Marketing Management Chapter 1

Creating and Capturing Customer ValueMarketing is - building & managing profitable customer relationships - attracting new customers by promising superior value- keep and grow current customers by delivering satisfaction- not only selling & advertising but satisfying customer needs focus on customers in order to capture value from them in return

1) Marketing Process: Steps of the Marketing Process: Understanding the marketplace and customer needs/wants Design a customer driven marketing strategy Construct an integrated marketing program that delivers super value build profitable relations and create customer delight ALL in order to CAPTURE CALUE to create PROFIT and CUSTOMER EQUITY

Steps of the Marketing Process2) FIRST STEP: Understanding Marketplace and Customer Needs Need: State of felt deprivation (Food, Safety, Socializing, Knowledge and Expression) Wants: human needs shaped by culture, individual personality, also society changes them Demands: human wants that are backed up by buying power (what resources do they have?) To get a better understanding of those needs, wants and demands consumer research and analysis of data Market offerings: Products, Services, Experiences not limited to physical products and include entities such as persons, places, organizations, information, ideas. Marketing Myopia: Sellers mistake of paying too much attention to specific products rather than to the benefits of the experience of those products. Products only a tool to solve a consumer problem Creation of Brand Experience (Ex.: Service plus Product) Customer Value and Satisfaction: What do customers actually expect from the product? It is influenced by propaganda and image. If too low: company is able to satisfy the expectations of the customers, but fail to attract new customersIf too high: buyers might be disappointed right LEVEL of EXPECTATION for VALUE & SATISFACTION

Exchanges and Relationships: Exchange Act of obtaining a desired object from someone by offering something in return. When agreement is reached: transaction takes place (monetary or barter situation) Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving products, service, ideas etc. STRONG relationships must be build in order to hold the customers and deliver superior customer value. Markets: Market is the set of actual and potential buyers. A need or want that needs to be satisfied by engaging in exchange relationships. Consumer research, product development, communication, distribution, pricing, and service are core marketing activities. VALUE CREATING PROCESS: Each party in the system adds value Suppliers Company, Competitors Marketing Intermediaries CONSUMERS (See figure 1.2 on page 32) affected by major environmental forces (demographic, economic, natural, technological, political, social/cultural) success depends on how the entire system serves the need of the final consumer

3) SECOND STEP: Designing a Customer Driven Marketing StrategyWhich customers should we choose and how can we bring them value? Marketing Management = art of choosing target markets in order to build profitable relationships Find, attract, keep, and grow target customers by creating, delivering, communicating superior customer value Questions we must answer in the beginning: Whats our target market? Whats our value proposition? Selecting Customers to serveDividing market into segments of customers (MARKET SEGMENTATION) and selecting which segments it will go after (TARGET MARKETING)Its not about finding as many customers as possible, but about serving the right ones well and profitably. (DEMARKETING = we dont want ALL the customers, that we can get) Choosing a Value Proposition =Set of benefits or values a company promises to deliver to customers to satisfy their needs How will the company differentiate and position itself on the market? Value Propositions help differentiate one brand from another. Strong value propositions give advantages in their target market. (Smart Car = compact, agile, economical, ecological) Marketing Management Orientations (Marketing Philosophies to the Marketplace)What philosophy should guide the marketing strategies? What weight should be given to the interests of customers, the organization, and society? Interests may conflict here. 5 Alternative Concepts (under which organizations design and carry out marketing strategies) - The Productions Concept (oldest concept) Consumer will favor products that are available and highly affordable. Management will focus on improving production and distribution efficiency. (in some cases successful, for ex.: Lenovo) BUT can lead to marketing myopia: focus is too narrowly on their own operations and loses sight of customer needs satisfaction and building customer relationships.- The Product Concept Consumer will favor products that offer the most in quality, performance, innovative features. Focus lies on continuous product improvements. Marketing myopia: The better mousetrap? Consumers may not need that. - The Selling Concept Consumers will not buy enough of the product unless a large scale selling and promotion effort is undertaken. (Insurance, blood donations) Tracking down prospects and selling them on a products benefits. Aim is to sell rather than building long term relationships with customers. Starting point of Selling Concept is the Factory, Focus on the Existing Products, Means are Selling and Promoting and End is Profits through Sales Volume(See Figure 1.3 Page 34) INSIDE-OUT VIEW - The Marketing Concept Hold that the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering desired satisfactions more effectively and efficiently than competitors. Instead of make and sell philosophy, rather sense and respond philosophy find the right products for the customers, not the other way around (Customer-driven companies) Starting point of Marketing Concept is the Market, Focus on the Customer Needs, Means are Integrated Marketing and End is Profits through Customer Satisfaction (See Figure 1.3 Page 34) OUTSIDE-IN VIEW Understanding the customer better, than they even know themselves. They often dont know what they want, or even what is possible. Customer-driving Marketing - The Societal Marketing Concept Three considerations underlying the societal marketing concept: Society (Human welfare), Company (Profits), Consumers (Want satisfaction) TRIANGLE (See figure 1.4 p. 35) Are there any possible conflicts between consumer short-run wants and consumer long-run welfare? Improve both customers and societys well being = Sustainable Marketing, socially and environmentally responsible marketing but also satisfaction of needs of consumers and businesses, while preserving the ability for future generations (Bottled water industry?)

