MKT Mid 1 Notes

Chapter 1 – Marketing: creating customer value and engagement

What is marketing?
Marketing is a process by which companies by which companies create value for customers and build
strong relationships in order to capture value from customers in return

The marketing process (all steps explained below)

Step 1: understanding the marketplace and customer needs

Concept 1: Customer needs, wants me and demands
Needs are states of felt deprivation
- Needs include food, knowledge, belonging, etc.

Wants are the form human needs take as they are shaped by culture and personality
- The newest iPhone is an example of a want

Demands are human wants that are backed by buying power

- A want without the buying power is just a want
- A person now has the buying power to get a car he wanted for the past year, his want now has
become demand

Concept 2: marketing offerings (products, services, experiences)

Market offerings are some combination of products, services, information, or experiences offered to a
market to satisfy its needs or wants

Marketing myopia (refers to short sightedness), when organizations invest so much time, energy, and
money in what they currently do that they’re often blind to the future
- Like when Kodak lost most of its sales to Sony because they didn’t plan for the popularity of
digital cameras

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Concept 3: markets
Marketing means managing markets to bring about profitable customer relationships

A market is the set of actual and potential buyers of a product

- Marketing involves serving a market of final consumers in the face of competitors

- A company can offer its products either directly or through marketing intermediaries

Step 2: designing a customer-driven marketing strategy

Concept 1: selecting customers to serve
To design the best marketing strategy, the marketing manager must answer two important questions:
1. What customers will we serve? (What’s our target market?)
a. One market segment (one specific group), like Rolls-Royce has a very exclusive target
market, that being people with liquid assets of at least $30 million
b. The whole market, like Toyota offers different models of cars for different market
segments like the Corolla for middle class, and Lexus for upper class

Market segmentation refers to dividing the markets into segments of customers (based on age, income,
gender, etc.)

Target marketing is differentiated marketing which targets several different target segments and
designs separate offers for each

Concept 2: choosing value proposition

The second question is:
2. How can we best serve these customers? (Whats our value proposition?)
a. The value proposition is the set of benefits/values a company promises to deliver its
customers to satisfy their needs
i. Apple’s value proposition is “light years ahead”. It highlights how lightweight
their MacBooks are (one of their main advantages against competitors) and how
advanced their technology is
 ii. Ubers value proposition is “the smartest way to get around”

Step 3: preparing an integrated marketing plan

Basically, this is developing our 4 Ps (product, place, price, promotion)

Preparing an integrated marketing plan involves developing and maintaining a product that will satisfy
customer needs, making the product available at the right place and at a price acceptable to customers,
and communicating (promotion) information that helps customers determine if the product will satisfy
their needs

The marketing mix is the 4 Ps the firm uses to implement its marketing strategy

Step 4: Managing customer relationships

Concept 1: customer relationship management (CRM)
CRM is the overall process of building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction

Customer perceived value is the customer’s evaluation of the difference between all the benefits and
costs of a product
- CPV = customer benefits – customer costs
- Customer benefits are anything a buyer receives in exchange
- Customer costs are anything a buyer must give up to obtain the benefits of the product
- To inc CPV, we either inc benefits or dec costs

Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s
expectations
Concept 2: customer engagement and today’s digital and social media
The new marketing is customer-engagement marketing
- Companies using online, mobile, and social media to refine their targeting and engage
customers more deeply and interactively
- It’s all about making the customers feel special and welcomed, and part of the company

Concept 3: partner relationship management

Partner relationship management involves working closely with partners inside the company (like those
in other departments) and outside the company (suppliers, retailers, wholesalers, etc.) to jointly bring
greater value to customers

Step 5: capturing value from customers

Customer lifetime value is the value of the entire stream of purchases that the customer would make
over a lifetime of investment

Customer equity is the total combined customer lifetime values of all the company’s customers
- Customer A + Customer B ….. + Y + Z

Share of wallet (share of customer) is the portion of the customer’s purchasing that a company gets in
its product categories
- It define show much a customer spends in a certain market for a specific company
- Like if company ABC buys new Dell laptops for their employees and HP for higher management
(which is 10% of all employees), then HP has a share of wallet of 10% for company ABC (and Dell
has 90%)
- For instance, Ali spends 60$ a month on fast food, and 30$ of the 60 goes to McDonald’s
(McDonalds has a 50% share of wallet for Ali)

Market share is the percentage of total revenue or sales in a a market that a company’s business makes
up

Companies should manage customer equity carefully!

- Building the right relationships with the right customers
- Different types of customers require different relationship management strategies
Question from previous exam on managing customer relationships:
For Apple, different types of customers require different engagement and relationship management
strategies. In the context of this electronics company, provide examples of the four possible customer
relationship groups and discuss the relationships that Apple should develop with the profitable groups
(so true friends and butterflies)

True friend, someone who buys whatever apple product comes out because he loves a lot
- Delight true friends by rewarding them (reward programs, free purchase, special discount, free
entry to apple events, etc.)

