Marketing Reviewer

Principles of Marketing by Kotler & Armstrong (17th edition)

Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Relationship
Company Wide Strategic Planning: Defining Marketing Role

Strategic Planning
- the process of developing and maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities.

Defining a Market Oriented Mission

Mission Statement
- a statement of the organization’s purpose; what it wants to accomplish in a larger environment
-acts as an “invisible hand” that guides people in the organization
-it should be market oriented and defined in terms of satisfying basic customer needs
- E.g., Under Armor, instead of saying its mission is to be a performance sports apparel; it said “to
make all athletes better through passion, science, and the relentless pursuit of innovation”.

Setting Company Objectives and Goals

The company needs to turn its mission into detailed supporting objectives for each level of
management. The mission leads into hierarchy of objectives including business, and marketing
objectives. There should be marketing strategies and programs created to support these objectives.

Designing the Business Portfolio

Business portfolio
- the collection of businesses and products that make up the company
- best business portfolio is the one that t fits the company’s strengths and weaknesses to
opportunities in the environment.
- Business portfolio planning includes these steps; (1)analyze its current business portfolio and
determine which businesses should receive more, less, or no investment; (2) shape the future
portfolio by developing strategies for growth and downsizing.

Portfolio Analysis
-used in analyzing the current business portfolio
-management evaluates the products and businesses that make up the company. The company will
put strong resources into its more profitable businesses and phase down or drop its weaker ones.

 Strategic business unit (SBU)- a company division, a product line within a division, or
sometimes a single product or brand
 Boston Consulting Group Approach- uses growth-share matrix (A portfolio-planning
method that evaluates a company’s SBUs in terms of its market growth rate and relative
market share.)
 Market growth rate= market attractiveness; Relative market share= company
strength in the market.

Problems with this approach:

This approach can be
difficult, time-consuming, and
costly to implement. Its focus
is classifying current
businesses but provide little
advice for future planning.
Product/ Market Expansion Grid
-used in developing strategies for growth and downsizing
-a portfolio-planning tool for identifying company growth opportunities through market penetration,
market development, product development, or diversification.

 Market Penetration- creating more sales without changing the original product.
 Market Development- identifying and developing new market segments for current
company products
 Product Development- Offering modified or new products to current marketing
segments.
 Diversification- Starting up or acquiring businesses outside the company’s current
products and markets.

Planning Marketing: Partnering to Build Customer Relationships

Partnering With Other Company Departments
-all departments in the company should work together to create value for the consumers.

Value Chain
- series of internal departments that carry out value-creating activities to design, produce, market,
deliver, and support a firm’s products.

Partnering With Others in the Marketing System

-the company must not only work internally but also build external relationships with its network.

Value Delivery Network

-network made up of the company, its suppliers, distributors, and customers who partner with each
other to improve the performance of the entire system.

Marketing Strategy and Marketing Mix

Marketing Strategy
-marketing logic by which the company hopes to create customer value and achieve profitable
customer relationship
-it should customer driven with its core is to create customer value and build relationships

Market Segmentation
-process of dividing a market into distinct groups of buyers who have different needs, characteristics,
or behaviors, and who might require separate products or marketing programs.
Market Segment
- consists of consumers who respond in a similar way to a given set of marketing efforts

Market Targeting
- evaluating each market segment’s attractiveness and selecting one or more segments to enter
- should target segments in which it can profitably generate the greatest customer value and sustain
it over time

Positioning
- arranging for a product to occupy a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers
- company’s entire marketing program should support chosen positioning strategy

Differentiation
- differentiating the company’s market offering so that it gives consumers more value.

Marketing Mix
- set of tactical marketing tools that the firm blends to produce the response it wants in the target
market.
-includes the 4Ps (product, price, place, and promotion)

Managing the Marketing Effort

SWOT Analysis
- evaluates the company’s overall strengths (S), weaknesses (W), opportunities (O), and
threats (T)
Marketing Strategy
- consists of specific strategies for target markets, positioning, the marketing mix, and marketing
expenditure levels.
Marketing Implementation
- process that turns marketing plans into marketing actions to accomplish strategic marketing
objectives.
- addresses the who, where, when, and how.

Marketing Department Organization

 Functional Organization- different marketing activities are headed by a functional specialist—a
sales manager, an advertising manager, a marketing research manager, a customer service
manager, or a new product manager.
 Geographic Organization- sales and marketing people are assigned to specific countries,
regions, and districts
 Product Management Organization- product manager develops and implements a complete
strategy and marketing program for a specific product or brand.
 Customer or Market Management Organization- similar to the product management
organization, responsible developing marketing strategies and plans for their specific markets or
customers.
 Customer Management- moving away from managing only product or brand profitability and
toward managing customer profitability and customer equity.

