Marketing CH 1 notes

A need can be a want when it is shaped by personal preferences and cultural influences.

Marketing process –
1. understand the marketplace and customer needs and wants,
2. design a customer-driven marketing strategy,
3. construct an integrated marketing program that delivers superior value,
4. build profitable relationships and create customer delight,
5. capture value from customers to create profits and customer equity

Core concepts of marketing

1. Customer needs, wants & demands,
2. market offerings,
3. customers value and satisfaction,
4. exchanges & relationships,
5. markets

Marketers do not create needs; they influence wants and influence demands by providing the
right products.

Market offers >> anything that can be offered to satisfy customer needs and wants
producers should think of not only selling a product (X), a solution to a need (O)

Marketing Myopia >> concentrate on improving the utility of a product or a service, rather than
just trying to sell them (for long-term profitability)
Marketing myopia >> sellers being preoccupied with their own products and losing sight of
underlying consumer needs

Companies that define their

missions in terms of products or
technologies are considered
myopic primarily because
________.
Companies that define their missions in terms of products or technologies are considered
myopic primarily because ________. D) products and technologies eventually become
outdated
 - The production concept and the product concept are marketing management orientations
that are more likely to lead to marketing myopia.
- Sellers should consider the particular benefits and experiences desired by their customers,
and not just pay attention to the specific products they offer. (to avoid market myopia)
- When sellers focus on existing needs and lose sight of underlying customer wants, they
suffer from marketing myopia. (false)
- Which of the following marketing management concepts is most likely to lead to
marketing myopia?
A) customer-driven marketing concept
B) customer-driving marketing concept
C) societal marketing concept
D) marketing concept
E) product concept

Answer: E

The marketing concept >> holds that the key to achieving organizational goals consists
in determining the needs and wants of target markets &
Delivering desired satisfactions more effectively and efficiently than competitors

The production concept >> focus on high production efficiency and wide distribution
(consumers>> widely available and low in cost)

The product concept (product-centered make-and-sell) >> making superior products and
improving them over time >> product concept
(consumers>> products with the most quality, performance and innovative features)

The selling concept ( inside-out perspective approach)

Consumers will not buy unless it is a large scale selling & promotion effort is undertaken
factory >> existing products>>selling and promoting>> profits through sales volume
It is typically practiced with unsought goods.
The selling concept is typically practiced with goods that buyers normally do not think of buying

The marketing concept (a customer-centered "sense-and-respond" philosophy) (outside-in

perspective)
holds that achieving organizational goals depends on knowing the needs and wants of target
markets and delivering the desired satisfactions better than competitors do
Market>> customer needs>> integrated marketing>> profits through customer satisfaction
The societal marketing concept seeks to establish a balance between consumer short-run wants
and consumer long-run welfare

Value Proposition – the set of benefits and values that a company promise to deliver to customers
to satisfy their needs
The set of marketing tools a firm uses to implement its marketing strategy is called the marketing
mix

customer-driven marketing >> customers know what they want

customer-driving marketing >> customers don’t know what they want

( marketer understands and anticipates customer needs even better than customers themselves do
and creates products and services to meet current and future needs.

Low potential profitability / short-term >> strangers

Low long >> barnacles
High / short >> butterflies
High / long. >> true friends

Large-scale marketing approaches that foster two-way customer relationships are made possible
by new communication technologies.

A club marketing program >> a marketing program designed specifically for regular and
frequent purchasers of a company's product or for those who have a special interest in it

Customer-perceived value is defined as the customer's evaluation of the difference between all
the benefits and all the costs of a market offering relative to those of competing offers

CRM – customer relationship management >> one of the key marketing tools today
Building and maintaining profitable customer relationships by delivering superior customer
value and satisfaction is called ________.

Primary reason why companies use multiple social media >> present a carefully integrated
message to fans and customers

Marketing is defined as a social and managerial process by which individuals and organizations
obtain what they need and want through value creation and exchange

Wants are human needs that are shaped by culture and individual personality.

Basic partnerships >> many low-margin consumers

Full partnerships>> few high-margin consumers
Customer satisfaction >> product performance = expectation

A room upgrade offered by a hotel to a guest who often stays in the hotel is an example of
________. A) a frequency marketing program

customer evangelists >> customers who make repeat purchases and tell others about their
positive experiences with a product or service
When backed by buying power, wants become demand.
A market offering is some combination of products, services, information or experiences
provided to consumers to satisfy need or want.

Consumer-generated marketing or consumer-managed marketing >> consumers shape their own

brand experience

When marketers set low expectations for a market offering, they run the risk of failing to attract
enough customers.

Exchange is the act of obtaining a desired object from someone by offering sth in return.

A market is a set of actual & potential buyers of a product or service.

Consumer research, product development, communication, distribution, pricing and service are
all core marketing activities.

Sellers are most effective when they focus more on the benefits and experiences produced by
their products and services.

