Chapter-1
What is marketing?
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
What is Marketing Management?
Marketing management is threat and science of choosing target markets and getting, keeping, and growing customer’s through creating, delivering, and communicating superior customer value.
What is marketed?
• Goods
• Services
• Events and experiences
• Persons
• Places and properties
• Organizations
• Information
• Ideas
Demand States
• Negative
• Nonexistent
• Latent
• Declining
• Irregular
• Unwholesome
• Full
• Overfull
Key Customer Markets
• Consumer markets
• Business markets
• Global markets
• Nonprofit/Government markets
Company Orientations
• Production
• Product
• Selling
• Marketing
Marketing Mix and the Customer
Four Ps
• Product
• Price
• Place
• Promotion
Four Cs
• Customer solution
• Customer cost
• Convenience
• Communication
Core Concepts
• Needs, wants, and demands
• Target markets, positioning, segmentation
• Offerings and brands
• Value and satisfaction
• Marketing channels
• Supply chain
• Competition
• Marketing environment
• Marketing planning
Marketing Management Tasks
• Developing marketing strategies
• Capturing marketing insights
• Connecting with customers
• Building strong brands
• Shaping market offerings
• Delivering value
• Communicating value
• Creating long-term growth
Functions of CMOs
• Strengthening the brands
• Measuring marketing effectiveness
• Driving new product development based on customer needs
• Gathering meaningful customer insights
• Utilizing new marketing technology
• Make the mission and responsibilities clear
• Fit the role to the marketing culture and structure
• Ensure the CMO is compatible with the CEO
• Remember that show people don’t succeed
• Match the personality with the CMO type
• Make line managers marketing heroes
• Infiltrate the line organization
• Require right-brain and left-brain skills
New Consumer Capabilities
• A substantial increase in buying power
• A greater variety of available goods and services
• A great amount of information about practically anything
• Greater ease in interacting and placing and receiving orders
• An ability to compare notes on products and services
• An amplified voice to influence public opinion
Internal Marketing
Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well.
Performance Marketing
• Financial Accountability
• Social Responsibility Marketing
• Social Initiatives
• Corporate social marketing
• Cause marketing
• Corporate philanthropy
• Corporate community involvement
• Socially responsible business practices
Marketing Management Tasks
• Develop market strategies and plans
• Capture marketing insights
• Connect with customers
• Build strong brands
• Shape market offerings
• Deliver value
• Communicate value
• Create long-term growth
Chapter-2
Three V’s Approach to Marketing
• Define the value segment
• Define the value proposition
• Define the value network
What is the Value Chain?
The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.
Core Business Processes
• Market-sensing process
• New-offering realization process
• Customer acquisition process
• Customer relationship management process
• Fulfillment management process
Characteristics of Core Competencies
• A source of competitive advantage
• Applications in a wide variety of markets
• Difficult to imitate
Becoming a Vigilant Organization
• Can we learn from the past?
• How should the present be evaluated?
• What do we envision for the future?
What is Holistic Marketing?
Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co prosperity among key stakeholders.
What is a Marketing Plan?
A marketing plan is the central instrument for directing and coordinating the marketing effort.
It operates at a strategic and tactical level.
Levels of a Marketing Plan
• Strategic
• Target marketing decisions
• Value proposition
• Analysis of marketing opportunities
• Tactical
• Product features
• Promotion
• Merchandising
• Pricing
• Sales channels
• Service
Corporate Headquarters’ Planning Activities
• Define the corporate mission
• Establish strategic business units (SBUs)
• Assign resources to each SBU
• Assess growth opportunities
Good Mission Statements
• Focus on a limited number of goals
• Stress major policies and values
• Define major competitive spheres
• Take a long-term view
• Short, memorable, meaningful
Major Competitive Spheres
• Industry
• Products
• Competence
• Market segment
• Vertical channels
• Geographic
Rubbermaid Commercial Products, Inc.
“Our vision is to be the Global Market Share Leader in each of the markets we serve. We will earn this leadership position by providing to our distributor and end-user customers innovative, high-quality, cost-effective and environmentally responsible products. We will add value to these products by providing legendary customer service through our Uncompromising Commitment to Customer Satisfaction.”
