Customers and potential customers who share a common need that can be satisfied by a specific product and are willing, able, and have the authority to make the exchange

Utility

a.     The usefulness or benefit customers receive from a product. Makes consumers feel they are buying more than a product; they are purchasing a lifestyle

Utility - time, place, possession, form, info

                   Time Utility: the benefit marketing provides by storing products until they are needed. Ex. some women rent their wedding dresses instead of buying them and only wearing them once. Is the product available when I want it? If so, provides time utility

      Place Utility: is the product where I want it? Making products available where customers want them. Ex. The most sophisticated wedding gown sewn in New York is of no use to a woman in Kansas unless shipped on time

                 Possession Utility: allowing customers to own, use and enjoy a product and sometimes when you otherwise wouldn’t be able to. Ex. The bridal store provides access to a range of styles and colors that would not be available to a woman outfitting a bridal party on her own. Ex. Best Buy selling you a TV on a payment plan

                 Form Utility: company adds value by transforming raw materials into a finished good. Ex. When a dress manufacturer combines silk, thread, and zippers to create a bridesmaid’s gown

                  Information: comes in the form of informed staff who are knowledgeable about the product and can inform you about the product you are interested in. Ex. staff at Best Buy may be more knowledgeable about a TV than the staff at Costco

The benefits a customer receives from buying a good or service. Something is valuable if the benefits outweigh the sacrifice

    Benefits – Sacrifice = Value

Components of Value

Image, Personal, Services, Product

Monetary cost, energy cost, psychic cost, all yield total customer cost

Societal marketing orientation (New Era) 

                The new era has an emphasis on satisfying the broader needs of society (employees, stockholders, etc). This is like marketing orientation, but there is a little something more. Building long-term relationships, not just satisfying a one-time need. Ex. Patagonia and the footprint chronicles

A company that practices the marketing concept. Determining and then satisfying the customers needs and wants at a profit

Selling orientation

   Getting the product out of the door. Reducing inventories. Product supply is greater than the demand. Under the selling orientation, they are one-time purchases, and do not establish relationships with the customer, unlike the societal marketing orientation. They do not care if the customer returns or not; repeat is irrelevant in the selling orientation

Competitor orientation

 The focus of this orientation is on competitor intelligence. Learning and reacting to what the competition is doing is key. Ex. Home Depot and Lowes – There is always a Home Depot close to Lowes

Production orientation

     The emphasis is on making the product better. Production efficiencies are best when demand surpasses supply. Encompasses entire organization

Marketing Myopia

   Being short-sided/limited. A company wants to avoid being “myopic” meaning too vague in your product. Focusing on the product rather than the customer

     Ex. Starbucks taking coffee out of their name so that their brand is not just limited to coffee

SWOT Analysis

   The second step in strategic planning in which the internal and external environments of an organization are assessed. Managers often synthesize their findings from a situation analysis into a formal we call SWOT analysis. (Strengths, Weaknesses, Opportunities & Threats)

SWOT Analysis: Internal 

•  Internal environment means all of the controllable elements within a firm, such as employee relations and technologies that directly influence how well the firm operates. What does the firm do well that other firms have a difficult time duplicating? What patents does it hold? A firm’s physical facilities can be a strength or weakness as well
• Internal strengths and weaknesses often lie in the firm’s employees and the firm’s human and intellectual capital. Ex. training and loyalty

                          Assessing a firm’s external environment can identify opportunities and threats

• The external environment is global so managers and marketers must take market trends, the current economy, competition, technology, laws, ethics, and social cultural trends into consideration
•  Unlike internal factors, that managers can control, external elements cannot be directly controlled so managers must respond to them through its planning process

SWOT Interactions

                          Leverage: Strength + Opportunities

                       Vulnerability: Strengths + Threats

                               Constraint: Weaknesses + Opportunities

        Problem: Weaknesses + Threats

BCG Growth Matrix: Star

HIGH industry growth as well as a HIGH relative market

                                               i.     To remain a star requires much investment

                                             ii.     It generates relatively high revenues

                                            iii.     Strategies = Build: Increase market share

BCG matrix: Cash Cow  

     Low industry growth and High relative market share

A cash cow owns the majority of the market, but the market is not growing very fast. Ex. Apple & iPoda.    

• Requires less investment and generates relatively high revenues
•  Supports other businesses
•     Strategies = Hold: Preserve market share

BCG matrix: Dog  

SBUs with a low market share in an industry with low growth

a.     Offer specialized products in limited markets that are not likely to grow quickly

b. Strategies = Divest: Get rid of SBU

SBUs with low market shares in fast-growth markets

a.     Big industry but doesn’t really affect anything. It shows that a business has failed to compete successfully; perhaps their products offer few benefits than competing products. Or maybe their prices are too high or their advertising is too weak

b.     Potential to become a star as a question mark

c.     Requires much investment and generates relatively low revenues

d.     Sometimes called the problem child

e.     Strategies = Harvest: Focus on the short term profits

Product standardization 

   Advocates of product standardization argue that the world has become so small that basic needs and wants are the same everywhere. Levitt 1983. Developing standardized products marketed worldwide with a standardized marketing mix. Essence of mass marketing mix. Good in theory, bad in practice. 