When sellers focus on existing

needs and lose sight of
underlying customer wants,
they
suffer from marketing myopia.
Briefly compare and contrast the concepts of needs, wants, and demands and provide examples
to illustrate your answer. How do these three concepts relate to marketing practices? Answer:
Human needs are states of felt deprivation. Needs are a basic part of the human makeup; they are
not created by marketers. Humans have a basic physical need for food, clothing, warmth, and
safety; a basic social need for belonging and affection; and a basic individual need for knowledge
and self-expression. Wants are needs shaped by culture, society, and individual personality. For
example, an American needs food but wants a Big Mac and a soft drink. Wants become demands
when they are backed by consumers' buying power. For example, an American with ten dollars
needs food, wants a Big Mac and soft drink, and demands lunch at McDonald's. Marketers
conduct extensive research to understand customers' wants and demands. They then attempt to
fulfill customers' wants and demands through their market offerings.

The art and science of choosing target markets and building profitable relationships with them is
called ________. marketing management

Selecting which segments of a population to serve is called target marketing.

Dividing the market into various groups of customers that a company may serve is called
________. market segmentation

Which of the following customer questions is answered by a company's value proposition? A)

"Why should I buy your brand rather than a competitor's?"

Henry Ford's philosophy was to perfect the Model T so that its cost could be reduced further for
increased consumer affordability. This reflects the ________ concept. (production concept)

Which of the following is the most likely result of a marketing strategy that attempts to serve all
potential customers?
Not all customers will be satisfied.

When demand for athletic shoes produced by Nike and endorsed by Michael Jordan is high, Nike
limits how many pairs of shoes are manufactured. This action maintains strong demand by
limiting supply. This decision contradicts the philosophy of which marketing concept?
production concept

FedEx offers its customers fast and reliable package delivery. When FedEx customers weigh
these benefits against the monetary cost of using FedEx along with other costs of using the
service, they are acting upon _____. (customer-perceived value >> difference btw the toal
customer value and the total customer cost)

Customer satisfaction is a goal that companies strive to earn. Companies can achieve customer
delight by ________. promising only what they can deliver and then delivering more than they
promise

Marketing in the non-profit sector is applied in all but which of these ways? (to publicize the
organization's supporters)

As part of the rapid globalization of today's economy, companies are selling more domestically
produced goods in international markets and ________ (purchasing more supplies abroad)
Through ________, companies
today are strengthening their
connections with all partners,
from providers of raw materials
and components to those
involved in the delivery of final
goods and services.
Through ________, companies today are strengthening their connections with all partners, from
providers of raw materials and components to those involved in the delivery of final goods and
services. (supply chain management)

Greater consumer control means that companies can no longer rely on ________. (marketing by
intrusion)

Apart from retaining good customers, most marketers want to constantly increase their "share of
customer." What does this mean in marketing terms?
Marketers want to increase the share they get of the customer's purchasing in their product
categories.

Which of the following actions should a marketer take in response to the new economy?
(hold the line on prices) hold the line = Maintain the existing position or state of affairs.

Following the change in consumer values and consumption patterns after the Great Recession,
marketers have changed their marketing strategies to emphasize the ________ of their products.
(value)

"Losing a customer once means losing the entire stream of possible purchases that the customer
would make over an extended period of patronage." This statement specifically indicates loss in
terms of_____. (consumer lifetime value)

A marketer wants to increase its "share of customer." It can do this by offering a greater variety
to customers, or by ________.
creating programs to cross-sell and up-sell to market more products and service to existing
customers

To increase share of the customer >> The marketer can offer greater variety to customers; in
addition, the marketer can train employees to cross-sell and up-sell in order to market more
products and services to existing customers
Describe and compare the four types of customers classified by their potential profitability to an
organization. Explain how an organization should manage each type of customer. Answer: The
four types of customers are strangers, butterflies, true friends, and barnacles. "Strangers" have
low potential profitability and loyalty. A company's offerings do not fit well with a stranger's
wants and demands. Companies should not invest in building a relationship with this type of
customer. Another type of customer in which a company should not invest is the "barnacle."
Barnacles are highly loyal but not very profitable because there is a limited fit between their
needs and the company's offerings. The company might be able to improve barnacles'
profitability by selling them more, raising their fees, or reducing service to them. However, if
they cannot be made profitable, they should be "fired." Like strangers, "butterflies" are not loyal.
However, they are potentially profitable because there is a good fit between the company's
offerings and their needs. Like real butterflies, this type of customer will come and go without
becoming a permanent, loyal consumer of a company's products. Companies should use
promotional blitzes to attract these customers, create satisfying and profitable transactions with
them, and then cease investing in them until the next time around. The final type of customers is
"true friends"; they are both profitable and loyal. There is a strong fit between their needs and the
company's offerings, so the company should make continuous relationship investments in an
effort to go beyond satisfying and to delight these customers. A company should try to convert
true friends into customer evangelists who tell others about their good experiences with the
company.

