Ba 311 - Business Marketing Notes

Chapter 1[pic 1]

Marketing: An organizational function and a set of processes for creating, capturing, communicating, delivering and exchanging offerings that have value for customers and stakeholders.  Also for managing customer relationships.  6 core aspects of marketing:

1. Marketing helps create value.
2. Satisfying customer needs and wants
3. Marketing entails an exchange between buyer and seller.
4. Marketing Mix (4 Ps)
5. Can be performed by both individuals and organizations
6. Marketing affects various stakeholders.

Marketing Mix (4 Ps): 

1. Product - Creating value

1. Goods: physical items
2. Services: intangible customer benefits that cannot be separated from the producer.
3. Ideas: Intellectual concepts that can be marketed.

1. Price - Capturing Value:  Everything the buyer gives up (money, time, energy, etc) in exchange for the product.

1. As the price of a product decreases, its perceived value from a customer standpoint increases.

1. Place - Delivering Value:  All activities necessary to get product to the right customer when customer wants it.  Includes supply chain mgmt.
2. Promotion Decisions - Communicating Value.

1. IMC - Integrated Marketing Communications:  Encompasses variety of communication disciplines in combination to provide clarity, consistency, and maximum communicative impact.  Including: general advertising, personal selling, sales promotion, public relations, direct marketing, electronic media.

Marketing Plan:  A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected pro forma income (and other financial) statements.

Eras of Marketing:

• Production-Oriented Era: Good product will sell itself.  Businesses concerned with innovation, not satisfying needs of individual consumers.
• Sales-Oriented Era:  Great Depression and WWII caused consumers to become more thrifty.  Businesses were producing more than what consumers wanted.  Businesses became sales oriented: dependant on personal selling and advertising.
• Market-Oriented Era:  Post WWII buyers market.  Consumers made choices based on quality, convenience, and price.  Manufacturers began focusing on what consumers wanted and needed before designing and attempting to sell products or services.  Marketing discovered in this era.
• Value-Based Marketing Era:  Successful firms today are market-oriented -- Attempt to discover and satisfy customer’s needs and wants.  Businesses must add greater value to products than competitors.

• Value:  The relationship of benefits the benefits of a product to its costs -- what you get for what you give.
• Value Cocreation:  Adding greater value to products by allowing consumers to participate in the design or decision making process.  (E.g. Nike’s design your own shoe).

Lightning-in-a-bottle:  Uncovering a want or need that no one knew existed.

How marketing firms become value driven:  Focus on four activities:

1. Marketing Analytics (Gather Information):  Gathering information about their customers, competitors, supply chain, etc.
2. Balance Benefits with Costs:  Value-oriented marketers measure the benefits that customers perceive against the cost of their offerings.
3. Building Relationships with Customers:

1. Relational Orientation: Philosophy that building long-term relationships with customers -- increases likelihood of returning customers.

1. Focuses on lifetime profitability of the relationship, not how much money is made during each transaction.

1. CRM - Customer Relationship Management: A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers.

1. Connecting with Customers using social and mobile media: 93% of marketers claim they use social media tools for their business.

1. Only 10% of world uses facebook though U.S. and U.K. reaching saturation.

1. Much growth potential.

Chapter 2: Developing Marketing Strategies and a Marketing Plan

Marketing Strategy: Defines three things:[pic 2]

1. Defines the firm’s target market
2. Related marketing mix (its four Ps)
3. Determines the method to build sustainable competitive advantage.

Sustainable Competitive Advantage: Advantage over the competition that is not easily copied and can be maintained over a long period of time.  Four overarching strategies for creating competitive advantage.

1. Customer Excellence:  Focus on retaining loyal customers and maintaining excellent customer service.

1. Customer loyalty: Customers are reluctant to patronize other similar products or services.

1. Achieved by providing something unique, or creating an emotional attachment (loyalty programs).

1. Outstanding Customer Service: Can be less consistent since service will vary from person to person.

1. Operational Excellence: Efficient operations and excellent supply chain and human resource mgmt.

1. Get customers merchandise they want, when the want it, in the required quantity, and at a lower cost than their competitors.
2. Achieved by developing sophisticated distribution and information systems as well as strong relationships with vendors.

1. Product Excellence: Having products with high perceived value and effective branding and positioning.
2. Locational Excellence:  Having a good physical location and internet presence.

The Marketing Plan:  Entails five steps:

I. Planning Phase:  

1. Define the mission/vision of the business.
2. SWOT Analysis: Strengths and Weaknesses are internal; Opportunities and Threats are external.

II. Implementation Phase:  Development of Marketing Strategy

1. Identify and evaluate different opportunities by engaging in STP.

1. STP - Segmentation, Targeting, and Positioning: Firm divides marketplace into subgroups or segments, determines which segment they should pursue/target, then decides how it should position its products and services to best meet needs of chosen target.

1. Market Segmentation: Process of dividing the market into groups of customers with different needs, wants, or characteristics.

