotion, advertising, and other communication tools to announce and promote the product. London Business School's Nirmalya Kumar has put forth a "3 Vs" approach to marketing: (1) define the value segment or customers (and their needs); (2) define the value proposition; and (3) define the value network that will deliver the promised service. Dartmouth's Frederick Webster views marketing in terms of: (1) value-defining processes such as market research and company self-analysis; (2) value-developing processes including new-product development, sourcing strategy, and vendor selection; and (3) value-delivering processes such as advertising and managing distribution. Value chain as a tool for identifying ways to create more customer value The value chain identifies nine strategically relevant activities-five primary and four support activities- that create value and cost in a specific business. The primary activities are inbound logistics or bringing materials into the business; operations or converting them into final products; outbound logistics or shipping out final products; marketing them, which includes sales; and servicing them. The support activities-procurement, technology development, human resource management, and firm infrastructure-are handled in specialized departments. The firm's infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs. Firm’s success depends also on how well the company coordinates departmental activities to core business processes − The market-sensing process. All the activities in gathering market intelligence, disseminating it within the organization, and acting on the information − The new-offering realization process. All the activities in researching, developing, and launching new high-quality offerings quickly and within budget − The customer acquisition process. All the activities in defining target markets and prospecting for new customers − The customer relationship management process. All the activities in building deeper understanding, relationships, and offerings to individual customers − The fulfillment management process. All the activities in receiving and approving orders, shipping the goods on time, and collecting payment Strong companies are reengineering their work flows and building cross-functional teams to be responsible for each process Company partner with supplier or distributors - Value delivery network, also called a supply chain. A core competency has three characteristics: (1) It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits. (2) It has applications in a wide variety of markets. (3) It is difficult for competitors to imitate. Competitive advantage ultimately derives from how well the company has fitted its core competencies and distinctive capabilities into tightly interlocking "activity systems." Business realignment may be necessary to maximize core competencies. It has three steps: (1) (re)defining the business concept or "big idea"; (2) (re)shaping the business scope; and (3) (re)positioning the company's brand identity. Holistic marketing framework is designed to address three key management questions 1. Value exploration - How can a company identify new value opportunities? 2. Value creation -How can a company efficiently create more promising new value offerings? 3. Value delivery - How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently? VALUE EXPLORATION: 3 spaces 1. the customer's cognitive space - reflects existing and latent needs and includes dimensions such as the need for participation, stability, freedom, and change 2. the company's competence space - in terms of breadth-broad versus focused scope of business; and depth-physical versus knowledge based capabilities. 3. the collaborator's resource space - includes horizontal partnerships, with partners chosen for their ability to exploit related market opportunities, and vertical partnerships, with partners who can serve the firm's value creation. VALUE CREATION - Value-creation skills for marketers include identifying new customer benefits from the customer's view; utilizing core competencies from its business domain; and selecting and managing business partners from its collaborative networks. VALUE DELIVERY - Delivering value often means making substantial investments in infrastructure and capabilities.  Customer relationship management allows the company to discover who its customers are, how they behave, and what they need or want.  Internal resource management to integrate major business processes, such as order processing, general ledger, payroll, and production, within a single family of software modules.  Business partnership management allows the company to handle complex relationships with its trading partners to source, process, and deliver products. Market-penetration strategy - gain more market share with its current products in their current markets Market-development strategy - finds or develops new markets for its current products Product-development strategy - develop new products of potential interest to its current markets Diversification strategy - review opportunities to develop new products for new markets A company's organization consists of its structures, policies, and corporate culture, all of which can become dysfunctional in a rapidly changing business environment. Corporate culture –  "the shared experiences, stories, beliefs, and norms that characterize an organization."  the way people dress, talk to one another, and greet customers. Innovative strategy firm, offers five key strategies for managing change in an organization: 1. Avoid the innovation title-Pick a name for the innovation team that won't alienate coworkers, 2. Use the buddy system-Find a like-minded collaborator within the organization, 3. Set the metrics in advance-Establish different sets of funding, testing, and performance criteria for incremental, experimental, and potentially disruptive innovations, 4. Aim for quick hits first-Start with easily implemented ideas that will work to demonstrate that things can get done, before quickly switching to bigger initiatives. 