Marketing – Chapter 1 – Defining Marketing for the Twenty-First Century The marketing program is developed to achieve the company’s

oped to achieve the company’s objectives.

Consumer benefits from the digital Firm benefits from the digital Marketing mix decisions include:
revolution include: revolution include: – Product: provides customer solution.
- Increased buying power. - New promotional medium. – Price: represents the customer’s cost.
- Greater variety of goods and services. - Access to richer research data. – Place: customer convenience is key.
- Increased information. - Enhanced employee and customer – Promotion: communicates with customer.
- Enhanced shopping convenience. communication.
COMPANY ORIENTATIONS
- Greater opportunities to compare - Ability to customize promotions.
product information with others. The orientation or philosophy of the firm typically guides marketing efforts. Several
competing orientations exist:
MARKETING DEFINED
Kotler’s social definition: -Production concept -Societal marketing concept
“Marketing is a societal process by which individuals and groups obtain what they -Product concept -Customer concept
need and want through creating, offering, and freely exchanging products and services -Selling concept -Marketing concept
of value with others.”

The AMA managerial definition: Achieving organizational goals requires that company be more effective than
“Marketing is the process of planning and executing the conception, pricing, competitors in creating, delivering, and communicating customer value.
promotion, and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational objectives.” Four pillars of the marketing concept:
-Target market -Profitability
Things that can be marketed Core Marketing Concepts -Customer needs -Integrated marketing
- Goods - Target markets and market segmentation CHANGES IN THE MARKETPLACE
- Services - Marketplace, market-space, metamarkets
 Globalization, technological advances, and deregulation have created many
- Experiences - Marketers & prospects
challenges:
- Events - Needs, wants, demands
- Persons - Product offering and brand – Customers
- Places - Value and satisfaction – Brand manufacturers
- Properties - Exchange and transactions – Store-based retailers
- Organizations - Relationship and networks
 Both companies and marketers have been forced to respond and adjust.
- Information - Marketing channels
- Ideas - Supply chain Marketing – Chapter 2 - Adapting Marketing to the New Economy
- Competition Drivers of the New Economy
- Marketing environment  Digitalization and connectivity
- Marketing program
– The Internet, intranets & extranets are key
Target markets & segmentation
– Intranet- a local or restricted communications network
- Differences in needs, behavior, demographics or psychographics are used – Extranets- an intranet that can be partially accessed by
to identify segments. authorized outside users
- The segment served by the firm is called the target market.
 Disintermediation and reintermediation
Shopping can take place in a:
Disintermediation- reduction in the use of intermediaries between producers
- Marketplace (physical entity, Lowe’s) and consumers, for example by investing directly in the securities market
- Marketspace (virtual entity, Amazon) rather than through a bank.
Metamarkets refer to complementary goods and services that are related in the minds Reintermediation- the transfer or bringing back of borrowing and
of consumers. investments from an outside credit business into the banking system.
Marketers seek responses from prospects.  Customization and customerization
Product is any offering that can satisfy a need or want, while a brand is a specific Customization – to modify or build according to individual or personal
offering from a known source. specifications or preference
When offerings deliver value and satisfaction to the buyer, they are successful. Customerization - is the customization of products or services through
Exchange involves obtaining a desired product from someone by offering something in personal interaction between a company and its customers.
return.  Industry convergence
Transaction involves at least two things of value, agreed-upon conditions, a time of -represents the most fundamental growth opportunity for organizations and
agreement, and a place of agreement. will redefine industry boundaries by shifting the focus from individual
Relationship marketing aims to build long-term mutually satisfying relations with key products to cross-industry value experiences, based on digital business
parties, which ultimately results in marketing network between the company and its principles
supporting stakeholders. Changes in Business Practices
Marketing Channels Old Economy New Economy
Communication Channels Product unit organization Customer segment organization
-Deliver messages to and receive messages from target buyers. Profitable transactions Lifetime value of customer
-Includes traditional media, non-verbal communication, and Financial scorecard Marketing scorecard
store atmospherics.
Stockholders Stakeholders
Distribution Channels
Marketing does the marketing Everyone does the marketing
-Display or deliver the physical products or services to the buyer
Build brands via advertising Build brands via performance
/ user.
Customer acquisition Customer retention
Service Channels
No customer satisfaction measurement Measure customer satisfaction and
Carry out transactions with potential buyers by facilitating the
retention rates
transaction.
Overpromise, underdeliver Underdeliver, overpromise
A supply chain stretches from raw materials to components to final products that are
carried to final buyers.
