Unit 1: Analysis Assignment Due 19 JAN 2020
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Each question response should consist of at least 150 words.
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Principles of Marketing 4.0
Jeff Tanner and Mary Anne Raymond
©FlatWorld 2018
1
PUBLISHED BY:
FLATWORLD
©2019 BY FLATWORLD. ALL RIGHTS RESERVED. YOUR USE OF THIS WORK IS SUBJECT TO THE LICENSE AGREEMENT AVAILABLE.
NO PART OF THIS WORK MAY BE USED, MODIFIED, OR REPRODUCED IN ANY FORM BY ANY MEANS EXCEPT AS EXPRESSLY PERMITTED UNDER THE LICENSING AGREEMENT.
©FlatWorld 2018
CHAPTER 1
What Is Marketing?
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KEY QUESTIONS
What is marketing?
Who does marketing?
Why study marketing?
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LEARNING OBJECTIVE
Define marketing and outline its components.
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DEFINING MARKETING
As defined by the American Marketing Association
THE ACTIVITY, SET OF INSTITUTIONS, AND PROCESSES FOR CREATING, COMMUNICATING, DELIVERING, AND EXCHANGING OFFERINGS THAT HAVE VALUE FOR CUSTOMERS, CLIENTS, AND SOCIETY AT LARGE.
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COMPONENTS OF MARKETING
There are four components of marketing:
Creating
Communicating
Delivering
Exchanging
The traditional way of viewing the components of marketing is via the four Ps:
Product
Promotion
Place
Price
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VALUE: THE CENTER OF MARKETING
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A MATHEMATICAL DEFINITION OF VALUE
Value:
The benefits buyers receive that meet their needs.
Ultimately determined by the customer.
What the customer gets by purchasing and consuming a company’s offering.
Hassle:
The time and effort the consumer puts into the shopping process.
VALUE* = BENEFITS RECEIVED – (PRICE + HASSLE)
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MARKETING CONCEPT
A philosophy of creating value:
Marketers seek to satisfy customer wants and needs.
Every employee in the company is focused on serving the customer at a profit.
These firms are said to be market oriented.
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ORIENTATIONS OF MARKETING
Production orientation: companies competed by reducing production costs.
Gave rise to the production era.
Selling orientation: companies pushed their products by heavily emphasizing advertising and selling.
Gave rise to the selling era.
Product orientation: companies focused on product innovation.
Gave rise to the marketing era.
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ERAS OF MARKETING
Value era: companies emphasize creating value for customers.
One-to-one era: companies compete by building relationships with customers one at a time and seek to serve each customer’s needs individually.
Transformative era: marketing is transforming complete companies and products to serve customers more completely.
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CREATING OFFERINGS THAT HAVE VALUE
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TANGIBLE GOOD
INTANGIBLE SERVICE
PRICE
COMMUNICATING OFFERINGS
Communicating:
Describing the offering and its value to your customers.
Learning from customers what it is they want and like.
Customers get a chance to tell the company what they think.
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COMMUNICATING OFFERINGS
Many forms of communication may be used:
Advertising on the web, TV, billboards, or magazines
Product placement in movies and on TV
Salespeople
News media
Special events
Sponsoring events
Describing the offering and its value for the customer.
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DELIVERING OFFERINGS
Delivering an offering:
More than simply getting the product into the hands of the user
Making sure that the user understands how to get the most out of the product and is taken care of if he or she requires service later.
Value is delivered in part through a company’s supply chain:
Includes a number of organizations and functions that mine, make, assemble, or deliver materials and products from a manufacturer to consumers.
Logistics:
The actual transportation and storage of materials and products.
The primary component of supply chain management.
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EXCHANGING OFFERINGS
Exchanging: the act of transacting value between a buyer and a seller.
Exchange occurs when consumers acquire, consume, and dispose of products and services, including during the consumption phase.
Sometimes for cash, sometimes for credit cards.
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KEY TAKEAWAYS
The focus has changed from the 4 Ps to value:
Product is now about creating value.
Price is now about exchanging value.
Place is now about delivering value.
Promotion is now about communicating value.
Value:
The benefits an individual receives.
The price the consumer paid.
The time and effort the consumer expended.
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LEARNING OBJECTIVE
Describe how the various institutions and entities that engage in marketing use marketing to deliver value.
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WHO DOES MARKETING?
