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Notes from readings

Chapter 1

Marketing is the activity for creating, communication, delivering and

exchanging offerings that benefit its customers, the organisation, its

stakeholders, and society at large.

Exchange – trade of things of value between buyer and seller so that

each is better off after the trade

page 7 of textbook; good diagram of factors affecting marketing.

What is needed for marketing to occur

1. two or more parties with unsatisfied needs

2. desire and ability to fulfil these needs

3. a way for the parties to communicate

4. something to exchange.

…goods, services, and ideas are all considered ‘products’ that are

marketed. [Therefore] a product is a good, service, or idea consisting of

a bundle of tangible and intangible attributes that satisfies consumers’

needs and is received in an exchange for money or something else of

value

How marketing discovers and satisfies customer needs

Discovering consumer needs

-what are the needs of the prospective customers

-prospective customers may not always know or be able to describe what

they need

Meeting consumer needs with new products

-up to 94% of new products fail in the long run

-focus on (1) what the customer benefit is, and (2) learn from the past

Need – occurs when a person feels deprived of basic necessities

Want – a need that is shaped by a person’s knowledge, culture and

personality

Market – made of potential customers, which is people with the ability

and desire to purchase a specific offering

Controllable forces = the marketing mix

Uncontrollable forces = environmental forces; social, economic,

technological, competitive and regulatory

Customer value – the unique combination of benefits received by

targeted buyers that includes quality, convenience, on-time delivery and

before and after sales service at a specific price

Customer value proposition – cluster of benefits that an organisation

promises customers to satisfy their needs

Relationship marketing – links the organisation to its individual

customers, employees, suppliers and other partners for mutual, long-term

benefit.

Marketing program – a plan that integrates the marketing mix to

provide a good, service, or idea to prospective buyers.

3M case study

-moving from ideas to marketable highlighter product

-adding the Post-it flag pen

-a marketing program for the post-it flag highlighter and pen

Evolution of the market orientation

Production era – goods were scarce and buyer were willing to accept

any goods available to them

Sales era – firms began to produce more than buyers could consumer.

Competition grew

Marketing concept era – businesses should strive to satisfy consumer

needs, whilst achieving their own goals. (1) strive to satisfy the needs of

the customer, (2) while also achieving the goals of the organisation

Market orientation – focuses on continually collecting info

about customers and their needs, sharing this info across

departments and using it to create customer value.

This has lead to customer relationship management – the process of

identifying prospective buyers, understanding them and developing long-

term good perceptions of the firm and its products

Customer experience – internal response that a customer has to all

aspects of an organisation.

Societal marketing concept – organisations should satisfy the needs of

consumers in a way that benefits society

Macromarketing – The study of aggregate flow of a nation’s products

and services to benefit society. The discipline that addresses broad issues

such as whether marketing costs too much, whether advertising is

wasteful, and what resource scarcities and pollution side effects result

from the marketing system

Micromarketing – how an individual firm directs its marketing activities

and allocates its resources to benefit its customers

The breadth and depth of marketing

1. Who markets? – Every organisation

2. What is marketed?

Product – a good/service/idea consisting of a bundle of tangible

and intangible attributes that satisfies consumers’ needs and is

received in exchange for money or something else of value

3. Who buys and what is marketed?

Ultimate consumers – those who use the products and

serviced purchased for a household

Organisational buyers – organisations that buy

products/services for their own use or resale

4. Who benefits?

Consumers who buy – increase in innovation, and quality of life

Organisations who sell

Society as a whole – increases competition; leading to lower

prices and more innovation

Marketing creates utility, in terms of form (the production of the g/s);

place (having the offering where needed); time (having the offering

available when needed); and possession

Ethical and social responsibility in marketing

Ethics – are the moral principles and values that govern the actions and

decisions of an individual or group. They serve as guidelines on how to

act rightly and justly when faced with moral dilemmas

Ethics of exchange – ethical exchanges should result in both parties

being better off, post transaction

Caveat emptor- let the buyer beware

Consumer Bill of Rights – in 1962 by J F K

Right to safety

Right to be informed – marketers have an obligation to give

consumers complete and accurate info over g/s

Right to choose – many supermarkets demand “slotting

allowances” from manufacturers, in the form of cash or free goods.

