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MKT340 Chapter readings
Introduction to Marketing (MKT 340)
Emory University
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Chapter 1 ● Marketing: process of creating, distributing, promoting and pricing goods/services and ideas to facilitate exchange relationships with customers to maintain favorable relationships with stakeholders in a dynamic environment ○ Both parties beneit; customer expects beneit/reward greater than cost of making a transaction and marketer gains price charge for product → customer develops expectations about seller’s future behaviors ● Marketing-mix variables (viewed as controllable because they can be modified) ■ BUT, competitive forces,economic conditions, political forces, laws/regulations, technology and sociocultural forces can share the decision-making environment for controllable variables ○ Product, Distribution, Promotion, Price ■ Marketing mix is built AROUND the customer to match their needs ■ Must collect in-depth information on customer needs ● Gender, ethnicity, educational level, preferences, attitude towards competitors ○ Marketing focuses on customers ■ Customers are the focal point of all marketing activities; they define their products as what they do to satisfy customers ● Target markets: specific group of customers a organization focuses on ○ Product Variable ■ Researching customer’s needs/wants and designing a product to satisfy that/ bundle of satisfaction that provides value ● Also includes creating or modifying brand names/packaging/warranty/repair services ■ Product is a tangible good, intangible service or ideas ○ Distribution Variable ■ Products must be available at right time and locations ■ Supply chain management: maintaining flow of products through physical distribution activities (acquiring inventory, resources and interlinked networks that make products available for customers) ○ Promotion variable ■ Activities used to inform and persuade to create a desired response ■ Sales promotions keep sales dynamic, Publicity provides information, sustain interest in established products ○ Price Variable ■ Decision and actions associated with pricing objectives and policies and actual product prices ■ Price is used as a competitive tool ■ Price is the most flexible variable in marketing mix because dramatic changes in price can happen over night ● Marketing creates value
○ Value: customer’s subjective assessment of benefits relative to costs in determining worth of a product (customer benefits - customer costs) ○ Customer costs include monetary costs and 2 non-monetary costs ■ Time and efort customers give up to buy product → companies can increase product availability making it easier for customer to buy ■ Risk → ofering warranties ○ Marketing mix used to enhance perceptions of value ■ Depends on what the customer hold value to (price, convenience, etc) ● Marketing builds relationships with customers and other stakeholders ○ 4 conditions of an exchange ■ Two groups/individuals must participate and possess something of value the other party desires ■ Exchange should provide benefit to both parties ■ Each party must have confidence in promise of product of value held by the other ■ Parties to the exchange must meet expectation to build trust ○ Customer relationship often endures over time and repeat purchases are important for the firm ○ Maintaining relationship with stakeholders ■ Must be proactive and responsive to their concerns → found to increase inancial performance ● Marketing occurs in a dynamic environment ○ Marketing environment effects buyers, sellers and value ■ Marketing environment: competitive, economic, political, legal, technological and socio cultural forces that surround the customer and affect the marketing mix ● Influence customer’s lifestyle/standard of living/preferences for products ● Marketing environment can determine whether and how a marketing manager can perform certain marketing activities ● Forces may shape a marketing manager’s decisions and actions by influencing buyer’s reactions to the firm’s marketing mix ● Understanding the marketing concept ○ Marketing concept: philosophy that organization should try to satisfy customer’s needs through activities that also allows organization to achieve its goals ■ Customer satisfaction is major focus of this concept ■ Affects all organizational activities from production, finance, accounting, human resources and marketing departments ○ Evolution of marketing concept ■ Market orientation: perspective that emphasizes marketers first need to find what customers want and THEN produce ■ Involves being responsive to changing needs, recognize the needs to create specific types of value-creating capabilities, linked to new product
