MKT CH 2 Lecture Notes.pdf

MKT CH 2 Lecture Notes

Marketing environment

oThe marketing environment is a set of forces, some controllable and some

uncontrollable, that influence the ability of a business to create value and attract

and serve customers

oMarketing environment: SWOT analysis

Strengths, weaknesses, opportunities, threats

oEnvironmental scanning

The process of collecting information about forces in the marketing

environment

Methods:

Observation

Secondary sources

Market research

oEnvironmental analysis

The process of assessing and interpreting information gathered through

environmental scanning

Is this information accurate? Consistent? Significant? Relevant?

oResponding to environmental forces

Responding to environmental forces

Reactive approach

oPassive view of environment as uncontrollable

oCurrent strategy is cautiously adjusted to accommodate

environmental changes

Proactive approach

oActively attempts to shape and influence environment

oStrategies are constructed to overcome market challenges

and take advantage of opportunities

oCompetitive forces

Competitors in your industry

Other people applying for the same positions

The microenvironment: porter’s 5 forces

Competitive rivalry within an industry

oBargaining power of customers

oThreat of substitute products

oThreat of new entrants

o Bargaining power of suppliers

Types of competitors

Brand

oMarket products with similar features and benefits to the

same customers at similar prices

Industry

oCompete in the same product class, but their products

have different features, benefits, and prices

Form

oProvide very different products that solve the same

problem or satisfy the same basic customer need

Generic

oCompete for the limited financial resources of the same

customers

Monitoring competition

Helps determine competitors’ strategies and their effects on firm’s

own strategies

oGuides development of competitive advantage and

adjusting firm’s strategy

oProvides ongoing information about competitors

oAssists in mainstreaming a marketing orientation

Segmentation, targeting, and positioning

o The STP process

Segmenting

Divide market based on needs/benefits, demographics, lifestyles,

behavioral measures

Targeting

Select most appropriate market(s)

Positioning

Target marketing messages through 4 P’s

oWhat is a market?

A group of people seeking products in a specific product category

Need/desire

Able

Willing

Authority

Segmentation, targeting, and positioning process

oEstablish strategic objectives

Segmentation

Identify a group of customers in your market who share a similar

set of needs and wants

Importance of segmenting markets

Markets have a variety of product needs and preferences

A market segment has specific needs and wants as well as the

ability and willingness to buy

Marketers can better define customer needs

Two words: competitive advantage

Why segment markets?

By understanding variance in customer needs, we can

oDevelop offerings that are higher value to each segment

than an undifferentiated offer

oCharge more for providing higher value products and

services

oAchieve higher sales volume overall by better meeting the

needs of each segment

oDetermine which segmentation variable to use

Segmentation variables

Demographic

oAge, occupation, gender, income, ethnicity, geography,

family life cycle

Psychographic

oValues, lifestyle, personality, activities, interests, opinions

oValues and lifestyles (VALS)

Ideals orientation

Thinkers -> innovators

Believers -> survivors

Achievement orientation

Achiever -> innovators

Striver -> survivors

Self-expression orientation

Experiencers -> innovators

Makers -> survivors

Behavioral

oDividing a market by the amount of product bought or

consumed

oUsage rate

o80/20 Principle

o20% of all customers generate 80% of the demand

Needs

oThe process of grouping customers into market segments

according to the benefits they seek from the product

oEvaluate relevant market segments

Targeting

The process of evaluating the various segments and then selecting

the most variable segment(s) who share a similar set of needs and

wants

Targeting strategies

Undifferentiated

oMarketing approach that views the market as one big

market with no individual segments and thus required a

single marketing mix

Differentiated

oA strategy that chooses two or more well-defined market

segments and develops a distinct marketing mix for each

Niche

oA concentrated strategy of focusing on a narrow market is

sometimes more profitable than spreading resources over

several different segments

Micro

oOne-to-one marketing which is individualized, information

intensive, with long-term perspective and goal of

increasing customer loyalty

oSelect specific target markets

Do customers’ needs differ enough to warrant the use of market

segmentation?

In which market segment(s) should the firm participate?

Does the firm have the resources and skills to compete effectively in the

target market?

What is the long-term growth potential of the market segment?

oDevelop positioning strategy

Positioning

Act of designing the company’s offering and image to occupy a

distinctive place in the mind of the target market

Perceptual mapping

A means of displaying or graphing, in two or more dimensions, the

location of products, brands, or groups of products in customers’

minds

Value proposition

The brand’s full mix of benefits on which a brand is differentiated

and positioned

Answers the question of “Why should I buy your brand?”