Four levels of competition can be distinguished by the level of product substitutability: How Marketing Practices are changing
-Brand competition -Generic competition  E-Business
-Industry competition -Form competition – E-business uses electronic means and platforms to conduct
The following forces in the broad environment have a major impact on the task business.
environment: – E-commerce web sites facilitate the online sale of products and
-Demographics -Social-cultural environment services.
-Economics -Political-legal environment – E-purchasing from online suppliers.
-Natural environment -Technological environment – E-marketing efforts include those that inform, communicate,
promote, and sell products and services over the Internet.
Internet Domains Marketing – Chapter 3 - Building Customer Satisfaction, Value, and
B2C = Business-to-Consumer Retention
 Benefits include: greater ordering convenience, lower cost, easier Customer Value
information and price gathering  Customers seek to maximize value by
B2B = Business-to-Business – estimating which offer (product/firm) delivers the most value (CPV)
 Volume is 10-15% higher than B2C. – forming an expectation of value and acting upon it (purchase)
 Benefits include: lower costs via B2B auctions, buying alliances, greater – evaluating their usage experience against the expectations
access to information.
 Satisfaction results when expectations are equaled or surpassed
C2C = Consumer-to-Consumer
Customer Perceived Value
 Transactions occur via online trading sites such as eBay.
 Perception of delivered value is a function of:
 Consumers are creating online product information via newsgroup and chat
– Total customer costs
room dialogues.
– Total customer value
C2B = Consumer-to-Business
 Firms at a disadvantage must:
 Facilitate communication between customer and businesses.
– Reduce perceptions of costs or enhance perceptions of value
Brick and click firms have often faced channel conflict issues
Customer Satisfaction
Brick and click firms tend to be more successful than pure click e-tailer competitors
because . . .  Satisfaction is defined as . . .
Customer acquisition costs are lower “a person’s feelings of pleasure or disappointment resulting from comparing a
product’s perceived performance (or outcome) in relation to his or her expectations.”
Resources, knowledge, customer base, supplier relationships are superior
 To maximize satisfaction . . .
 Setting up web sites
– Don’t exaggerate the product / service’s capabilities in advertising or
The Seven “C’s” of Web Site Design
other communications
Context Customization
 Dissatisfaction will result
Content Commerce
 FTC may become involved
Community Connection
– Don’t set expectations too low
Communication
 Market size will be limited
 Placing Ads and Promotions Online
High Performance Businesses
– Banner ads
Keys to Success
– Sponsorships
 Stakeholders
– Microsite
– Identify several stakeholder groups for your University
– Interstitials
– How might the needs of these groups conflict with each other?
– Browser ads
 Processes
– Alliances and affiliate programs
– New product development
Dot.com revenue and profit models:
– Customer attraction and retention
Advertising income Product and service sales income
– Order fulfillment
Sponsorship income Transaction commissions and fees
– Reengineering work flows
Alliance income Market research/ information
– Building cross functional teams
Profile income Referral income
 Resources
Membership and subscription income
– Resources include labor, materials, machines, energy, and
 Customer relationship marketing information
 Customer Relationship Marketing (CRM) allows companies to: – Outsourcing vs. ownership: Own and nurture core
– Deliver real-time customer service competencies
– Customize market offerings, products, services, media, and  Organization
messages – Organization refers to the organization’s policies, structures, and
 Effective Customer Relationship Marketing requires: corporate culture
– Reducing customer defection rates – Corporate culture: shared experiences, stories, beliefs, and
– Extending the life of the customer relationship norms within an organization
– Enhancing customer sales / profit potential Core Business Practices
– Making low-profit customers MORE profitable or terminating Market Sensing New Offering Realization
them Customer Acquisition Fulfillment Management
– Focusing on high value customers Customer Relationship Management
 CRM Leads to One-on-One Marketing Customer Retention
– Four Steps for One-to-One Marketing  Reducing customer churn (defection) is highly desirable
 Don’t go after everyone, carefully identify your – Define and measure retention rate
prospects and customers. – Identify causes of attrition
 Group customers by their needs and their value to – Estimate profit lost from customer defection (customer lifetime value)
the company; aggressively pursue the most valuable
– Estimate cost to reduce defection; take appropriate action
customers.