Everyone does some form of marketing.
Here we will focus on organizations:
For-profit companies like Wal-Mart, P&G, and local businesses.
Non-profits like charities, schools, hospitals, governments.
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FOR-PROFIT COMPANIES
For-profit companies do marketing:
McDonald’s
Procter & Gamble (the makers of Tide detergent and Crest toothpaste)
Walmart
For-profit companies can be defined by the nature of their customers.
A B2C company sells products to be used by consumers.
B2B company sells products to be used by companies, organizations, and government agencies and entities.
Companies that engage in marketing can be categorized as:
Manufacturer
Retailer
Wholesaler
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NONPROFIT ORGANIZATIONS
Nonprofit organizations also engage in marketing.
This called nonprofit marketing.
Government entities also engage in marketing activities.
Social marketing is marketing conducted to achieve social objectives.
Social marketing can be done by:
Government agencies
Nonprofit institutions
Religious organizations
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MARKETING YOU
Completing this course will help you to more effectively:
Create value.
Communicate and deliver that value to the receiver.
Receive something in exchange.
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KEY TAKEAWAYS
Marketing can be thought of as a set of business practices that for-profit organizations, nonprofit organizations, government entities, and individuals can utilize.
When a nonprofit organization engages in marketing activities, this is called nonprofit marketing.
Marketing conducted in an effort to achieve certain social objectives is called social marketing.
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LEARNING OBJECTIVE
Explain the role marketing plays in individual firms and society as a whole.
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THE IMPACTS OF MARKETING ON SOCIETY
Enables profitable transactions to occur
Delivers value
Benefits society
Costs money
Offers people career opportunities
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OPPORTUNITIES AVAILABLE IN MARKETING
Marketing research
Merchandising
Sales
Advertising
Product development
Direct marketing
Digital media
Event marketing
Non-profit marketing
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CRITICISMS OF MARKETING
It is costly.
Prices could be lower.
It fuels consumerism.
Consumers want more and more products and services they don’t need.
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KEY TAKEAWAYS
By facilitating transactions, marketing delivers value to both consumers and firms.
At the broader level, this process creates jobs and improves the quality of life in a society.
Marketing can be costly, so firms need to hire good people to manage their marketing activities.
Being responsible for both making money for your company and delivering satisfaction to your customers makes marketing a great career.
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LEARNING OBJECTIVE
Understand and outline the elements of a marketing plan as a planning process.
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MARKETING’S ROLE IN THE ORGANIZATION
Marketing is a functional area in companies.
Just like operations and accounting are.
Marketing activities do not occur separately from the rest of the company.
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MARKETING PLAN
Marketing strategists develop a marketing plan from:
Corporate strategy
Company mission
An understanding of the market
STRATEGY FOR IMPLEMENTING THE COMPONENTS OF MARKETING: CREATING, COMMUNICATING, DELIVERING, AND EXCHANGING VALUE.
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STEPS IN CREATING A MARKETING PLAN
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THE CHANGING MARKETING ENVIRONMENT
Marketing is changing along with the way business is conducted.
There are several themes, or important trends:
Digital information and big data
Ethics and social responsibility
Sustainability
Service-dominant logic
Metrics
A global environment
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KEY TAKEAWAYS
A company’s marketing plan flows from its strategic plan. Both begin with a focus on customers.
The essential components of the plan are understanding customers, creating an offering that delivers value, communicating the value to the customer, exchanging with the customer, and evaluating the firm’s performance.
A marketing plan is influenced by environmental trends such as social responsibility, sustainability, service-dominant logic, the increased availability of data and effective metrics, and the global nature of the business environment.
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Principles of Marketing 4.0
Jeff Tanner and Mary Anne Raymond
©FlatWorld 2018
1
PUBLISHED BY:
FLATWORLD
©2018 BY FLATWORLD. ALL RIGHTS RESERVED. YOUR USE OF THIS WORK IS SUBJECT TO THE LICENSE AGREEMENT AVAILABLE.
NO PART OF THIS WORK MAY BE USED, MODIFIED, OR REPRODUCED IN ANY FORM BY ANY MEANS EXCEPT AS EXPRESSLY PERMITTED UNDER THE LICENSING AGREEMENT.
©FlatWorld 2018
CHAPTER 2
Strategic Planning
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LEARNING OBJECTIVE
Explain the meaning of a value proposition.
