Week 6 MARKETING: AN INTRODUCTION BUSN 102 – Özge Can

Marketing in a Changing World The process of creating value for customers and building relationships with those customers in order to capture value back from them Applies to: not only good and services but also: for-profit organizations, people, places, and causes

Marketing in a Changing World Place Marketing: Marketing efforts to attract people and organizations to a particular geographical area Cause-Related Marketing: Identification and marketing of a social issue, cause, or idea to selected target markets

The Role of Marketing in Society Needs and wants Exchanges and transactions Four utilities

The Role of Marketing in Society Needs Differences between a person’s actual state and his or her ideal state; they provide the basic motivation to make a purchase Wants Specific goods, services, experiences, or other entities that are desirable in light of a person’s experiences, culture, and personality

The Role of Marketing in Society Exchange Process The act of obtaining a desired object or service from another party by offering something of value in return Transaction An exchange of value between parties

The Role of Marketing in Society Utility The power of a good or service to satisfy a human need Four aspects of utility: Form Time Place Possession

Examples of the Four Utilities

Different Views of Marketing Function: Product concept: Focusing on the production of goods, not satisfying customers Selling concept: Generating as many sales transactions as possible; customers are only a target to be sold to

Different Views of Marketing Function: Marketing concept: An approach to business management that stresses customer needs and wants, seeks long-term profitability, and integrates marketing with other functional units within the organization

Selling Concept vs. Marketing Concept

The Marketing Concept Involves: Relationship Marketing A focus on developing and maintaining long-term relationships with customers, suppliers, and distribution partners for mutual benefit Customer Loyalty The degree to which customers continue to buy from a particular retailer or buy the products of a particular manufacturer or service provider

Challenges in Contemporary Marketing 1) Involving the customer in the marketing process 2) Making data-driven decisions 3) Conducting marketing activities with greater concern for ethics and etiquette

1) Involving the Customer Customer Relationship Management (CRM) A type of information system that captures, organizes, and capitalizes on all the interactions that a company has with its customers Social Commerce The creation and sharing of product-related information among customers and potential customers

2) Making Data-Driven Decisions Marketing Research The collection and analysis of information for making marketing decisions Tracking each aspect of marketing effectiveness Key marketing research techniques: Observation, surveys, interviews and focus groups, process data collection, ethnographic research, neuromarketing studies

3) Greater Concern for Ethics and Etiquette Permission-Based Marketing Firms first ask permission to deliver messages to an audience and then promise to restrict their communication efforts to those subject areas in which audience members have expressed interest Stealth Marketing The delivery of marketing messages to people who are not aware that they are being marketed to

Understanding Today’s Customers I. Consumer Market: Individuals or households that buy goods and services for personal use II. Organizational Market: Companies, government agencies, and other organizations that buy goods and services either to resell or to use in the creation of their own goods and services

The Consumer Decision Process Think about several purchase decisions you’ve made recently. Classical economics suggests that your behavior would follow a rational process of first recognizing a need and then gathering information, identifying alternative solutions, and finally making your choice from those alternatives. But how often do you really make decisions in this way? Researchers now understand that consumer behavior tends to be far less logical and far more complicated—and more interesting—than this model suggests. In fact, some research suggests that as much as 95 percent of the decision-making process is subconscious and that sensory cues can play a much larger role than objective information. You can start to understand why so many decisions seem mysterious from a rational point of view if you consider all the influences that affect purchases: Culture Socioeconomic level Reference groups Situational factors Self-image

The Organizational Customer Decision Process The purchasing behavior of organizations is easier to understand than the purchasing behavior of consumers because it’s more clearly driven by economics and influenced less by subconscious and emotional factors. Here are some of the significant ways in which organizational purchasing differs from consumer purchasing: An emphasis on economic payback and other rational factors A formal buying process Greater complexity in product usage The participation and influence of multiple people Close relationships between buyers and sellers

Consumer Decision Process Rational model of customer buying behavior: Need recognition Information research Evaluation of alternatives Purchase Postpurchase evaluation

The Consumer Decision Process Consumer behavior is less logical and far more complicated: Subconscious decision-making, gut feelings and emotional responses Cognitive Dissonance Tension that exists when a person’s beliefs don’t match his or her behaviors; a common example is buyer’s remorse, when someone regrets a purchase immediately after making it

Major Purchase Influences: Culture Socioeconomic level Reference groups Situational factors Self-image