3) THIRD STEP: Preparing an Integrated Marketing Plan and ProgramA program that will actually deliver the intended value to target customers. Transforming the marketing strategy into action. Consists of: MARKETING MIX (Set of tools to implement Marketing Strategy) 4 Ps Product, Price, Place and Promotion all must blend into a comprehensive plan that communicates and delivers the value intended => Integrated Marketing Program

4) FOURTH and most important STEP: Building Customer RelationshipsCustomer Relationship Management (=CRM most important concept of modern marketing, key marketing tool today)Managing detailed information about individual customers and carefully managing customer touchpoints for more customer loyalty. Aspects like acquiring, keeping and growing customers Customer value and satisfaction (AGAIN! Who would have thought) Principles:Customer Value: Attracting and retaining customers BUT customers ACT on PERCEIVED VALUE, not the actual one. Relative to every customer, which product is more valueable. Customer Satisfaction: Depends on the products perceived performance relative to a buyers expectation Performance may be less, matched or exceeding the expectation THIS influences Customer LOYALTY Customer DELIGHT leads to better company performance (ex.: Ritz-Carlton hotel) ---->> Delicate Balance between Customer Value, Satisfaction while still maintaining high profits.

Customer Relationship Levels and ToolsFULL VS. BASIC Parternships- Basic Partnerships: Low-margin Customers For example: Nike doesnt contact their customers personally, but instead brand-building advertising, PR, Website- Full Partnerships: Few Customers with High-Margins Nikes sales representatives have a close relationsip to Foot Locker, Sports Authority large retailers There are different levels in between these extremes-Ways to build a stronger BOND with customers Frequency Marketing Program (reward for loyalty, frequent buys or high amount spent hotels, airlines etc) Club Marketing Program (benefits to create member communities Harley Davidson has Harley Owner Group)

Changing Nature of Customer Relationships Mass Marketing or Focus on deeper more direct and long lasting relationships?

- Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers:Customer Profitability Analysis which customers are too costly to serve, which should we focus on, where are our profits? If they prove to not be profitable, then customer may be send to competitors by the own company (insurance company) Customer Divestment

- Relating more deeply and interactively incorporating two-way relationships through blogs, websites, online communities, social networks: Two-Way Customer Relationships changing communications environment affects companies and how brands relate to customers creation of a community surrounding the brand

This also means greater power & control to consumers information about brand is everywhere, point of view is shared on different platforms customer- managed relationships

Creating Market offerings and messages that involve consumer rather than interrupt them (brand-consumer interaction = twitter, facebook) Consumer- Generated Marketing: Consumers themselves are playing a big role in shaping their brand experience and of others aswell. (Heinz invited consumer to submit youtube videos as ads for Ketchup) But it can be time consuming and costly to be processed and actually find something useful.