● The customers because they define their products as what to do 3. What are the four variables of the marketing mix? ● Price, Product, Distribution, Promotion ● Known as variables because we can change them 4. What is value? How can marketers use the marketing mix to enhance the perception of value? ● Value is (customer benefits-customer costs); customer’s subjective assessment of benefits relative to costs ● Product has a feature that provides value and demonstrates benefits ● Promotion help create an image that help in customer’s assessment of a product’s value ● Lowest price can mean value to some customers ● The availability or distribution of product can enhance value 5. What conditions must exist before a marketing exchange can occur? Describe a recent exchange in which you participated. ● Two groups/individuals must participate and possess something of value the other party desires ● Exchange should provide benefit to both parties ● Each party must have confidence in promise of product of value held by the other ● Parties to the exchange must meet expectation to build trust 6. What are the forces in the marketing environment? How much control does a marketing manager have over these forces? ● competitive, economic, political, legal, technological and socio cultural forces that surround the customer and affect the marketing mix ● Cannot control but can plan on them for opportunities 7. Discuss the basic elements of the marketing concept. Which businesses in your area use this philosophy? Explain why. ● Marketing concept: an organization should try to satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals ● focuses on customer analysis, competitor analysis, and integration of the firm's’ resources to provide customer value and satisfaction, as well as to generate long-term profits 8. How can an organization implement the marketing concept? ● First establish information system to find out customer’s needs to create satisfying products ● Must coordinate all activities to satisfy customers and their own goals ○ Monitoring external environment, reconsutrying internal operations 9. What is customer relationship management? Why is it so important to “manage” this relationship? ● Using information about customers to create strategies to develop & sustain customer relations ● Deepens customer’s trust in the company → close relationship leads to creation of value → increase long-term proitability through customer loyalty 10. Why is marketing important in our society? Why should you study marketing?
Chapter 2 ● Strategic market management: process of planning, implementing and evaluating performance of market activity and strategies; with overall goal being to facilitate highly desirable customer relationships and to minimize doing so ○ Effectiveness: degree to which customer relationships achieves objectives ○ Efficiency: minimizing resources used to achieve specific level of desired customer relationships ● Strategic planning process ○ Strategic planning: establishing organizational mission, and formulating goals, corporate strategy, marketing objectives and marketing strategies. ■ A market orientation should guide this process ○ Establishing goals → develop strategies to achieve goals on corporate and business-unit level → analysis of strengths and weaknesses and identifying opportunities and threats ○ Developing goals ■ Goals should derive from its mission statement and broadcasted to people know what to expect from them ■ This will help guide its planning efforts; and each level of management should have goals that will help firm’s actions ○ Developing corporate and business unit strategies ■ 3 planning levels: corporate strategy, business-unit strategy and marketing strategy ● Corporate strategy: determines means for utilizing resources in the functional areas of marketing, production, finance, research and development to achieve goals ○ Who are our customers? ○ What is our Core competency? ● Business-unit strategy: division, product line or other profit center within parent company ○ Market share: percentage of market that buys specific product from particular company ○ Market growth/market share matrix can be used to determine marketing strategy ■ Stars: high market share and high product market growth ■ Cash cows: high market share but low prospects for growth ■ Dogs: low market shares and low prospects for growth ■ Question marks: low market share and require large amount of cash to build market share ○ Competitive growth strategies (product-market matrix) ■ Market penetration: strategy of increasing sales in
developing, and risk of early sales not performing as well as predicted ● Late-mover: ability of later market entrants to achieve long term competitive advantages by not being first ○ Can learn from first mover’s mistakes, lower initial investment costs ○ Disadvantages: patents limit companies from producing similar product ○ Developing marketing objective and marketing strategies ■ Marketing objective: states what is to be accomplished through marketing activities ● In terms of product introduction, advertising, profitability, sales volume, product improvement ● Marketing objectives should be based on SWAT analysis ● Objective should be clear, measurable, have a time frame, and consistent with both business unit and corporate strategies ■ Marketing strategy: selecting of target market and creating of marketing mix that will satisfy the needs of target market members; articulates best use of if company’s resources to achieve objectives ● Need to adapt as environment changes ■ Selecting target market ● Selecting target market must be chosen before organization can adapt its marketing mix ● Must determine whether selected target aligns