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3/3/2014 4:38:00 AM
Notes from readings
Chapter 1
Marketing is the activity for creating, communication, delivering and
exchanging offerings that benefit its customers, the organisation, its
stakeholders, and society at large.
Exchange – trade of things of value between buyer and seller so that
each is better off after the trade
page 7 of textbook; good diagram of factors affecting marketing.
What is needed for marketing to occur
1. two or more parties with unsatisfied needs
2. desire and ability to fulfil these needs
3. a way for the parties to communicate
4. something to exchange.
…goods, services, and ideas are all considered ‘products’ that are
marketed. [Therefore] a product is a good, service, or idea consisting of
a bundle of tangible and intangible attributes that satisfies consumers’
needs and is received in an exchange for money or something else of
value
How marketing discovers and satisfies customer needs
Discovering consumer needs
-what are the needs of the prospective customers
-prospective customers may not always know or be able to describe what
they need
Meeting consumer needs with new products
-up to 94% of new products fail in the long run
-focus on (1) what the customer benefit is, and (2) learn from the past
Need – occurs when a person feels deprived of basic necessities
Want – a need that is shaped by a person’s knowledge, culture and
personality
Market – made of potential customers, which is people with the ability
and desire to purchase a specific offering
Controllable forces = the marketing mix
Uncontrollable forces = environmental forces; social, economic,
technological, competitive and regulatory
Customer value – the unique combination of benefits received by
targeted buyers that includes quality, convenience, on-time delivery and
before and after sales service at a specific price
Customer value proposition – cluster of benefits that an organisation
promises customers to satisfy their needs
Relationship marketing – links the organisation to its individual
customers, employees, suppliers and other partners for mutual, long-term
benefit.
Marketing program – a plan that integrates the marketing mix to
provide a good, service, or idea to prospective buyers.
3M case study
-moving from ideas to marketable highlighter product
-adding the Post-it flag pen
-a marketing program for the post-it flag highlighter and pen
Evolution of the market orientation
Production era – goods were scarce and buyer were willing to accept
any goods available to them
Sales era – firms began to produce more than buyers could consumer.
Competition grew
Marketing concept era – businesses should strive to satisfy consumer
needs, whilst achieving their own goals. (1) strive to satisfy the needs of
the customer, (2) while also achieving the goals of the organisation
Market orientation – focuses on continually collecting info
about customers and their needs, sharing this info across
departments and using it to create customer value.
This has lead to customer relationship management – the process of
identifying prospective buyers, understanding them and developing long-
term good perceptions of the firm and its products
Customer experience – internal response that a customer has to all
aspects of an organisation.
Societal marketing concept – organisations should satisfy the needs of
consumers in a way that benefits society
Macromarketing – The study of aggregate flow of a nation’s products
and services to benefit society. The discipline that addresses broad issues
such as whether marketing costs too much, whether advertising is
wasteful, and what resource scarcities and pollution side effects result
from the marketing system
Micromarketing – how an individual firm directs its marketing activities
and allocates its resources to benefit its customers
The breadth and depth of marketing
1. Who markets? – Every organisation
2. What is marketed?
Product – a good/service/idea consisting of a bundle of tangible
and intangible attributes that satisfies consumers’ needs and is
received in exchange for money or something else of value
3. Who buys and what is marketed?
Ultimate consumers – those who use the products and
serviced purchased for a household
Organisational buyers – organisations that buy
products/services for their own use or resale
4. Who benefits?
Consumers who buy – increase in innovation, and quality of life
Organisations who sell
Society as a whole – increases competition; leading to lower
prices and more innovation
Marketing creates utility, in terms of form (the production of the g/s);
place (having the offering where needed); time (having the offering
available when needed); and possession
Ethical and social responsibility in marketing
Ethics – are the moral principles and values that govern the actions and
decisions of an individual or group. They serve as guidelines on how to
act rightly and justly when faced with moral dilemmas
Ethics of exchange – ethical exchanges should result in both parties
being better off, post transaction
Caveat emptor- let the buyer beware
Consumer Bill of Rights – in 1962 by J F K
Right to safety
Right to be informed – marketers have an obligation to give
consumers complete and accurate info over g/s
Right to choose – many supermarkets demand “slotting
allowances” from manufacturers, in the form of cash or free goods.
