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Review Of Chapter 1 to 6 Course Overview QUIZ 1 Franck VIGNERON What is Marketing? Delivery of long term customer satisfaction at a profit. 1-1 Marketing Management Philosophies Production Concept • Consumers favor products that are available and highly affordable •Improve production and distribution Product Concept •Consumers favor products that offer the most quality, performance, and innovative features Selling Concept •Consumers will buy products only if the company promotes/ sells these products Marketing Concept Societal Marketing Concept •Focuses on needs/ wants of target markets & delivering satisfaction better than competitors •Focuses on needs/ wants of target markets & delivering superior value which improves customers and society’s well-being What Motivates a Consumer to Take Action? • Needs - states of felt deprivation including physical needs for food, social needs for belonging and individual needs for selfexpression. i.e. I am thirsty. • Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Coca-Cola. • Demands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola. Other Applications of Marketing • Person Marketing: Mkg efforts for getting attention, interest, and preference of a target toward a person, e.g., Celebrities (Shaquille O’Neal) or political candidate (Bush). • Place Marketing: Visitors, improve image, real estate, … • Cause Marketing: “friends don’t let friends drive drunk” • Event Marketing: Sporting, cultural or charitable activities; Salt Lake City 2002 Winter Olympics • Organization Marketing: Navy = “let the journey begin” How Do Consumers Choose Choose Among Many Products and Services? • Customer Value - difference between the value the customer gains from owning and using a product and the cost of obtaining the product. • Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. • Both are closely linked to Quality and Total Quality Management (TQM). How do Consumers Obtain Products and Services? • Transactions - trade of values between parties: one party gives X to another party and gets Y in return (acquisition + return) • Exchanges - act of obtaining a desired object from someone by offering something, such as money, another good, or a service, in return (value agreed upon) • Relationship Marketing - building long-term relationships with valued consumers, distributors, dealers, and suppliers (long-term) Marketing Management Defined • Marketing management is defined as the analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. • Marketing management is concerned not only with finding and increasing demand, but also with changing or even reducing it. E.g., Demarketing 1-13 THE PLANNING PROCESS MKG PLAN • • • • • • • I. EXECUTIVE SUMMARY – A stimulating summary of the marketing plan II. CURRENT MKG SITUATION – Internal Analysis: Strengths & Weaknesses – External Analysis: Opportunities & Threats III. ISSUE ANALYSIS – Evaluate Potential Strategic Alternatives – Recommend Alternative(s) IV. MARKETING OBJECTIVES – The goals to be achieved through the marketing plan in such areas as customer satisfaction, sales volume or market share V. MARKETING STRATEGIES – Overall Strategies & STP - used to achieve the objectives VI. ACTION PROGRAMS – 4P’s - that will be used to achieve the objectives – Programs that pinpoint who is responsible for the marketing activities and that establish budgets and timetables for executing the MKG strategies VII. CONTROLS – Procedures for monitoring the plan over time and for taking corrective action if needed Strategic Planning Process Defining the company mission Setting company objectives and goals Designing the business portfolio Planning, marketing, and other functional strategies – Defining the Company Mission: Statement of an organization’s purpose - what it wants to accomplish in the larger environment. – Setting Company Objectives and Goals: Supporting objectives for each level of management. – Designing the Business Portfolio: Collection of businesses and products that make up the company. – Planning Functional Strategies: Detailed planning for each department designed to accomplish strategic objectives. Situation Analysis S Things the company does well. W Things the company does not do well. O Conditions in the external environment that favor strengths. T Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Analyzing Current SBU’s: Boston Consulting Group Approach Relative Market Share High Low Market Growth Rate High Stars Low Question Marks • High growth & share • Profit potential • May need heavy investment to grow • High growth, low share • Build into Stars/ phase out • Require cash to hold market share Cash Cows Dogs • Low growth, high share • Low growth & share • Established, successful • Low profit potential SBU’s •Produce cash ? PORTFOLIO MATRIX (continued) Allocating future resources for each • Build – Invest in a problem child that has the potential to become a star • Harvest ? – Increase short-term cash flow from any source except stars • Divest • Hold – Hold and protect; use Cow cash flow to maintain market share – Sell off or close dogs and sometimes problem children that cannot be converted to Dog stars Marketing Strategies Four Basic Types of Strategic Opportunities PRODUCT Present New M A R K E T P r e s e n t N e w Market Penetration Product Development Market Development Diversification Management Decision Hierarchy Decision Markers Decisions Top Managers Goals & Objectives Division Managers Strategies Field Managers Tactics Outcomes Output Managing marketing Strategies Lead to Tactics • Strategy: – Direct our promotion to males, ages 25 to 40 years old. • Tactical alternatives: – Advertise in magazines read by this group of people – Advertise on television programs watched by this group Four Ps of Marketing Marketing Mix Products Price Place Target Market Promotion Marketing Environment • Marketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. • Includes: – Microenvironment - forces close to the company that affect its ability to serve its customers. – Macroenvironment - larger societal forces that affect the whole microenvironment. Marketing Environment Macroenvironment Microenvironment Company The Marketing Environment Demographic Company Economic Cultural Publics Suppliers Company Customers Competitors Natural Political Intermediaries Technological What is a Marketing Information System (MIS)? • Consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers. • Functions: – Assess Information Needs. – Develop Needed Information. – Distribute Information. The Marketing Information System Marketing Managers Marketing Information System Distributing Information Assessing Information Needs Marketing Decisions and Communications Developing Information Information Analysis Internal Databases Marketing Research Marketing Intelligence Marketing Environment Definition of Marketing Research The systematic and objective identification, collection, analysis and reporting of information for the purpose of assisting management in decisions relating to the identification and solution of problems and opportunities in marketing. Types of Data & Where It Comes From Internal data (inside the firm) Secondary data Facts and Figures • Already recorded prior to the project Data • Facts and figures pertinent to the problem • Financial statements, research reports files, customer letters, sales call reports, and customer lists External data (outside the firm) • U.S. Census reports, trade association studies, and magazines, business periodicals, and commercial reports Observational data (watching people) Primary data Facts and Figures • Newly collected for the project • Mechanical and electronic approaches • Personal approaches Questionnaire data (asking people) • Idea generation through in-depth interviews and focus groups • Idea evaluation through mail, telephone, and personal surveys Marketing Research Process Step 1. Defining the Problem & Research Objectives Types & Levels of Information Needed Exploratory Research Descriptive Research Causal Research Gathers preliminary information that will help define the problem and suggest hypotheses. •Describes such things as market potential for a product or attitudes and demographics of consumers who buy the product. •Test hypotheses about causeand-effect relationships. – preliminary information: identify issues problem definition first stage of descriptive or causal research – – – – – expand understanding of factors describe phenomenon representative sample - test cause and effect hypothesis experimentation Primary Research • Qualitative: – Individual in-depth interviews – Focus groups • Quantitative: – Observation – Survey: Mail, telephone, or in-person questionnaire – Experiment Designing the Questionnaire Formatting the Question • Decision to be made regarding the degree of freedom to be given to the respondents in answering the questions Alternatives • Open ended with no classification • Open ended where the interviewer uses precoded classifications to record the response • Close ended or structured format in which a question or a supplementary card presents the responses to be considered Question Wording Care Has to Be Taken That • Is the vocabulary simple, direct, and familiar to all respondents? • Do any words have vague or ambiguous meanings? • Are any questions " double-barreled”? • Are any questions leading or loaded? • Are the instructions potentially confusing? • Is the question applicable to all respondents? • Are the questions of appropriate length? Market Research Process: types of samples • Probability Samples – Simple random sample • known chance • equal probability – Stratified random sample • mutually exclusive groups • random sample drawn • Non-probability Samples – Convenience sample • select easiest population – Judgment sample • select for accurate response • interview set number The Marketing Research Process