with company’s overall mission and objectives → then asses whether company has appropriate resources to develop marketing mix ○ Creating marketing mixes ■ Marketing mix decisions should have 2 additional characteristics: consistency and flexibility ● All marketing mix decisions should be consistent with business- unit and corporate strategies ○ Consistency is making sure goals are achieved on all 3 levels ○ Flexibility permits organization to alter marketing mix in response to changes in competition and market conditions ● Managing marketing implementation: process of putting marketing strategies into action ○ Organizing the marketing unit ■ Centralized organization: structure in which top level managers delegate little authority to lover levels ● Ineffective in firms that must respond quickly to customer demand ■ Decentralized organization: structure in which decision-making authority is delegated as far down the chain of command as possible ○ Coordinating and communicating
■ Marketing managers must work closely with production, development, accounting and human resources to ensure marketing activities align with functions of the firm ■ Must coordinate activities of internal marketing staff with marketing efforts of external organizations (resellters, researchers, shippers) ○ Establishing timetable for implementation ■ Identifying activities to be performed ■ Determining time required for each activity ■ Separating the activities to performs in sequence or simultaneously ■ Organizing activity in proder order ■ Assigning responsibility for completing activity to teams/employees ● Evaluating marketing strategies ○ Strategic performance evaluation: establishing performance standards and comparing established standards with actual performance ● Analyzing actual performance ○ Sales analysis: uses sales figures to evaluate firm’s current performance ■ Sales transaction, market share percentage ○ Marketing costs analysis: analysis of costs to determine which are associated with specific marketing efforts ■ Pinpointing incurred costs can help isolate profitable or unprofitable customers, products and geographic areas ■ Compare company’s costs with industry averages ○ Fixed cost & variable costs ● Creating marketing plan ○ Strategic planning process → marketing strategy → framework for a marketing plan (speciies marketing activities to be performed to implement and evaluate the organization’s marketing strategies) ○ Executive summary: introduction & explanation of major aspects of plan and statement of costs → environmental analysis (current market, assessment of target markets)→ SWOT analysis → marketing objective → marketing strategies (marketing mix) → marketing implementation → performance evaluations
Identify the major components of strategic planning, and explain how they are interrelated. ● Establishment or revision of an organization’s missions and goals ● Corporate and business-unit strategies ○ Develops strategies to achieve missions/goals ● Analysis of organization’s strengths and weaknesses and identifies opportunities and threats within the external marketing environment ● Each functional area of organization establishes own objectives and strategies to achieve them ○ Must support mission and goals
Explain how an organization can create a competitive advantage at the corporate strategy level and at the business-unit strategy level.
When assessing actual performance of a marketing strategy, should a marketer perform marketing cost analysis? Why or why not? ● A firm must take into account the marketing costs associated with strategy to completely understand effectiveness at achieving desired sales level
Identify and explain the major components of a marketing plan. ● Executive summary ○ Synopsis of entire marketing plan ● Environmental analysis ○ Info about current situation in marketing environment ● SWOT analysis ● Marketing objective ● Marketing strategies ○ Outline of how the company will achieve objective ● Marketing implementation ○ How they will implement these strategies ● Performance evaluation
Chapter 3 : Marketing environment 1. Why are environmental scanning and analysis important to marketers? a. Marketing environment: competitive, economic, political, legal/regulatory, technological & sociocultural forces i. Monitoring marketing environment is important to firm’s survival and long term achievement of goals b. Environmental scanning: collecting info about forces in environment i. Observation, marketing research, business, trade, government and general-interest publications ii. Internet is a environmental scanning tool to gather data easily c. Environmental analysis: assessing & interpreting info gathered from scanning i. Identifies potential threats/opportunities from change in environment 1. Opportunities: increase in consumer income, decrease unemployment, drop in commodity prices d. Firms can choose whether to be reactive or proactive depending on if they see environmental change as controllable or not i. Proactive: use political skills (lobbying) , disclose social responsibility activities (ex: cage-free hens), increase reputation for sustainability 2. What are the four types of competition? Which is most important to marketers? a. Brand competitors i. Market products with similar features/benefits to same customers @ similar prices ii. Are most significant to marketers because customers see these products as substitutes for each other