Butterfly, someone that supports apple in general buy buys the Samsung galaxy since it happened to be
the best available phone on the market and the Dell because it was better than the MacBook
- Motivate butterflies to make more purchases from apple instead of competitors by giving
significant discounts on future purchases

Barnacle, someone who would buy only Apple phones when his iPhone is broken or outdated

Stranger, someone that buys an Apple Pencil or AirPods once but otherwise never uses the store or buy
an apple product
Chapter 2- partnering to build customer engagement, value, and relationships
Company-wide strategic planning
Strategic planning is the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities, and its changing marketing opportunities

Based on the growth-plan of the company, you need to develop the marketing plan

Strategic planning:

Steps 1 &2: defining the company mission and setting goals

The mission statement is the organization’s purpose; what it wants to accomplish in the larger
environment
- The company needs to turn its broad mission into detailed supporting objectives

The objectives are supporting the much

broader mission

Step 3: designing the business portfolio

The business portfolio is the collection of businesses and products that make up the company
- For example, ESPN’s business portfolio includes ESPN.com, ESPN radio, ESPN cable channels,
ESPN zone, etc.

Business portfolio designing involves two steps:

- First, the company must analyze its current business portfolio and determine which businesses
should receive, more, less, or no investment
- Second, it must share the future portfolio by developing strategies for growth and downsizing
Analyzing the current business portfolio:
A company classifies all its strategic business units (divisions or products) according to the Boston
Consulting Group (BCG) growth share matrix
- In order to analyze the portfolio!!

-
Developing strategies for growth

Market penetration —> company growth by increasing sales of current products to current market
segments without changing the product

Market development —> company growth by identifying and developing new market segments for
current company products
- New market segments such as a new age group/new country

Product development —> company growth by offering modified or new products to current market
segments
- Market doesn’t change, only the product changes

Diversification —> company growth through starting up or acquiring business outside the company’s
current products and markets
- Everything changes

Planning marketing: partnering to build customer relationships

Partnering with other company departments
- Under the company-wide strategic plan, marketers must work closely with other departments
to form an effective internal company value (a series of departments that carry out value
creating activities to design, produce market, deliver, and support a firm’s products)

Partnering with others in the marketing system

- More companies today are partnering with other members of the supply to improve the
performance of the customer value delivery network (its made up of the company, suppliers,
distributors, and ultimately customers who partner with each other to improve performance of
the entire system)

Marketing plan
1. Executive summary
2. Missions statement
3. Environmental analysis (macro and micro environment of the firm)
4. SWOT analysis
5. Marketing strategy
6. Marketing mix
7. Marketing implementation
8. Marketing control
Marketing strategy and the marketing mix
Customer-value driven marketing strategy:

Market segmentation is the division of a market into distinct groups of buyers who have different
needs, characteristics, or behaviors and who might require separate products or marketing mixes
- Market segment is a group of consumers who respond in a similar way to a given set of
marketing efforts

Marketing strategy is the marketing logic by which the company hopes to create customer value and
achieve profitable customer relationships

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

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

Differentiation involves the development of a product/service that is unique for the customers in terms
of product design, features, brand image, quality or customer service

Developing an integrated marketing mix:

Marketing mix is the set of controllable, tactical marketing tools (4 Ps) that the firm blends to produce
the response it wants in the target market
SWOT analysis

- Strengths are good things specific to the company

- Weaknesses are bad things specific to the company
- Opportunities are positive trends in the environment (affecting the entire industry/market)
- Weaknesses are negative trends in the environment (affecting the entire industry/market)

Marketing implementations and marketing control

Marketing implementation is turning marketing strategies and plans into marketing actions to
accomplish strategic marketing objectives

Marketing control is measuring and evaluating the results of marketing activities and taking corrective
action where needed
- Measuring return on investment is important
- ROI = returns from marketing investment/cost of marketing investment
o If >1, you’re fine
o If <1, you need to take corrective action
Chapter 3 – analyzing the marketing environment
A company’s marketing environment
The marketing environment includes the actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers

Microenvironment consists of the actors close to the company that affect its ability to serve its
customers
- The company, suppliers, marketing intermediaries, customer markets, competitors, publics

Macroenvironment consists of the larger societal forces that affect the microenvironment
- Demographic, economic, natural, technological, political, and cultural forces

MICROENVIRONMENT:
The company
- In designing marketing plans, marketing management takes other company groups into account
(top mgt, finance, R&D, purchasing, operations, accounting)
- You have to be considerate of others with you in the company!

