Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in returnThe Marketing Process•Understand the marketplace and customer wants and needs•Design a customer-driven marketing strategy•Construct a marketing plan that delivers superior value•Build profitable relationships and create customer satisfaction•Capture value from customers to create profit and customer equityMarketing management is the art and science of choosing target markets and building profitable relationships with them.•What customers will we serve?•How can we best serve these customers?Market segmentation: Dividing the markets into segments of customersTarget marketing: Which segments to go afterThe value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needsThe marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy: •P roduct•P rice•P romotion•P laceThe marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction.Customer perceived value is the difference between total customer value and total customer cost. Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations.The supply chain is a channel that stretches from raw materials to components to final products to final buyers.•Supply management•Strategic partners•Strategic alliancesCustomer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.Customer equity is the total combined customer lifetime values of all of the company’s customersStrategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.The business portfolio is the collection of businesses and products that make up the company Steps in Analyzing the Current Business Portfolio•Identify key businesses making up the company•Assess the attractiveness of its various SBUs•Decide how much support each SBU deservesA strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses.•Company division•Product line within a division•Single product or brandGrowth share matrix is a portfolio planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative share.Strategic business units are classified as:•Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows.•Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share.•Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share.•Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash.Problems with Matrix Approaches•Difficulty in defining SBUs and measuring market share and growth•Time consuming•Expensive•Focus on current businesses, not future planningProduct/market expansion grid strategies•Market penetration•Market development•Product development•DiversificationMarket penetration is a growth strategy increasing sales to current market segments without changing the product.Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets.A value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.A value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system.A marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objectivesMarket segmentation is the division of a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes.A market segment is a group of consumers who respond in a similar way to a given set of marketing efforts.Target marketing 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 the target consumer.The marketing mix is the set of controllable tactical marketing tools—product, price, place, and promotion—that the firm blends to produce the response it wants in the target market.•Product is the goods and services in combination that the company offers to the target market.•Price is the amount of money customers have to pay to obtain the product.•Place is the company activities that make the product available to target customers.•Promotion is the activities that communicate the merits of the product and persuade target customers to buy it.Marketing analysis is the complete analysis of the company’s situation in a SWOT analysis that evaluates the company’s:•Strengths include internal capabilities, resources, and positive situational factors that may help to serve company customers and achieve company objectives.•Weaknesses include internal limitations and negative situational factors that may interfere with company performance.•Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage.•Threats are unfavorable factors or trends that may present challenges to performance. Market Planning•Planning is the development of strategic and marketing plans to achieve company objectives.•Marketing strategy consists of the specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels.Sections of a marketing plan include:•Executive summary•Current marketing situation•Threats and opportunities•Objective and issues•Action programs•Budgets•ControlsA marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, strategies, and activities to determine problem areas and opportunitiesReturn on marketing investment(ROI) is the net return from a marketing investment divided by the costs of the marketing investment. (Marketing ROI provides a measurement of the profits generated by investments in marketing activities.)Customer-Centered Measures•Customer acquisition•Customer retention•Customer lifetime valueThe marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers.The 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, and publics.The macroenvironment consists of the larger societal forces that affect the microenvironment.•Demographic•Economic•Natural•Technological•Political•CulturalResellers are the distribution channel firms that help the company find customers or make sales to them. These include:•Wholesalers•RetailersCustomer markets consist of individuals and households that buy goods and services for personal consumption.Business markets buy goods and services for further processing or for use in their production process.Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.Economic environment consists of factors that affect consumer purchasing power and spending patterns..Subsistence economies consume most of their own agriculture and industrial output..Industrial economies are richer markets.The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviorsA marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.•Assess the information needs•Develop needed information•Analyze information•Distribute informationMarketing intelligence is the systematic collection and analysis of publicly available information about competitors and developments in the marketplace.Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.1.Defining the problem and research objectives2.Developing the research plan3.Implementing the plan4.Interpreting and reporting the findingsThe research plan is a written proposal that includes: Management problem, Research objectives, Information needed, How the results will help management decisions, BudgetSurvey research is the most widely used method and is best for descriptive information—knowledge, attitudes, preferences, and buying behaviorA sample is a segment of the population selected for marketing research to represent the population as a whole.•Who is to be surveyed?•How many people should be surveyed?•How should the people be chosen?Customer Relationship Management (CRM)•Consists of sophisticated software and analytical tools•Integrates customer information from all sources•Analyzes it in depth•Applies the results to build stronger customer relationshipsConsumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption.Consumer market refers to all of the personal consumption of final consumers.Culture is the learned values, perceptions, wants, and behavior from family and other important institutions.Reference groups are groups that form a comparison or reference in forming attitudes or behavior.Lifestyle is a person’s pattern of living as expressed in his or her psychographics.Measures a consumer’s AIOs (activities, interests, and opinions) to capture information about a person’s pattern of acting and interacting in the environment.Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environmentBrand personality refers to the specific mix of human traits that may be attributed to a particular brand:•Sincerity•Excitement•Competence•Sophistication•RuggednessSelf-concept refers to people’s possessions that contribute to and reflect their identities. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes:•Selective attention•Selective distortion•Selective retentionFive stages in the buyer decision process1、Need recognition occurs when the buyer recognizes a problem or need triggered by:1.Internal stimuli2.External stimuli2、Information search is the amount of information needed in the buying process and depends on:•The strength of the drive,•The amount of information you start with,•The ease of obtaining the information,•The value placed on the additional information, and•The satisfaction from searching3、Evaluation of alternatives is how the consumer processes information to arrive at brand choices.4、The purchase decision is the act by the consumer to buy the most preferred brand5、The post-purchase decision is the satisfaction or dissatisfaction the consumer feels about the purchaseCustomer satisfaction is a key to building profitable relationships with consumers—to keeping and growing consumers and reaping their customer lifetime valueStages in the Adoption Process•Awareness is when the consumer becomes aware of the new product but lacks information.•Interest is when the consumer seeks information about the new product.•Evaluation is when the consumer considers whether trying the new product makes sense.•Trial is when the consumer tries the new product to improve his or her estimate of value.•Adoption is when the consumer decides to make full and regular use of the product. Business buying process is the process where business buyers determine which products and services are needed to purchase and then find, evaluate, and choose among alternative brands. Major Types of Buying Situations•Straight rebuy is a routine purchase decision such as a reorder without any modification.•Modified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliers.•New task is a purchase decision that requires thorough research such as a new product.•Systems selling involves the purchase of a packaged solution from a single seller.•Two-step process of selling:•Interlocking products•System of production, inventory control, distribution, and other services to meet the buyer’s need for a smooth-running operationThe Buying Process•General need description describes the characteristics and quantity of the needed item.•Product specification describes the technical criteria.•Value analysis is an approach to cost reduction where components are studied to determined if they can be redesigned, standardized, or made with less costly methods of production•Supplier search involves compiling a list of qualified suppliers.•Proposal solicitation is the process of requesting proposals from qualified suppliers.•Supplier selection is the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions.•Order-routine specifications is the final order with the chosen supplier and lists all of the specifications and terms of the purchasePerformance review involves a critique of supplier performance to the purchase terms. Problem recognition occurs when someone in the company recognizes a problem or need.•Internal stimuli•Need for new product or production equipment•External stimuli•Idea from a trade show or advertisingMarket segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs.To be useful, a market segment must be:•Measurable•Accessible•Substantial•Differentiable•ActionableCompetitive advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices.Value proposition is the full mix of benefits upon which a brand is positioned.•More for more•More for the same•Same for less•Less for much less•More for lessA product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want.Service is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership.Organization marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization.Brand is the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service.Packaging involves designing and producing the container or wrapper for a product.Label identifies the product or brand, describes attributes, and provides promotionBrand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers.Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service.Customer equity is the value of the customer relationships that the brand creates.Brand valuation is the process of estimating the total financial value of the brand.Brand strategy decisions include:•Brand positioning•Brand name selection•Brand sponsorship•Brand developmentBrand strategy decisions include:•Product attributes•Product benefits•Product beliefs and valuesBrand Name Selection•Desirable qualities•Suggests benefits and qualities•Easy to pronounce, recognize, and remember•Distinctive•Extendable•Translatable for the global economyBrand Sponsorship•Manufacturer’s brand•Private brand•Licensed brand•Co-brandBrand SponsorshipPrivate brands provide retailers with advantages.•Product mix control•Slotting fees for manufacturers’brands•Higher margins•ExclusivityBrand Development•Line extensions•Brand extensions•Multibrands•New brandsNature and Characteristics of a Service•Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased.•Inseparability refers to the fact that services cannot be separated from their providers.•Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided.•Perishability refers to the fact that services cannot be stored for later sale or use. Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product.New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.New-Product Development Process•New idea generation is the systematic search for new product ideas.•Idea screening refers to reviewing new-product ideas in order to drop poor ones as soon as possible.•Product idea is an idea for a possible product that the company can see itself offering to the market.•Product concept is a detailed version of the idea stated in meaningful consumer terms.•Product image is the way consumers perceive an actual or potential product.oncept testing refers to new-product concepts with groups of target consumersMarketing strategy development refers to the initial marketing strategy for introducing the product to the market.•Marketing strategy statement•Business analysis•Product development•Test marketing•CommercializationMarketing Strategy StatementPart 1:•Description of the target market•Product positioning, sales, market share, and profit goalsPart 2:•Price distribution and budgetPart 3:•Long-term sales, profit goals, and marketing mix strategy•Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives.•Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments.•Requires an increase in investmentTest marketing is the stage at which the product and marketing program are introduced into more realistic marketing settingsApproaches to test marketing•Standard test markets•Controlled test markets•Simulated test marketsCommercialization is the introduction of the new product•When to launch•Where to launch•Planned market rolloutProduct life-cycle (PLC) is the course that a product’s sales and profits take over its lifetime.•Product development•Introduction•Growth•Maturity•Decline•Introduction stage is when the new product is first launched.•Takes time•Slow sales growth•Little or no profit•High distribution and promotion expense. Growth stage is when the new product satisfies the market.•Maturity stage is a long-lasting stage of a product that has gained consumer acceptance.•Slowdown in sales•Many suppliers•Substitute products•Overcapacity leads to competition•Increased promotion and R&D to support sales and profits.•Decline stage is when sales decline or level off for an extended time, creating a weak product.•Maintain the product•Harvest the product•Drop the productPrice is the only element in the marketing mix that produces revenue; all other elements representare equal to total revenueand there is no•Pure competition•Monopolistic competition•Oligopolistic competition•Pure monopolyPricing Strategies•Market skimming pricing is a strategy with high initial prices to “skim”revenue layers from the market•Market penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share.FOB (free on board) pricing means that the goods are delivered to the carrier and the title and responsibility passes to the customer.Retailing includes all the activities in selling products or services directly to final consumers for their personal, non-business use.Franchise organizations are based•On some unique product or service•On a method of doing business•On the trade name, good will, or patent that the franchisor has developed Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.。