Organizational Customer Decision Process: An emphasis on economic payback and other rational factors A formal buying process Greater complexity in product usage The participation and influence of multiple people Close relationships between buyers and sellers

Strategic Marketing Planning The process of examining an organization’s current marketing situation, assessing opportunities and setting objectives, and then developing a marketing strategy to reach those objectives Involves the following steps: Examining current marketing situation Asessing opportunities abd setting objectives Developing marketing strategy

Strategic Marketing Planning Process

Analyzing External Environment Environmental factors include: Economic conditions Natural enviorenment Social and cultural trends Laws and regulations Technology

Pursuing Market Opportunities

Crafting a Marketing Strategy Using the current marketing situation and your objectives as your guide, you’re ready to develop a marketing strategy, which consists of dividing your market into segments, choosing your target markets and the position you’d like to establish in those markets, and then developing a marketing mix to help you get there.

Crafting a Marketing Strategy An overall plan for marketing a product; includes: 1) identification of target market segments 2) choosing the target markets 3) positioning in the target market 4) developing the marketing mix

Dividing Markets into Segments A market contains all the customers who might be interested in a product and can pay for it. However, most markets contain subgroups of potential customers with different interests, values, and behaviors. To maximize their effectiveness in reaching these subgroups, many companies subdivide the total market through market segmentation, grouping customers with similar characteristics, behaviors, and needs. Each of these market segments can then be approached by offering products that are priced, distributed, and promoted in a unique way that is most likely to appeal to that segment. The overall goal of market segmentation is to understand why and how certain customers buy what they buy so that you use your finite resources to create and market products in the most efficient manner possible. Four fundamental factors marketers use to identify market segments are demographics, psychographics, geography, and behavior. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

1) Dividing Markets into Segments A group of customers who need or want a particular product and have the money to buy it Market Segmentation The division of a diverse market into smaller, relatively homogeneous groups with similar needs, wants, and purchase behaviors

1) Dividing Markets into Segments Demographics: The study of statistical characteristics of a population Psychographics: Classification of customers on the basis of their psychological makeup, interests, and lifestyles Geographic Segmentation Categorization of customers according to their geographical location Behavioral Segmentation: Categorization of customers according to their relationship with products or response to product characteristics

Choosing Your Target Markets After you have segmented your market, the next step is to find appropriate target segments, or target markets, on which to focus your efforts. Marketers use a variety of criteria to narrow their focus to a few suitable market segments, including the magnitude of potential sales within each segment, the cost of reaching those customers, fit with a firm’s core competencies, and any risks in the business environment.

2) Choosing Your Target Markets Specific customer groups or segments to whom a company wants to sell a particular product Undifferentiated (mass) marketing Differentiated marketing Concentrated marketing Individualized marketing (micromarketing)

Market-Coverage Strategies:

Staking Out a Position in Your Target Markets After you have decided which segments of the market to enter, your next step is to decide what position you want to occupy in those segments. Positioning is the process of designing a company’s offerings, messages, and operating policies so that both the company and its products occupy distinct and desirable competitive positions in your target customers’ minds.

3) Positioning in Your Target Markets Managing a business in a way designed to occupy a particular place in the minds of target customers Such variables emphasized: product attributes, customer service, brand image, price or category leadership Customers ultimately decide on the positioning

The Marketing Mix After you’ve segmented your market, selected your target market, and taken steps to position your product, your next task is to develop a marketing mix. A firm’s marketing mix consists of product, price, distribution, and customer communication.

4) The Marketing Mix Marketing Mix The four key elements of marketing strategy: product, price, distribution, and customer communication

4) The Marketing Mix

4) The Marketing Mix Product A bundle of value that satisfies a customer need or want Holistic view to the offering: Brand name, design, packaging, support services, warranty, ownership experience, and etc.

4) The Marketing Mix Price The amount of money charged for a product or service Factors on pricing: Marketing objectives, government regulations, production costs, customer perceptions, competition, customer demand

4) The Marketing Mix Distribution (marketing) channels Systems for moving goods and services from producers to customers Key factors: customer needs, product support requirements, market coverage, distribution costs, competition, positioning

4) The Marketing Mix Promotion Persuasive techniques used by companies to communicate with their target markets and the general public Direct and indirect communication: Face-to-face, media, direct mail, billboards, social media and etc.

