Chapter 1 What is Marketing

1. 2. Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. Process by which individuals and group obtain what they need and want through creating and exchanging products and value with others Marketing is the delivery of customer satisfaction at a profit Marketing is the process of influencing voluntary exchange transactions in which one party to the transaction can be envisioned as a customer of the other the marketer. The marketing process involves communication and requires a mechanism or system to carry out the exchange of the marketers product for something of value.

3. 4.

Core marketing concepts People have unlimited want but limited resources

1.
2.

Market set of potential buyers for a product or service Needs, wants and demands a. Needs -- State of felt deprivation for basic items (e.g. foods, clothing belonging) b. Want form that a human need takes as shaped by culture and individual personality

3.

c. Demands human wants backed by buying power Products and services

Product -- anything that can be offered to a market to satisfy a need or want b. Service any activity or benefit that one party can offer to another, intangible, does not result in ownership of anything Value, satisfaction and quality a. Customer Value value gained from owning a product and costs of obtaining the product b. Customer Satisfaction Products perceived performance in delivering value relative to buyers expectations

a.

4.

c. 5.

TQM involves improving the quality of products, services and marketing processes Total customer satisfaction

Exchange, transactions and relationship marketing a. Exchange -- Desired object from someone by offering something in return b. Transactions trade of values between two parties, it is marketing unit of measurement, build long term relationship c. Relationship process to creating maintaining and enhancing strong, value-laden relationships Marketing myopia org paying more attention to specific products rather than benefits produced by these products Concept of exchange necessary conditions for exchange 1. At least two parties 2. Something of value 3. Ability to communicate offer 4. Freedom to accept or reject 5. Desire to deal with other party Customer Retention 1. Customer satisfaction the products performance matches expectations 2. Customer dissatisfaction the products performance falls short of expectation 3. Customer delight the products performance exceeds expectations Developing competitive advantage 1. Create customer value a. Offer products that perform b. Give consumers more than they expect c. Avoid unrealistic pricing d. Give the buyer facts e. Offer organization wide commitment in service and support 2. Build long term relationship a. Forge long term partnerships with customers b. Develop customer oriented personnel c. Use internet as a tool 3. Maintain customer satisfaction a. Meet or exceed customers expectations b. Focus on keeping customers satisfied c. Provide solutions to customers problems

Marketing Management The analysis, planning, implementation and control of program designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organization objectives, involves managing demand and managing customer relationships 1. Marketing management implementing programs to create exchanges with target buyers to achieve organizational goals

2.
3.

Demand management finding and increasing demand, also changing or reducing demand such as in De-marketing Profitable customer relationship attracting new customers and retaining and building relationships with current customers

Marketing Management Philosophies 1. Production concept consumers favor products that are available and highly affordable, improve production and distribution 2. Product concept consumers favor products that offer the most quality, performance, and innovative features 3. Selling concept consumers will buy products only if the company promotes / sells these products 4. Marketing concept focuses on needs / wants of target markets & delivering satisfaction better than competitors a. Focus on customer wants and needs to distinguish products from competition b. Integrated all organizations activities to satisfy customer wants and need c. Achieves organization long term goals by satisfying customer wants and needs 5. Societal Marketing Concept Focuses on needs / wants of target markets & delivering superior value. The Four CS

1. 2. 3. 4.

Collaborators suppliers, complementors Competitors industry, org offer products that near substitutes Customers form utility, place utility, time utility, possession utility Company -- Total organization, interactive, flexibility, entrepreneurial approach, intra-premarital approach Company Microenvironment 1. Demographic environment 2. Economic environment 3. Natural environment 4. Technological environment 5. Political environment 2. 3. 1 of 11 Location based Quality based 9/23/2012

Company Microenvironment 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics Competition 1. Price based Prepared by: Derek Tai

4.

Time based choice

Marketing Mix 1. Product (service)

2. 3. 4. 5.