Suppliers
- Provide the resources to produce goods and services
- Treat the suppliers as partners in order to provide customer value

Customers
- Consumers markets (such as individuals buying MacBooks)
- Business markets (such as AUS buying and using MacBooks only)

Marketing intermediaries
- Firms that help the company promote, sell, an distribute its goods to final consumers

Publics
- Any group that has an actual or potential interest in or impact on an organizations ability to
achieve its objectives such as media publics, environmentalists, etc.
o MBC, FDA, beeah, etc.
MACROENVIRONMENT:

Demographic environment
- Demography is the study of human populations (size, density, location, age, gender, race,
occupation, other statistics)
- The demographic environment involves people, and people make up markets
- Demographic trends include changing age and family structures, geographic population shifts,
educational characteristics, and population diversity
o In the UAE, diverse population, young people, less locals, smaller families, etc.
Economic environment
- Economic factors are determinants of a certain economy’s performance. Factors include
economic growth, exchange rates, inflation rates, interest rates, disposable incomes of
consumers, unemployment rates
- GDP is the best indicator!

Natural environment
- The natural environment is the physical environment (weather, terrain, etc.) and the natural
resources that are needed as inputs by marketers or that are affected by marketing activities
- Trends include:
o Growing shortages of resources
o Increased pollution
o Increased gov. Intervention in natural resource management
- Many companies developing strategies that support environmental sustainability

Technological environment
- Most dramatic force in changing the marketplace
- New products, opportunities
- Concern for the safety of new products
o Artificial intelligence, virtual reality, 5G, internet, etc, level of innovation

Political environment
- All about how and to what degree a government intervenes in the economy or a certain industry
- Factors include government policy, political stability/instability, corruption, foreign trade policy,
tax policy, labor law, trade restrictions

Cultural environment
- Consists of the customer San traditions of the society in which a business is existing. Includes the
standard of living, taste, preference and education level of people living in the society where the
business exists
- Need to study/consider language, preferences, culture, people, and everything which makes up
the culture

Responding to the marketing environment

Proactive is preventing problems before they arise
- Its better to be proactive than reactive

Reactive is reacting to a problem after it arises

Chapter 4 – managing marketing information to gain customer insights

Marketing information and customer insights
A consumer insight is specific information about the opinions and of consumers, that doesn’t just
explain what they do, prefer or think, but also the reason behind it

Customer insights are fresh marketing information-based understandings of the customers and the
marketplace that become the basis for creating customer value, engagement, and relationships
- Firms are creating customer insights teams to collect customer and market information and to
manage this information
Marketing information system (MIS) refers to the people and procedures dedicated to assessing
information needs, developing the needed information, and helping decision makers to use the
information to generate and validate actionable customer and market insights

Developing marketing information

Marketers obtain information from:
- Internal data
- Marketing intelligence
- Marketing research

Internal databases are collections of consumer and market information obtained from data sources
within the company network
- Like detailed records of sales, costs, cash flows, etc.

Marketing intelligence is the systematic collection and analysis of publicly available information about
consumers, competitors, and developments in the marketing environment
- Like tracking consumer conversations on social media about competing brands and the
company’s own brands

Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization
A “problem” is not necessarily an issue, rather something the company wants to figure out

Research design:
Exploratory research is usually conducted when a researcher has just begun an investigation and wishes
to understand the topic generally

Descriptive research aims to describe or define the topic at hand

Causal research aims to explain why particular phenomena work in the way that they do. It’s about
cause-and-effect relationships
- Such as researching how students focus in class (many variables affect this)

Collecting data:
Data types include secondary and primary data:

Secondary data is information that already exists somewhere, having been collected for another
purpose
- Internally such as sales records, research reports, etc.
- Externally such as trade associations, government publications, magazines, online databases,
etc
- We start with the collection of secondary data BEFORE primary data

Primary data is information collected for the specific purpose at hand

- Observation, surveys, experiments
Research approaches for primary data:
Observation involves gathering primary data by observing relevant people, actions, and situations
- Ethnographic research approach is a form of observation that involves sending trained
observers to watch and interact with consumers in their “natural environments”
o Such as students in a classroom, kids in a playground, etc.
- Observations are best suited for exploratory research

Surveys include gathering primary data by asking people questions about their knowledge, attitudes,
preferences, and buying behavior
- Can be collected by mail, telephone, personnel interview (individual interview or focus group
interview), or online
- Online surveys are cheap, fast, higher response rates, good for hard to reach groups

Experiments involve gathering primary data by selecting matched groups of subjects, giving them
different treatments, controlling related factors, and checking for differences in group responses
- Best suited for gathering causal information

Research instrument: questionnaire

Question types include:
- Closed-end questions that include all possible answers, and subjects choose from them (MCQ,
Yes/No, etc.)
- Open-end questions allow respondents to answer in their own words

Primary data collection: sampling plan

A sample is a segment of the population selected for marketing research to represent the population as
a whole
- Who is to be studied? How many? How should they be chosen?
- We basically interdependent characteristics/trends of populations based on such samples