Drivers of Customer Equity
 Build stronger relationships with customers via
individual interaction.  Brand Equity
 Customize messages, services, and products for  Relationship Equity
each customer.  Value Equity
 Customer Databases and Database Marketing are the key to Effective Strong Customer Bonds
CRM Keys to Success
 Database uses include:  Adding Financial Benefits
– Best prospect identification – Frequency programs
– Matching offers to customers – Club memberships
– Deepening customer loyalty  Adding Social Benefits
– Reactivating customer purchasing – Personalize customer relationships
– Avoiding serious mistakes  Adding Structural Tie
– Create long-term contracts
– Charge less for ongoing purchases
– Link product to long-term service
20 – 80 – 30 Rule  Strategy dictates the game plan for achieving goals. Porter’s generic
20% of your customers strategies offer a starting point for strategic thinking:
Generate 80% of your profit – Overall cost leadership
Half of your profit is lost serving the bottom 30% of your customer base – Differentiation
Marketing – Chapter 4 - Winning Markets Through Strategic Planning, – Focus
Implementation, and Control  Program formulation and implementation involves:
“It is more important to do what is strategically right than what is immediately – Developing supporting programs
profitable” – Estimating implementation costs
Nature of Strategic Planning – Carefully managing the details so great strategy isn’t ruined by
 Strategic planning requires actions in three key areas poor implementation
 Strategic planning takes place at the corporate, division, business unit and  Feedback and control is crucial
product levels The Marketing Process
 Marketing plans operate at strategic and tactical levels  Two Views of the Value Delivery Process:
Corporate and Division Strategic Planning – Traditional physical process sequence
 Planning activities include:  Make the product . . . Sell the product
– Defining the Corporate Mission – Value creation and delivery sequence
– Establishing Strategic Business Units (SBUs), and Assigning  Choose the value . . . Provide the value . . .
Resources to SBUs Communicate the value
– Planning New Businesses, Downsizing Older Businesses  Steps in the Marketing Process:
Mission statements define the company’s major competitive scopes: – Analyzing market opportunities
Industry scope Vertical scope – Developing marketing strategies
Products and applications scope Market-segment scope – Planning marketing programs
Competence scope Geographical scope – Managing the marketing effort
 Strategic Business Units share three characteristics:  Marketing Plan Contents
– Single business or collection of businesses which can be Executive summary and TOC Marketing strategy
managed separately Current situation Action programs
– Has own set of competitors Opportunity and issue analysis Financial projections
– Has manager responsible for strategic planning and profits Objectives Controls
 SBUs are treated as investment portfolios. Resources are allocated Managing The Marketing Process
by:
 Marketing Departments can be organized by:
– The BCG Growth-Share Matrix
– Function
 Stars
– Geographic area
 Cash Cows
– Products or brands
 Question Marks – Customers or markets
 Dogs – Corporate divisions
– The General Electric Market-Attractiveness Model – Global aspects
 Building a Companywide Marketing Orientation Requires:
– Commitment from top management
– Training programs; employee empowerment
– Recognitions and rewards programs
– Modern marketing planning system
– Process-outcome focus
 Injecting more creativity into the organization can be beneficial
 Successfully implementing programs requires four sets of skills:
– Diagnostic skills
 Planning New Businesses and Downsizing Old Businesses – Identification of company level
– Involves taking advantage of one or more of the following: – Implementation skills
 Intensive growth – Evaluation skills
 Integrative growth Types of Control
 Diversification growth  Annual plan
 Harvesting or divesting old businesses  Responsibility of top and middle management
Business Strategic Planning  Examines whether planned results are achieved
Planning Involves Eight Steps:  Five tools are used to evaluate annual plan performance:
Business Mission Strategy Formulation  Sales analysis
SWOT Analysis: Internal Program Formulation  Market-share analysis
SWOT Analysis: External Implementation  Marketing expense-to-sales analysis
Goal Formulation Feedback and Control  Financial analysis
SWOT Analysis  Market-based scorecard analysis
 Opportunities and threats stemming from the external environment  Profitability
– Monitoring key forces for trends  Responsibility of marketing controller
– For each trend, conduct an MOA - Marketing Opportunity  Examines where the company is making and losing money
Analysis  Strategic
 Internal strengths and weaknesses  Responsibility of top management and marketing auditor
– Brand awareness, image, reputation  Examines whether company is pursuing its best opportunities
– Distribution, pricing, customer loyalty, product benefits  Strategic controls should be conducted periodically via:
– Finance, R&D, manufacturing  Marketing-effectiveness reviews
 Effective goals should be formulated so that they are:  Marketing audits
– Arranged hierarchically from broader to more specific objectives  Additional reviews to consider:
– Stated in quantitative terms  Marketing excellence review
– Realistic  Ethical and social responsibility review
– Consistent with each other and the company mission