"Losing a customer once means

losing the entire stream of
possible purchases that the
customer would make over an
extended period of patronage."
This statement specifically
indicates loss in terms of
CH-2

Companywide strategic planning – developing and maintaining a strategic fit btw the
organization’s goals and capabilities and its changing marketing opportunities

Steps in strategic planning

1. Define the company mission
2. Setting the company’s objectives and goals
3. Designing the business portfolio
4. Planning marketing and other functional strategies
Companywide strategic planning guides marketing strategy and planning.

Defining a market-oriented mission

The mission statement is the organization’s purpose, what it wants to accomplish in larger
environment

Market-oriented mission statement defines the business in terms of satisfying basic customer
needs

Setting company’s objectives and goals

-detailed supporting objectives for each level of management

-SMART components for the managers
Specific
Measurable
Actionable
Realistic
Time-bound

Designing the business portfolio

Business portfolio is the collection of businesses and products that make up the company
Portfolio analysis is a major activity in strategic planning whereby management evaluates the
businesses and products that make up the company

Analyzing the business portfolio

SBU>> strategic business unit is a unit of a company that has a separate mission and objectives
that can be planned separately from other company business
Company division
Product-line with a division
Single product or brand

1. identify key businesses

2. access the attractiveness
3. decide how much support each SBU deserves
Planning marketing and other functional strategies

Developing strategies for growth and downsizing

Product/market expansion grid is a tool for identifying company growth opportunities

Market penetration (making consumers to buy more)
Market development (to adopt a new market (ie. a new target market)
Product development (selling other products of the company)
Diversification (have to learn about new market/ new project)

Downsizing >> is the reduction of the business portfolio by eliminating products or business
units that are not profitable or no longer fit the company’s overall strategy

Partnering to build customer relationships

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

Value delivery network is made up of the company, suppliers, distributors and ultimately
customers who partner with each other to improve performance of the entire system

Marketing strategy and the marketing mix

Market segmentation >> is the division of a market into distinct grp of buyers who have
distinct needs, characteristics or behavior and who might require separate products or
marketing mixes

Market segment >> is a group of customers who respond in a similar way to a given set of
marketing efforts

Market targeting >> is the process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter

Market positioning >> the arranging for a product to occupy a clear, distinctive, and desirable
place relative to competing products in the minds of the target customer

Marketing mix >> the set of controllable tactical marketing tools (the four P) that the firm
blends to produce the response it wants in the target market

Marketing implementation >> turns marketing plans to marketing actions

Marketing control >> measurement and evaluation of results + taking corrective action as
needed (operating control, strategic control)
 Marketing ROI >> net return from the marketing investment by the cost of marketing
investment

A company's broad mission leads to ________. a hierarchy of objectives, including

business objective and marketing objectives.
A company's broad mission leads it to develop all of the following EXCEPT ________.
A) budget objectives.

Mission statements should be ________. meaningful and specific yet motivating.

Which of the following is the first step of business portfolio planning?

determining which businesses should receive more, less, or no investment

Most standard portfolio analysis methods evaluate SBUs on the ________. strength of
the market or industry position

According to the Boston Consulting Group approach, ________ provides a measure of

market attractiveness. market growth rate
Which of the following is true of the BCG matrix approach? It considers market growth rate
to be a measure of market attractiveness.

Within a company, who is most likely to perform strategic planning?

cross-functional teams of divisional managers close to their markets

Which of the following is true with regard to cash cows?

They can be used to help finance the company's question marks and stars.
By harvesting its SBU, a company would most likely be ________.
milking the SBU's short-term cash flow regardless of the long-term effect

Modern strategic planning ________. is decentralized

Which of the following is true with regard to geographic organization?

It allows salespeople to work with a minimum of travel time and cost

Emerson Studios has designed its marketing organization along the lines of a ________
organization in which operational specialists head different marketing activities.
Functional

Marketing ________ addresses the what and why of marketing activities, while
marketing ________ addresses the who, where, when, and how.
planning; implementation

Effective positioning begins with ________. differentiation

Ch-3

Marketing environment >> actors & forces outside marketing >> MM’s ability
Microenvironment >> actors close to the company >> ability (to serve its customers)

The company, suppliers, marketing intermediaries, customer markets, competitors & public

Marketing intermediaries >> help the company promote, sell, & distribute >> final buyers
(4 types) resellers, physical distribution firms, marketing services agencies and financial
intermediaries

Publics >> any grp that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives

Macroenvironment >> broader forces that affect the actors in the microenvironment
6 > demographic, economic, natural, technological, political, cultural

Demographic environment >> study of human populations >> age, family structure, geographic
population shifts, and educational characteristics and population diversity

Generational marketing >> in segmenting people by lifestyle of life state instead of age

Economic environment >> factors that affect consumer purchasing power and spending patterns
Value marketing >> financially cautious buyers>> greater value (the right combination of quality
and services at a fair price)

Natural environment >> natural resource that are needed as inputs by markets or that are
affected by marketing activities

Technological environment >> most dramatic force >>