Mid-Term Exam Format: Multiple-choice questions (%60) Short essays (%40) Content: Motivation (Chp.10) HRM concepts (Chp.11) Labor relations (Chp.12) Marketing (Chp.13)

Exam: Key Topics Four indicators of motivation Classical theories of motivation Maslow’s hierarchy of needs, Theory X, Y and Z, Herzberg’s two factors, McClelland’s three needs Modern theories of motivation Expectancy, equity, goal-setting theories, job characteristics model Core job dimensions to consider in motivation Reinforcing high-performance

Exam: Key Topics Human resource (HR) planning Managing the employee life-cycle (recruiting, terminating retiring) Evaluating employees: Performance appraisal Training and development Employee compensation Salary, wage, incentives, benefits Unionization: employee and management perspectives Collective bargaining process

Exam: Key Topics The role of marketing Product, sales and marketing concepts Challenges in contemporary marketing Customer decision process & buying behavior Consumer market vs. organizational market Steps in stratetigc marketing planning Marketing strategy and its dimensions Marketing mix: product, price, distribution, promotion

Example Questions: In the workplace, motivation can be assessed by measuring four indicators: satisfaction, engagement, rootedness, and ________. A) intelligence B) commitment C) creativity D) work performance Answer: B

Example Questions: Workplace factors such as health insurance, pension plans, and retirement benefits would satisfy which of the following needs in Maslow's hierarchy? A) safety needs B) social needs C) esteem needs D) physiological needs Answer: A

Example Questions: ________ suggests that employee satisfaction depends on the perceived ratio of inputs to outputs. A) Herzberg's two-factor theory B) David McClelland's three needs theory C) Expectancy theory D) Equity theory Answer: D

Example Questions: Carrey works as a bank teller who handles deposits and disbursement. In an attempt to improve her motivation, Carrie's manager asks her to distribute traveler's checks and sell certificates of deposit as well. Though the additional tasks are not more challenging than what Carrey has been doing, they give her more to do. This is an example of ________. A) job enrichment B) cross-training C) job enlargement D) benchmarking Answer: C

Example Questions: John stayed late in order to finish up a project. When his manager found the completed project on her desk, she immediately sent John an email praising his good work and thanking him for going the extra mile. In this example, John's manager uses ________. A) transactional analysis B) cognitive restructuring C) negative reinforcement D) positive reinforcement Answer: D

Example Questions: ________ refers to a statement of the tasks involved in a given job and the conditions under which the holder of a job will work. A) Job specification B) Job description C) Succession planning D) Job analysis Answer: B

Example Questions: Quality of hire measures ________. A) the amount of money spent in hiring and training new employees B) the level of productivity of employees in the probationary period C) how closely incoming employees meet the company's needs D) the percentage of the workforce that leaves every year Answer: C

Example Questions: Salary differs from wages in that the salary ________. A) falls under the purview of a certain law B) is based on a fixed amount per year C) relates to exempt employees D) is paid by the unit of time Answer: B

Example Questions: ________ refers to an incentive program that rewards employees for meeting specific, individual goals. A) Pay for performance B) Knowledge-based pay C) Salary D) Commission Answer: A

Example Questions: ________ refers to a company-sponsored counseling or referral plan for employees with personal problems. A) Health savings accounts B) Employee assistance program C) High-deductible insurance D) Retirement plans Answer: B

Example Questions: ACZ Pharmaceuticals, an American multinational pharmaceutical corporation, conducts "HIV/AIDS Awareness" camps in various cities across the United States. The firm also uses this campaign to promote its latest range of drugs. In this example, ACZ Pharmaceuticals uses ________. A) place marketing B) social commerce C) stealth marketing D) cause-related marketing Answer: B

Example Questions: ________ utility is the benefit provided by making the company's products available where customers want to purchase them. A) Form B) Possession C) Place D) Time Answer: C

Example Questions: Creating new goods and services for a firm's current markets is called ________. A) market penetration B) product development C) market development D) diversification Answer: B

Example Questions: Majestic Shoes Inc., an international shoes and footwear manufacturing firm, groups its customers according to the region in which they live. The firm markets its range of waterproof, cold-weather footwear in mountainous regions. In this example, Majestic Shoes Inc. uses which of the following targeting strategies? A) demographic segmentation B) psychographic segmentation C) horizontal integration D) geographic segmentation Answer: D

Example Questions: Which of the following is true about concentrated marketing? A) It ignores differences among buyers. B) It refers to firms that use the same marketing mix for the entire market. C) It allows a firm to focus all its time and resources on a single type of customer. D) It refers to firms that use a different marketing mix for each marketing segment. Answer: C