Marketing Control
- evaluating the results of marketing strategies and plans and taking corrective action to ensure that
the objectives are attained.
 Operating Control- checking ongoing performance against annual plan and taking corrective
actions when necessary
 Strategic Control- looking at whether the company’s basic strategies are well matched to its
opportunities
Return of Marketing Investment (Marketing ROI)
- net return from a marketing investment divided by the costs of the marketing investment.
- measures the profits generated by investments in marketing activities.

Chapter 3 Analyzing the Marketing Environment

Marketing Environment
- consists of the actors and forces outside marketing that affect marketing management’s ability to
build and maintain successful relationships with target customers.

Microenvironment
- actors close to the company that affect its ability to serve its customers—the company, suppliers,
marketing intermediaries, customer markets, competitors, and publics.
Marketing Intermediaries- help the company promote, sell, and distribute its products to
final buyers
 Physical Distribution Firms
 Marketing Services Agencies
 Financial Intermediaries
Publics- any group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives
 Financial Publics
 Media Publics
 Government Publics
 Citizen-action Publics
 Local Publics
 General Publics
 Internal Publics
Customers- most important actor in the company’s microenvironment
 Consumer Market
 Business Market
 Reseller Market
 Government Market
 International Market

Macroenvironment
- the larger societal forces that affect the microenvironment—demographic, economic, natural,
technological, political, and cultural forces.

Demography- study of human populations in terms of size, density, location, age,

gender, race, occupation, and other statistics
 Baby Boomers- post–World War II baby boom produced 78 million baby boomers, who were
born between 1946 and 1964
 Generation X- 49 million people born between 1965 and 1976, called “birth dearth”
 Millennials/ Generation Y- born between 1977 and 2000
Economic Environment- consists of economic factors that affect consumer purchasing power and
spending patterns
 Industrial Economies- rich market for different kinds of goods
 Subsistence Economies- consume most of their own agricultural and industrial output; offer
few marketing opportunities
 Developing Economies- offer outstanding marketing opportunities
Natural Environment- natural resources that are needed as inputs by marketers or that are affected
by marketing activities
Environmental Sustainability- an effort to create a world economy that the planet can support
indefinitely; responding to consumer demands with environmentally responsible products.
Technological Environment- Forces that create new technologies, creating new product and market
opportunities; most dramatic force
Political and Social Environment- consists of laws, government agencies, and pressure groups that
influence or limit various organizations and individuals in a given society.
Cultural Environment- consists of institutions and other forces that affect a society’s basic values,
perceptions, preferences, and behaviors.