Understand why a company may develop different value propositions for different target markets.
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THE VALUE PROPOSITION
It shows why the good is superior to competing goods.
The value proposition answers the questions:
“why should I buy from you?”
“why should I hire you?”
THIRTY-SECOND “ELEVATOR SPEECH” STATING THE SPECIFIC BENEFITS A PRODUCT OR SERVICE OFFERING PROVIDES A BUYER
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THE VALUE PROPOSITION
Firms identify their target markets when they are developing their value propositions.
The value proposition tells each group why they should buy a product or service.
Once the benefits are clear, firms must develop strategies that support the value proposition.
The value proposition serves as a guide for this process.
Individuals and students should also develop their own personal value propositions.
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THE VALUE PROPOSITION
The acronym S.O.R.E. is beneficial for developing value propositions:
Simplifier: take complex scenarios and simplify them so that everyone can understand.
Organizer: take the lead in organizing opportunities.
Resolver: work towards efficient and effective resolutions to achieve results.
Executor: take pride in executing to achieve results.
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KEY TAKEAWAYS
A value proposition is a thirty-second “elevator speech” stating the specific value a product or service provides to a target market.
Firms may develop different value propositions for different groups of customers.
The value proposition shows why the product or service is superior to competing offers and why the customer should buy it or why a firm should hire you.
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LEARNING OBJECTIVES
Explain how a mission statement helps a company with its strategic planning.
Describe how a firm analyzes its internal environment.
Describe the external environment a firm may face and how it is analyzed.
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STRATEGIC PLANNING
Typically, it is a long-term process.
The strategic planning process includes:
Conducting a situation analysis
Developing the organization’s:
Mission statement objectives
Value proposition
Strategies
PROCESS THAT HELPS AN ORGANIZATION ALLOCATE ITS RESOURCES TO CAPITALIZE ON OPPORTUNITIES IN THE MARKETPLACE
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THE STRATEGIC PLANNING PROCESS
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CONDUCTING A SITUATION ANALYSIS
A situation analysis must be conducted before a company can decide on specific actions.
A situation analysis involves analyzing:
The external (macro and micro factors outside the organization)
The internal (company) environments
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CONDUCTING A SWOT ANALYSIS
Organizations conduct a SWOT analysis by analyzing:
Strengths
Weaknesses
Opportunities
Threats
Strengths and weaknesses:
Internal factors
Somewhat controllable
Opportunities and threats:
External factors
Largely uncontrollable
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CONDUCTING A SWOT ANALYSIS
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ASSESSING THE INTERNAL ENVIRONMENT
Companies can use their strengths to capitalize on opportunities and develop their competitive advantage.
Managers need to examine both the past and current strategies to determine what strategies succeeded and which ones failed.
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INTERNAL SWOT ANALYSIS
Actions required:
Capitalize on a strength
Address a weakness
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ASSESSING THE EXTERNAL ENVIRONMENT
Analyzing the external environment involves tracking conditions in the macro and micro marketplace.
The macro environment includes:
Economic factors
Demographic trends
Cultural and social trends
Political and legal regulations
Technological changes
The price and availability of natural resources
The micro environment includes:
Competition
Suppliers
Marketing intermediaries (retailers, wholesalers)
The public
The company
Customers
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EXTERNAL SWOT ANALYSIS
Actions required:
Stay informed on global markets and issues
Anticipate and prepare for government actions
Monitor technology advances
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THE COMPETITIVE ENVIRONMENT
Both nonprofit and for-profit organizations compete for customers’ resources.
An industry is group of competitors that provide similar products or.
Michael Porter developed an approach for analyzing industries called the five forces model.
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FIVE FORCES MODEL
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COMPETITIVE ANALYSIS
When a firm conducts a competitive analysis, it focuses on direct competitors and tries to determine their strengths and weaknesses, image, and resources.
Competitive analysis involves looking at any information available on competitors.
Another means of collecting competitive information utilizes mystery shoppers.
According to Porter, organizations must consider the strength and impact the following could have:
Substitute products
Potential entrants in the marketplace
The bargaining power of suppliers
The bargaining power of buyers
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THE POLITICAL AND LEGAL ENVIRONMENT
All organizations must comply with government regulations and understand the political and legal environments in which they do business.
Different government agencies enforce regulations that have been established to protect both consumers and businesses.