1. Market Segment: Consumers who respond similarly to a firm’s marketing efforts.

1. Target Marketing (or targeting): Process of evaluating attractiveness of various segments then deciding which to pursue as a market.
2. Market Positioning: Process of defining marketing mix variables (4ps) so that target customers have a clear understanding of what the product does or represents in comparison with competing products.

1. After completing this phase, the company has decided what to do, how to do it, and how many resources should be allocated to it.

1. Implement marketing Mix (4 Ps)

III. Control Phase:

1. Evaluate performance of strategy using metrics and taking corrective actions.

1. Metric: Measuring system that quantifies a trend, dynamic, or characteristic.

1. Relative metric:  A metric used to determine whether a marketing plan was successful by looking at whether sales increased or decreased over the given time period in relation to past years or months.

1. Determine who is accountable for performance.

1. Use performance evaluations to determine why performance was above or below what was expected.

1. Evaluate Performance Objectives, Marketing Analytics, and Metrics.
2. Financial Performance Metrics:  Assess revenues, sales, profits.  Determine relative level of sales and profits (this year’s profits versus last year’s).
3. Portfolio Analysis: Management evaluates the firm’s various products and businesses and allocates resources according to which products are expected to be the most profitable for the firm in the future.

1. SBU - Strategic Business Unit: Division within the firm that can be managed and operated somewhat independently and may have a different mission or objectives.
2. Product Line: Groups of associated items, such as those that consumers use together or think of as part of a group of similar products.  E.g. toothpaste, floss, and mouthwash.
3. Portfolio Analysis typically performed at SBU or product line level.
4. BCG Matrix (Boston Consulting Group): Popular Portfolio Analysis.[pic 3]

1. Organize products into two-by-two matrix as shown in image.
2. Circles represent brands and their sizes are in direct proportion to the brands’ annual sales.

• Stars are products that require heavy resource or marketing investment to fuel rapid growth..
• Cash cows are products that bring in a lot of money and require little marketing efforts.
• Question marks are products that might get discontinued or phased out due to the company offering a similar but more successful product.
• Dogs are products that don’t have much room to grow or lack popularity among consumers.
• Market Share: Percentage of a market accounted for by a specific entity.
• Relative Market Share:  A measure of the product’s strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry.
• Market Growth Rate: Annual rate of growth of the specific market in which the product competes.

The Strategic planning process does not necessarily follow in this sequential order.[pic 4]

Growth Strategies:

• Market Penetration:  Employs the existing marketing mix and focuses the firm’s efforts on existing customers.  Current Market -- Current Product

• E.g. attracting consumers away from competitors in the company’s already existing target market.

• Market Development:  Strategy that employs the existing marketing offering to reach new market segments.  Current product -- New Market

• E.g. aging consumers attracted to products that were marketed similarly to when they were youths.  The company uses the same marketing strategy that they used years ago, the target has simply aged into a new demographic.

• Product Development:  Strategy that offers a new product or service to a firm’s current target market.
• Diversification:  Introduces a new product or service to a market segment that currently is not served by the company.

• Related Diversification:  Strategy where the current target market and/or marketing mix shares something in common with the new opportunity.
• Unrelated Diversification:  Strategy where a new business lacks any common elements with the present business.

Chapter 3: Social and Mobile Marketing

Social Media: Content distributed through online and mobile technologies

• Social Networking Sites:

• Facebook: 1.4 billion active users.
• LinkedIn: 347 million users.

• Media-Sharing Sites:  Content sharing and generation.

• Youtube, Instagram, Flickr and other Photo Sites

• Thought-Sharing Sites:

• Professional Blog:  Website written by a person who reviews and gives recommendations on products and services.
• Personal Blogs:  Written by people who receive no products or payment (supposedly -- my addition).
• Microblog: Twitter.

4E Framework for Social Media:  

• Excite Customers with relevant offers

• Offers must be relevant to targeted customers.

• Educate them about the offering

• Should have a clear call to action as a means to draw customers to the company website or their stores.

• Experience: Help them experience products whether directly or indirectly.

• Product online unboxing, demos, blogs, etc.

• Engage: Give them an opportunity to engage with their social network.

• Positively engaged consumers purchase 20 to 40 percent more than less engaged customers.
• Negatively engaged customers can be more detrimental than any engagement at all.

Seven Primary Motivations for Mobile App Usage:

1. Me time: (46%) Half the time that people spend on their smartphones is seeking fun.
2. Socializing: (19%) Interacting with other people.
3. Shopping (12%)
4. Accomplishing: (11%) Managing finances, health, and productivity.
5. Preparation: (7%) Planning for upcoming activities -- Calendars, flight trackers, trip planning apps, etc.
6. Discovery: (4%) Seeking news and information.
7. Self-Expression: (1%) Participating in hobbies and interests.

App Pricing Models:

• Ad-supported apps: Free apps that generate revenue by placing ads on the screen.
• Freemium Apps: Apps that are free to download but include in-app purchases that enhance the app or game.

• Research indicates that freemium apps are the largest revenue generators at the moment.

• Paid Apps: Charge an upfront price to download the app.
• Paid Apps with in-app Purchases

Half of all mobile device users use their devices to make purchases.

How Firms engage their customers using social media: