marketing strategy Marketing in Today’s Economy 1 1 C H A P T E R

The Challenges and Opportunities Of Marketing in Today’s Economy Power Shift to Customers Massive Increase in Product Selection Audience and Media Fragmentation Changing Value Propositions Shifting Demand Patterns New Sources of Competitive Advantage Privacy, Security, and Ethical Concerns Unclear Legal Jurisdiction 1-2

The Challenges and Opportunities Of Marketing in Today’s Economy Power Shift to Customers –Increased access to info Massive Increase in Product Selection –The variety and assortment of offerings –Global sourcing Audience and Media Fragmentation –Increased media selections and limited time allocation to each Changing Value Propositions –Value proposition: the whole bundle of benefits the firm promises to deliver, not just the benefits of the product itself View offering as commodities, customers will turn to the most convenient, lest expensive alternatives 1-3

The Challenges and Opportunities Of Marketing in Today’s Economy Shifting Demand Patterns due to Tech Changes –Record industry, storage medias, and... New Sources of Competitive Advantage –Networking to customers –Partnership and alliances to other businesses Privacy, Security, and Ethical Concerns –The biggest obstacle to e-commerce Unclear Legal Jurisdiction –Global markets 1-4

The Children’s Online Privacy Protection Act (COPPA) 1-5 Exhibit 1.2

Basic Marketing Concepts 1-6 Marketing (AMA 2005 definition) –“…an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” –An organizational function like... –A set of processes, not an isolated event –Creating, communication, and delivering value –Include goods and services –Value: the customer’s evaluation of the difference bet. benefits and costs –Something that has utilities to somebody –Managing customer relationships –Relationship is continuous, and mutually beneficial

Basic Marketing Concepts 1-7 What Is a Market? Market –A collection of buyers and sellers Marketplace –A physical location where buyers and sellers meet to conduct transaction Marketspace –Electronic marketplaces that are not bound by time or space –Shift from marketplace to marketspace –Those who are slow in the transition – who are they?

Basic Marketing Concepts 1-8 Metamarket –A cluster of closely related goods and services that center around a specific consumption activity Metamediary –Provides a single access point where buyers can locate and contact many different sellers in the metamarket

Basic Marketing Concepts Common Metamarkets and Participants 1-9 Exhibit 1.3

Basic Marketing Concepts 1-10 What is Exchange? Exchange –Process of obtaining something of value by offering something in return Five Conditions of Exchange –There must be at least two parties to the exchange. –Each party has something of value to the other party. –Each party must be capable of communication and delivery. –Each party must be free to accept or reject the exchange. –Each party believes it is desirable to exchange with the other party.

Basic Marketing Concepts People -Places -Experiences and Events -Real or Financial Property -Organizations What is a Product? Product –Something that can be acquired via exchange to satisfy a need or a want Examples -Goods -Services -Ideas -Information -Digital Products

Basic Marketing Concepts 1-12 Utility –Ability of a product to satisfy a customer’s desires Five Types of Utility –Form Utility –Time Utility –Place Utility –Possession Utility –Psychological Utility

1-13 Basic Marketing Concepts –Form Utility –Attributes or features that set them apart from the competition; includes raw materials, ingredients, or components –Time Utility –Availability when customers want them –Available now rather than later

1-14 Basic Marketing Concepts –Place Utility –Availability where customers want them –Possession Utility –Transfer of ownership or title from marketer to customers OR possession itself –Credits, installments, financing arrangements –Psychological Utility –Delivery of positive experiential or psychological attributes –Products with status symbols, social desirability, and less guilty feeling

Discussion Question UtilitiesOffering Example Form Time Place Possession Psychological 1-15 What offerings can you relate to the utilities?

Discussion Question ProductPricePlacePromotion Form Utility Time Utility Place Utility Possession Utility Psychological Utility 1-16 How are the offerings related to the 4 P’s?