Price Place Promotion People

cost convenience communication care

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Chapter 2 MIS, Marketing Research & Consumer Behavior

Marketing research Make decisions based on objective, systematically, gathered data Process of planning, collecting and analyzing data relevant to a marketing decision Uses of marketing research 1. Improving the quality of decision making 2. Tracking problems 3. Keeping existing customers 4. Understanding the ever changing marketplace Three roles of marketing research 1. Descriptive 2. Diagnostic 3. Prescriptive When conducting marketing research 1. Value of research information exceeds the cost of generating the information 2. When time permits conducting quality research 3. Where there is a high level of uncertainty Marketing information System (MIS) Consist of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers 1. Access information needs a. Cost and benefit 2. Develop needed information a. Customers b. Environment c. Marketing activities 3. Develop information a. Internal data b. Marketing intelligence c. Marketing research 4. Decision Support system (DSS) a. Interactive b. Flexible c. Discovery oriented d. Accessible 5. Distribute information a. Distributes routine information for decision making b. Distributes non-routine information for special situations c. Distribute Right manager at right time Marketing research Process (DMAIC) 1. Define problem and research objective

a.
b.

Exploratory research gather preliminary info. Help define problem and suggest hypotheses Descriptive research describes things as market potential

2.

Causal Research Test hypotheses about cause and effect Develop research plan for data collection a. Determining specific information need Gathering , evaluating secondary information i. Source quality ii. Data quality iii. Data compatibility c. Planning primary data collection i. Observation method ii. Survey research iii. Experimental research Implement research plan Collect data b. Processing data c. analyzing data Interpreting and report finding a. Interpret the finding b. Draw conclusions c. Report to management

c.

b.

3.

a.

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Consumer buying behavior All these consumers make up the consumer market How consumers make purchase decisions and how they use and dispose of the purchased goods and services Help marketers design product or service at right place, price, promotion Buyer Decision Process Need recognition Information search evaluation of alternatives purchase decision Post-purchase Behavior 1. Need recognition a. Routine response behavior b. Limited Decision making c. Extensive Decision making Information Search a. Personal Sources b. Commercial Sources c. Public Sources mass media d. Experiential Sources Evaluation of Alternatives a. Use careful calculation and logical thinking b. Buy on impulse and rely on intuition c. Make buying decisions on their own d. Buying decisions only after consulting others Purchase decision a. Attitudes of others b. Unexpected situational factors Post-purchase behavior depends on quality of match between expectations and outcomes Stages in the adoption Process 1. Awareness aware of product, but lack information 2. Interest seeks information about new product 3. Evaluation considers trying new product 4. Trial tries new product on a small scale 5. Adoption decides to make regular use of product 3 of 11 9/23/2012

2.

3.

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Factors influencing consumer behavior (study text book pls!) 1. Cultural sub cultural, social class 2. Social reference group, family, roles and status

3.
4. 5.

Personal age and life cycle, occupational, economic situation, self concept Psychological Perception, motivation, learning, beliefs and attitudes Buyer

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Chapter 3 - Segmentation
Steps in market targeting

1.

Market segmentation grouping people by needs or wants, similar response characteristics a. Identify bases for segmenting the market i. Measurable ii. Accessible iii. Actionable iv. Stable over time v. Substantial vi. Differential vii. Response differences b. Develop segment profiles i. Consumer 1. Geography 2. Demographics 3. Psychographic 4. Benefits Sought 5. Usage Rate ii. Business Market 1. Geography 2. Organizational characteristics 3. Purchase behavior 4. Usage patterns

5. 2.

Organizational predispositions

Market targeting The way the products is defined by consumers on important attributes the place the product occupies in consumers mind relative to competing products. a. Develop measure of segment attractiveness i. Segment Size and Growth ii. Segment Structural attractiveness iii. Company Objectives and Resources iv. Strategic analysis of market segmentation 1. Customer analysis 2. Competitor analysis 3. Positioning analysis

b.

Select target segments i. Factors influencing the choice ii. Evaluating market segments 1. Segment size and growth 2. Segment structural attractiveness 3. The companys objectives and resources iii. Selecting marketing segments iv. Company can adopt a number of market coverage strategies

v.

Concentrated marketing fit for small new company Choosing a market coverage strategy 1. Company resources 2. Product variability 3. Products Stage in the life cycle 4. Market variability 5. Competitors Marketing Strategies

1. 2. 3.

Undifferentiated marketing common in the needs of customers Differentiated marketing separate offers for targeted several market segment

3.

Market positioning How a products is geared to attract market segment a. Develop positioning for target segments i. Identifying possible competitive advantages ii. Selecting the right competitive advantage iii. Communicating and delivering the chosen position b. Develop a marketing mix for each segment

Levels of market segmentation

1. 2. 3. 4.

Mass marketing----------------------------same product to all consumers Segment marketing-----------------------different products to one or more segments Niche marketing---------------------------different products to subgroups within segments, more narrowly defined consumer group Micromarketing----------------------------Products to suit the tastes of individuals and locations a. Local marketing b. Individual marketing b. Price and Quality c. Use or Application d. Product User e. Product Class f. Competitor Competitive advantage An advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage a. Product differentiation 9/23/2012

Positioning for competitive advantage

1.
2.

Positioning strategies consumers do not usually reevaluate products Positioning concept

Experiential sensory pleasure, variety Positioning Base a. Attribute Prepared by: Derek Tai 3.

a. b. c.

Functional solve consumption related problems Symbolic self-enhancement, ego identification 4.

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b. c.

Service differentiation People differentiation

d.

Image differentiation

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Chapter 5 Marketing of Services

Goods services continuum approach envisions a spectrum that ranges from a pure good to a pure service Services can be defined as intangible tasks that satisfy consumer and industrial user need Services represent 90% Hong Kong GDP and nearly all new job Key features of Services 1. Intangibility personal selling and advertising must show the benefits of using the service 2. Inseparability those who provide the service are perceived as the service itself 3. Perishability the utility of most services is short lived 4. Difficulty of standardization it is often impossible to standardize offerings among sellers of the same service or to even assure consistency of quality 5. Buyer involvement the consumer often plays a major role in the marketing and production of eservices 6. Variable quality service quality depends on the service provider and service delivery Service Quality

1.
2. 3. 4. 5.

Tangibles the physical evidence of the service Reliability the consistency of performance and dependability Responsiveness the willingness and readiness of employees to provide service Assurance the confidence communicated by the service provider Empathy --- the service providers efforts to understand the customers need and then individualize the service

Service encounter interaction point between the buyer and the service provider 1. World of mouth communication 2. Service switching 3. Service loyalty Consumer services are classified as convenience, shopping, and specialty services Business services are classified as adjunct service or outside providers Adjunct services provide supporting roles such as consulting Outside services outsource tasks Classifying services 1. What is the nature of the service act? 2. What type of relationship does the service organization develop with its customers? 3. How much can the service provider customize and adjust the service product? 4. What is the nature of demand for the service? 5. How is the service delivered? Environments for Service Firms 1. Economic environment 2. Social cultural environment 3. Political legal environment 4. Technological environment 5. Competitive environment Marketing mix for service firms 1. Service Strategy a. Service providers must struggle to find the right product mix just like goods producers b. Service firms use line extension principles to grow; this task grows out of changes in the service environment 2. Price Strategy a. Due to government regulation, price competition is limited in many services b. Price negotiation is an important part of many professional service transactions c. Pricing is sometimes handle by bundling services 3. Distribution Strategy a. Generally the channels for services are simpler and more direct than channels of distribution for products b. Two major exceptions to direct distribution of services are consolidators and franchises 4. Promotional Strategy a. This is a critical element of the marketing mix for services b. There are several possible strategies i. Making service more tangible by personalizing ii. Creating a favorable image for the service

iii. 1. 2.

Showing the tangible benefits of purchasing an intangible service

Marketing Strategies for Service Firms Managing Service Differentiation develop differential offer, delivery and image Managing Service Quality a. Empower front line employees b. Become Customer obsessed c. Develop high service quality standards d. Watch service performance closely Managing Service Productivity a. Train current or new employees better b. Work on quality as well as quantity c. Utilize technology

3.

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Chapter 6 The Product

Product Classifications 1. Consumer Products Convenience Products buy frequently & immediately, low priced, mass advertising, many purchase locations b. Shopping products buy less frequently , higher price, fewer purchase location, comparison shop c. Specialty Products special purchase efforts, high price, unique characteristics, brand identification, few purchase locations d. Unsought Products new innovations, products consumers dont want to think about these products, require much advertising & personal selling Industrial Products a. Materials and parts b. Capital items c. Supplies and services

a.

2.

Product Positioning Product position is the place the product occupies in the consumers mind with respect to some small tangible or intangible key attributes (Position Map) Product MIx 1. Consistency of the product mix refers to the inter-relatedness of the product lines 2. Width of the product mix refers to the number of different product lines in the product mix, interrelated or not 3. Depth of the product mix refers to the number of items or the variation within each product line in the product mix Development of Product lines --Product lines are centered on a firms core competencies Firms benefit from product lines 1. By facilitating the desire to grow 2. By optimal use of company resources 3. By enhancing the companys position in the market 4. By exploiting the Product Life cycle Individual Product Decisions 1. Product Attributes a. Product Quality b. Product Features c. Product Style & Design 2. Branding a. Brand Name selection

b.
c.

d.