This may limit the number of new products available to consumers

Right to be heard – consumers should have access to public policy

makers regarding complaints about g/s

Ethics of competition

Economic espionage – collection of trade secrets or proprietary

info about a company’s competitors. It is illegal and unethical

Bribery – most likely in Somalia; Denmark, NZ and Singapore

the least likely. Transparency International shows figures.

Corporate culture – set of values, ideas and attitudes that is learned

and shared among the members of an organisation

Code of ethics – is a formal statement of ethical principles and

rules of conduct

Ethical behaviour of top management and co-workers –

can affect own ethical behaviour

Your own personal moral philosophy and ethical

behaviour

Moral idealism – a personal moral philosophy that considers certain

individuals rights or duties as universal, regardless of the outcome.

Utilitarianism – a personal moral philosophy that focuses on the

greatest good for the greatest number

Social responsibility – organisations are part of a larger society and are

accountable to that society for their actions

Profit responsibility – maximum profits for

owners/sharedholders

Stakeholder responsibility – obligations to those who can

affect achievement of its objectives [suppliers/distributors,

employees, consumers]

Societal responsibility – [public interest groups, ecological

environment, general public]; the emphasis these days is the

triple-bottom line – recognition of the need to improve the

state of people, the planet and profit at the same time

o Cause marketing – where charitable contributions of a

firm are directly tied to customer revenues produced

through the promotion of one of its products.

o Green marketing – marketing efforts to produce,

promote and reclaim environmentally sensitive products

Social audit – a systematic assessment of a firm’s objectives, strategies

and performance in terms of social responsibility. Consists of 5 steps:

1. recognition of firm’s social expectations and rationale

for engaging in social responsibility endeavours

2. identification of social responsibility causes consistent

with mission

3. determination of organisational objectives and priorities

for programs and activities it will undertake

4. specification of the type and amounts of resources

necessary to achieve objectives

5. evaluation of programs/activities undertaken

Sustainable development – involves conducting business in a way that

protects the natural environment while making economic progress.

Case Study Notes

Allpress case:

1. Does not just market goods, but also services, experiences and

ideas

2. Create value for retailers and patrons of cafes

3. Perform some essential marketing functions such as sourcing,

processing, packaging and marketing beans

4. Has evolved with the market (e.g. cutomers increasingly want to

know where the raw materials come from

5. Position the brand as a provider of consistency, variety and

quality

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Developing successful marketing and organisational strategies

Organisation – legal entity that consists of people who share a common

mission.

This motivates them to develop offerings (products, services or ideas)

that create value for the organisation and its customers by satisfying

needs and wants

Business firm – privately owned organisation that serves customers to

earn a profit, so it can survive

Profit – total revenues less total expenses; is the reward for risk

undertaken

Non profit organisation – non-govt. org. that serves its customers but

does not have profit as a goal

Strategy – an orgs long term course of action designed to deliver unique

customer exp while achieving its goals

Structure of today’s organisations

Corporate level – where top mgmt. directs over all strategy for the

entire org. Usually means board of directors and senior management

officers [e.g. 5 year growth plan]

Strategic business unit level – a subsidiary, division or unit of an org

that markets a set of related offerings to a clearing defined group of

customers. Managers set a more specific strategic decision for their

business to exploit value-creating ops [e.g. gain a 20% share of X market

by introducing a new product]

Functional level – where groups of specialists actually create value for

the org. The term dept generally refers to these specialised functions,

such as accounting and marketing

Cross-functional teams – consist of a small number of people from dif

dept. who are mutually accountable to accomplish a task/common set of

goals

Strategy in visionary organisations

Organisational foundation [why] + Organisational direction [what] =

organisational strategies [how]

Organisational foundation – why does it exist

Core values – the fundamental, passionate and enduring

principles that guide its conduct over time. They capture the

firm’s heart and soul to try and motivate its stakeholders

Mission – a statement of the orgs function in society that often

identifies its customers, markets, products and technologies. Aka

mission statement and vision

Organisational culture – set of values, ideas, attitudes and

norms of behaviour that is learned and shared among the

members of an organisation

Organisational direction – what will it do?

Business – describes the clear, underling industry or market

sector of an orgs offering; Theodore Levitt’s bs on the railroad

industry; don’t be too narrow

Business model – strategies on org develops to provide value

to the customers it serves

Goals/objectives – are statements of an accomplishment of a

task to be achieved. E.g. profit, sales, market share, quality,

customer satisfaction, employee welfare, social responsibility

Organisational strategies – how will it do it?

