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ONLINE MARKT 351 A. LEBARD C-1

FOUNDATIONAL MARKETING CONCEPTS

I. Definitions A. Marketing – 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 [AMA] (the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large – prior AMA) B. Demand – Human wants that are backed by buying power (simultaneous desire and

ability required) C. Marketing Mix (The 4 Ps): Product, Price, Promotion and Place (more later) D. Market (general view) – The set of all actual and potential buyers of a product or service E. A Market (precise view) – A point, place, or sphere in which the ownership of

goods is affected 1. Point

2. Place

3. Sphere (two meanings)

F. Exchange – The act of obtaining a desired object from someone by offering something in return (people giving up something to receive something they would rather have)

G. Marketing Offers – Some combination of products, services, information, or experiences offered to a market to satisfy a need or want

H. Economic Utilities – The creation of value 1. Form

2. Time

3. Place

4. Possession (ownership)

II. Marketing Management Orientations (Philosophies) Production Group – The widget business A. Production Concept – Assumes consumers will favor products that are available and highly affordable. Management should, therefore, focus on improving production and distribution efficiency. Henry Ford – Model T

B. Product Concept – Assumes consumers will favor products that offer the most quality, performance and features. The organization should, therefore, devote its energy to making continuous product improvements. (Concept based on the Economic Person Theory) Bottle Opener

C. Selling Concept – Assumes consumers will not buy or not buy enough of the organizations product unless the organization undertakes a large-scale selling and promotion effort. (Still strategically employed for the Unsought class of consumer goods) Life Insurance

Marketing Group – The satisfaction business D. Marketing Concept – Assumes that achieving organization goals depends on

determining the needs and wants of target markets and delivering the desired satisfaction more effectively than competitors do. (Broadly implemented strategy) L.L. Bean guaranteed to give 100% satisfaction in every way.

Marketing Concept implications

1. A customer needs and wants orientation 2. An integrated marketing effort 3. Customer satisfaction is the key to organizational objectives

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E. Societal Marketing Concept – Assumes the Marketing Concept plus “in a way that maintains or improves the consumer’s and society’s well-being. (Not a universally accepted strategy) Coors – know when to say when

C-2

STRATEGIC PLANNING FOR COMPETITIVE ADVANTAGE

I. Concepts A. Strategic Planning – The managerial process of creating and maintaining a [strategic]

fit between the organization’s objectives and resources and the evolving market opportunities

B. Mission Statement – Statement of the organizations purpose – what it wants to accomplish in the larger environment. What business are we in?

1. Market-oriented rather than product-oriented 2. Concise and to the point 3. Based on the organizations distinctive competency 4. Realistic and specific 5. Motivating 6. Example – Shell Oil, increase the world’s supply of energy

C. Marketing Strategy – The marketing logic by which the company hopes to achieve strong and profitable customer relationships

1. Objectives – Specific steps toward the company mission. (a statement of what is to be accomplished through marketing activities) Shell Oil, increase geothermal energy production

2. Goals – Objectives delineated in quantitative terms; amount and time. Shell Oil, add 5 million KW by 2014 3. Situation Analysis – Strengths, Weaknesses, Opportunities, and Threats (SWOT) 4. Competitive Advantage – set of unique features of a company and its products that

are perceived by the target market as significant and superior to the competition a. Cost b. Product/Service c. Niche d. Sustainable Competitive Advantage

II. Portfolio Analysis A. Product/Market Expansion Grid – Company growth based markets/products (offers)

1. Market penetration – existing market, existing product (offer) 2. Market development – new market, existing product (offer) 3. Product development – existing market, new product (offer) 4. Diversification – new market, new product (offer)

PMG Market Existing New

Existing

Offering

MP MD

New

PD DIV

B. Strategic Business Units (SBU) – A part of an organization that can be managed separately for marketing purposes (a subgroup of a single business or collection of related businesses within the larger organization)

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C. Boston Consulting Group (BCG) Growth-Share Matrix 1. Star (*) – high growth rate, high market share 2. Cash Cow ($) – low growth rate, high market share 3. Question Mark (?) – high growth rate, low market share 4. Dog (D) – low growth rate, low market share

BCG Market Share High Low

High

Growth Rate

* ?

Low

$ D

Four Basic Strategies: build, hold, harvest, divest

III. Marketing Strategy and the Marketing Mix A. Segmentation Analysis - Format

1. Segmentation a. Identify bases for segmenting the market b. Develop profiles of resulting segments 2. Targeting a. Develop measures of segment attractiveness b. Select the target market (s) 3. Positioning a. Develop positioning for each target market b. Develop a marketing mix for each target market

B. Conceptual Framework 1. External and Uncontrollable a. Demographic-Economic environment b. Technological-Natural environment c. Social-Cultural environment d. Political-Legal environment e. Marketing Intermediaries f. Publics g. Competitors 2. Strategic Process: analysis, planning, implementation and control 3. Non-Marketing Resources: personnel, production, location, public image, research/development and finance 4. Marketing Mix: a. Product

b. Price

c. Promotion

d. Place

5. Target Customer – profitable customer relationship

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