Chapter 4: Managing Marketing Information to Gain Customer Insights

 Customer Insights- understandings of  Descriptive research- better describe

customers and marketplace derived from marketing problems, situations, or
marketing information that become the markets
basis for creating customer value and  Causal research- test hypotheses
relationship. about cause-and-effect relationships
 Marketing Information System- people
and procedures for assessing information  Written Proposal- a research plan should
needs, developing the needed information, be presented in this format: proposal should
and helping decision makers to use the cover the management problems
information to generate and validate addressed, the research objectives, the
actionable customer and market insights. information to be obtained, and how the
results will help management decision
making.
 Secondary data- consist of information that
already exists somewhere, having been
collected for another purpose; secondary
data should be relevant, accurate, current,
& impartial.
 Commercial online databases- collections
of information available from online
commercial sources or accessible via the
 Internal Databases- electronic
Internet; source of secondary data
collections of consumer and market
information obtained from data  Primary data- consist of information
sources within the company source. collected for the specific purpose at hand;
 Competitive Marketing in collecting data it needs to consider the
Intelligence- systematic collection research approach, contact method,
and analysis of publicly available sampling plan, & research instrument.
information about consumers,
competitors, and developments in
the marketing environment.
 Marketing Research- systematic
design, collection, analysis, and Research Approaches
reporting of data relevant to a  Observational research- involves
specific marketing situation facing an gathering primary data by observing
organization. relevant people, actions, and situations;
suited for exploratory research
 Ethnographic research- A form of
observational research that involves
sending trained observers to watch and
interact with consumers in their “natural
Different Kinds of Research environments”.
 Exploratory research- to gather  ‘Webnography’ research- observing
preliminary information that will help consumers in a natural context on the
define problems and suggest Internet; helps provide useful insights
hypotheses. into both online and off-line buying
motives and behavior.
  Survey research- gathering primary  Sample- a segment of the population selected
data by asking people questions about for marketing research to represent the
their knowledge, attitudes, preferences, population as a whole.
and buying behavior; suited for  Probability Sample
descriptive research 1. Simple random sample- every
 Experimental research- gathering member of the population has a
primary data by selecting matched known and equal chance of selection.
groups of subjects, giving them different 2. Stratified random sample- the
treatments, controlling related factors, population is divided into mutually
and checking for differences in group exclusive groups (such as age
responses; there’s a manipulation of groups) and random samples are
independent variable; suited for causal drawn from each group.
research 3. Cluster (area) sample- the
population is divided into mutually
Contact Methods exclusive groups (such as blocks),
 Mail questionnaires- used to collect and the researcher draws a sample of
large amounts of information at a low the groups to interview.
cost per respondent.  Nonprobability Sample
 Telephone interviewing- one of the 1. Convenience sample- the
best methods for gathering information researcher selects the easiest
quickly, provides greater flexibility than population members from which to
mail questionnaires but its cost is obtain information.
higher. 2. Judgement sample- the
 Individual interviewing- involves researchers use his/her judgement
talking with people in their homes or to select population members are
offices, on the street, or in shopping good prospects for accurate
malls; personal interviewing information.
 Group interviewing- consists of inviting 3. Quota sample- the researcher finds
six to ten people to meet with a trained and interviews a prescribed number
moderator to talk about a product, of people in each of several
service, or organization; also called as categories.
“focus group interviewing”.  Behavioral targeting- tracking consumers’
 Online marketing research- collecting online behavior and using it to target ads to
primary data online through internet them.
surveys, online focus groups, web-
based experiments, or tracking Research Instruments
consumers’ online behavior.  Questionnaires- most common
 Online focus groups- gathering a small instrument; very flexible and it can
group of people online with a trained include both close and open-ended
moderator to chat about a product, questions.
service, or organization and gain  Mechanical Instruments- used to
qualitative insights about consumer monitor consumer behaviors using
attitudes and behavior. physical and neuro responses.

 Customer Relationship Management-

manage detailed information about individual
customers and carefully manage customer
touch points to maximize customer loyalty.

Sampling Plan

Chapter 5 Consumer Markets and Consumer Buyer Behavior

 Consumer Buying Behavior- buying behavior of final consumers- individuals and households
that buy goods and services for personal consumption.
 Consumer market- all the individuals and households that buy or acquire goods and services
for personal consumption: final consumers
Model of Consumer’s Buying Behavior
We can measure the whats,
wheres, and whens of
consumer buying behavior. But
it’s very difficult to “see” inside
the consumer’s head and
figure out the whys of buying
behavior (that’s why it’s called
the black box).

Characteristics Affecting Consumer Buying Behavior

Culture
 Culture- the set of basic values, perceptions, wants, and behaviors learned by a member of
society from family and other important institutions; factors that may influence on consumer
buying behavior
 Subculture- a group of people with shared value system based on common life experiences
and situations; example Hispanic American Consumers, marketers market their products
differently for this subculture as they have different culture from the mainstream buying public.
 Social class- relatively permanent and ordered division in a society whose members share
some similar values, interests, and behaviors.
Social
 Group- two or more people who interact to accomplish individual or mutual goals
a. Membership group- direct influence and to which a person belongs
b. Reference group – serve as direct (face to face) or indirect points of comparison or
reference in forming a person’s attitudes or behavior.
 Word of Mouth Influence and Buzz Marketing- has a powerful impact on consumer buying
behavior; comes from recommendations and personal words of friends, other consumers, and
influential people
 Opinion leaders- people within a reference group who, because of special skills, knowledge,
personality, or other characteristics, exert social influence on others; Called “the influentials or
leading adopters”
 Online Social Networks- online social communities- blogs, social networking web sites, or
even virtual worlds- where people socialize or exchange information and opinions.

2 Types of brand awareness

Brand recognition- they have previous encounter with the brand, and they can remember it
Brand recall- the brand is at the top of your mind; if you’re a given category, it’s the first brand that
you will think about

Personal
 Lifestyle- a person’s pattern of living as expressed in his or her psychographics.
 Personality- unique psychological characteristics that distinguish a person or group.
 Brand Personality- specific mix of human traits that may be attributed to a particular brand
Psychological
 Motive (Drive)- a need that is sufficiently pressing to direct the person to seek satisfaction
  Motivation Research- qualitative research designed to probe consumers’ hidden,
subconscious motivations
 Perception-the process by which people select, organize, and interpret information to form a
meaningful picture of the world.
a. Selective Attention- the tendency of people to screen out most of the information they
are exposed to
b. Selective Distortion- tendency of people to interpret information in a way that will
support what they already believe
c. Selective Retention-consumers are likely to remember good points made about a
brand they favor and forget good points made about competing brands
 Learning- changes in an individual’s behavior arising from experience
 Drive- strong internal stimulus that calls for action
 Cues- minor stimuli that determine when, where, and how the person responds.