- Most environmental analyses is on brand competitors b. Product competitors
i. Market products in same product class but market products with different features, benefits and prices (ex: different beverages) c. Generic competitors i. Firms that provide very different products that solve same problem and satisfy same customer need d. Total budget competitors i. Firms that compete for limited financial resources of same customers 3. In what ways can each of the business cycle stages affect consumers’ reactions to marketing strategies? a. Prosperity: low unemployment, high total income → high buying power i. Marketers expand product oferings, promotion eforts & distribution → people buy more b. Recesion: high unemployment, total buying power decreases, consumer pessimism → decrease consumer and business spending i. Marketers should focus marketing research on what functions buyers want in products during tough times; promotional efforts should emphasis value and utility and needs of their target market c. Depression: extremely high unemployment, very low disposable income, consumer pessimism + lack of confidence in economy i. Marketing budgets are severely cut d. Recovery: high unemployment declines, disposable income increases, consumers become optimistic again i. Marketers must assess how soon consumers will buy again; must be flexible 4. What business cycle stage are we experiencing currently? How is this stage affecting business firms in your area? 5. Define income, disposable income, and discretionary income. How does each type of income affect consumer buying power? a. Income: amount of $ received through wages, rents, investments and pensions for a period b. Disposable income: after-tax income; used for spending/saving i. Ready source of buying power; higher taxes = less disposable income c. Discretionary income: income after purchasing basic needs i. Used for entertainment, wants, automobiles, durable goods ii. Credit increases current buying power at expense of future buying power 6. How do wealth and consumer credit affect consumer buying power? a. More wealth = gain buying power by... i. Using wealth to make purchases, generate income and acquire large amounts of credit ii. Credit gives customers buying power to purchase goods/services b. Income, credit and wealth equip customers with buying power to purchase goods and services 7. What factors influence a buyer’s willingness to spend? : inclination of buy because of expected satisfaction from a product
iii. National advertising review board: investigates challengers of NAD b. advantages i. Establishment and implementation are less expensive with realistic guidelines, and reduce need to expand government bureaucracy
- But these programs lack tools/authority to enforce guidelines
- What does the term technology mean to you? Do the benefits of technology outweigh its costs and potential dangers? Defend your answer. a. Technology: application of knowledge and tools to solve problems and perform tasks more efficiently
- Discuss the impact of technology on marketing activities. a. Marketers can reach more people through a variety of media b. Social networks, smart phones, tablet computers help marketers stay in touch with clients, make appointments
- What factors determine whether a business organization adopts and uses technology? a. Determine when a technology is changing the industry and firms must define influence of the new technology to keep up and adapt to technological changes b. Technology assessment: foreseeing effects of new products/processes on the firm's operations i. Estimate benefits of adopting technology outweigh costs to the firm/society
- What evidence exists that cultural diversity is increasing in the United States? a. Increasing immigration to U b. Younger immigrants tend to have more children c. Shifted to 3 main races/ethinic groups: black/white/hispanics
- In what ways are cultural values changing? How are marketers responding to these changes? a. Younger people not wanting to purchase vehicles/not obtain licenses b. Health conscious c. Reduce risk of STDs d. Alternative medicines e. More eating/taking out f. Green marketing
- Describe consumerism. Analyze some active consumer forces in your area. a. Organized efforts by individuals, groups and organizations to protect consumers’ rights i. Major forces include individuals, consumer organizations, consumer education and consumer laws
Chapter 5: Marketing research and information systems
- What is marketing research? Why is it important? ● Systematic design, collection, interpretation and reporting of info to help m marketers solve specific marketing problems or take advantage of marketing opportunities ○ Detecting shifts in consumer behavior and attitudes help companies keep up with