For example, the Sherman Act (1890) prohibits U.S. firms from restraining trade by creating monopolies and cartels.
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THE ECONOMIC ENVIRONMENT
Economic factors include variables such as:
Inflation
Unemployment
Interest rates
Whether the economy is in a growth period or a recession
Inflation occurs when the cost of living continues to rise and erodes the purchasing power of money.
During a recession, it is possible for both high-end and low-end products to sell well.
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THE DEMOGRAPHIC, SOCIAL, AND CULTURAL ENVIRONMENTS
The demographic and social and cultural environments are constantly changing the global marketplace. They include:
Social trends (such as people’s attitudes toward fitness and nutrition)
Demographic characteristics (such as people’s age, income, marital status, education, and occupation)
Culture, which relates to people’s beliefs and values)
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TECHNOLOGY
Technology changes the way people communicate and the way companies do business.
Marketers increasingly use online ads and mobile marketing.
Organizations must adapt to new technologies to succeed.
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NATURAL RESOURCES
Natural resources are scarce commodities.
Consumers are becoming increasingly aware of this fact.
Green marketing involves marketing environmentally safe products and services.
The marketing is done in a way that is good for the environment.
Green marketing not only helps the environment but also saves the company money.
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THE MISSION STATEMENT
The firm’s mission statement states:
The purpose of the organization
Why it exists.
Both profit and nonprofit organizations have mission statements.
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KEY TAKEAWAYS
A firm must analyze factors in the external and internal environments it faces throughout the strategic planning process. These factors are inputs to the planning process.
As they change, the company must be prepared to adjust its plans.
Different factors are relevant for different companies.
Once a company has analyzed its internal and external environments, managers can begin to decide which strategies are best, given the firm’s mission statement.
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LEARNING OBJECTIVES
Explain how companies develop the objectives driving their strategies.
Describe the different types of product strategies and market entry strategies that companies pursue.
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DEVELOPING OBJECTIVES
Objectives are what organizations want to accomplish in a given time frame.
Objectives should be realistic and measurable.
Objectives help guide and motivate a company’s employees and give its managers reference points for evaluating marketing actions.
A firm’s marketing objectives should be consistent with the company’s objectives at other levels, such as corporate and business.
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FORMULATING STRATEGIES
Strategies are what a firm is going to do to achieve its objectives.
Tactics include specific actions taken to execute the strategy, such as:
Coupons
Television commercials
Banner Ads
Firms often use multiple strategies to accomplish their objectives and capitalize on marketing opportunities.
A marketing plan is a strategic plan that provides a firm’s marketing group with direction.
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MARKETING PLAN
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WHICH PRODUCTS WILL BE CREATED
HOW THE PRODUCTS WILL BE EXCHANGED FOR REVENUE
HOW THE PRODUCTS WILL BE COMMUNICATED
HOW THE PRODUCTS WILL BE DELIVERED
SUPPORTING RESEARCH AND FORECASTS
PRODUCT AND MARKET ENTRY STRATEGIES
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STRATEGIC CHOICES
There are different types of product and market-entry strategies that a firm can pursue in order to meet objectives.
Other choices include:
Licensing
Franchising
Contract manufacturing
Joint ventures
Direct investment
Diversification strategies
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Market Penetration
Product Development
Market Development
TYPES OF PRODUCT AND MARKET ENTRY STRATEGIES
Market penetration strategies:
Increasing a firm’s sales of its existing products to its existing customers.
Product development strategies:
Creating new products for existing customers.
Market development strategies:
Entering new markets with existing products.
Firms can simply export, or sell their products to buyers abroad
The least risky and least expensive method
Also offers the least amount of control
Firms can also license some aspect of their production processes, trademarks, or patents to individuals or firms in foreign markets.
Franchising is a longer-term and thus riskier form of licensing.
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TYPES OF PRODUCT AND MARKET ENTRY STRATEGIES
Contract manufacturing allows companies to hire manufacturers to produce their products in another country.
Joint ventures combine the expertise and investments of two companies and help companies enter foreign markets.
Direct investment provides the most control but also has the most risk.
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MARKET ENTRY METHODS
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DIVERSIFICATION STRATEGIES
Diversification strategies involve:
Entering new markets with new products
Doing something outside a firm’s current businesses.
Diversification can be profitable, but it can also be risky if a company does not have the expertise or resources it needs.
