The Comprehensive Guide to Marketing: Understanding the Process and Key Concepts
Define the Marketing and Outline the Steps in the Marketing Process
Marketing is a process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
Goals:
- Attract new customers by promising superior value.
- Preserve and increase current customers by delivering satisfaction.
- A social and administrative process through which individuals and groups get what they need and want through the creation and exchange of products and value with others.
The purpose of marketing is to create demand before achieving a sale.
Marketing Process
Simple model of the marketing process:
- Understand the market and the needs and desires of the consumer.
- Design a customer-oriented marketing strategy.
- Develop a marketing program that delivers superior value.
- Create charm and profitable relationships with customers.
- Attract customer value to profit and create quality for the customer.
Explain the Importance of Understanding the Marketplace and Customers and Identify the Five Core Marketplace Concepts:
Needs, Desires, Demands
Needs: State of perceived lack including physical, social, and individual needs.
- Physical needs: Food, clothing, shelter, safety
- Social needs: Belonging, affection
- Individual needs: Learning, knowledge, personal expression
Desires: Human needs are shaped by individual culture and personality.
Desires + Purchasing Power = Demand
Discuss the Special Issues Some Marketing Researchers Face, Including Public Policy and Ethics Issues
P&G: Customer Insights and Creating Irresistibly Superior Experiences
Customer insights are fresh marketing information-based understandings of customers and the marketplace that become the basis for creating customer value, engagement, and relationships.
To gain deep customer insights, P&G employs a wide range of marketing research approaches— from traditional large-scale surveys and small-scale focus groups to real-time social media listening, mobile surveys, and big data analytics.
Nielsen helps client companies to turn its research and media data into consumer insights solutions that guide their marketing strategies.
Marketing Information and Customer Insights (1 of 5):
- Customer insights • Fresh and deep insights into customer needs and wants
- Companies use customer insights to develop a competitive advantage
- Insights can be difficult to obtain; marketers must manage marketing information from a wide range of sources
Marketing Information and Customer Insights (2 of 5):
- Marketing Information and Today’s “Big Data”
- Big data is the huge and complex data sets generated by today’s sophisticated information generation, collection, storage, and analysis technologies
- Big data comes from marketing research, internal transaction data, and real-time data flowing from its social media monitoring, connected devices.
Marketing Information and Customer Insights (3 of 5):
- Managing Marketing Information
- Customer insights teams
- Include all company functional areas
- Collect information from a wide variety of sources
- Use insights to create more value for their customers
Define the Marketing Information System and Discuss Its Parts
A marketing information system (M IS) refers to the people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights.
Assessing Marketing Information Needs (1 of 2)
- A marketing information system (M IS) provides information to the company’s marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies.
Assessing Marketing Information Needs (2 of 2)
- Characteristics of a Good M IS: Balancing the information users would like to have against what they need and what is feasible to offer: User’s Needs, M IS Offerings.
Developing Marketing Information (1 of 3)
- Marketers obtain information from:
- Internal data
- Marketing intelligence
- Marketing research
Developing Marketing Information (2 of 3)
- Internal Data
- Internal databases are collections of consumer and market information obtained from data sources within the company network.
Information in the database may include:
- information on customer characteristics
- sales transactions
- website visits
- customer satisfaction and service records
- records of sales, costs, and cash flows
- reports on production, shipments, and inventories
- reports on reseller reactions and competitor activities
- point-of-sale transaction data
Developing Marketing Information (3 of 3):
- Competitive Marketing Intelligence
- Competitive marketing intelligence is the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment.
Competitive marketing intelligence: Mastercard’s digital intelligence command center—called the Conversation Suite—monitors, analyzes, and responds in real time to millions of brand-related conversations across 43 markets and 26 languages around the world.
Define the Consumer Market and Construct a Simple Model of Consumer Buyer Behavior
Consumer buyer behavior is the buying behavior of final consumers—individuals and households that buy goods and services for personal consumption. Consumer markets are made up of all the individuals and households that buy or acquire goods and services for personal consumption.
Explain how value is derived through different product layers
A product represents all that a customer receives in an exchange. Marketers distinguish among three distinct “layers” of the product: Core product, Actual product, Augmented product
Describe how marketers classify products. Based on how consumers feel about, purchase, and consume products: How long products last, How consumers buy products, How businesses buy products. How long do products last?
Durable goods are consumer products that provide benefits over a period of months, years, or even decades. Cars, Furniture, Appliances. Non-durable goods are consumed over the short term. Magazines, Sushi
Classification of products: CONSUMER: convenience products, shopping products, speciality products, unsought products. BUSINESS: equipment, maintenance repair and operating (MRO), raw materials, processed materials and special services, component parts.
How Do Consumers Buy Products? Marketers also classify products based on where and how consumers buy the product. Convenience products are typically non-durable goods or services bought with minimal effort. Staples(e.g., milk, bread) basic or necessary items that we simply can’t do without. Gasoline and milk are a couple of examples. Consumer packaged good (CPG),also referred to as a fast-moving consumer good (FMCG). Impulse products are bought on the spur of the moment
Shopping products are goods and services for which consumers will spend time and effort to gather information on price, product attributes, and product quality. Computers, Smart phones, Appliances, Automobiles. Consumers are more likely to compare alternatives before they buy.