Variation by level – moving down an org involves creating

increasingly specific, detailed strategies and plans

Variation by offering – organisational strategies also vary by

the organisation’s offering

Tracking strategic performance with marketing dashboards

Marketing dashboard – is the visual computer display of the essential

info related to achieving a marketing obj

Marketing metric – a measure of the quantitative value or trend of a

marketing activity or result

Data visualisation – presents info about an orgs marketing

metrics so marketers can quickly spot deviations and take

corrective actions

Setting strategic direction

Where are we now? [the three C’s]

Competencies – the firm’s special capabilities; the skills, tech

and resources that distinguish it from other orgs and provide

customer value

o Competitive advantage – a unique strength relative to

competitors that provides superior returns, often based on

quality, time, cost or innovation

Customers

Competitors

Where do we want to go?

Business portfolio analysis (BCG Matrix) – technique used

by managers to quantify performance measures and growth

targets to analyse the firm’s strategic business units (SBUs) as

though they are a collection of separate investments. Vertical

axis – market growth rate; horizontal axis – relative market

share

Cash cow – SBUs that generate large amounts of cash,

far more than they can invest profitably in themselves.

Dominant share in a low growth market

Stars – SBUs with a high share of high-growth markets.

May need extra cash to finance future growth

Question marks – SBUs with a low share of high growth

markets. Require large cash injections to maintain their

market share, and obviously more to increase it

Dogs – shit cunts SBUs. Low shares of slow growth

markets. May generate enough cash to sustain themselves,

they do not hold the promise of becoming real winners for

the org

Case study: Kodak

Digital cameras = ? Star;

Digital picture frames = ? ; cow

Ink-jet printer = ? dog either star or dog;

film = star cash cow dog

Diversification analysis – technique that helps a firm search

for growth opportunities from among current and new markets,

as well as current and new products

Market penetration – increasing sales of current

products in current markets

Market development – selling current products to new

markets

Product development – selling new products to the

current markets

Diversification – selling a new product to new markets

The strategic marketing process

1. How do we allocate our resources to get where we want to go?

2. how do we convert our plans into actions?

3. how do our results compare with our plans, and do deviations require

new plans?

The planning phase of the strategic marketing process

1. Situation (SWOT) Analysis – taking stock of where the

firm/product has been recently, where it is now, and where it is

headed in terms of the orgs marketing plans, and the external

forces and trends affecting it

2. Market-product focus and goal setting – determining

what products will be directed towards what consumers. Often

based on market segmentation – which involves aggregating

prospective buyers into groups/segments that have (1) common

needs and (2) will respond similarly to marketing actions

Goal setting involves specifying measurable objectives to be

achieved

i. Set marketing and product goals

ii. Select target markets

iii. Find points of difference – those characteristics of a

product that make it superior to competitive substitutes

iv. Position the product

3. Marketing program

i. Product strategy

ii. Price strategy

iii. Promotion strategy

iv. Place strategy

4. The implementation phase of the strategic marketing process

1. Obtaining resources

2. Designing the marketing organisation

3. Developing planning schedules – must identify tasks to be done, the

time to allocate to each, the people responsible and the deadlines for

their accomplishment

4. Executing the marketing program

Marketing strategy – means by which a marketing goal is to

be achieved, normally characterised by a specified target

market and a marketing program to reach it. Specifies the

end sought (target market) and the means to achieve it

(marketing program)

Marketing tactics – detailed, day-to-day operational

decisions essential to the overall success of marketing

strategies

5. The evaluation phase of the strategic marketing process

1. Comparing results with plan to identify deviations

2. Acting on deviations

Exploiting a positive deviation

Correcting a negative deviation

SEGMENTATION is about analysis in building a deep understanding of a

market, and creativity in making sense of that analysis.

TARGETING is about marketers seeking to identify and understand parts

of the market that they can offer the most value. These parts of the total

market form the organisation’s target market.

POSITIONING is the first step or “seed” that you plant that ultimately

leads to the growth of rest of the marketing mix (the 4 p’s).

Scanning the marketing environment

Environmental scanning – the process of continually acquiring info on

events occurring outside of the org to identify and interpret potential

trends

Environmental forces

-social

-economic

-technological

-competitive

-regulatory

Social forces – include the demographic characteristics of the population

and its values.

