Marketing is an organizational function & a set of processes for creating, communicating, and delivering value to customers & for managing customer relationships in ways that benefit the organization & its stakeholders. Identify & explain the stages in the strategic marketing process The process is divided into three phases: Planning phase: Step 1: situation (SWOT) analysis (identify industry trends, analyze competitors, assess own company, research present and prospective customer) Step 2: Market-product focus and goal setting (set market and product goals, select target markets, find points of difference, position the product) Step 3: Marketing program (develop the program’s marketing mix, develop the budget, by estimating revenues, expenses, and profits) Implementation phase (obtain resources, design marketing organization, develop schedules, execute marketing program) Evaluation phase (compare results with plans to identify deviations, act to correct negative deviations; exploit positive ones) What are secondary data & primary data? (advantages vs. disadvantages) Secondary data are facts and figures that have already been recorded before the project at hand. Internal secondary data come from within the organization, such as sales reports and customer comments. The most widely used external secondary data are reports from government studies on characteristics of the country’s population, manufacturers, and retailers. Primary data are facts and figures that are newly collected for the project and are obtained by either observing or questioning people. Secondary: (advantages) the tremendous time savings and low cost such as free or inexpensive Census reports; (disadvantages) data that may be out of date, and definitions or categories that may not be appropriate for the company’s project. Primary: (advantages) being more specific to the problem being studied; (disadvantages) far more costly and time consuming to collect than secondary data. Marketing creates utility, the benefits or customer value received by users of the product. Form utility: the production or alteration of a good or service. Place utility: having a product available where needed. Time utility: having a product available when needed. Possession utility: making an item easy to purchase so consumers can use it. Marketing research is the process of defining a marketing problem & opportunity, systematically collecting & analyzing information, & recommending actions. Five-step marketing research approach leading to marketing actions (1) define the problem; (2) develop the research plan; (3) collect relevant data; (4) develop findings; and (5) take marketing actions. The stages in the consumer decision process (5 stages) Problem recognition is perceiving a difference between a person’s ideal and actual situation big enough to trigger a decision. Information search involves remembering previous purchase experiences (internal search) and external search behavior such as seeking information from other sources. Alternative evaluation clarifies the problem for the consumer by (a) suggesting the evaluative criteria to use for the purchase, (b) yielding brand names that might meet the criteria, and (c) developing consumer value perceptions. The purchase decision involves the choice of an alternative, including from whom to buy and when to buy. Post purchase behavior involves the comparison of the chosen alternative with a consumer’s expectations, which leads to satisfaction or dissatisfaction and subsequent purchase behavior. Influences on the consumer purchase decision process Marketing mix influences (4Ps) Psychological influences (motivation, personality, perception, learning, values, beliefs and attitudes, lifestyle) Sociocultural influences (personal influence, reference groups, family, social class, culture and subculture) Situational influences (purchase task, social surroundings, physical surroundings, temporal effects, antecedent states) How stages of the PLC relate to a firm’s marketing objectives & marketing mix actions Briefly describe the product life cycle. The concept of the product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. The introduction stage occurs when a product is first introduced to its intended target market. Sales grow slowly, and profit is minimal as the result of large investment costs in product development. The marketing objective is to create consumer awareness and stimulate trial. Company spends heavily on advertising and promotion to stimulate primary demand. Distributions are limited and the number of variations of the product is restricted to ensure the control of product quality. Pricing can be either high or low, depends on using skimming strategy or penetration strategy. The growth stage is characterized by rapid increases in sales. The result of more competitors and more aggressive pricing is that profit usually peaks during this stage. Advertising focuses on stimulate selective demand, stresses the differentiation. It’s important to gain as much distribution as possible. Maturity stage is characterized by a slowing of total industry sales or product class revenue. Marginal competitors begin to leave the market. Sales increase at a decreasing rate in the maturity stage as fewer new buyers enter the market. Profit declines because there is fierce price competition among many sellers and the cost of gaining new buyers at this stage increases. Marketing objective is to hold market share through further product differentiation and finding new buyers. The major consideration is to reduce overall marketing cost by improving promotional and distribution efficiency. Decline stage occurs when sales begin to drop mostly because of environmental changes (technological innovation). Products tend to consume a disproportionate share of management time and financial resources relative to their potential future worth. Product deletion is the most drastic strategy. Harvesting is when a company retains the product but reduces marketing costs. The product continues to be offered, but salespeople do not allocate time in selling nor are advertising dollars spent. The purpose is to maintain the ability to meet customer requests. Some important aspects of PLC are their length, the shape of