Partner Relationship Management= It involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Partners inside the Company: Every functional area can interact with customers (electronically). No matter what job you have in the company, you must understand marketing. Linking departments cross-functional customer teams costumer value

Marketing Partners Outside the Firm: Marketing Channels consists of distributors, retailers, and others who connect the company to its buyers. deliver costumer value. Supply Chain describes the channel from raw materials to final product to final buyer. Success also depends on how well your Supply Chain performs against the competitors supply chains Strategic Partners, Strategic alliances

5.) FIFTH STEP: Capturing Value from Customers

Creating Customer Loyalty and RetentionCustomer delight (emotional relationship with the brand, not just rational preference) consumers are loyal to products and positive influence on brand image, because of propaganda complete satisfaction necessary to keep up the loyalty (slight drop could influence loyalty and keeping an old costumer is cheaper than having to gain a NEW one) Costumer Lifetime Value: is the value of the entire stream of purchases that the customer would make over a lifetime of patronage (it means losing an entire stream of purchases)

Growing Share of CustomerShare of Customer: The Portion of the costumers purchasing that a company gets in its product categories. By offering greater variety of to current customers cross-sell, up-sell = Amazon recommends its customers based on their purchase history, product searches other products that might be of interest. Building Customer Equity =Total number of combined customer lifetime values of all f the companys customersCompanies want to own the customer for life, therefore earn greater share of their purchases and capture customer lifetime value What is Customer Equity? = Ultimate aim of CRM is to produce high customer equity. Its the total combined customer lifetime values OF ALL THE COMPANYS CUSTOMERS. good measure of a firms performance

Building the Right Relationships with the Right Customers: Customers are assets that must be managed and maximized. But not all are profitable. Classification scheme based on potential profitability and projected loyalty: Strangers, butterflies, true friends and barnacles Strangers: low potentional profitability, little loyalty / Butterflies: potentially profitable, but not loyal / True friends: profitable and loyal / Barnacles: highly loyal but not very profitable Different types of customers require different relationship management strategies

The Changing Marketing LandscapeMajor Trend and Developments: Uncertain Economic Environment: Even brands like Lexus promote fuel economy, resale value etc cutting prices in a down economy. BUT balance between brands value propositions and the current times while also enhancing long-term equity. Digital Age: WE are all connected to eachother Web 2.0, but Web 3.0 is starting: virtual world to carry in your pocket. Rapid Globalization: Companies are connected globally with their customers and marketing partners. Global Competition. Global marketing? Go global? But how?Sustainable Marketing the Call for more Social responsibility: Social Values, responsibilities and how the Earth sustains us. Corporate ethics, environmental responsibilities protecting land and water Growth of Not-for-Profit Marketing: Colleges, hospitals, museums, zoos, churches etc. face competition for support and membership. Attracting new donors?

So what is Marketing? Pulling it all together Summary Figure 1.5 Page 53

Chapter 2Objectives of this Chapter: Companywide Strategic Planning: Defining Marketings Role Designing the Business Portfolio Planning Marketing: Partnering to build Customer Relationships Marketing Strategy and the Marketing Mix Managing the Marketing Effort Measuring and Managing Return on Marketing Investment (ROI)

1.) Company and Marketing Strategy: Partnering to Build Customer Relationships

Companywide Strategic Planning: Defining Marketings Role

Strategic planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. Game plan for long-run survival and growth, - given its specific situation, opportunities, objectives and resources. Steps in Strategic Planning: (Corporate level---> ) Defining a company mission (guide for company, which direction) Setting company objectives and goals Designing the business portfolio (how much support to give to each business or product of the portfolio) Planning marketing and other functional strategies (-- > on the level of business unit, product and market) (See figure 2.1 p. 63)