1-17 Major Marketing Activities and Decisions Strategic Planning –Strategy Setting objectives and game plan or roadmap for getting there –Tactical Planning Narrow but specific strategy regarding specific markets or market segments and the development of marketing programs –Marketing Plan More specific game plans for connecting products and markets in ways that satisfy both organizational and customer objectives

Major Marketing Activities and Decisions Social Responsibility and Ethics –Social Responsibility Organization’s obligation to maximize its positive impact on society while minimizing its negative impacts –Marketing Ethics The principles and standards that define acceptable conduct in marketing activities –What kinds of ethical issues are there in marketing strategy? 1-18

Major Marketing Activities and Decisions Research and Analysis –Internal Analysis Objective review of internal info regarding to the firm’s current strategy and performance, as well as the current and future availability of resources –Competitive Intelligence Analyzing the capabilities, vulnerabilities, and intention of competing firms. –Environmental Scanning Analysis of economic, political, legal, technological, and cultural events and trends that affect the future of the organization and its marketing efforts. –Situation Analysis = Sum (internal, competitive and environmental analysis) 1-19

Major Marketing Activities and Decisions Developing Competitive Advantage –Competitive Advantage Something that the firm does better than its competitors and gives it an edge in serving customers’ needs –SWOT Analysis 1-20

Major Marketing Activities and Decisions Marketing Strategy Decisions How the firm will fulfill the needs and wants of its customers A plan for how the organization will use its strengths and capabilities to match the needs and requirements of the market Marketing strategy > marketing programs –Market Segmentation and Target Marketing Process: the division of the total market into smaller, relatively homogeneous groups or segments that share similar wants or characteristics Result: the identification and selection of one or more of target markets 1-21

Major Marketing Activities and Decisions Marketing Strategy Decisions (Continued) –Product Positioning Establishing a mental image, or position, of the product offering relative to competing offerings in the minds of target buyers –Product Decisions Connection bet. the product’s benefits and the customers’ needs Regarding design, style, feature, package design, branding, trademarks, warranties, new product development –Pricing Decisions Leads to revenue and profit; Directly connected to customer demand Easy to change; Major quality cue for customers Regarding price setting, price revisions, bundle pricing, etc. 1-22

Major Marketing Activities and Decisions 1-23 Marketing Strategy Decisions (continued) –Distribution and Supply Chain Decisions –Getting the product to the right place, at the right time, in the right quantities, at the lowest possible cost. Supply Chain Management: managing a long line of activities from the sourcing of the raw materials to the final products to the end users. Important due to the product availabilities and distribution cost

1-24 Major Marketing Activities and Decisions Marketing Strategy Decisions (continued) –Promotion Decisions Integrated Marketing Communications (IMC) Coordination of all promotional activities (media advertising, direct mail, personal selling, sales promotion, PR, packaging, store displays, website design, personnel, and...) to produce a unified, customer-focused message

1-25 Major Marketing Activities and Decisions Implementation and Control –Marketing Implementation: the process of executing the marketing strategy –Includes revisions of planning –Involves the fifth P of the marketing programs: People –Recruiting, training, motivating the people Developing and Maintaining Customer Relationships –Transactional Marketing –Relationship Marketing

1-26 Major Marketing Activities and Decisions Exhibit 1.4

1-27 Unending Change People-Driven Nature of Marketing Lack of Rules for Choosing Marketing Activities Increasing Demands of Customers Shifts in Markets and Competition Aggressive Cost-Cutting Measures Increasing Expansion into Foreign Markets Increasing Cooperation with Supply Chain Partners and Competitors Taking on the Challenges of Developing Marketing Strategy

1-28 Unending Change –Customers, competitors, and even the marketing organization changes People-Driven Nature of Marketing –Understanding customers as well as other stakeholders is critical –Marketing strategy is about people serving people Lack of Rules for Choosing Marketing Activities –No formula or universal rules of marketing effectiveness Increasing Demands of Customers –High expectations about offerings Taking on the Challenges of Developing Marketing Strategy

1-29 Shifts in Markets and Competition –Competing in Mature Markets Increasing commoditization Little real differentiation among product offerings What are the characteristics of mature markets? –Overall Decline in Brand Loyalty & Increase in Price Sensitivity Aggressive Cost-Cutting Measures –Elimination of products or product line, increase in direct distribution Taking on the Challenges of Developing Marketing Strategy

1-30 Increasing Expansion into Foreign Markets Increasing Cooperation with Supply Chain Partners and Competitors Taking on the Challenges of Developing Marketing Strategy

1-31 American Customer Satisfaction Index Exhibit 1.5

Discussion Question The text argues that marketing possesses very few rules for choosing the appropriate marketing activities. Can you describe any universal rules of marketing that might be applied to most products, markets, customers, and situations? 1-32

1-33 Give you a framework for organizing the planning process and the ability to see how all of the pieces fit together A mindset or way to think about marketing strategy Goal in This Textbook