Motorola
“The purpose of Motorola is to honorably serve the needs of the community by providing products and services of superior quality at a fair price to our customers; to do this so as to earn an adequate profit which is required for the total enterprise to grow; and by doing so, provide the opportunity for our employees and shareholders to achieve their personal objectives.”
eBay
“We help people trade anything on earth. We will continue to enhance the online trading experiences of all—collectors, dealers, small businesses, unique item seekers, bargain hunters, opportunity sellers, and browsers.”
Product Orientation vs. Market Orientation
Company | Product | Market |
Missouri-Pacific Railroad | We run a railroad | We are a people-and-goods mover |
Xerox | We make copying equipment | We improve office productivity |
Standard Oil | We sell gasoline | We supply energy |
Columbia Pictures | We make movies | We entertain people |
Dimensions that Define a Business
• Customer groups
• Customer needs
• Technology
Characteristics of SBUs
• It is a single business or collection of related businesses
• It has its own set of competitors
• It has a leader responsible for strategic planning and profitability
An off’s Product-Market Expansion Grid
• Market penetration strategy
• Market development strategy
• Product development strategy
• Diversification strategy
What is Corporate Culture?
Corporate culture is the shared experiences, stories, beliefs, and norms that characterize an organization.
Tactics for Managing Change
• Avoid the innovation title for the team
• Use the buddy system
• Set the metrics in advance
• Aim for quick hits first
• Get data to back up your gut
SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
Market Opportunity Analysis (MOA)
• Can the benefits involved in the opportunity be articulated convincingly to a defined target market?
• Can the target market be located and reached with cost-effective media and trade channels?
• Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
• Can the company deliver the benefits better than any actual or potential competitors?
• Will the financial rate of return meet or exceed the company’s required threshold for investment?
Goal Formulation and MBO
• Unit’s objectives must be hierarchical
• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent
Porter’s Generic Strategies
• Overall cost leadership
• Differentiation
• Focus
Categories of Marketing Alliances
• Product or service alliance
• Promotional alliance
• Logistics alliances
• Pricing collaborations
Marketing Plan Contents
ü Executive summary
ü Table of contents
ü Situation analysis
ü Marketing strategy
ü Financial projections
ü Implementation controls
Evaluating a Marketing Plan
ü Is the plan simple?
ü Is the plan specific?
ü Is the plan realistic?
ü Is the plan complete?
Chapter -3
What is a Marketing Information System (MIS)?
A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
Information Needs Probes
• What decisions do you regularly make?
• What information do you need to make these decisions?
• What information do you regularly get?
• What special studies do you periodically request?
• What information would you want that you are not getting now?
• What are the four most helpful improvements that could be made in the present marketing information system?
Internal Records and Marketing Intelligence
• Order-to-payment cycle
• Sales information system
• Databases, warehousing, data mining
• Marketing intelligence system
Steps to Improve Marketing Intelligence
• Train sales force to scan for new developments
• Motivate channel members to share intelligence
• Network externally
• Utilize a customer advisory panel
• Utilize government data sources
• Collect customer feedback online
• Purchase information
Secondary Commercial Data Sources
• Nielsen
• MRCA
• Information Resources
• SAMI/Burke
• Simmons
• Arbitral
Sources of Competitive Information
• Independent customer goods and service review forums
• Distributor or sales agent feedback sites
• Combination sites offering customer reviews and expert opinions
• Customer complaint sites
• Public blogs
Needs and Trends
• Fads
• Trends
• Megatrends
Trends Shaping the Business Landscape
• Profound shifts in centers of economic activity
• Increases in public-sector activity
• Change in consumer landscape
• Technological connectivity
• Scarcity of well-trained talent
• Increase in demand for natural resources
• Emergence of new global industry structures
• Ubiquitous access to information
• Management shifts from art to science
• Increase in scrutiny of big business practices
Environmental Forces
• Demographic
• Economic
• Socio-cultural
• Natural
• Technological
• Political-legal
Population and Demographics
• Population growth
• Population age mix
• Ethnic markets
• Educational groups
• Household patterns
• Geographical shifts
Economic Environment
• Income Distribution
• Savings, Debt, and Credit
Social-Cultural Environment
• Views of themselves
• Views of others
• Views of organizations
• Views of society
• Views of nature
• Views of the universe
Most Popular American Leisure Activities
• Reading
• TV Watching
• Spending time with family
• Going to movies
• Fishing
• Computer activities
• Gardening
• Renting movies
• Walking
• Exercise
• Listening to music
Natural Environment
• Shortage of raw materials
• Increased energy costs
• Anti-pollution pressures
• Governmental protections
Keys to Avoiding Green Marketing Myopia
• Consumer Value Positioning
• Calibration of Consumer Knowledge
• Credibility of Product Claims
Technological Environment
• Pace of change
• Opportunities for innovation
• Varying R&D budgets
• Increased regulation of change
Chapter -4
What is Marketing Research?
Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
Types of Marketing Research Firms
• Syndicated service
• Custom
• Specialty-line
The Marketing Research Process
• Define the problem
• Develop research plan
• Collect information
• Analyze information
• Present findings
• Make decision
Step 1: Define the Problem
• Define the problem
• Specify decision alternatives
• State research objectives
Step 2: Develop the Research Plan
• Data sources
• Research approach
• Research instruments
• Sampling plan
• Contact methods
Research Approaches
• Observation
• Ethnographic
• Focus group
• Survey
• Behavioral data
• Experimentation
Research Instruments
• Questionnaires
• Qualitative Measures
• Technological Devices
Questionnaire Do’s and Don’ts
• Ensure questions are free of bias
• Make questions simple
• Make questions specific
• Avoid jargon
• Avoid sophisticated words
• Avoid ambiguous words
• Avoid negatives
• Avoid hypotheticals
• Avoid words that could be misheard
• Use response bands
• Use mutually exclusive categories
• Allow for “other” in fixed response questions
Question Types – Dichotomous
In arranging this trip, did you contact American Airlines?
£ Yes £ No
Question Types – Multiple Choice
With whom are you traveling on this trip?
£ No one
£ Spouse
£ Spouse and children
£ Children only
£ Business associates/friends/relatives
An organized tour group
Question Types – Likert Scale
Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.
£ Strongly disagree
£ Disagree
£ Neither agree nor disagree
£ Agree
£ Strongly agree
Question Types – Semantic Differential
American Airlines
Large ………………………………...…….Small
Experienced………………….….Inexperienced
Modern……………………….…..Old-fashioned
Question Types – Importance Scale
Airline food service is _____ to me.
£ Extremely important
£ Very important
£ Somewhat important
£ Not very important
£ Not at all important
Question Types – Rating Scale
American Airlines’ food service is _____.
£ Excellent
£ Very good
£ Good
£ Fair
£ Poor
Question Types –Intention to Buy Scale
How likely are you to purchase tickets on American Airlines if in-flight Internet access were available?
£ Definitely buy
£ Probably buy
£ Not sure
£ Probably not buy
£ Definitely not buy
Question Types –Completely Unstructured
What is your opinion of American Airlines?
Question Types –Word Association
What is the first word that comes to your mind when you hear the following?
Airline ________________________
American _____________________
Travel ________________________
Question Types –Sentence Completion
When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
Question Types –Story Completion
“I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Question Types –Picture (Empty Balloons)
Qualitative Measures
• Word association
• Projective techniques
• Visualization
• Brand personification
• Laddering
Technological Devices
• Galvanometers
• Tachistoscope
• Eye cameras
• Audiometers
• GPS
Sampling Plan
• Sampling unit: Who is to be surveyed?
• Sample size: How many people should be surveyed?
• Sampling procedure: How should the respondents be chosen?
Table 4.2 Types of Samples
Probability Samples
• Simple random
• Stratified random
• Cluster
Nonprobability Samples
• Convenience
• Judgment
• Quota
Contact Methods
• Mail questionnaire
• Telephone interview
• Personal interview
• Online interview
Pros and Cons of Online Research
Advantages
• Inexpensive
• Fast
• Accuracy of data, even for sensitive questions
• Versatility
Disadvantages
• Small samples
• Skewed samples
• Technological problems
• Inconsistencies
What is a Marketing Decision Support System (MDSS)?
A marketing decision support system is a coordinated collection of data, systems, tools, and techniques with supporting hardware and software by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.