STEPS IN STRATEGIC PLANNING

1.) FIRST STEP: Defining a Market- Oriented MissionMission statement: Organizations purpose what it wants to accomplish in the larger environment Invisible Hand leading the way of the business they should be meaningful and motivating (We create fantasies a place where dreams come true etc Disney) What VALUE is created for the customer? Emphasize on that rather than profit goals. How will the company win in the marketplace?The Company must answer certain question carefully and completely in order to be successful. What is our business? What should our business be? Who is the customer? What do consumers value? Mission statements should be market oriented not product oriented. = > Defined in terms of satisfying the customer basic needs. (Facebook: not a social network, but its mission is to connect people; Google: information universally accessible and useful) Product-Oriented Definition VS. Market- Oriented Definition (see figure 2.1 p.64 for more examples)

2.) SECOND STEP: Setting Company Objectives and Goals Turning the mission into detailed supporting objectives of each level of the management.Broad Mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Business Objectives: Build profitable customer relationships, Invest in research, Improve profitsMarketing Objectives: Increase market share, Create local partnerships, and increase promotion In a way, the firms mission is translated into a set of objectives for the current period.

3.) THIRD STEP: Designing the Business PortfolioGuided by the mission statement and objectives set beforehand, the business portfolio is set up. It shows the companys strengths and weaknesses to opportunities in the environment. Business Portfolio: collection of businesses and products that make up the companyThe planning involves two steps: Analysis of the current portfolio, then determine which business should receive more, less or no investment. Then the future portfolio must be shaped by developing strategies for growth and downsizing. Analyzing the current Business Portfolio (major activity in strategic planning)Portfolio Analysis: Management evaluates the products and businesses of their companyIdentification of key businesses that make up the company STRATEGIC BUSINESS UNITS (SBUs: it can be a division, a product line, a single product or brand) How much support should the various SBUs get? they should fit the core philosophy and competencies

Summary: STEPS of analyzing the current Business Portfolio: Identify key businesses(SBUs) Asses the attractiveness of its various SBUs Decide how much support each SBUs deserves

The BOSTON Consulting Group ApproachThe best known portfolio planning method was developed by that Group, a leading management consulting firm. AXIS: Market Growth Rate (attractiveness of market) Relative Market Share ( measure of company strength in the market) This classification places strategic business units/products in the following four categories:1. Stars SBUs/products characterized by high-growth and high- market share. They often require heavy external investment to sustain their rapid growth as they may not be producing any positive cash flow. Eventually, their growth will slow, and they will turn into cash cows.2. Cash Cows- SBUs/products characterized by low-growth, high-market share. These are well established and successful BUs that dont require substantial investment to keep their market share. They produce a lot of cash to be used for other business units (Stars and Question Marks) of the company.3. Question Marks- SBUs/products characterized by low-market share in high-growth markets. They require a lot of financial resources to increase their share since they cannot generate enough cash themselves. The crucial decision is to decide which Question Marks to phase out and which ones to grow into Stars.4. Dogs- SBUs/products with low-growth, low-market share. In addition, they often have poor profitability. The business strategy for a Dog is most often to divest. However, occasionally management might make a decision to hold a Dog for possible strategic repositioning as a Question Mark or Cash Cow.

Problem with Matrix Approaches: They can be difficult, time consuming, costly to implement. Its difficult to define SBUs and measure market share and growth. ALSO: they measure CURRENT businesses but provide little advice for future. Nowadays strategic planning is decentralized; cross-functional teams of divisional manager are responsible.

Developing Strategies for Growth and DownsizingProduct/Market Expansion Grid: A portfolio-planning tool for identifying company growth opportunity through market penetration, market development, product development, or diversificationMarketing needs to identify, evaluate, and select market opportunities and establish strategies for capturing them.

ANSOFF MATRIX : Market Penetration/Market Development/Product Development/Diversification (for more information see p.69/70)

Downsizing: The reduction of the business portfolio by eliminating products or business units that are not profitable or that dont fit the companys strategy anymore. Difficult economic times: focus limited resources on the stronger products or markets. Dont waste energy trying to salvage fading opportunities.