This may limit the number of new products available to consumers
Right to be heard – consumers should have access to public policy
makers regarding complaints about g/s
Ethics of competition
Economic espionage – collection of trade secrets or proprietary
info about a company’s competitors. It is illegal and unethical
Bribery – most likely in Somalia; Denmark, NZ and Singapore
the least likely. Transparency International shows figures.
Corporate culture – set of values, ideas and attitudes that is learned
and shared among the members of an organisation
Code of ethics – is a formal statement of ethical principles and
rules of conduct
Ethical behaviour of top management and co-workers –
can affect own ethical behaviour
Your own personal moral philosophy and ethical
behaviour
Moral idealism – a personal moral philosophy that considers certain
individuals rights or duties as universal, regardless of the outcome.
Utilitarianism – a personal moral philosophy that focuses on the
greatest good for the greatest number
Social responsibility – organisations are part of a larger society and are
accountable to that society for their actions
Profit responsibility – maximum profits for
owners/sharedholders
Stakeholder responsibility – obligations to those who can
affect achievement of its objectives [suppliers/distributors,
employees, consumers]
Societal responsibility – [public interest groups, ecological
environment, general public]; the emphasis these days is the
triple-bottom line – recognition of the need to improve the
state of people, the planet and profit at the same time
o Cause marketing – where charitable contributions of a
firm are directly tied to customer revenues produced
through the promotion of one of its products.
o Green marketing – marketing efforts to produce,
promote and reclaim environmentally sensitive products
Social audit – a systematic assessment of a firm’s objectives, strategies
and performance in terms of social responsibility. Consists of 5 steps:
1. recognition of firm’s social expectations and rationale
for engaging in social responsibility endeavours
2. identification of social responsibility causes consistent
with mission
3. determination of organisational objectives and priorities
for programs and activities it will undertake
4. specification of the type and amounts of resources
necessary to achieve objectives
5. evaluation of programs/activities undertaken
Sustainable development – involves conducting business in a way that
protects the natural environment while making economic progress.
Case Study Notes
Allpress case:
1. Does not just market goods, but also services, experiences and
ideas
2. Create value for retailers and patrons of cafes
3. Perform some essential marketing functions such as sourcing,
processing, packaging and marketing beans
4. Has evolved with the market (e.g. cutomers increasingly want to
know where the raw materials come from
5. Position the brand as a provider of consistency, variety and
quality
3/3/2014 4:38:00 AM
Developing successful marketing and organisational strategies
Organisation – legal entity that consists of people who share a common
mission.
This motivates them to develop offerings (products, services or ideas)
that create value for the organisation and its customers by satisfying
needs and wants
Business firm – privately owned organisation that serves customers to
earn a profit, so it can survive
Profit – total revenues less total expenses; is the reward for risk
undertaken
Non profit organisation – non-govt. org. that serves its customers but
does not have profit as a goal
Strategy – an orgs long term course of action designed to deliver unique
customer exp while achieving its goals
Structure of today’s organisations
Corporate level – where top mgmt. directs over all strategy for the
entire org. Usually means board of directors and senior management
officers [e.g. 5 year growth plan]
Strategic business unit level – a subsidiary, division or unit of an org
that markets a set of related offerings to a clearing defined group of
customers. Managers set a more specific strategic decision for their
business to exploit value-creating ops [e.g. gain a 20% share of X market
by introducing a new product]
Functional level – where groups of specialists actually create value for
the org. The term dept generally refers to these specialised functions,
such as accounting and marketing
Cross-functional teams – consist of a small number of people from dif
dept. who are mutually accountable to accomplish a task/common set of
goals
Strategy in visionary organisations
Organisational foundation [why] + Organisational direction [what] =
organisational strategies [how]
Organisational foundation – why does it exist
Core values – the fundamental, passionate and enduring
principles that guide its conduct over time. They capture the
firm’s heart and soul to try and motivate its stakeholders
Mission – a statement of the orgs function in society that often
identifies its customers, markets, products and technologies. Aka
mission statement and vision
Organisational culture – set of values, ideas, attitudes and
norms of behaviour that is learned and shared among the
members of an organisation
Organisational direction – what will it do?
Business – describes the clear, underling industry or market
sector of an orgs offering; Theodore Levitt’s bs on the railroad
industry; don’t be too narrow
Business model – strategies on org develops to provide value
to the customers it serves
Goals/objectives – are statements of an accomplishment of a
task to be achieved. E.g. profit, sales, market share, quality,
customer satisfaction, employee welfare, social responsibility
Organisational strategies – how will it do it?