Barriers Limiting the Use of Marketing Research
• A narrow conception of the research
• Uneven caliber of researchers
• Poor framing of the problem
• Late and occasionally erroneous findings
• Personality and presentational differences
Table 4.3 Characteristics of Good Marketing Research
• Scientific method
• Research creativity
• Multiple methods
• Interdependence
• Value and cost of information
• Healthy skepticism
• Ethical marketing
What are Marketing Metrics?
Marketing metrics are the set of measures that helps marketers quantify, compare, and interpret marketing performance.
Table 4.4 Marketing Metrics
External
• Awareness
• Market share
• Relative price
• Number of complaints
• Customer satisfaction
• Distribution
• Total number of customers
• Loyalty
Internal
• Awareness of goals
• Commitment to goals
• Active support
• Resource adequacy
• Staffing levels
• Desire to learn
• Willingness to change
• Freedom to fail
• Autonomy
What is Marketing-Mix Modeling?
Marketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities.
Marketing Dashboards
• A customer-performance scorecard records how well the company is doing year after year on customer-based measures.
• A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the company’s performance including employees, suppliers, banks, distributors, retailers, and stockholders.
Table 4.5 Sample Customer-Performance Scorecard Measures
• % of new customers to average #
• % of lost customers to average #
• % of win-back customers to average #
• % of customers in various levels of satisfaction
• % of customers who would repurchase
• % of target market members with brand recall
• % of customers who say brand is most preferred
Common Measurement Paths
• Customer metrics pathway
• Unit metrics pathway
• Cash-flow metrics pathway
• Brand metrics pathway
The Measures of Market Demand
• Potential market
• Available market
• Target market
• Penetrated market
Vocabulary for Demand Measurement
• Market demand
• Market forecast
• Market potential
• Company demand
• Company sales forecast
• Company sales potential
How Can We Estimate Current Demand?
• Total market potential
• Area market potential
• Market buildup method
• Multiple-factor index method
Estimating Future Demand
• Survey of Buyers’ Intentions
• Composite of Sales Force Opinions
• Expert Opinion
• Past-Sales Analysis
• Market-Test Method
Chapter -5
Creating Customer Value, Satisfaction,
and Loyalty
and Loyalty
Chapter Questions
• What are customer value, satisfaction, and loyalty, and how can companies deliver them?
• What is the lifetime value of customers?
• How can companies cultivate strong customer relationships?
• How can companies both attract and retain customers?
• What is database marketing?
What is Customer Perceived Value?
Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
Figure 5.2 Determinants of Customer Perceived Value
Total customer benefit
· Total customer cost
· Product benefit
· Monetary cost
· Services benefit
· Time cost
· Energy cost
· Psychological cost
· Personal benefit
· Image benefit
Steps in a Customer Value Analysis
• Identify major attributes and benefits that customers value
• Assess the qualitative importance of different attributes and benefits
• Assess the company’s and competitor’s performances on the different customer values against rated importance
• Examine ratings of specific segments
• Monitor customer values over time
What is Loyalty?
Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
Top Brands in Customer Loyalty
• Avis
• Google
• L.L. Bean
• Samsung (mobile phones)
• Yahoo!
• Canon (office copiers)
• Land’s End
• Coors
• Hyatt
• Marriott
• Verizon
• KeySpan Energy
• Miller Genuine Draft
• Amazon
Measuring Satisfaction
• Periodic surveys
• Customer loss rate
• Mystery shoppers
• Monitor competitive performance
What is Quality?
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
Maximizing Customer Lifetime Value
• Customer profitability
• Customer equity
• Lifetime value
Estimating Lifetime Value
• Annual customer revenue: $500
• Average number of loyal years: 20
• Company profit margin: 10
• Customer lifetime value: $1000
What is Customer Relationship Management?
CRM is the process of carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty.
Framework for CRM
• Identify prospects and customers
• Differentiate customers by needs and value to company
• Interact to improve knowledge
• Customize for each customer
CRM Strategies
• Reduce the rate of defection
• Increase longevity
• Enhance share of wallet
• Terminate low-profit customers
• Focus more effort on high-profit customers
Customer Retention
• Acquisition of customers can cost 5 times more than retaining current customers.