4.) FOURTH STEP: Planning Marketing: Partnering to Build Customer RelationshipMajor functional departments in each unit marketing, finance, accounting, purchasing, operations, information systems, hum resources, and others must work together to accomplish strategic objectives. Costumer value = key ingredient for success but marketing alone cannot deliver superior value. Therefore PARTNER RELATIONSHIP MANAGEMENT besides customer relationship management Partnering with other company departments: Value Chain: Series of internal departments that carry out value-creating activities to design, produce, market, deliver and support a firms products. Even More than that: They must partner effectively with other companies in the marketing system to form VALUE DELIVERY NETWORK (includes company, suppliers, distributors, customers who partner with each other to improve performance of system) value can be only achieved if the whole company obsesses over creating that value, not only the marketing department.

5.) FIFTH STEP: Marketing Strategy and the Marketing MixMarketing Strategy is: Which customers will we serve? (Segmentation and Targeting) and How will we create value (Differentiation and Positioning) After that the Marketing Program is designed 4PsCustomer Driven Marketing Strategy: Too many different kinds of consumers with too many different kinds of needs = dividing up the market choosing best segments design strategy to serve best TOOLS: Marketing Segmentation: Dividing market into groups of buyers with different needs, characteristics, behavior etc require different marketing programs Marketing Segment: A group of costumers who respond in similar way to given set of marketing efforts Market Targeting: Process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market Positioning: Arranging for a product to occupy a clear, distinctive, desirable place relative to competing products in the minds of target costumers. Differentiation: Positioning the brand effectively how to stand out from other brands

Developing an Integrated Marketing MIXMarketing Mix: Set of tactical marketing tools products, price, place, promotion that firm blends to produce the response it wants in the target market. Concern: 4 Ps concept takes the sellers view of the market, not the buyers view 4 Cs (Product = Customer Solution; Price = Customer Cost; Place = Convenience; Promotion = Communication)

6.) SIXTH STEP: Managing the Marketing Effort Through implementation the company turns plans (Strategic and Marketing Plan) into actions but measuring and evaluating the result of marketing activities for corrective action are needed Analysis (see figure 2.6 page 78 ) Its a circular Process (continuous) Marketing Aalysis: SWOT Analysis (Strength, weakness, opportunities, threats) Show the current market situation Micro/Macro Environment Concepts of a Marketing Plan: Executive Summary: Summary of goals and recommendations helping top management find major points quickly Current marketing situation: Describes target market and companys position, with information about market, product, performance, competition, distribution. Threats and opportunities analysis: Assesses threats and opportunities that product might face, helping management to anticipate the developments that impact the firm and its strategies Objectives and issues: Objectives that company would like to attain during the plans term + key issuesMarketing strategy: broad marketing logic by which it wants to create customer value + target markets, positioning, marketing expenditure levels, strategies for each elemenet of marketing mix + reaction to SWOT analysis Action programs: How to turn plan in Action programs Answering: What, When, Who, How much? Budgets: A projected profit and loss statement shows expected revenues, cost of production, distribution, marketing. Budget is basis for materials buying, production scheduling, personnel planning, marketing operations Controls: Controls that will be used to monitor progress review implementation, spot products that are not meeting the goals and measures of RETURN on MARKETING INVESTMENT

Marketing Implementation: The process that turns marketing plan into marketing actions to accomplish strategic marketing objectivesSuccessful implementation depends on how well the company blends its people, organizational structure, and decision and reward system and company culture into a cohesive action plan that supports those strategies. Modern Marketing departments can be arranged in several ways: Functional Organizations: different marketing activities are headed by functional specialist a sales manager, an advertising manager, a marketing research manager, a customer service manager, new product manager Geographic Organizations: companies that sell across the country or internationally = sales and marketing people are assigned to specific region, countries etc. Product Management Organization: Many different Products or Brands = each product/brand has own strategy and marketing program Market or Customer Management: For companies that sell one product line to many different types of markets and customers who have different needs etc.

Marketing Control: Controlling is the measurement and evaluation of result and the taking of corrective action as needed Differences between expected and actual performances Corrective actions Operating control: Checking Ongoing Performance against the annual plan with corrective actions if necessaryStrategic control: Looking whether the companys basic strategies are matched to its opportunities. They can be quickly outdated, therefore necessary to periodically reassess its approach to the market.