 Belief- descriptive thought that a person has about something; may be based on real
knowledge, opinion, or faith and may or may not carry an emotional charge
 Attitude- describes a person’s relatively consistent evaluations, feelings, and tendencies
toward an object or idea.
Types of Buying Decision Behavior

 Complex Buying Behavior- highly involved in a purchase and perceive significant differences
among brands; happens when the product is expensive, risky, purchased infrequently, and
highly self-expressive (eg. Computer)
 Dissonance Reducing Buying Behavior- consumers are highly involved with an expensive,
infrequent, or risky purchase but see little difference among brands; buyers may experience
post purchase dissonance (when they noticed certain disadvantages of the purchased carpet
brand)
 Habitual Buying Behavior- occurs under conditions of low-consumer involvement and little
significant brand difference; these are frequently purchased products (eg. Table salt)
 Variety-Seeking Buying Behavior- low consumer involvement but significant perceived brand
differences; consumers often do a lot of brand switching in buying products (eg. Cookies)

The Buyer Decision Process

 Need recognition- the buyer recognizes a problem or need

 Information Search- the buyer searches for more information; may have heightened attention
or may go into an active information search
 Alternative evaluation- the consumer processes information to arrive at brand choices.
 Purchase decision- the buyer’s decision about which brand to purchase
 Postpurchase behavior- consumers take further action after purchase based on their
satisfaction or dissatisfaction with a purchase; may experience cognitive dissonance (buyer
discomfort caused by postpurchase conflict)

The Buyer Decision Process for New Products

 New product- good, service, or idea that is perceived by some potential customers as new
 Adoption process- the mental process through which an individual passes from first learning
about an innovation to final adoption

Stages in Adoption Process

 1. Awareness: The consumer becomes aware of the new product but lacks information about it.
2. Interest: The consumer seeks information about the new product.
3. Evaluation: The consumer considers whether trying the new product makes sense.
4. Trial: The consumer tries the new product on a small scale to improve his or her estimate of its
value.
5. Adoption: The consumer decides to make full and regular use of the new product.

Chapter 6 Business Markets and Business Buyer Behavior

 Business buyer behavior- the buying behavior of the organizations that buy goods and
services for use in the production of other products and services that are sold, rented, or
supplied to others.
 Business buying process- business buyers determine which products and services their
organizations need to purchase and then find, evaluate, and choose among alternative
suppliers and brands
Characteristics of
Business
Markets

 Derived demand- ultimately comes from (derives from) the demand for consumer goods.
 Inelastic demand- the total demand for many business products is not much affected by price
changes, especially in the short run
 Supplier development- systematic development of networks of supplier-partners to ensure an
appropriate and dependable supply of products and materials for use in making products or
reselling them to others

Business Buyer Behavior

 Straight rebuy- buyer reorders something without any modifications (in suppliers maintains
product and service quality to keep the business; out suppliers find new ways to add value or
exploit dissatisfaction so the buyer will consider buying from them)
 Modified rebuy- the buyer wants to modify product specifications, prices, terms, or suppliers
(in suppliers may feel pressure to put their best foot forward to protect the account; out
suppliers may see the situation as an opportunity to make a better offer and gain new
business)
 New task- the buyer purchases a product or service for the first time
 Systems selling (solutions selling)- buying a packaged solution to a problem from a single
seller, thus avoiding separate decision involved in a complex buying situation

Participants in the Business Buying Process

 Buying center- decision-making unit of a buying organization; includes all the individuals and
units that play a role in the business purchase decision making process
 Users- members of the organization who will use the product or service; initiate the buying
proposal and help define the product specifications
 Influencers- help define specifications and also provide information for evaluating
alternatives
 Buyers- formal authority to select the supplier and arrange terms of purchase; major role is
selecting vendors and negotiating
 Deciders- formal or informal power to select or approve the final suppliers; buyers are
often the deciders or approvers
 Gatekeepers- control the flow of information to others