• The average customer loses 10% of its customers each year.
• A 5% reduction to the customer defection rate can increase profits by 25% to 85%.
• The customer profit rate increases over the life of a retained customer.
Steps for Creating Customer Evangelists
• Customer plus-delta
• Napsterize your knowledge
• Build the buzz
• Create community
• Make bite-size chunks
• Create a cause
Database Key Concepts
• Customer database
• Database marketing
• Mailing list
• Business database
• Data warehouse
• Data mining
Using the Database
• To identify prospects
• To target offers
• To deepen loyalty
• To reactivate customers
• To avoid mistakes
Don’t Build a Database When
• The product is a once-in-a-lifetime purchase
• Customers do not show loyalty
• The unit sale is very small
• The cost of gathering information is too high
Perils of CRM
• Implementing CRM before creating a customer strategy
• Rolling out CRM before changing the organization to match
• Assuming more CRM technology is better
• Stalking, not wooing, customers
Chapter -6
Analyzing
Consumer Markets
Consumer Markets
Chapter Questions
• How do consumer characteristics influence buying behavior?
• What major psychological processes influence consumer responses to the marketing program?
• How do consumers make purchasing decisions?
• How do marketers analyze consumer decision making?
What Influences Consumer Behavior?
• Cultural factors
• Social factors
• Personal factors
What is Culture?
Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions.
Subcultures
• Nationalities
• Religions
• Racial groups
• Geographic regions
Fast Facts About American Culture
• The average American:
• chews 300 sticks of gum a year
• goes to the movies 9 times a year
• takes 4 trips per year
• attends a sporting event 7 times each year
Social Classes
• Upper uppers
• Lower uppers
• Upper middles
• Middle
• Working
• Upper lowers
• Lower lowers
Characteristics of Social Classes
• Within a class, people tend to behave alike
• Social class conveys perceptions of inferior or superior position
• Class may be indicated by a cluster of variables (occupation, income, wealth)
• Class designation is mobile over time
Social Factors
• Reference groups
• Family
• Social roles
• Statuses
Reference Groups
• Membership groups
• Primary groups
• Secondary groups
• Aspirational groups
• Disassociative groups
Family Distinctions Affecting Buying Decisions
• Family of Orientation
• Family of Procreation
Personal Factors
• Age
• Life cycle stage
• Occupation
• Wealth
• Personality
• Values
• Lifestyle
• Self-concept
Brand Personality
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness
Lifestyle Influences
• Multi-tasking
• Time-starved
• Money-constrained
Table 6.2 LOHAS (Lifestyles of Health and Sustainability) Market Segments
• Sustainable Economy
• Healthy Lifestyles
• Ecological Lifestyles
• Alternative Health Care
• Personal Development
Key Psychological Processes
• Motivation
• Perception
• Learning
• Memory
Motivation
Freud’s Theory: Behavior is guided by subconscious motivations
Maslow’s Hierarchy of Needs: Behavior is driven by lowest, unmet need
Herzberg’s Two-Factor Theory: Behavior is guided by motivating and hygiene factors
Maslow’s Hierarchy of Needs
• Physiological needs
• Safety needs
• Social needs
• Esteem needs
• Self-actualization needs
Perception
• Selective attention
• Selective retention
• Selective distortion
• Subliminal perception
Figure 6.4 Consumer Buying Process
• Problem recognition
• Information search
• Evaluation
• Purchase decision
• Post purchase behavior
Sources of Information
• Personal
• Commercial
• Public
• Experiential
Non-Compensatory Models of Choice
• Conjunctive
• Lexicographic
• Elimination-by-aspects
Perceived Risk
• Functional
• Physical
• Financial
• Social
• Psychological
• Time
Other Theories of Consumer Decision Making
Involvement
• Elaboration Likelihood Model
• Low-involvement marketing strategies
• Variety-seeking buying behavior
Decision Heuristics
• Availability
• Representativeness
• Anchoring and adjustment
Mental Accounting
• Consumers tend to…
• Segregate gains
• Integrate losses
• Integrate smaller losses with larger gains
• Segregate small gains from large losses
- Cumming soon: next chapters.