Brand Sponsor (term, sign, symbol) Brand Strategy i. Line extension existing brand names extended to new forms, size, and flavors of an existing product category ii. Brand extensions existing brand names extended to new or modified product categories iii. Multibrands new brand names introduced in the same product category iv. New brands new brand names in new product categories Benefits of branding i. Product identification ii. Generates repeat sales iii. Facilitates new product sales Identified product or brand Describes several things about the product

3.

Labeling -- Printed information appearing on or with the package

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Promotes the product through attractive graphics Packaging a. Activity of designing and producing the container or wrapper for a product Packaging used to just contain and protect the product c. Packing now has promotional value and marketers Product Support Service

a. b. c. b.

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New products obtained ways 1. Through acquisition buying a whole company, a patent, or a license to produce another companys product 2. New product development using the companys own research and development department Major Stages in New Product Development 1. Idea generation 2. Idea screening 3. Concept development and testing 4. Marketing strategy 5. Business analysis 6. Product development 7. Test marketing 8. Commercialization

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Chapter 8 Distribution and Logistics

Distribution Function The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. Channel Functions 1. Physical distribution a. Accumulating bulk b. Creating assortments c. Breaking bulk d. Reducing transactions e. Transporting & storing 2. Communication & transaction a. Gather & disseminate information b. Buying & selling (personal selling, advertising, sales promotion) c. Transfer of ownership 3. Facilitating a. Extra services b. Credit services c. Risk taking Benefits of supply chain management 1. Reduced costs 2. Improved service 3. Enhanced revenues Logistics function 1. Costs minimize costs of attaining logistics objectives 2. Order processing -- received, processed, shipped 3. Warehousing storage, distribution automated 4. Inventory when to order, How much to order, Just in time 5. Transportation rail, truck, water, pipeline, air Integrated Logistics management Providing better customer service andd trimming distribution costs requires teamwork, both inside the company and among all the marketing channel organizations 1. Cross functional teamwork inside the company 2. Building channel partnerships 3. Third party logistics Supply Chain functions 1. Sourcing & procurement 2. Production scheduling 3. Order processing and customer service 4. Inventory control systems 5. Warehouse & materials management 6. Transportation

Distribution Channel 1. A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. 2. Marketing channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision. Intermediaries function 1. Using intermediaries results from their greater efficiency in making goods available to target markets 2. Offer the firm more than it can achieve on its own through the intermediaries a. Contacts b. Experience c. Specialization d. Scale of operation 3. match producers supply to consumer demand Horizontal Marketing system two or more companies at one channel level join together to follow a new marketing opportunity Hybrid marketing system a single firm sets up two or more marketing channels to reach one or more customer segments Disintermediation means that product and service producers are bypassing intermediaries and going directly to final buyers or that new types of channel intermediaries are emerging to displace traditional ones Classification of Retailing Includes all the activates involved in selling goods or services directly to final consumers for their personal, non-business use 1. Amount of service a. Self service provide few or no services to shoppers b. Limited service provide only a limited number of services to shoppers c. Full service retailers that provide a full range of services to shoppers 2. Product line Length and breadth of product assortment (specialty stores, department stores, supermarkets, convenience stores) 3. relative prices a. higher prices and offer higher quality goods and customer service b. regular prices and offer normal quality goods and customer service c. lower prices and offer lower quality goods and customer service 4. retail organization a. merchandising conglomerates b. corporate chain c. franchise organizations d. retailer cooperatives e. voluntary chain Presentation of retail store 1. Employee type and density 2. Merchandise type & density 3. Fixture type & density 4. Sound 5. Odors 6. Visual factor Key retail issue 1. Merchandise assortment 2. Location 3. Atmospherics 4. Customer service 5. Store image 6. Database management 7. Internet strategy Future of retailing 1. New retail forms and shortening retail lifecycle

2.

Growth of non-store retailing 3. Increasing intertype competition 4. Rise of mega retailer 5. Growing importance of retail technology 6. Global expansion of major retailers 7. Retail stores as communities or hangouts Wholesaler functions 1. Management service & advice 2. Market information 3. Risk bearing 4. Financing 5. Transportation 6. Selling and promoting 7. Buying and assortment building 8. Bulk breaking 9. Warehousing 9 of 11 9/23/2012

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Vertical marketing systems

5. 6.

Conventional distribution channel -- One or more independent producers, wholesalers and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the channel as a whole Vertical marketing system -- VMS is a distribution channel structure in which producers wholesaler and retailers act as an independent company work together. a. Corporate VMS coordination and conflict management are attained through common ownership at different levels of the channel b. Contractual VMMS coordination and conflict management are attained through contractual agreements among channel members

c. 7. 8.

Administered VMS coordination and conflict management are attained through leadership assumed by one or a few dominant channel members

Horizontal marketing system channel arrangement in which two or more organization at one level join together to follow a new marketing opportunity Hybrid marketing system a multi-channel distribution system in which a single company set up two or more marketing channels to reach one or more customer segments

Marketing intermediaries 1. Intensive distribution stocking the product in as many outlets as possible 2. Exclusive distribution -- giving a limited number of dealers the exclusive right to distribute the companys products in their territories 3. Selective distribution using more than one, but fewer than all., of the intermediaries who are willing to carry the company products Evaluating the major alternatives 1. Economic criteria the likely profitability of different channel alternatives 2. Control criteria using an intermediary usually means giving it some control over the marketing of the product and some intermediaries take more control than others do 3. Adaptive criteria -- the company wants to keep the channel as flexible as possible but long-term commitment may make it difficult to adapt to the changing marketing environment Channel management decisions 1. Selecting channel members 2. Motivating channel members 3. Evaluating channel members Factors influence the distribution decision 1. Buyers considerations 2. Product characteristics 3. Financial and control consideration 4. Factor favoring direct distribution Selecting the channel strategy 1. Market access 2. Financial considerations 3. Flexibility and control considerations

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Chapter 13 ethical behavior in business

Marketing impact on individual consumers 1. High prices a. High costs of distribution b. High advertising and promotion costs c. Excessive markups

2.

Deceptive practices

3. 4. 5. 6.

Deceptive packaging exaggerating package contents, not filing package to the Top, using misleading labeling High pressure selling Shoddy, unsafe products Planned obsolescence Poor service to some Code of ethics helps 1. Identify acceptable business practices 2. Internally control behavior 3. Reduce confusion in decision making 4. Facilitate discussion about right and wrong Corporate social responsibility 1. Philanthropic be a good citizen 2. Ethical do what is right 3. Legal obey the law 4. Economic be profitable Ethical decision making 1. Extent of ethical problems within the organization 2. Top management action of ethics 3. Potential magnitude of consequences 4. Social consensus 5. Probability of harmful outcome 6. Length of time between the decision and the onset of consequence 7. Number of people to be affected

a. b. c.

Deceptive pricing falsely advertising factory or wholesale price, large reduction from phony high list price Deceptive promotion overstating the products features, luring customers to the store for out of stock bargains

Marketing impact on society as a whole 1. False wants & too much materialism 2. Producing too few social goods 3. Marketing perceived negative impact on society as a whole 4. Too much political power 5. Cultural pollution Marketing impact on other businesses 1. Acquisitions of competitors 2. Marketing practices create barriers to entry 3. Unfair competitive marketing practices Consumerism right 1. The right to choose & Be informed 2. The right to be safe & protected 3. The right to be heard about quality of life issues 4. The right to choose & expect the product to perform Enlightened Marketing 1. Consumer Oriented marketing 2. Innovative marketing 3. Value marketing sense of mission marketing societal marketing

Ethical guidelines and code of ethics advantages 1. Helps employees and management identify acceptable business behavior 2. Effective internal control of behavior 3. Provides guidelines for making decisions 4. The process of developing a code of ethics facilitates discussion and buy in by all parties Enlightened marketing 1. Consumer oriented marketing holds that company should view an organize its marketing activities from the consumers point of view 2. Innovative marketing require that a company seek both real product and marketing improvements 3. Value marketing company should put most of its resources into value-building marketing investments 4. Sense of mission marketing company should define its mission iin broad social terms rather than narrow product terms 5. Societal marketing company should make marketing decision by considering consumers wants the company requirement, the consumers, long run interests and society long run interests Product classification 1. Deficient products products that have neither immediate appeal nor long run benefits ( ineffective medicine_ 2. Pleasing products products that give high immediate satisfaction but may hurt consumers in the long run (cigarettes) 3. Salutary products products that may have low appeal but may benefit consumers in the long run ( seat belts and air bags)

4.

Desirable products products that give both high immediate satisfaction and high long run benefits (tasty and nutritious food)

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