changing marketplace ○ Marketing research can help firm understand market opportunities ● Failing to conduct research can prevent companies from maintaining a competitive advantage ● Understanding the market is crucial for effective marketing strategies ○ When used effectively, information from research can facilitate relationship marketing by helping marketers focus their efforts on meeting/anticipating needs of their customers 2. Describe the five steps in the marketing research process. ● 1. Locating and defining issues or problems ○ Firms could define a problem as (1) finding a way to adjust for biases uncovered when gathering data from existing customers or (2) developing methods for gathering info to help find new customers ■ Ex: See why firm didn’t meet 12% sales increase or see how to maximize rise in sales ● 2. Designing the research project ○ Creating a research design; overall plan for obtaining information needed to address a research problem or issue ■ Developing a hypothesis ● 3. Collecting data ○ Research design must specify what types of data to collect and how they will be collected ○ Primary data ■ Data observed/recorded/collected directly from respondents ○ Secondary Data ■ Data compiled both inside and outside the organization for some purpose other than the current investigation ● Ex: general reports supplied by data services. Internal and online databases; provides market share, retail inventory levels, customer’s buying behavior ● 4. Interpreting research findings ● 5. Reporting research findings 3. What is the difference between defining a research problem and developing a hypothesis? ● Hypothesis: informed guess/assumption about a certain problem that is based on insight and knowledge available about the problem 4. Describe the different types of approaches to marketing research, and indicate when each should be used. ● Exploratory research ○ Main goal is to better understand a problem/situation and to help identify additional data needs or decision alternatives ○ Also known as qualitative research/non-metrics ■ EX: Focus groups customer advisory boards ● Conclusive research ○ Designed to verify insights through objective procedure to help marketers make
● Shopping mall intercept interview ● On-site computer interview 7. Suggest some ways to encourage respondents to cooperate in mail surveys. ● Attaching personal message on post it note to survey packet → response rate goes up ● Offering premiums of incentives ● Main panels (people who are interviewed regularly by mail) 8. If a survey of all homes with listed telephone numbers is to be conducted, what sampling design should be used? ● Stratified sampling(?) 9. Describe some marketing problems that could be solved through information gained from observation. What is a marketing information system, and what should it provide? ● Observing customers and how they interact with a product in a real-world environment that cannot be observed online→ to understand their like and dislikes ● Can observe demographics of their customers ● Marketing information system (MIS): framework for day-to-day management and structuring of information gathered regularly from sources inside and outside of organization. ○ Provides a continuous flow of information about prices, advertising expenditures, sales, competition and distribution expenses ○ Main purpose of MIS are data storage & retrieval computer capabilities and management’s information requirements ○ Important asset for developing marketing strategies 10. Define database. What is its purpose, and what does it include? ● Collection of information arranged for easy access and retrieval ○ Allow marketer to tap into information useful in making marketing decisions (internal sales reports, articles, company new releases, economic reportS) ● CRM (customer relationship management) incorporates these three elements: ○ Identifying and building a database of current and potential consumers, including a wide range of demographic, lifestyle, and purchase information ○ Delivering differential messages according to each consumer’s preferences and characteristics through established and new media channels ○ Tracking customer relationships to monitor the costs of retaining individual customers and the lifetime value of their purchases 12. What is big data? Why is it important to marketing research? ● Big data is massive data files that can be obtained from both structured and unstructured databases ○ Often consists of high-volume data that marketers can use to discover unique insights and make better marketing decisions ○ New opportunity to use IT enabled info to assist in marketing decision making ○ Marketers want to use this data to create competitive advantages that will help them discover insights into customer behavior ○ Companies that use big data see improvement of return on investment from
15%-20%