7.) LAST STEP: Measuring and Managing Return on Marketing Investment Return on marketing investment (Marketing ROI): is the net return from a marketing investment divided by the costs of the marketing investment. Marketing ROI provides a measurement of the profits generated by investments in marketing activities. most difficult part of marketing

Chapter 3Analyzing the Marketing Environment

Objectives of this Chapter: The companys Microenvironment The companys Macroenvironment Responding to the Marketing Environment

The Marketing Environment: Includes the actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with customers. Marketers must be environmental trend trackers and opportunity seekers. Marketing Research and Marketing Intelligence for collecting information on the environment/customers/competitors.

Microenvironment: Actors close to the company that affect its ability to serve its customers company, suppliers, marketing intermediaries, customer markets, competitors, publics. (VALUE CHAIN) Macroenvironment: The larger societal forces that affect the microenvironment demographic, economic, natural, technological, political and cultural forces. Microenvironment The Company (INTERNAL environment): Top management (sets the companys mission, objectives, broad strategies, policies) Finance R&D Purchasing Operations AccountingWhen designing the marketing plans, marketing management takes other company groups into account. They form the internal environment.

Suppliers: Link in the companys overall customer value delivery network. They provide the resources to produce goods and services (also supply shortages, delays, labor strikes, natural disasters = could damage customer satisfaction) Treated as partners to provide customer value

Marketing Intermediaries: Help the company to promote, sell and distribute its products to final buyers = include resellers, physical distribution channel firms, wholesalers, retailers, marketing service agencies (marketing research firms, advertising agencies, media firms, marketing consulting firms etc), financial intermediaries (banks, credit companies, insurance companies VALUE DELIVERY NETWORK Ex.: Coca-Cola and McDonalds

Competitors: Provide greater customer value than your competitors. Firms must gain strategic advantage by positioning their offerings against competitors offerings.

Publics: Any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives: Financial publics (Ability to obtain funds = banks etc) Media publics (editorial opinion = newspaper etc) Government publics (government development? = lawyer must be consultet on products safety etc) Citizen-action publics (consumer organizations, environmental groups, minority groups etc) Local publics (neighborhood, community = provide some community support) General public (attitude of general public towards activities = image of company) Internal publics (workers, managers, volunteers, directors = newsletters to inform and motivate internal publics) Company can create marketing plan for these major publics as well as for the customer markets. Achieve GOODWILL, favorable word of mouth, donations etc. MacroenvironmentCompanies that understand and adapt well to their environment can thrive. How can marketing plans be affected by these?

The Demographic EnvironmentDemography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Demographic environment is important because it involves people, and people make up markets Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity

Changing age structure of the population: Baby boomers include people born between 1946 and 1964 Most affluent Westerners Generation X includes people born between 1965 and 1976 High parental divorce rates, Cautious economic outlook, Less materialistic , Family comes first, Lag behind on retirement savings Millennials (Generation Y or echo boomers) include those born between 1977 and 2000 Comfortable with technology Includes: Tweens (ages 812), Teens (1319), Young adults (20s)

Korean Generational Groups The War Generation The Baby Boomers (1955-1963) The 386 generation (1960s) (term came about in the 1990s when the generation were in their 30s) Born 1960s, educated 1980s (now called the 486 generation) The X generation (1970s) The Y generation (1980s) The W generation (World Cup Generation) The P generation (Participation, Passion, Power, Paradigm shift) has been argued to include the X generation V Generation (1990s) Valiant, Various and Vivid

Generational marketing is important in segmenting people by lifestyle of life state instead of age Marketers need to form precise age-specific segments within each group (ex. Baby boomers) Defining people by their birth date may be less effective than segmenting them by their lifestyle, life stage, common values Changing FAMILY: More people are Divorcing or separating Choosing not to marry Choosing to marry later Marrying without intending to have children Increased number of working women Stay-at-home dads Changes in the Workforce More educated More white collar INCREASING DIVERSITY: Markets are becoming more diverse International, National Also Ethnicity, Gay and lesbian, Disabled