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KEY TAKEAWAYS
The strategic planning process includes a company’s mission (purpose), objectives (end results desired), and strategies (means).
Sometimes the different SBUs of a firm have different mission statements.
A firm’s objectives should be realistic (achievable) and measurable.
The different product market strategies firms pursue include market penetration, product development, market development, and diversification.
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LEARNING OBJECTIVES
Identify the different levels at which strategic planning may occur within firms.
Understand how strategic planning that occurs at multiple levels in an organization helps a company achieve its overall corporate objectives.
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STRATEGIC PLANNING
Corporate-level plans are developed by top executives for the corporation as a whole.
A strategic business unit (SBU) is a business or product line within an organization that has its own competitors, customers, and profit center.
A firm’s SBUs may also have their own mission statement.
Business-level plans are developed by SBUs for themselves.
The different departments (accounting, finance, marketing, and so forth) within a company or SBU might also develop strategic plans.
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STRATEGIC PLANNING LEVELS IN AN ORGANIZATION
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STRATEGIC PLANNING
The strategies and actions implemented at the functional level must help an organization achieve its objectives at both the business and corporate levels.
The SBUs at the business level must also help an organization achieve its corporate-level objectives.
Organizations can utilize multiple methods and strategies at different levels to accomplish their various goals.
Similarly, individuals may use different strategies to accomplish their goals.
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KEY TAKEAWAYS
Strategic planning can occur at different levels (corporate, business, and functional) in an organization.
The number of levels may vary.
If a company has multiple planning levels, the plans must be consistent, and all must help achieve the overall goals of the corporation.
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LEARNING OBJECTIVES
Explain how SBUs are evaluated using the Boston Consulting Group matrix.
Explain how businesses and the attractiveness of industries are evaluated using the General Electric approach.
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PORTFOLIO PLANNING APPROACH
Analyzing a firm’s entire collection of businesses relative to one another.
Two of the most widely used portfolio planning approaches include the:
Boston Consulting Group (BCG) matrix
General Electric (GE) approach
Two popular approaches:
Boston Consulting Group (BCG Matrix)
General Electric business and industry planning model
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THE BOSTON CONSULTING GROUP MATRIX
Helps companies evaluate each of its strategic business units based on two factors:
The SBU’s market growth rate
The SBU’s relative market share
Because the BCG matrix assumes that profitability and market share are highly related, it is a useful approach for making business and investment decisions.
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THE BOSTON CONSULTING GROUP (BCG) MATRIX
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CATEGORIES OF PRODUCTS BASED ON BCG MATRIX
Star: A product with high growth and a high market share.
Cash cow: A product with low growth and a high market share.
Question marks or problem children: Products with a low share of a high-growth market.
Dog: A product with low growth and a low market share.
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THE GENERAL ELECTRIC APPROACH
Examines a business’s strengths and the attractiveness of the industry in which it competes.
Companies evaluate their strengths and the attractiveness of industries as high, medium, and low.
Companies with a medium rating on industry attractiveness and business strengths should be cautious when investing and attempt to hold the market share they have.
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THE GENERAL ELECTRIC APPROACH
Evaluate SBU’s on the following factors:
Market share
Growth of the SBU
Size of the opportunity
Potential for profit
Environmental factors
Competitive conditions
Green: invest for growth
Yellow: status quo
Red: divest
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KEY TAKEAWAYS
A group of businesses is called a portfolio.
Organizations that have multiple business units must decide how to allocate resources to them and decide what objectives and strategies are feasible for them.
Portfolio planning approaches help firms analyze the businesses relative to each other.
The BCG and GE approaches are two of the most common portfolio planning methods.
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Directions
· Your answers should show familiarity with the text and topics being covered in the unit.
· Use the text, lecture notes, and/or PowerPoint as references
· Each question response should consist of at least 150 words.
· Responses should be free of typographical, spelling, and grammar errors.
Questions
1. Compare and contrast a four Ps approach to marketing versus the value approach (creating, communicating, delivering and exchanging value). What would you expect to be the same and what would you expect to be different between two companies that apply one versus the other approach?
https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/6778-4-ps-of-marketing.html
2. You are considering working for United Way upon graduation. Explain how the marketing goals, strategies, and markets for the nonprofit differ from a for-profit organization
3. How has PepsiCo employed a product development strategy?
4. Describe the value propositions the social networking sites YouTube and Facebook offer Web users.