Variation by level – moving down an org involves creating
increasingly specific, detailed strategies and plans
Variation by offering – organisational strategies also vary by
the organisation’s offering
Tracking strategic performance with marketing dashboards
Marketing dashboard – is the visual computer display of the essential
info related to achieving a marketing obj
Marketing metric – a measure of the quantitative value or trend of a
marketing activity or result
Data visualisation – presents info about an orgs marketing
metrics so marketers can quickly spot deviations and take
corrective actions
Setting strategic direction
Where are we now? [the three C’s]
Competencies – the firm’s special capabilities; the skills, tech
and resources that distinguish it from other orgs and provide
customer value
o Competitive advantage – a unique strength relative to
competitors that provides superior returns, often based on
quality, time, cost or innovation
Customers
Competitors
Where do we want to go?
Business portfolio analysis (BCG Matrix) – technique used
by managers to quantify performance measures and growth
targets to analyse the firm’s strategic business units (SBUs) as
though they are a collection of separate investments. Vertical
axis – market growth rate; horizontal axis – relative market
share
Cash cow – SBUs that generate large amounts of cash,
far more than they can invest profitably in themselves.
Dominant share in a low growth market
Stars – SBUs with a high share of high-growth markets.
May need extra cash to finance future growth
Question marks – SBUs with a low share of high growth
markets. Require large cash injections to maintain their
market share, and obviously more to increase it
Dogs – shit cunts SBUs. Low shares of slow growth
markets. May generate enough cash to sustain themselves,
they do not hold the promise of becoming real winners for
the org
Case study: Kodak
Digital cameras = ? Star;
Digital picture frames = ? ; cow
Ink-jet printer = ? dog either star or dog;
film = star cash cow dog
Diversification analysis – technique that helps a firm search
for growth opportunities from among current and new markets,
as well as current and new products
Market penetration – increasing sales of current
products in current markets
Market development – selling current products to new
markets
Product development – selling new products to the
current markets
Diversification – selling a new product to new markets
The strategic marketing process
1. How do we allocate our resources to get where we want to go?
2. how do we convert our plans into actions?
3. how do our results compare with our plans, and do deviations require
new plans?
The planning phase of the strategic marketing process
1. Situation (SWOT) Analysis – taking stock of where the
firm/product has been recently, where it is now, and where it is
headed in terms of the orgs marketing plans, and the external
forces and trends affecting it
2. Market-product focus and goal setting – determining
what products will be directed towards what consumers. Often
based on market segmentation – which involves aggregating
prospective buyers into groups/segments that have (1) common
needs and (2) will respond similarly to marketing actions
Goal setting involves specifying measurable objectives to be
achieved
i. Set marketing and product goals
ii. Select target markets
iii. Find points of difference – those characteristics of a
product that make it superior to competitive substitutes
iv. Position the product
3. Marketing program
i. Product strategy
ii. Price strategy
iii. Promotion strategy
iv. Place strategy
4. The implementation phase of the strategic marketing process
1. Obtaining resources
2. Designing the marketing organisation
3. Developing planning schedules – must identify tasks to be done, the
time to allocate to each, the people responsible and the deadlines for
their accomplishment
4. Executing the marketing program
Marketing strategy – means by which a marketing goal is to
be achieved, normally characterised by a specified target
market and a marketing program to reach it. Specifies the
end sought (target market) and the means to achieve it
(marketing program)
Marketing tactics – detailed, day-to-day operational
decisions essential to the overall success of marketing
strategies
5. The evaluation phase of the strategic marketing process
1. Comparing results with plan to identify deviations
2. Acting on deviations
Exploiting a positive deviation
Correcting a negative deviation
SEGMENTATION is about analysis in building a deep understanding of a
market, and creativity in making sense of that analysis.
TARGETING is about marketers seeking to identify and understand parts
of the market that they can offer the most value. These parts of the total
market form the organisation’s target market.
POSITIONING is the first step or “seed” that you plant that ultimately
leads to the growth of rest of the marketing mix (the 4 p’s).
Scanning the marketing environment
Environmental scanning – the process of continually acquiring info on
events occurring outside of the org to identify and interpret potential
trends
Environmental forces
-social
-economic
-technological
-competitive
-regulatory
Social forces – include the demographic characteristics of the population
and its values.
