BUAD 307—MARKETING FUNDAMENTALS

1. BUAD 307—MARKETING FUNDAMENTALS MARKETING OVERVIEW AND STRATEGY

3. Learning Objectives • Understanding • The scope and basic objectives of the marketing function • Customer value • The contrasting perspectives of the “Marketing Concept” and the “Selling Concept.” • Appreciating the need of firms for unique and specific strategies based on tradeoffs and, unique strengths, and market conditions

4. 2007American Marketing Association (AMA) Definition Marketing: “The (1) activity, (2) set of institutions, and (3) processes for (4) creating, (5) capturing, (6) communicating, (7) delivering, (8) and exchanging (9) offerings that have (10) value for (11) customers, (12) clients, (13) partners, and (14) society at large.” (Numbering added.) Definition not needed for the exam!

5. ACTIVITY INSTITUTIONS PROCESSES MARKETING CREATION COMMUNICATION DELIVERY EXCHANGE CUSTOMERS OFFERINGS VALUE CLIENTS PARTNERS SOCIETY

6. Value • Benefits—examples • Convenience • In delivery • In usage • Reliability • Durability • Performance • Style/aesthetics • Prestige • Service component • Costs—examples • Money • Time • Risk

7. Customer Value, Part I • Value is the ratio of the benefits received (usually goods or services) to what is given up (usually money) • For a transaction to take place, the benefits received must usually be greater than the sacrifice • Note that a high price product may be a good value to the customer even if a high price is paid if the perceived benefits received are higher

8. Customer Value, Part II • A low priced product may not represent value to a customer if the benefits received are perceived to be low, too. • Different customer segments will have different value perceptions • A product which is adapted to the needs of a particular segment can be very valuable to that segment even if the overall “quality” is not seen as superior by most other consumers • Cost may be in terms of money or other sacrifice

9. Value: Implications • A low quality, low price product represents poor value for many customers • A very high benefit product at a high price can represent value for some segments • Customer segments differ in what they find valuable

10. Steps Toward Value Orientation • Information sharing within the firm • Balance of cost and benefits (for the target segment—different balances for different types of customers) • Relationships with customers (as opposed to “one shot” transactions)

11. STRATEGY • Strategy • Target markets • Related marketing mix: Product, distribution, promotion, and price • Counterintuitive realities • Marketing, strategy, and the organization • Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

12. Learning Objectives • Appreciate • The scope of strategic decisions • Tradeoffs that firms must make in their decisions • Cumulative and “spill-over” effects of strategic decisions and the need for consistency • The need for industry balance and firm unit cash flow balance

13. Strategy • Plan • To achieve desired objectives (e.g., profit, market share) • Based on available resources (e.g., financial, patents, trademarks, people, brand name/image , distribution channels) • Subject to choices made (e.g., willingness to take risk, short run vs. long run goals)

14. MARKETING STRATEGY COMMON SENSE ENVIRONMENT STRATEGY PRIORITIES/ OPPORTUNITY COSTS COUNTER- INTUITIVE REALITIES RESOURCES EXPERIMENTATION/ EXPRIENCE

15. Counterintuitive Realities • A firm’s product should not necessarily appeal to the majority of customers—it is usually better to serve one segment well. • Large segments may not be attractive to serve—those attract a great deal of competition • It is usually not a good idea to closely imitate successful competitors • If a competitor lowers its price and takes market share away from you, the best response may be to raise your price

16. Marketing Strategy: Sequence BUSINESS MISSION STATEMENT OBJECTIVES PRODUCT SITUATION/ SWOT ANALYSIS DISTRIBUTION Adapted from text, p. 16. MARKETING STRATEGY PROMOTION PRICE IMPLEMENTATION EVALUATION CONTROL

17. REMINDER • It is tempting to try to enlarge market share by reaching out to new targets but • Compromises in product design, distribution, and positioning will tend to make the brand less attractive to the core segment • This will likely lead to increased competitive intensity

18. Market Balance A WELL BALANCED GADGET INDUSTRY • Different firms should attempt to offer different forms of value, appealing to different customer segments—otherwise, competition is likely to degenerate into price competition EASYTECH, LTD. EASE OF USE TROJAN CREATIONS, INC. PERFORMANCE BRUIN PRIDE, INC. LOW PRICE MICROGEEKS, LTD. SMALL SIZE PATIENCE-IS-STUPID, INC. SPEED

19. Examples of Objectives • Profit level • Profit growth • Total unit sales • Growth in unit sales • Growth in dollar sales • Total dollar sales • Brand perception by customers • Value • Quality • Innovativeness • Reliability • Brand name recognition • Brand name recognition by product category • Product availability • Availability across retailers and other distributors • Store placement • Percentage of products sold at full price • Percentage of revenue from new products • Affordability of product • Elimination of unsafe product ingredients

20. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis STRENGTHS STRATEGY WEAKNESSES OPPORTUNITIES THREATS

21. SWOT--Microsoft • Strengths • New Products • Windows 7—powerful; opportunity to sell upgrades • Office 2010 applications • Technology • Market share • Barriers to entry • Brand name • Cash • Weaknesses • Zune • Bing (search engine) • Opportunities • Bing (search engine) • Windows 7 64 bits • Gaming • Threats • Economic fluctuations • Apple • Image • Design