Value is a relationship between price and quality

oMore quality for more/same/less price

oThe same quality for a lower price

oLess quality for a much lower price

Unique selling proposition

Positioning statement

For (Target Market), the (Brand) is the (Point of Differentiation)

among all (Frame of Reference) because (Reason to Believe)

The point of differentiation (POD) describes how your brand or

product benefits customers in ways that set you apart from your

competitors

The frame of references is the segment or category in which your

company competes

The reason to believe is a statement providing compelling

evidence and reasons why customers in your target market can

have confidence in your differentiation claims

What is Business Marketing?

oBusiness products

Are used to manufacture other products

Become part of another product

Aid the normal operations of an organization

Are required for resale without change in form

oBusiness markets

Producer markets

Reseller markets

Government markets

Institutional markets

oTypes of business products

Major equipment

Accessory equipment

Raw materials

Component parts

Processed materials

Supplies

Business services

oDemand for business products

Derived demand

Inelastic demand (NOT INCLUDED IN FIRST EXAM)

Joint demand

Fluctuating demand (NOT INCLUDED IN FIRST EXAM)

oDemand for business products

Demand involving the use of two or more items in combination to

produce a product (joint demand)

Ketchup and mustard

Peanut butter and jelly

oTypes of business purchases

Straight rebuy

Original product is re-ordered

Modified rebuy

Changes are desired in the original product

New task

Product is purchased for the first time

oBusiness vs. consumer markets

Business

Organizational

Larger

Fewer

Concentrated

Personal selling

Multiple

More complex

Consumer

Individual

Smaller

Many

Dispersed

Advertising

Single

Simpler

Culture

oSocial influences: culture

oCulture: the accumulated values, knowledge, beliefs, customs, objects, and

concepts of a society

oSub-culture: groups of individuals whose characteristics values and behavior are

similar, but also differ, from those of the surrounding culture

oConsumer culture

Enculturation: learning your own culture

Acculturation: learning a new/foreign culture, theory of reasoned action

example

Reverse acculturation: home society impacted by other cultures

oSocial responsibility: an organization’s obligation to maximize its positive impact

and minimize its negative impact on society

oCorporate social responsibility

Philanthropic: be a good citizen

Ethical: do what is right

Legal: obey the law

Economic: be profitable

oStrategic philanthropy

Cause-related marketing: the practice of linking products to a particular

cause on an ongoing or short-term basis

Green marketing: the specific development, pricing, promotion, and

distribution of products that do not harm the natural environment

oEthical development levels (more childlike)

Preconventional morality based on what will be punished or rewarded

Self-centered, calculating, selfish

oConventional morality (in-between childlike and mature)

Moves toward the expectations of society

Concerned over legality and the opinion of others

oPostconventional morality (more mature)

Concern about how they judge themselves

Concern if it is right in the long run

Global vision

oDeveloping a global vision

“The new trade routes of the 20st century are laser flashes and satellite

beams. The cargo is not silk or spices, but technology, information, and

ideas” – Renato Ruggiero, former Director General, WTO

oMultinational corporation

A company that is heavily engaged in international trade, beyond

exporting and importing

oGlobal marketing

Access to new markets

Gain scale economies

Access lower costs

Offset domestic cycles

Enhance brand image

Overcome trade barriers

Access foreign investment

oGlobal marketing miscues

“If I am selling to you, I speak your language. If I am buying from you,

dann mussen Sie in meiner Sprache sprechen.” – German Chancellor Willy

Brandt

An American T-shirt maker in Miami printed shirts in Spanish for the

Pope’s visit

They wanted “I saw the Pope” – el papa

They said “I saw the Potato” – la papa

oGlobal marketing standardization

Production of uniform products that can be sold the same way all over

the world

Same product/same message: one product one message

Lays chips – same all around

Change product/same message: product adaption

McDonalds – different product but same message

Same product/change message: message adaption

Kit-Kat changed message/logo but kept the same product

Change product/change message: product invention

Fosters beer – changed logo and product

oEntering the global marketplace

Export

Licensing (ON EXAM)

Example: franchising: paying for the right to sell that product with

that name

Contract manufacturing (ON EXAM)

Joint venture

Direct investment

Market plan

oA business plan is a written document that defines the operational and financial

objectives of a business over a particular time, and defines how the business

plans to accomplish those objectives

oA marketing plan is a document that includes an assessment of the marketing

situation, marketing objectives, marketing strategy, and marketing initiatives

oSections of a marketing plan

Executive summary: written with senior leadership as primary audience -

goals, recommendations

Company description, purpose, and goals: includes historical information

on business and products, and the company’s core competencies and

reason for existence

Marketing situation: contains assessments of – customers, competitors,

product portfolio, distribution channels, and marketing environment

Forecasting: anticipated outcome if marketing objectives are met

Marketing strategy: what actions should be taken to meet objectives –

target market, positioning, and marketing mix

Measurement and control: how to monitor progress toward meeting

objectives? – financial factors and nonfinancial factors

oPurposes and significance of the marketing plan

A good marketing plan will:

Explain both the present and future situations of the organization

Specify the outcomes that are expected

Describe the specific actions that are to taker place

Identify the resources that will be needed

Be realistic, achievable, and measurable

Communicating is marketing strategy to top executives is paramount

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