○ Look at patterns of consumption behavior and discover trends that predict future buying behaviors ● Challenges ○ Challenging to narrow down ○ Privacy issues 13. How can marketers use online services and the internet to obtain information for decision making? ● Marketing analytics ○ Web analytics is a tool for measuring marketing strategy effectiveness ○ Considered one of the most important marketing research tools to aid strategic decisions and implementation ○ Investing in market analytics ■ Defining what to measure and what tools to use ■ Collecting data ■ Developing reporting capabilities ■ Implementing campaign and analysing results ○ Google analytics measure website visitors, page views, percentage of new visits, average amount of time spent on visit ○ Goal is identifying how to develop better targeted campaigns ● Marketing decision support system ○ Customized computer software that aids marketing managers in decision making by helping them anticipate the effects of certain decisions ■ Linked to availability of big data and marketing analytics 14. What role do ethics play in marketing research? Why is it important that marketing researchers be ethical? ● Standards are necessary because of ethical and legal issues that develop in gathering marketing research data ● Marketing research association: developed codes of conduct and rules to conduct ethical marketing research ● Customer privacy
- How does marketing research in other countries differ from marketing research in the United States? ● In home (door to door) interviews are illegal in some countries ● In less developed countries, many homes don’t have landlines ● Two-pronged approach to international marketing research. ○ First phase ■ Detailed search for and analysis of secondary data to gain a greater understanding of a particular marketing environment and to pinpoint issues that must be taken into account in gathering primary research data ○ Second ■ Involves field research using many of the methods described earlier, including focus groups and telephone surveys, to refine a firm’s
within that market similar with regard to what the group is seeking ■ Helps marketers identify and understand these segments ● EXAMPLE: JAVA HOUSE SURVEY ○ Survey group of individuals that are appropriate to your business (location wise,etc) ○ 7 point scale, positive and negative likert scale ■ Should cover everything the customer might consider in your company/product ○ Cluster analysis gives outputs of specific clusters of customers on graphs, compares them on different attributes of the survey ○ Then can analyze who they are as segments and identify their size ○ Perceptual mapping ■ We come up with a perceptual map that happens in the customer’s mind/how they view you in the marketplace ■ Helps in offering a sense of where a company is strong and weak ■ 2 approaches ● attribute -based approach ○ Diff elements we put together to form a product ○ Can do quickly in excel, r, python ● Multidimensional scaling (MDS) ■ Attribute based ● Customers complete a survey about how company rates amongst other companies and ask customers how important these specific qualities/attributes are to them ● Averages are taken over question that have pair of means for each attribute → plot in 2D graph ○ X axis: competition parity (better than or worse than competitor) ○ Y axis: High or low importance to customer ○ Use 4P’s to change process to shift the dots ■ MDS ● Software that asks how similar are these 2 brands? (pair of brands) rated on attributes ● Output of correlation matrix ○ Lower the number the greater the perceived similarity ● Results are plotted, similar brands are closer together and different brands are further apart ○ Analyze why products are in the quadrants they are ○ Use data from attribute ratings and plot vectors of attributes important to the customer ● Can be used to determine how to position/reposition the brand for
the future ○ Focus groups (qualitative research) ■ Exploratory technique where consumers discuss products and competitors’ products ■ These groups help come up with the attributes ■ NOT good for predicting marketplace response/ bad external validity ● Cant take the results of this study and project it to the marketplace because the amount of people in these groups are not representative of the market ■ Focus group moderator that runs the group ● Starts with general introductions → asks key client questions → continues discussion → bring out quieter members/ control overbearing members ● Moderator hired to interpret results and draw conclusions ■ Inexpensive, gives a good place to start ● Other qualitative techniques ○ Secret shoppers, observing consumers in store, ethnographies (researcher is embedded in decision making process/live with consumers) ○ Surveys ■ Used to measure customer satisfaction, repurchase intentions, etc ■ Process ● Write questions ● Pre-test them ● Administer to sample of customers ● Analyze results ■ Should be short to enhance repose rate, be confidential, respondents can be consumers or B2B customers, can be administered through in person, phone, web ■ Surveys factor analysis ● Question on surveys are called variables, factor analysis simplifies those variables ● Examines strong and weak correlations to identify underlying factors common to the responses ○ Factors based on similarity of responses ○ Decrease to 4-6 factors ● Correlation matrix between variables → create factors based on correlation of responses ● All factors will have 4P’s/ marketing mix to design product/service ○ Conjoint analysis/trade-off analysis ■ Used to understand how customers make trade-offs ● What do consumers want if they can't have all the features and cheap prices? ● Used in new product design, brand & line extensions, pricing,
MKT340 Chapter readings
Course: Introduction to Marketing (MKT 340)
University: Emory University
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