STEP1: Defining the Problem and Research Objectives STEP 2: Developing the Research Plan STEP 3: Implementing the Research Plan STEP 4: Interpreting and Reporting the Findings Five-Step Marketing Research Approach Leading to Marketing Actions Step 1 Define the problem • Set Research Objectives • Identify possible marketing actions Step 2 Develop the research plan • Specify constraints • Identify data needed for marketing actions • Determine how to collect data Step 3 Collect relevant information by specifying • Secondary data • Primary data Step 4 Develop findings and recommendations • Analyze data • Present findings • Make recommendations Step 5 Take marketing actions • Implement recommendations • Evaluate results A Classification of Marketing Research Data Marketing Research Data Secondary Data Primary Data Qualitative Data Quantitative Data Descriptive Survey Data Experimental Observational & Other Data Experimental Data External Influence Input Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Need Recognition Process Prepurchase Search Evaluation of Alternatives Output Purchase 1. Trial 2. Repeat purchase Postpurchase Evaluation Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience Figure 1-1 A Simple Model of Consumer Decision Making Consumer Behavior Influences: cultural factors • • • • Culture Set of basic values, perceptions and behaviors learned behavior by a member of society from family and other important institutions Consumer Behavior Influences: Social Factors • Groups – membership – reference • Family – most important consumer influence – changing family roles – children may influence strongly Table 5-3 Young Single Married without children Married with children Divorced with children Family-Cycle Stages Middle-Aged Single Married without children Married with children Married without dependent children Divorced without children Divorced with children Divorced without dependent children Older Older married Older unmarried Sources: Adapted from Patrick E. Murphy and William A. Staples, “A Modernized Family Life Cycle,” Journal of Consumer Research, June 1979, p. 16, copyright Journal of Consumer Research, Inc., 1980. Also see Leon G. Schiffman and Leslie Lazar Kanuk, Consumer behavior (Englewood Cliffs, NJ: Prentice Hall, 1994), pp.. 361-70. Consumer Behavior Influences: Social Factors • Roles – Activities people expected to perform • Status – Esteem given a role by society Consumer Behavior Influences: Personal Factors • Lifestyle • A person’s pattern of living • as expressed in his of her – Activities: work, hobbies, shopping, sports, social events – Interests: food,fashion,family, recreation – Opinions: about themselves, social issues, business, products Consumer Behavior Influences: Personal Factors • Occupation – affects goods or services purchased – identify occupations with product need – specialized professional products • Economic situation – indicator for income sensitive products Consumer Behavior Influences: Personal Factors • Psychographics – Technique of measuring lifestyles – Developing lifestyle classifications – By measuring • activities • interests • Opinions – + Social Class and Personality Characteristics Consumer Behavior Influences: Personal Factors • Personality – traits – may predict behavior • Self-concept – self-image – possessions reflect identity Factors Influencing Consumer Behavior Cultural Social Culture Reference groups Subculture Family Social class Roles and status Personal Age and life-cycle Occupation Economic situation Lifestyle Personality and self-concept Psychological Motivation Perception Learning Beliefs and attitudes Buyer Consumer Behavior Influences: Psychological Factors • Motivation – biological needs – psychological needs • Motive – Need sufficiently pressing – to drive a person to seek satisfaction – may be unconscious Maslow’s Hierarchy of Needs 5 Self-Actualization (Self-fulfillment, personal enrichment) Ego Needs (Prestige, status, self esteem) Social Needs (affection, friendship, belonging) Safety and Security Needs (Protection, order, stability) Physiological Needs (Food, water, air, shelter, sex) 4 3 2 1 Types of Buying Behavior High involvement Low involvement Significant differences between brands Complex buying behavior Varietyseeking behavior Few differences between brands Dissonance reducing behavior Habitual buying behavior The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior Adopter Groups 2.5% Innovators Buyer behavior 13.5% 34% Early Early Adopters Majority 34% Late Majority 16% Laggards Business Buying Situations Involved Decision Making New Task Buying Modified Rebuy Straight Rebuy Participants in the Business Buying Process: The Buying Center Gatekeepers Users Buying Center Buyers Deciders Influencers Stages of the Business Buying Process Problem Recognition General Need Description Product Specification Supplier Search Proposal Solicitation Supplier Selection Order Routine Specification Performance Review