  Advocates of product localization feel that the world is not that small and that you need to tailor products and promotional messages to local environments because they are all different. Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction. Essence of segmentation. “Think globally, act locally”. Examples: Coke, McDonalds 

Independent/Dependent variables

1. Independent Variable: Manipulated by researcher. Controlled or selected by the experimenter to determine its relationship to an observed phenomenon
2. Dependent Variable: Measured by researcher. Not directly controlled
1. Independent is the variable that is changed and Dependent is the variable that is observed

Advantages/disadvantages: Mail Questionnaires

                                      Advantages: respondents feel anonymous, low cost, good for ongoing research

                                Disadvantages: take long to be returned, low rate of response/may not return, inflexible, length is limited by respondents interest in the topic, questions may be unclear

Advantages/disadvantages: Telephone Interviews

                                          Advantages: fast, high flexibility in questioning, low cost, limited interview follow-up

                                       Disadvantages: decreasing levels of respondent cooperation, limited questionnaire length, high likelihood of misunderstanding, respondents cannot view materials, cannot survey households without phones, consumers screen call, and do not call lists

Advantages/Disadvantage:Face-to-Face Interviews

                                         Advantages: flexibility in questioning, can use long questionnaires, take a lot of time, visuals available

                                       Disadvantages: high cost, interviewer bias a problem

Advantages/disadvantages:  Online Questionnaire

                                          Advantages: questioning very flexible, low cost, no interviewer bias, no geographic constrictions, visuals available

                                    Disadvantages: unclear who is responding, no assurance that respondents are being honest, limited length, unable to determine whether respondents understands the questions, self-selected samples

Advantgaes/Disadvantages:   Broad Advantages & Disadvantages

                                         Advantages: Answers exact specific questions and you can see the results

                                    Disadvantages: Time consuming and expensive

Data Mining

 Process which analysts sift through data to identify unique patterns of behavior among different customer groups

   Ex. Nordstrom has a database with all their customer information to better serve you

     Ex. Hotels remember exactly what you ordered for breakfast the last time you stayed with them

Concentrated: Only focus on one segment (do what you do best). Most COs start with this. Focusing a firm’s efforts on offering one or more products to a single segment

Differentiated: Different product offerings for each segment. Developing one or more products for each of the several distinct customer groups and making sure these offerings are kept separate in the marketplace. Ex. Toyota has distinct product lines that cater to multiple customer groups (Toyota, Lexus & Scion)

Undifferentiated: One strategy for everyone. Mass Marketing – appealing to a broad spectrum of people. Ex. Wal-Mart

Custom Marketing: Tailors specific products and the messages about them to individual customers

Mass Communization: Modifies a basic good or service to meet the needs of an individual. Ex. Dell.com and personalizing your computer 

Decision making process

Step 1: Problem Recognition 

Step 2: Information Search

Step 3: Evaluate Alternatives

Step 4: Product Choice

Step 5: Postpurchase Evaluation 

Postpurchase Dissonance

     High involvement, usually for expensive items. Ex. House or Car. Marketers encourage consumers to use extended problem solving when their products are not being selected, want customers to consider them as an alternative (ex. Pepsi challenge an alternative to Coca Cola)

Medium involvement. Ex. Jeans

Routine/Habitual Problem Solving 

    Low involvement, habit brand purchasing. Ex. Milk or Newspapers. Marketers encourage consumers to use this when their products are being selected, reward them for being loyal customers

Stimulus generalization

Me Too branding is a strategy in which you make your product look very similar to one that is already produced by other companies and is already on the market – also known as the

Halo Effect

                                               i.     Ex. Vitamin Water looks very similar to Gatorade

                                             ii.     Ex. Sony is a family brand, they make radios, TV’s, etc

All & Tide are another example of Me Too products

Evoked set

 Small set of choices that you would even consider. It is the shortlist of potential products that the consumer has to choose from within the purchasing decision making process. Ex. which bike to choose

Elaboration Likelihood Model; central/peripheral route to persuasion

  How attitudes were formed and how change was developed and distinguishes between two routes of persuasion

                             Central Route (High Involvement – Facts): The subject considers the idea logically
Ex. Purchasing a home

                           Peripheral Route (Low Involvement – Pictures & Colors): The audience uses preexisting ideas and superficial qualities to be persuaded

1.     Ex. Grocery shopping

2.     Ex. The majority of beverages like Coca Cola use the peripheral route

New Task Buying

Expensive, high-risk, and extensive decision-making. Ex. Purchasing a jet

Modified Rebuy

Straight Rebuy

Crowdsourcing

Outsourcing

Stages of Adoption 

Interest (create buzz, teasers)

Evaluation, provide information

Trail, experience the product

Confirmation, determine costs vs. benefits

Brand equity

     The worth of a company’s brand name in comparison to others in the same market

Characteristics of a service

Intangible: cant see it

Perishable: cant save a service for a later time. Ex. you cannot save a hotel room for a later time

Inseparable: manufactured and consumed at the same time.