the sales curve, how they vary by product classes and forms, and the rate at which consumers adopt products. Ways to segment consumer markets  Customer characteristics  Geographic (region, city size, density)  Demographic (gender, age, race, household size, marital status, income, education, occupation)  Psychographic (personality, values, & lifestyles)  Buying situation  Benefits sought (quality, service, warranty)  Usage/patronage (usage rate – heavy, light, & nonusers) A product is a good, service, or idea consisting of a bundle of tangible & intangible attributes that satisfies consumers & is received in exchange for money or some other unit of value. What is a brand? Branding strategy? A brand name is any word, device (design, sound, shape, or color) or combination of these used to distinguish a seller’s goods or services. Branding is a marketing decision by an organization to use a name phrase, design, or symbols, or combination of these to identify its products and and distinguish them from those of competitors. Branding strategies: multiproduct branding, multibranding, private branding, and mixed branding. What are the three demand factors besides the product’s price or factors that determine consumers’ willingness and ability to pay for goods and services? - Consumer tastes: demographics, culture, &technology. - Price and availability of substitutes or similar products. - Consumer income The relationships between marketing channels, logistics, & supply chain management A marketing channel relies on logistics to make products available to consumers and industrial users. Logistics involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. The performance of these activities is logistics management – the practice of organizing the cost-effective flow of raw materials, in- process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements. What are logistics costs? Include transportation, materials handling & warehousing, order processing, inventory, & stockouts. Key logistics functions in a supply chain: Transportation, Warehousing & materials handling, Order processing, & Inventory management What are functions performed by intermediaries? Transactional, logistical and facilitating function What are the types of vertical marketing systems? VMS are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. There are 3 major types of VMS: corporate, contractual, and administered. A corporate VMS combines successive stages of production and distribution under a single ownership. A contractual VMS exists when independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. The contractual VMS has three variations, including wholesaler-sponsored voluntary chains, franchise program, and retailer-sponsored cooperatives. Franchise program involves manufacturer-sponsored retail franchise system, manufacturer-sponsored wholesale franchise system, service-sponsored retail franchise system, and service-sponsored franchise system. An administered VMS achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. What are components of the communication process? A source, a message, a channel of communication, a receiver, and the processes of encoding and decoding. What are elements of the promotional mix? (definitions + tools) Advertising: an paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor (magazines, newspapers, radio, TV, internet) Personal selling: the two-way flow of communication between a buyer and seller, designed to influence a person’s or group’s purchase decision (face- to-face communication between the sender and receiver) Public relations is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other public about a company and its products or services ( special events, lobbying efforts, annual reports, press conferences, and images management) Sales promotion: a short-term inducement of value offered to arouse interest in buying a good or service (coupons, rebates, samples, and sweepstakes) Direct marketing: uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet (direct mail, catalogs, telephone solicitations, direct response advertising on TV, radio and in print, and online marketing) What are methods used to set the promotional budget? Percentage of Sales (funds are allocated to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold) Competitive parity (matching the competitor’s absolute level of spending or the proportion per point of market share) All you can afford (money is allocated to promotion only after all other budget items are covered) Objective and task (the company determines its promotion objectives, outlines the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks) How does competitive product advertising differ from competitive institutional advertising? The advertising that promotes a specific brand’s features and benefits is competitive. The objective of these messages is to persuade the target market to select the firm’s brand rather than that of a competitor. Competitive institutional advertisements promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers. Please describe the channel strategies? A manufacturer uses a push strategy directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales promotion play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance. Sales promotions, such as case discount allowances, are offered to stimulate demand. By pushing the product through the channel, the goal is to get channel members to push it to their customers. A manufacturer uses a pull strategy by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Seeing demand from ultimate consumes, retailers order the product from wholesalers and thus the item is pulled through the intermediaries. . it. Marketing research is the process of defining a marketing problem & opportunity, systematically collecting & analyzing information, & recommending actions. Five-step marketing. willingness and ability to pay for goods and services? - Consumer tastes: demographics, culture, &technology. - Price and availability of substitutes or similar products. - Consumer income The. The performance of these activities is logistics management – the practice of organizing the cost-effective flow of raw materials, in- process inventory, finished goods, and related information