Major Influences on Business Buyers

The Business Buying Process

 Problem recognition- someone in the company recognizes a problem or need that can be met
by acquiring a specific product or service; first stage in business buying behavior
 General need description- describes the characteristics and quantity of the needed item; general
description palang
 Product specification- decides on the best technical product characteristics or specifications for
the needed item
 Product value analysis- cost reduction approach where components are studied carefully if
they can be redesigned, standardized, or made by less costly methods of production
 Supplier Search- the buyer tries to find the best vendor
 Proposal solicitation- the buyer invites qualified suppliers to submit proposals
 Supplier selection- the buyer reviews the proposal and selects a supplier/ suppliers
 Order-routine specification- includes the final order with the chosen supplier or suppliers and
lists items such as technical specifications, quantity needed, expected delivery time, return
policies, and warranties.
 Performance review- the buyer reviews the supplier performance and decides whether to
continue, modify, or drop the arrangement

 E-procurement- purchasing through electronic connections between buyer and seller- usually
online
 Reverse auction- they put their purchasing requests online and invite suppliers to bid for the
business.
 Online trading exchanges- companies work collectively to facilitate the trading processes
Institutional and Government Markets
 Institutional market- consist of schools, hospitals, nursing homes, prisons, and other
institutions that provide goods and services to people in their care; low budget and captive
patrons
 Government market- government units (federal, state, and local) that purchase or rent goods
and services for carrying out the main functions of government

Chapter 7 Customer Driven Marketing Strategy: Creating Value for Target Market

 Market segmentation- dividing a market into smaller segments of buyers with distinct
needs, characteristics, or behaviors that might require separate marketing strategies or
mixes.
 Geographic segmentation- dividing the market into different geographical units, such as
nations, regions, states, counties, cities, or even neighborhood
 Demographic segmentation- divides the market into segments based on variables such
as age, gender, family size, family life cycle, income, occupation, education, religion,
race, generation, and nationality
 Age and life-cycle segmentation- dividing a market into different age and life-cycle
groups
 Gender segmentation- dividing a market into different segments based on gender
 Income segmentation- dividing a market into different income segments
 Psychographic segmentation- divides buyers into different segments based on social
class, lifestyle, or personality characteristics
 Behavioral segmentation- divides buyers into segments based on their knowledge,
attitudes, uses, or responses to a product
 Occasion segmentation- dividing the market into segments according to
occasions when buyers get the idea to buy, or use the purchased item
 Benefit segmentation- dividing the market into segments according to the
different benefits that consumers seek from the product
 User status- segmented into nonusers, ex-users, potential users, first-time users,
and regular users of a product
 Usage rate- segmented into light, medium, and heavy product users
 Loyalty status- segmented by customer loyalty
 Market targeting- evaluating each market segment’s attractiveness and selecting one or more
market segments to enter
 Differentiation- differentiating the firm’s market offering to create superior customer value
 Positioning- arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumer

Segmenting Business Market

-segmenting business markets include customer operating characteristics, purchasing approaches,
situational factors, and personal characteristics

Segmenting International Business Market

-segmenting by geographic location, economic factors, political and legal factors, cultural factors and
other factors.
 Intermarket segmentation (cross-market segmentation)- segments of consumers who
have
similar needs and buying behaviors even though they are located in different countries.

Requirements for Effective Segmentation

  Measurable
 Accessible
 Substantial
 Differentiable

Market Targeting
 Target Market- set of buyers who share common needs or characteristics that the company
decides to serve

 Undifferentiated marketing (mass marketing)- ignore market segment differences

and target the whole market with one offer
 Differentiated marketing (segmented marketing)- target several market segments
and designs separate offers for each
 Concentrated marketing (niche marketing)- the firm goes after a large share of one
or a few segments or niches

 Micromarketing- tailoring products and marketing programs to suit the tastes of specific
individuals and location; includes local marketing and individual marketing
 Local marketing- tailoring brands and promotions to the needs and wants of local
customer groups—cities, neighborhoods, and even specific stores.
 Individual marketing- tailoring products and marketing programs to the needs and
preferences of individual customers; also called one-to-one marketing, mass
customization, and markets-of-one marketing

Differentiation and Positioning

 Product’s position- way the product is defined by consumers on important attributes; the place
the product occupies in consumers’ minds relative to competing products.
 Competitive advantage- an advantage over competitors gained by offering greater customer
value, either by having lower prices or providing more benefits that justify higher prices.
 Value proposition- the full positioning of a brand; he full mix of benefits on which a brand is
differentiated and positioned

 Positioning statement- Company and brand positioning should be summed up; To (target
segment and need) our (brand) is (concept) that (point of difference).