Ex. cant bring a Thai massage back with you

Variable: service can change or vary

Functions of a distribution channel

-Provides time, space and ownership utility, but no form because the products are already finished

-Increases efficiency flow from many different manufacturers to large number of consumers

-Transportation and storage functions

-High risk in taking damaged products

-Facilitation Functions such as offering credit to buyers

-Communication and transaction functions

-Efficiency Creation

Efficiency Creation: Breaking Bulk

Channel leader

1. Dominant firm that controls channels
2. Have some form of power relative to the other members of the channel

Channel power

a.     Gains legitimate power when it has legal authority to call the shots

b.     Gains economic power when it has the ability to control resources

c.     Has a reward or coercive power if it engages in exclusive distribution and has the ability to give profitable products and to take them away from the channel intermediaries

1. Price is a value customers give up, or exchange, to obtain the desired product
2. Payment may be in the form of anything that has value to the other party such as goods, services, or favors
3. Opportunity Cost: cost of the thing you give up. Ex. come to class and miss out on accident event in Terrell Mall – by going to class you are giving up the opportunity to witness the event

Promotional budgets, techniques: Bottom-Up

                                      i.     Start at the beginning by identifying promotion goals and allocate enough money to accomplish them

                                    ii.     Objective Task: What do we need to accomplish goals? Get money to do it

                                   iii.     Set up the goal and see how much we need to put in for reaching the goal

                                   iv.     More expensive because of extensive research needed

                                    v.     Best approach with a greater amount of money

                                      i.     Requires top management to establish the overall amount of money that the organization allocates for promotion activities

                                    ii.     “We got a bucket of money, how do we split it up?”

                                   iii.     Percentage of sales: promotional budget is based on last year’s sales or an estimate of the present year’s

                                   iv.     All you can afford

                                    v.     More common because it is easier

Promotional budgets, techniques: Competitive Parity

  Looking at what the competition is spending then you spend the same

Greenwashing: Sin of Hidden Trade-Off

                            A claim suggesting a product is green based off a narrow set of attributes without attention to other important environmental issues. Paper, for example, is not necessarily environmentally preferable just because it comes from a sustainably-harvested forest. Other important environmental issues in the paper making process, such as greenhouse gas emissions, or chlorine use in bleaching may be equally important

Greenwashing: Sin of No Proof

                        An environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are facial tissues or toilet tissue products that claim various percentages of post-consumer recycled content without providing evidence

Greenwashing: Sin of Vagueness

                          A claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. “All natural” is an example. Arsenic, uranium, and mercury are all naturally occurring and poisonous. All natural isn’t necessarily green

Greenwashing: Sin of Irrelevance

An environmental claim that may be truthful but is unimportant or unhelpful. Ex. CFC-free is a frequent claim but is irrelevant because CFCs are banned by law

Claim that may be true within the product category, but that risks distracting the consumer from the greater environmental impacts of the category as a whole. Organic cigarettes are an example as might the fuel efficient sport utility vehicle

Greenwashing: Sin of Fibbing

Environmental claims that are simply false. Most common examples were products falsely claiming to be Energy Star certified or registered

Greenwashing: Sin of Worshipping False Labels 

                         A product that, through either words or images, gives the impression of third-party endorsement where no such endorsement exists; fake labels

Q-scores

·      a way a company can evaluate the influence of someone (like celebrities)

·      A measurement of the familiarity and appeal of a brand, company, celebrity, or show. The higher the score, the more highly regarded the item or person is among the group that is familiar with them.

·      Measured by samples of the population

Push/Hype – Opt Out

                        i.     The default is to collect information unless the consumer takes an affirmative action to prevent the collection of data. No consent required, everything is pre-checked

                       ii.     Spam

Pull/Buzz – Opt In

                        i.     Requires an affirmative action by the consumer to allow collection and use of consumer information. Consent required; consumer chooses

                       ii.     BACN (Knuff Knugget): we want BACN not Spam 

Bland Automated Community Notification (BACN)

1.     It is by consent, we request these notifications such as deals from Hotels or Alaska Airlines

2.     The more transparent you are as an organization, the more likely you are to create buzz. Openness breeds trust and benefits the brand, bringing in friends and allies

3.     We can see the deals now or see them later

4. A pull concept 

Touchpoint analysis

a.     Experiences that get talked about add up to conversations & you can measure this to understand what people are saying about you

b.     People experience different aspects of brand in different ways and places. Understanding these experiences drivers s the first step in tapping word-of-mouth. Doing something with them is the second  (KNUFF KNUGGET!)

c.     There are multiple views of touchpoint analysis. Choose the one(s) that expose the aspects of your business that matter to your customers, and, that you can control

a.     Positive conversation, value to customer, and replicable experience

d.     Touchpoint Optimization: Identify and focus on what gets talked about. 