Specialty products have unique characteristics that are important to buyers at almost any price. Generally, an extended problem-solving purchase that requires a lot of effort to choose. Marketers have to go to a lot of effort to make their products stand out. Customers tend to be very loyal to brands they have previously purchased and been satisfied with.
Unsought products are goods and services for which a consumer has little awareness or interest until a need arises. Retirement plans, Life insurance, New tires for a car. Often require a good deal of advertising or personal selling to interest buyers.
The new product development model is based on categories of R&D expenditures. In most organizations, this process is well-defined and systematic. R&D investment is a central metric for measuring an organization’s commitment to innovation relative to its rivals. There are seven phases of new product development: phase 1: idea generation, phase 2: product concept development and screening, phase 3: marketing strategy development, phase 4: business analysis, phase 5: technical development, phase 6: test marketing, phase 7: commercialization.
For many firms, new products are critical for their long-term growth and success.
Key reasons for new product failure include: 1) creating a product with no discernable benefit over existing alternatives; 2) overestimating the size of the market; 3) poor positioning strategy; and 4) poor implementation of the marketing mix (bad product quality, pricing too high or low; inadequate distribution; targeting the wrong market; ineffective advertising).
What is a price? Price is the amount of money charged for a product or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service. More broadly speaking, price is the sum of all the values that customers give up to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs.
Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.
Value-based pricing uses the buyers’ perceptions of value rather than the seller’s cost. 1.Value-based pricing is customer driven. 2.Cost-based pricing is product driven. Customer value-based pricing uses buyers’ perceptions of value as the key to pricing. Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. (Michael kors, apple)
Cost-based pricing sets prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk. Whereas customer-value perceptions set the price ceiling, costs set the floor for the price that the company can charge. Some companies, such as Ryanair or Wizz Airlines, work to become the low-cost producers in their industries. Companies with lower costs can set lower prices that result in smaller margins but greater sales and profits. However, other companies—such as Apple, BMW, and Steinway—intentionally pay higher costs so that they can add value and claim higher prices and margins.
Competition-based pricing involves setting prices based on competitors’ strategies, costs, prices, and market offerings. Consumers will base their judgments of a product’s value on the prices that competitors charge for similar products. In assessing competitors’ pricing strategies, the company should ask: 1.How does the company’s market offering compare with competitors’ offerings in terms of customer value? 2.How strong are current competitors and what are their current pricing strategies?
Understand the communication process and the traditional promotion mix.
Integrated marketing communication (I M C) involves the planning, execution, and evaluation of coordinated, brand communication programs over time to targeted audiences. Aim is to deliver consistent messaging across platforms. Must use a multichannel promotion strategy which combines traditional marketing communication with social media and other online activities.
Advertising is the most familiar element of the promotion mix. It reaches large numbers of consumers at one time and can convey rich and dynamic images that establish and reinforce a distinctive brand identity.
Consumer sales promotion includes programs such as contests, coupons, or other incentives designed to build interest in or encourage purchase during a given period.
Public relations describes a variety of communication activities that seek to create and maintain a positive image of an organization and its products among various publics, including customers, government officials, and shareholders.
Distribution planning
Step 1: Develop Distribution Objectives
The first step requires that objectives be developed for the distribution plan that support the firm’s overall marketing goals.
This requires consideration of how distribution can work with the other marketing mix elements to increase profits, market share, or perhaps sales.
More specific objectives may depend upon the nature of the product. If the product is heavy or bulky, the key goal may be to minimize shipping costs. On the other hand, if the product is marketed on the basis of status or prestige, the goal may be to choose retailers who provide the level of store service and merchandise mix that is consistent with supporting the product’s desired image.
Step 2: evaluate internal and external environmental influences
In the second step, marketers consider both the internal and external environmental influences and how these factors can be used or minimized to develop the best channel structure.
The firm should look at its own ability to implement distribution functions by answering such questions as what intermediaries are available, can customers reach these intermediaries, how does the competition distribute their products, and should a firm use the same or different retailers than its competitors use?
Step 3: choose a distribution strategy
Beyond the number of channel levels, distribution strategies also involve two additional decisions:
Decision 1: a conventional, vertical, or horizontal marketing system
Decision 2: Intensive, exclusive, or selective distribution
Step 4: develop distribution tactics
The final step in distribution planning is to develop the tactics for distribution necessary to implement the distribution strategy.
Distribution tactics relate to two aspects of the implementation of these strategies: (1) how to select individual channel members, and (2) how to manage the channel.
In evaluating intermediaries, manufacturers try to answer questions such as the following:
Will the channel member contribute substantially to our profitability?, Does the channel member have the ability to provide the services customers want?, What impact will a potential intermediary have on channel control?
Implementation of the plan for distribution may be more important than for any other part of the marketing mix. Implementation success comes from getting the timing right and delivering on promises.
Logistics is the process of designing, managing, and improving the movement of products through the supply chain. Logistics includes purchasing, manufacturing, storage, and transport.
Reverse logistics includes product returns, recycling, and material reuse, and waste disposal.