Economic Environment : consists of factors that affect consumer purchasing power and spending patterns. Marketers must pay close attention to major trends and consumer spending patterns both across and within world markets. Nations vary greatly in their level and distribution of income: For Example: - Industrial economies are richer markets - Subsistence economies consume most of their own agriculture and industrial output Changes in consumer Spending Until recently consumers would buy and spent their money freely, without caution because of the boom in stock markets etc. BUT Changes in income now they are buying less and expect greater value in the things they buy. VALUE MARKETING (involves ways to offer financially cautious buyers greater valuethe right combination of quality and service at a fair price) Ernst EngelEngels Law: As income rises: The percentage spent on food declines The percentage spent on housing remains constant The percentage spent on savings increases Natural Environment:involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. For example changing weather or natural disaster warm winter influences the sales of winter clothes, but boosted the demand for running shoes etc. Marketers should be aware of several trend in the natural environment: Shortages of raw materials Increased pollution Increase government intervention These concerns have lead to a so-called green movement environmentally sustainable strategies

Technological Environment: Is perhaps the most dramatic force in changing the marketplace Creates new products and opportunities But safety of new product always a concern (scary and dangerous products little transmitters implanted in products?, Chemical Weapons etc) As products become more complex, public needs to know whether they are safe or not. Government agencies regulate them etc.

Political and Social Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Affecting Businesses around the world and it is increasing well-conceived regulation can encourage competition and ensure fair marketsBusiness Legislation: to protect companies from each other Government Regulation: to protect consumers from unfair business practices to protect the interest of society against unrestrained business behavior New laws and their enforcement will continue to increase Marketers need to know about major laws Increased emphasis on ethics: Beyond written laws and regulations, businesses are also governed by social codes and rules of professional ethics Socially responsible behavior These businesses actively seek out to protect the long-run interests of their consumers and the environment Cause-related marketing To exercise more social responsibility and build more positive images, many companies are linking themselves with worthwhile causes. has become primary form of corporate giving do well by doing good ---- > but also controversial: cause-related may in fact be cause-exploitative marketing? (taking advantage of disasters to promote own company?)

Cultural Environment Cultural environment consists of institutions and other forces that affect a societys basic values, perceptions, and behaviors. People grow up in a particular society that shapes their basic beliefs and values. absorb worldviews that define their relationships The following cultural characteristics can affect marketing decision making:Persistence of Cultural Values Core beliefs and values are persistent and are passed on from parents to children and are reinforced by schools, churches, businesses, and government Secondary beliefs and values are more open to change and include peoples views of themselves, others, organization, society, nature, and the universe Shifts in Secondary Cultural Values Peoples view of themselves: People vary their emphasis on serving themselves versus serving others. Some seek pleasure, wanting fun, change. Others seek self-realization, self expression etc influence the product and services that match their views of themselves. Yankelovich Monitors consumer segments: - Do-it-yourselfersrecent movers - Adventurers Peoples view of others: Peoples attitudes and interactions with others shift over time. Internet age could result in diminished human interaction. More cocooning vs. Mass mingling Peoples view of organizations: Attitude towards corporations, government agencies, trade unions etc Peoples view of society: Attitude toward their society Patriots defend it - Reformers want to change it - Malcontents want to leave it Peoples view of nature: Some feel ruled by it - Some feel in harmony with it - Some seek to master it Peoples view of the universe: Renewed interest in spirituality

Responding to the Marketing EnvironmentThere are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder whats happened. Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They analyze environmental forces and design strategies that will help the company avoid threats and take advantage of opportunities. Other companies take proactive stance toward the marketing environment. Others are reactive And so on (for more see p. 113)

Chapter 4Managing Marketing Information to gain Customer InsightsHow companies develop and manage information about important marketplace elements: Customers, competitors, products and marketing programs. In this Chapter: Marketing Information and Customer Insights Assessing Marketing Information Needs Developing Marketing Information Marketing Research Analyzing Marketing Information Distributing and Using Marketing Information Other Marketing Information ConsiderationsInformation: A wise person recognizes the convenience of a general statement, but bows to the authority of a particular fact To manage a business well is to manage its future; and to manage the future is to manage information