·      Purchasing power parity (PPP)

·      Assumption is that the Big Mac in any country should equal the price of the Big Mac in the US after being converted to a dollar price 

Heider’s Balance Theory (balance triangle) 

·      We try to stay balanced at all times

·      All positives, or two negatives on two sides (to balance it) and then one positive

·      If all 3 are negative, one has to be changed to make one of them positive

·      Can be used when people don’t like certain celebrities 

Types of salesperson compensation plans

a.     Straight Commission Plan: Does not reward performance, reduces pushy sales people, likely to facilitate transactional selling

b.     Commission Withdraw Plan: Get paid weekly, owe company money

c.     Straight Salary Compensation Plan: Relationship selling

d.     Quota Bonus Plan: Meet quota and receive a bonus

e.     Combination Plan: Most companies do this

a.     How we find out if we have brand advocates – people talking positively about the company

b.     Ask customers how likely they are to recommend the company

c.     Identify score by scale from 0 -10, subtract high scores from low scores, the higher the score means the more you have people recommended your product to others

                    i.     Share of promoters (9 – 10)

                  ii.     Share of detractors (0 – 6)

                 iii.     Likelihood of Recommendation (0 to 10)

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= the confidence consumers have in the economy, they measure it by surveys and people ask how a company is doing now and how they will do in the future

Advantages of social media

a.     Potential

a.     Communication economies of scale

b.     Build brand communities

c.     Create customer loyalty

d.     Diffusion of potential problems, immediate response

e.     Real-time consumer perceptions of your firm

f.      Endless pot of gold – who will write success stories?

b.     Low cost, accessible to everyone, global reach

c.     If the average user has 150 friends and a company has 50,000 followers, that’s over 7 million people you can reach

Home country is the focus; associated with attitudes of national arrogance and supremacy

•Management focus is to do in host countries what is done in the home country

•“My product can be sold everywhere without adaptation.” “We think we’re the best”

     Polycentric

•Opposite of ethnocentrism

•Management operates under the assumption that every country is different; the company develops country-specific strategies

–Company operates differently in each host country based on that situation

–100% adaptation

•Decisions are decentralized 

Regiocentric

•Region becomes the relevant geographic unit (rather than by country)

•Management orientation is geared to developing an integrated regional strategy

–European Union

–NAFTA 

 Geocentric 

•Entire world is a viewed as potential market.

•Managerial goal is to develop integrated world market strategies:

-Global companies serve world markets from a single country and tend to retain association with a headquarters country

-Transnational companies serve global markets and acquire resources globally; blurring of national identity 

Metrics to determine successful social media strategy

a.     Non-traditional forms of marketing rely on non-traditional metrics

b.     Is the number of followers or fans a meaningful metric?

                                      i.     Clicks, time on site, mentions about you and/or competitor

                                    ii.     Are you listening to the right people

1. Successful social network marketing resembles a conversation with your customers

b.     As a company, we want to be present in their community, meaning being relevant in the online community in which your customers interact. You are part of the conversation with the customers – you are listening and present in their community

c.     Just because you said something doesn’t mean people are interested

d.     Ex. Alec Baldwin and Greyhound – Greyhound listened to Alec Baldwin’s online complaint comparing American airlines to Greyhound Bus Lines and offered a free trip and brought up facts about people who like them

Understand the word-of-mouth impact in an online setting

a.     It takes money to drive the purchase funnel (marketer generated). It takes substantial product or experience to drive the flywheel. Over the long-term, the Flywheel always wins

b.     Low Hanging Fruit

a.     Customers will talk about even the most little things about their experiences with an organization in an online setting

b.     Ex. laptop bag left alone on sidewalk in downtown Boston by bellboy. Picture was posted online by smart phone then many people commented and reacted to it

Corporate Social Responsibility

1.     Corporations see a growing need to be responsible, a New Era corporate orientation

2.     Improve company image through different activities

3.     Giving back to the community

a.     Philanthropic

                          b. Environmental 

A measurement approach that gauges the difference between a customer’s expectation of service quality and what actually occurs. By identifying specific places in the service system where there is a gap between what customers expect and the service they received. Companies use this to get a handle on what needs to improve