5. Get data to back up your gut-Use testing to get feedback and improve an idea. Scenario analysis - which consists of developing plausible representations of a firm's possible future that make different assumptions about forces driving the market and that include different uncertainties Quiz 1. The first phase of the value creation and delivery sequence is _________. a. choosing the value 2. The market sensing process, one of the core business processes, includes _________. a. all the activities involved in gathering market intelligence, disseminating it within the organization, and acting on the information 3. Whereas core competencies tend to refer to areas of special technical and production expertise, distinctive capabilities tend to describe _________. a. excellence in broader business processes 4. The holistic marketing framework is designed to address which three key management questions? a. value exploration; value creation; value delivery 5. The _________ is the central instrument for directing and coordinating the marketing effort. a. marketing plan 6. An SBU refers to _________. a. strategic business unit 7. A company's organization consists of its _________. a. structures; policies; corporate culture 8. SWOT analysis refers to an analysis of a company's _________. a. strengths; weaknesses; opportunities; threats 9. MOA refers to _________. a. market opportunity analysis 10. The last section in a marketing plan should contain _________. a. implementation controls 11. The traditional view of marketing is that the firm makes something and then sells it. a. True 12. Michael Porter proposed the value chain as a tool for identifying ways to create more customer value. a. True 13. The value chain identifies nine strategically relevant activities. a. True 14. Competitive advantage ultimately derives from how well the company has fitted its core competencies and distinctive capabilities into tightly interlocking "activity systems." a. True 15. Value exploration is concerned with how a company can efficiently create more promising new value offerings. a. False (How can a company identify new value opportunities) 16. The first step in corporate planning is defining the mission. a. True 17. A marketing opportunity is an area of buyer need and interest in which there is a high probability that a company can profitably satisfy that need. a. True 18. Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking: overall cost leadership, differentiation, and focus. a. True 19. A marketing plan is a written document containing tactical guidelines for the marketing programs and financial allocations over the planning period. a. True 20. The marketing plan should open with a brief summary of the main goals and recommendations. This is called a situation analysis. a. False (executive summary.) 21. Good mission statements have five major characteristics. List and discuss each of these. First, good mission statements should focus on a limited number of goals. Second, mission statements stress the company's major policies and values. They narrow the range of individual discretion so that employees act consistently on important issues. Third, they define the major competitive spheres within which the company will operate. Fourth, they take a long-term view. Fifth, they are as short, memorable, and meaningful as possible. 22. An SBU has 3 characteristics. Describe each of these. 1. It is a single business or collection of related businesses that can be planned separately from the rest of the company. 2. It has its own set of competitors. 3. It has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profits. CH4 pg.124 Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Types of Marketing Research Firms 1. Syndicated service 2. Custom 3. Specialty-line The Marketing Research Process 1. Define the problem 2. Develop research plan 3. Collect information 4. Analyze information 5. Present findings 6. Make decision 1. Define the Problem • Define the problem • Specify decision alternatives • State research objectives 2. Develop the Research Plan • Data sources • Research approach • Observation • Ethnographic • Focus group • Survey • Behavioural data • Experimentation • Research instruments • Questionnaires • Qualitative Measures • Word association • Projective techniques • Visualization • Brand personification • Laddering • Technological Devices • Galvanometers • Tachistoscope • Eye cameras • Audiometers • GPS • Sampling plan • Sampling unit: Who is to be surveyed? • Sample size: How many people should be surveyed? • Sampling procedure: How should the respondents be chosen? • Contact methods • Mail questionnaire • Telephone interview • Personal interview • Online interview • Barriers Limiting the Use of Marketing Research • A narrow conception of the research • Uneven caliber of researchers • Poor framing of the problem • Late and occasionally erroneous findings • Personality and presentational differences Characteristics of Good Marketing Research • Scientific method • Research creativity • Multiple methods • Interdependence • Value and cost of information • Healthy skepticism • Ethical marketing Marketing metrics are the set of measures that helps marketers quantify, compare, and interpret marketing performance. Marketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities. Marketing Dashboards • A customer-performance scorecard records how well the company is doing year after year on customer-based measures. • A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the company’s performance including employees, suppliers, banks, distributors, retailers, and stockholders. The Measures of Market Demand • Potential market - is the set of consumers who profess a sufficient level of interest in a market offer • Available market - is the set of consumers who have interest, income, and access to a particular offer • Target market - is the part of the qualified available market the company decides to pursue • Penetrated market - is the set of consumers who are buying the company's product Vocabulary for Demand Measurement • Market demand - for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. • Market forecast - Only one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called the market forecast • Market potential - is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. o Product-penetration percentage, which is the percentage of ownership or use of a product or service in a population. • Company demand - is the company's estimated share of market demand at alternative levels of company marketing effort in a given time period. • Company sales forecast - is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment. • Company sales potential - is the sales limit approached by company demand as company marketing effort increases relative to that of competitors How Can We Estimate Current Demand? • Total market potential - is the maximum amount of sales that might be available to all the firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. • Area market potential o Market buildup method - calls for identifying all the potential buyers in each market and estimating their potential purchases o Multiple-factor index method Estimating Future Demand • Survey of Buyers’ Intentions • Composite of Sales Force Opinions • Expert Opinion • Past-Sales Analysis • Market-Test Method Marketing insights provide diagnostic information about how and why we observe certain effects in the marketplace, and what that means to marketers. Marketing research firms fall into three categories: 1. Syndicated-service research firms-These firms gather consumer and trade information,
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