Flashcards in MKT4580 Chapter 1 Deck (52):
Recent challenges and opportunities of marketing
I. Power shift to customers (co-producers)
II. Massive increase in product selection
III. Audience & media fragmentation
IV. Changing value propositions
V. Shifting demand patterns (Redbox)
What is marketing? (AMA definitions)
Marketing is an organizational function & a set of business processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Five types of utility
I. Form Utility- Attributes or features that set product apart.
II. Time Utility – Products available when customers want them
III. Place Utility – Products available where customers what them
IV. Possession Utility – Transfer of ownership or title; ease of acquisition
V. Psychological Utility – Positive experiential attributes that customers find satisfying (Driving a BMW makes you feel good)
Mission vs. Vision statement
A mission statement answers, “what business are we in?” It is clear, concise, and contains a lot of information. The mission statement explains the organization’s reason for existence. A vision statement answers, “what do we want to become?” Vision statements tend to be future oriented and represents where the organization is headed.
Goals vs. Objectives
Goals are the end product. Where as, objectives are more specific and steps to get to the goals. For example the goal is to increase sales and the objective is to increase sales by 20% in 3 months.
Marketing strategy development (Sean Paton) vs. Implementation (Drew Brees)
Functional strategies are designed to integrate efforts focused on achieving the area’s stated objectives. The strategy must: Fit the needs, be realistic, and be consistent. Implementation involves activities that execute the functional strategy. A company must rely on its internal market (its employees) for a functional strategy to be implemented successfully.
Internal vs. Customer vs. External environment
Internal environment – review of current objective, strategy, & performance, availability of Resources, Organizational Culture and Structure
Customer Environment – Who are out Current & potential customers? What do customers do with our products? Where do customers purchase our Products? When do customers purchase our product? Why (& How) do customers select our products?
4 levels of competition
a. Brand Competitors – Market product with similar features & benefits to same customers at similar prices? (Diet Coke vs. Diet Pepsi)
b. Product Competitors – Compete in the same product class, but with products that are different in features, benefits, & price (Any other soft drinks)
c. Generic Competitors – market very different product that solve the same problem or satisfy the same basic customer needs. (Anything you can drink)
d. Total Budget Competitors - Compete for the limited financial resources of the same customers (anything that can be consumed with you $2 snack)
External Environment -Competitive environment
Identify, Characteristics, assessment, capabilities, response
External Environment -Economic environment
Economic change is inevitable & has a profound impact on marketing. Factors that affect consumer purchasing power & spending patterns.
External Environment -Political/legal environment
Lobbying is absolutely necessary to marketing strategy in highly regulated industries. Firms must abide by the law, but many laws are vague and difficult to enforce. (Court decisions, Corporate governance, Trade agreements
External Environment -Technological environment
(Changes rapidly)Forces that create new technologies, creating new product and market opportunities. Frontstage technology – advance that are noticeable to customers (Smartphone, GPS). Backstage Technology – Advances that are not noticeable to customers (Computer technology).
External Environment - Sociocultural environment
Influences that cause changes in attitudes, beliefs, norms, customs, and lifestyles. Socialcultural forces can be profound effect on the way customers live and buy products.
Sociocultural environment -
a. Demographic Trends
b. Lifestyle Trends
c. Value Trends
a. Aging population
c. Greater focus on ethics & social responsibility
what are the 6 External Environment
Total Budget competitors
a framework for organizing and utilizing the pieces of data and info. gained from the situation analysis.SWOT is simplistic, it helps lower cost, enhances the strategic plan, gives the ability to integrate and synthesis diverse info., and fosters collaboration and helps open exchange between different functional areas.
A good strategy is...
about matching the firm’s strengths to the available opportunities.
Strengths & Weaknesses are
Opportunities & Threats are
Three basic strategies for competitive advantages
Operational excellence, Product Leadership, Customer Intimacy
-Focus on efficiency of operations & processes (Wal-Mart)
-Lower cost operations lead to lower prices for customers (Southwest)
-Excellence in technology & product development
-Most advanced, highest quality product offering in the industry
-Understanding customers better than the competition m
-Develop long-term customer relationships
Four major directions for strategic focus (using the SWOT matrix)
Internal Strengths/External Opportunities
Internal Strengths/External Threats
Internal Weaknesses/External Opportunities
Internal Weaknesses/External Threats
Red vs. Blue ocean
A red ocean strategy is like Michael Porters strategy. This strategy is used in industries with known market space and too many competitors. When using the red ocean strategy you can only use differentiation OR low cost. The goal is to beat the competition to increase your market shares. As for the Blue Ocean strategy it is like Michael Porters strategy but is more advanced. Companies that have use this strategy has: new market space and their competition is Irrelevant. When using the blue ocean strategy you can have both differentiation AND be a low cost provider. Blue Ocean Strategy defines good strategy as having Focus, Divergence, and Compelling Tagline.
Indentifies factors that the industry currently competes on and what customers receive from existing product offerings (captured by the horizontal axis – suppliers & buyers) Identifies the offering level received by buyers for each factor (captured by the vertical axis – Substitute, new entrants, established rivals). Identifies a company’s relative performance across its industry’s factors of competition (captured by the value curve).
Four actions framework
which factors that the industry takes for granted, should be eliminated? (Factors may no longer have value for buyers.)
Which factors should be reduced well below the industry’s standard? (Have products been over designed in a race to beat competition?)
Which factors should be raised well above the industry’s standard? (Has the industry forced customers to make compromises?)
Which factors should be created that the industry has never offered?(What are the potential new sources of value for buyers?)
Example - Southwest Airlines
Eliminate – Coach, Business, First Class = All one class
Reduce – Number of times serve food
Raise – Number of times serve food
Create – Add satellite TV
7. Developing Goals vs. Objectives
To develop a good marketing goal, would inquire having attainability, consistency, comprehensiveness, and intangibility. The marketing goal would be a statement of broad and desired accomplishments. As for the marketing objectives it must be specific, quantitative benchmarks used to measure progress toward the achievement of marketing goals. The marketing objectives should be attainable, continuity, time frame, and assignment of responsibility.
Traditional targeting strategies
undifferentiated approach that involves no segmentation.
Mass marketing works best when
the needs of an entire market are homogeneous, and results in lower marketing costs even though it is inherently risky and vulnerable to competitors. (Ford – Model T)
dividing the total market into groups of customers having relatively common or homogenous needs and developing a strategy to pursue one or more of these groups.
Differentiated Marketing - Multisegment
attracting buyers in more than one segment by offering a variety of products that appeal to different needs
Differentiated Marketing - Market Concentration
Focusing on a single market segment and attempting to gain maximum share in that segment
focuses marketing efforts on one small, well-defined market segment or niche that has a unique, specific set of needs. Requires that firms understand and meet the needs of target customers so completely that the firm’s substantial share of the segment makes it highly profitable
What are the pros & cons of using niche versus differentiated marketing?
Niche marketing Pros: customize customer’s needs (Luxury items). Cons: fewer consumer groups. Wont group as must. Market shrinks go out of business. Use niche strategy when you have limited resources, in the long run you could expand resources.
Criteria for successful segmentation
-Identifiable and Measurable – Size, buying power
-Substantial – Large, Profitable
-Accessible – Communication, distribution channels
-Responsive - (Responding to marketing efforts [increase your ad expenditure], & Homogeneous response within the segment)
-Viable and sustainable
gender, age, occupation, education, generation, income.
zip code, city, regional, population density.
usage rate, usage occasion, price sensitivity, benefits sought,