Demographics – describing a population according to selected
characteristics such as age, gender, ethnicity, income and occupation
Growing world population; but particularly in poorer countries.
Growth rate has slowed in wealthier countries.
Aging world population
Changing dynamic of the [American] household
Population shifting to urban areas
Greater racial and ethnic diversity
Generational cohorts
Baby boomers – born between 1946 and 64 – targeted by
interest in fitness, health, retirement, financial planning and
physical appearance
Generation X – 65-76 – casual, tech friendly lodging in hotels
for example
Generation Y – 77 – 94 – music, sports, computers, video
games, communications and networking.
Culture – incorporates the set of values, ideas and attitudes that are
learned and shared among the members of a group
Changing attitude of men and women; women are now more
important than they were in the past; more independent;
traditional roles challenged
Changing values – in the 70’s the focus was on achievement,
work, efficiency and material comfort. Nowadays there is a
greater focus on personal control, continuous change, equality,
individualism, self help, competition, future orientation and
action
Value consciousness – the concern for obtaining the best
quality, features and performance of a product or services for a
given price
Economic forces
Economy – income, expenditure and resources that affect the cost of
running a business and household
Macroeconomic conditions – the performance of an economy
based on indicators such as GDP, unemployment and price
changes (inflation/deflation)
Consumer income
Gross income – total amount of money made in one year
by a person, household or family unit
Disposable income – money a consumer has left after
paying taxes to use for necessities such as food, housing,
clothing and transport
Discretionary income – the money that remains after
taxes and necessities
Technological forces
Technology – innovations or inventions from applied science and
engineering research
Technology of tomorrow
-social networks will become social platforms to provide
functionality, community and identity
-“natural user interfaces” will utilize gesture, touch, and voice to
change the way we interact with and control computers and
complicated machines
-green technologies
-biotechnologies – genetically modified crops
Electronic business technologies
Marketspace – an information and communication based
electronic exchange env. mostly occupied by sophisticated
computer and telecommunication technologies and
digitized offerings
Electronic commerce – electronic communication in
inventory, exchange, advertisement, distribution and
payment for g/s
Intranet – internet-based network used within the
boundaries of an org
Extranet – internet- based technologies, permitting
communication between a company and its suppliers,
distributors and other partners
Competitive forces
Competition – refers to the alternative firms that could provide a
product to satisfy a specific market’s needs
Pure competition – in which there are many sellers and they
each have a similar product
Monopolistic competition – many sellers compete with
substitutable products within a price range
Oligopoly – when a few companies control a majority of the
industry sales
Pure monopoly – only one firm sells the product
Components of competition
Barriers to entry – business practices/conditions that make it
difficult for new firms to enter the industry
Power of buyers and suppliers
Existing competitors and substitutes
Small business as competitors
Small business make up the majority of the competitive
landscape for most businesses. [In the US, there are 27.5 million
small businesses, which employ half of all private sector
employees. Small businesses generate 65% of new jobs and
make 50% of the GDP]
Regulatory forces
Regulation – consists of restrictions state and federal laws place on
business with regard to the conduct of its activities
Protecting competition
(1)Forbid contracts, combinations or conspiracies in the restrain
of trade
(2)Forbid actual monopolies or attempts to monopolise any part
of trade/commerce
Product-related legislation
Various federal laws specifically address the product component
of the marketing mix. Some are aimed at protecting the
company, some at the consumer, and at least one at both.
Consumerism – a movement to increase the influence,
power and rights of consumers in dealing with institutions
Pricing-related legislation
Can prohibit price discounting and price fixing. Price fixing is per
se illegal. Certain forms of price discounting are allowed.
Distribution-related legislation
Exclusive dealing – an arrangement a manufacturer makes
with a reseller to handle only its products, and not that of a
competitor. Only illegal if it lessens comp.
Requirement contracts – require a buyer to purchase all or
part of its needs for a product from one seller for a time period.
Not always illegal
Exclusive territorial distributorship – a manufacturer grants
a distributor the sole rights to sell a product in a specific
geographical area. Courts have found a few violations with these
agreements
Tying arrangement – whereby a seller requires the purchaser
of one product to also buy another item in the line. May be illegal
when the seller has such economic power in the tying product
that the seller can restrain trade in the tied product
Advertising and promotion related legislation