Demographics – describing a population according to selected

characteristics such as age, gender, ethnicity, income and occupation

Growing world population; but particularly in poorer countries.

Growth rate has slowed in wealthier countries.

Aging world population

Changing dynamic of the [American] household

Population shifting to urban areas

Greater racial and ethnic diversity

Generational cohorts

Baby boomers – born between 1946 and 64 – targeted by

interest in fitness, health, retirement, financial planning and

physical appearance

Generation X – 65-76 – casual, tech friendly lodging in hotels

for example

Generation Y – 77 – 94 – music, sports, computers, video

games, communications and networking.

Culture – incorporates the set of values, ideas and attitudes that are

learned and shared among the members of a group

Changing attitude of men and women; women are now more

important than they were in the past; more independent;

traditional roles challenged

Changing values – in the 70’s the focus was on achievement,

work, efficiency and material comfort. Nowadays there is a

greater focus on personal control, continuous change, equality,

individualism, self help, competition, future orientation and

action

Value consciousness – the concern for obtaining the best

quality, features and performance of a product or services for a

given price

Economic forces

Economy – income, expenditure and resources that affect the cost of

running a business and household

Macroeconomic conditions – the performance of an economy

based on indicators such as GDP, unemployment and price

changes (inflation/deflation)

Consumer income

Gross income – total amount of money made in one year

by a person, household or family unit

Disposable income – money a consumer has left after

paying taxes to use for necessities such as food, housing,

clothing and transport

Discretionary income – the money that remains after

taxes and necessities

Technological forces

Technology – innovations or inventions from applied science and

engineering research

Technology of tomorrow

-social networks will become social platforms to provide

functionality, community and identity

-“natural user interfaces” will utilize gesture, touch, and voice to

change the way we interact with and control computers and

complicated machines

-green technologies

-biotechnologies – genetically modified crops

Electronic business technologies

Marketspace – an information and communication based

electronic exchange env. mostly occupied by sophisticated

computer and telecommunication technologies and

digitized offerings

Electronic commerce – electronic communication in

inventory, exchange, advertisement, distribution and

payment for g/s

Intranet – internet-based network used within the

boundaries of an org

Extranet – internet- based technologies, permitting

communication between a company and its suppliers,

distributors and other partners

Competitive forces

Competition – refers to the alternative firms that could provide a

product to satisfy a specific market’s needs

Pure competition – in which there are many sellers and they

each have a similar product

Monopolistic competition – many sellers compete with

substitutable products within a price range

Oligopoly – when a few companies control a majority of the

industry sales

Pure monopoly – only one firm sells the product

Components of competition

Barriers to entry – business practices/conditions that make it

difficult for new firms to enter the industry

Power of buyers and suppliers

Existing competitors and substitutes

Small business as competitors

Small business make up the majority of the competitive

landscape for most businesses. [In the US, there are 27.5 million

small businesses, which employ half of all private sector

employees. Small businesses generate 65% of new jobs and

make 50% of the GDP]

Regulatory forces

Regulation – consists of restrictions state and federal laws place on

business with regard to the conduct of its activities

Protecting competition

(1)Forbid contracts, combinations or conspiracies in the restrain

of trade

(2)Forbid actual monopolies or attempts to monopolise any part

of trade/commerce

Product-related legislation

Various federal laws specifically address the product component

of the marketing mix. Some are aimed at protecting the

company, some at the consumer, and at least one at both.

Consumerism – a movement to increase the influence,

power and rights of consumers in dealing with institutions

Pricing-related legislation

Can prohibit price discounting and price fixing. Price fixing is per

se illegal. Certain forms of price discounting are allowed.

Distribution-related legislation

Exclusive dealing – an arrangement a manufacturer makes

with a reseller to handle only its products, and not that of a

competitor. Only illegal if it lessens comp.

Requirement contracts – require a buyer to purchase all or

part of its needs for a product from one seller for a time period.

Not always illegal

Exclusive territorial distributorship – a manufacturer grants

a distributor the sole rights to sell a product in a specific

geographical area. Courts have found a few violations with these

agreements

Tying arrangement – whereby a seller requires the purchaser

of one product to also buy another item in the line. May be illegal

when the seller has such economic power in the tying product

that the seller can restrain trade in the tied product

Advertising and promotion related legislation