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Marketing Management MKTG 6170 The class has a website where everything is kept: www.business.uni.edu/clayson/mm Fundamentals http://www.youtube.com/watch?v=KkBvzS_fJ2g&feature=player_embedded# Marketing CUSTOMER-DRIVEN http://www.youtube.com/watch?v=l4seWLW2KhQ&feature=player_embedded Marketing is the only business function that is external: Marketing is universal: Marketing is universal: Promotion is only a part of marketing… Advertising is only a part of promotion… The average person sees…. 350 to 2,500 ads per day Marketing is universal: Promotion is only a part of marketing… Advertising is only a part of promotion… There are 54 jobs in sales for every job in advertising! Marketing can look very complicated and sometimes almost incomprehensible, but is it? http://www.youtube.com/watch?v=hxRqKgjD3vY&feature=related https://www.youtube.com/watch?v=M-HrTC8QCbM On the other hand, marketing can look very simple, but is it? Marketing is a combination of: Science Rene Descartes (1596 – 1650) Isaac Newton (1643-1727 Experience Giambattista Vico (1668 – 1744) Henry Ford (1863 – 1947) Psychology Sigmund Freud (1856 – 1939) B. F. Skinner (1904 – 1990) Perception: and Brain Function Perception: and Biology http://www.123opticalillusions.com/pages/Spinning_Dancer.php Promotion and Propaganda Politics Both external An American president is arguably the most marketed product in the world! Hagiology hagiology (ˌhæɡɪˈɒlədʒɪ)n, pl gies1. (Theology) literature concerned with the lives and legends of saints 2. (Theology)a. a biography of a saint b. a collection of such biographies 3. (Theology) an authoritative canon of saints 4. (Theology) a history of sacred writings hagiologic ˌhagioˈlogical adj ˌhagiˈologist nCollins English Dictionary – Complete and Unabridged © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003 Politics and internal! and Art Some basic background Logic and Research What is an Opinion? It is basically a Belief A belief has three forms: 1. Descriptive Jane is pretty. X=Y 2. Evaluative X = Y and Y = value, therefore X = value Jane is pretty, therefore I like Jane. This is called a “halo effect.” Being attractive is good, Jane is attractive, therefore Jane is good. A belief has three forms: 1. Descriptive Jane is pretty. X=Y 2. Evaluative X = Y and Y = value, therefore X = value Jane is pretty, therefore I like Jane. 3. Normative X = Y and Y = norm, therefore X = norm Jane would make a good wife, but a poor mother. Logic and Research What is an Opinion? It is basically a Belief, or Guess. Logic and Research Are all opinions equal? Yes! In that everyone can have them. No! In that every opinion has to be based on something. Some person’s opinion about the stock market are more valuable than others!! Opinions about solutions are not equal. Logic and Research What is a Hypothesis? An opinion that can be tested. A hypothesis can be logically and statistically tested…. Logic and Research What is a Statistic? 1. Mathematical method of calculating probability 2. Characteristic of a sample A statistic is a characteristic of a group. It tells you nothing about an individual… except for a probability. That probability allows for decisions to be made that are better than chance. Statistic: Education majors have the lowest standardized scores (ACT, Iowa Basic, etc.) of any majors on campus. Statistic: Education majors have the lowest standardized scores (ACT, Iowa Basic, etc.) of any majors on campus. An education major says, “That can’t be true. Both my friend and I had the highest ACT scores in my high school and we are both education majors. I am highly offended by your slur.” What is wrong with this logic? In the United States: Blacks are imprisoned at 5X the rate of whites A Washington-based think tank found In Iowa: Blacks are imprisoned at 13X times the rate of whites Does this mean that Iowa's criminal justice system is racist? Nevada has over twice as many whites per 100,000 in jail than does Iowa. Does this mean the Nevada justice system is biased against whites? Or does it imply that the white population of Nevada is not the same as the white population of Iowa in relationship to committing crimes deemed important by the state? Logic and Research What is a research findings? Logic and Research What is a research findings? Results of controlled research procedures. Logic and Research What is a fact? Reality is a fact, but… what is reality? Poverty rate of children: Married parents Divorced Mother Never Married Mother 9% 32% 54% What are these statements? Income of average working women: Income of husband & wife working: $32,200 $76,000 Income of single mother in NYC who is working: $22,000 Median income of women in NYC is $33,000! “The single best thing a person can do to fight poverty is to get marred!” What is this statement? “Having a child without a husband is a one way ticket to poverty!” What is this statement? “Having a child without a husband is a one way ticket to poverty!” What is this statement? But… What about politics and art? Would you always want to make this statement? http://www.gallup.com/poll/124922/Presidential-Approval-Center.aspx Marketing Definition of Marketing Marketing (AMA): “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 objectives.” Two approaches: 1. Value and 2. Exchange Value Definition: Marketing is an organizational function and A set of processes for: Creating Communicating Delivering Value To customers Exchange Definition: Marketing is the processes of: Creating exchanges that satisfy individual and organizational objectives. Exchange Definition: Marketing is: Arranging a Buyer… Seller for a Seller… Buyer The conception, pricing, promotion, and distribution These are called the 4-Ps or the Marketing Mix The conception, pricing, promotion, and distribution The 4-Ps or the Marketing Mix (mnemonic) 1. Product 2. Promotion 3. Price 4. Place (distribution) All of these need to be redefined in terms of the two approaches! But first, let’s define some terms common to all approaches. Value: Definition: The benefits a customer receives from obtaining a product (good, service, information) Value: Definition: The benefits a customer receives from obtaining a product (good, service, information) Need: Definition: The difference between an exchanger’s actual state and some ideal state Desired State Need Actual State Want: Definition: The desire to satisfy needs in a specific way Demand: Definition: Wants backed with resources Satisfaction: Definition: Benefits = Expectations “Satisfaction is not symmetrical.” Delight: Definition: Benefits > Expectations So in the value approach: 1. Product: That which gives value 2. Price 3. Promotion 4. Place 1. Product: 2. Price Value (benefits – costs) 3. Promotion 4. Place 1. Product: 2. Price 3. Promotion The communication of value 4. Place 1. Product: 2. Price 3. Promotion 4. Place The distribution of value, or increasing value by distribution Exchange Approach Exchange Approach 1. Product: That which is transacted 2. Price 3. Promotion 4. Place Exchange 1. Product: 2. Price The value of a transaction 3. Promotion 4. Place Exchange 1. Product: 2. Price 3. Promotion The communication process of a transaction 4. Place Exchange 1. Product: 2. Price 3. Promotion 4. Place The actual transaction You wake up in a corn field…. “Marketing is arranging a buyer for a seller.” This means: 1. Marketing is the process of creating satisfying exchanges. “Marketing is arranging a buyer for a seller.” This means: 1. Marketing is the process of creating satisfying exchanges. 2. Wealth is created through free exchanges. We both have something that was more valuable to us than what we had before. We are “wealthier.” Marketing Concept: “All marketing strategies should be based on known consumer needs and/or wants.” Note the word: KNOWN This is very important, so let’s repeat it! Marketing Concept: “All marketing strategies should be based on known consumer needs and/or wants.” Note the words: STRATEGIES, KNOWN, NEEDS, WANTS Extension: “All firms and companies have the same product… that is, a customer.” Implications………….. Without producing a customer…. nothing else produced is relevant. “There is only one valid definition of business purpose: to create a customer.” Peter Drucker “Everybody is paid by the customer. Pay raises, bonuses, job promotions, and worker benefits are paid by the customer.” Jeffrey Fox “Inside an organization there are only cost centers. The only profit center is a customer whose check has not bounced.” Peter Drucker Without producing a customer…. nothing else produced is relevant. Products only have one function… to produce a customer. Why does John Deere produce tractors? If farmers decided they wanted to pull their grandchildren around in little wagons instead of buying tractors, what should John Deere do? Without producing a customer…. nothing else produced is relevant. Promotion only has one function… to produce a customer. Ad firms love to show off their awards… Ads that do not produce customers may be entertaining, but Promotion is not entertainment… Plop…Plop… Fizz…. Fizz http://www.youtube.com/watch?v=ErgdUhZteqw&feature=player_embedded Without producing a customer…. nothing else produced is relevant. Price has only one function… to produce a customer. Without producing a customer…. nothing else produced is relevant. Place has only one function… to produce a customer. “Customers fire employees every day for many reasons.” “Every single job in a company must directly or indirectly help to get and keep a customer.” Jeffrey Fox Employees have only one function… to produce a customer. “Jobs that don’t get and keep customers are temporary, unnecessary, or should be outsourced.” Jeffrey Fox Without producing a customer…. nothing else produced is relevant. Historical Development Historical Development Based Mostly on Supply & Demand Historical Development 1. Barter (Until about 1850; industrial revolution) Historical Development 1. Barter (Until about 1850; industrial revolution) 2. Production Era (Demand exceeds Supply) Historical Development 1. Barter (Until about 1850; industrial revolution) 2. Production Era (Demand exceeds Supply) 3. Sales Era (Demand = Supply; Until about 1945-1960) Historical Development 1. Barter (Until about 1850; industrial revolution) 2. Production Era (Demand exceeds Supply) 3. Sales Era (Demand = Supply; Until about 1945-1960 4. Marketing Orientation a. Marketing Department Era (Supply > Demand) b. Marketing Concept Era c. Relationship Era In summary “Marketing is the only external business function.” “Marketing is arranging a buyer for a seller.” “Marketing is creating an exchange.” You will make a living by marketing only if: You create an exchange… And you can add value to that exchange! All Business is Service! “People become rich when they make other people happy. They become very wealthy when they make a lot of people happy.” Benjamin Stein