Information Complaints: Too much information of the wrong kind and not enough of the right kind Marketing information is so dispersed throughout the company that great effort is often required to locate simple facts Vital information: suppressed by executives for personal reasons arrives too late to be useful Information arrives providing no idea of its accuracy and there is no-one to turn to for confirmation

Customer Insights are: Real Value lies behind HOW the information will be used Fresh and deep insights into customers needs and wants (Apple iPod instead of Walkman) Difficult to obtain Not obvious consumers cant tell you what they need or why they buy Customers unsure of their behavior Most companies are overloaded with data and overwhelmed by it tweets, blogs, Facebook, digital channels Not quantity but quality counts AND more effective use of existing information

Companies are forming customer insights team: (Harness information to turn into customer insights) Include all company functional areas Use insights to create more value for their customers Customer controlled could be a problem

Marketing information system (MIS): consists of people and procedures dedicated to: Assessing the information needs Developing needed information Helping decision makers use the information for customer - They make information available to users in the right form at the right time.

MARKETING INFORMATINS SYSTEM Marketers obtain information from: Internal data , Marketing intelligence , Marketing researchMIS provides information to the companys marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies

Characteristics of a Good MIS : Balancing what the information users would like to have against what they need and what is feasible to offer Internal databases: are electronic collections of consumer and market information obtained from data sources within the company networkMarketing Intelligence: Marketing intelligence is the systematic collection and analysis of publicly available information about consumers, competitors and developments in the marketplace Goal of competitive marketing intelligence is to improve strategic design making by understanding the consumer environment, assessing and tracking competitors actions and providing early warning of opportunities and threats. From quizzing own companys employees, benchmarking competitors products, to researching and monitoring the Internet etc. (Chief Listening Officers = are going through online customer conversations) Marketing Research: Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization A SPECIFIC PROBLEM Companies frequently hire outside research specialist to consult with management on specific marketing problems

Marketing Research Process:

1. Step Defining the problem and research objectives: Exploratory research: Marketing research to gather preliminary information that will help define problems and suggest hypotheses.Descriptive research: To better describe marketing problems, situations, markets or potential ones for a products or the demographics and attitudes of consumersCausal research: Marketing research to test hypotheses about cause-and-effect relationships

2. Step Developing the research plan for collecting informationOnce researchers have defined the problem and objectives, they must determine the exact information needed, develop a plan to gather it effectively. THE RESEARCH PLAN outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments to gather data

The research plan should be a written proposal, especially when large and complex project. The proposal should cover: - Management problem - Research objectives - Information to be obtained - How the results will help management decisions Budget (Research Costs) What data to use? Secondary data consists of information that already exists somewhere, having been collected for another purpose Disadvantages: Relevant, accurate, current, impartial? Questions to be answered in perspective of the secondary data. Advantages: Cost, Speed, no data elsewhere Primary data consists of information gathered for the special research plan

Planning PRIMARY DATA COLLECTION:

1. Research Approaches: (Different types of methods) Observational research involves gathering primary data by observing relevant people, actions, and situations Ethnographic research involves sending trained observers to watch and interact with consumers in their natural environment Survey research is the most widely used method and is best for descriptive informationknowledge, attitudes, preferences, and buying behavior Flexible People can be unable or unwilling to answer Gives misleading or pleasing answers Privacy concerns Experimental research is best for gathering causal informationcause-and-effect relationships

2. Contact Methods: Focus Group: Six to 10 people with a trained moderator Challenges: - Expensive - Difficult to generalize from small group - Consumers not always open and honest

Online Research: Advantages: Low Cost, Speed, High response rate, Good for hard to reach groupsDisadvatages: Restricted internet access, not sure who is answering

3. Sampling PlanSample is a segment of the population selected for marketing research to represent the population as a whole Designing the sample requires three decisions: Who is to be surveyed? How many people should be surveyed? How should the people be chosen?

The different kind of samples:

4. Research InstrumentsQuestionnaires: - Most common - Administered in person, by phone, or online - Flexible - Research must be careful with wording and ordering of questionsQuestions Close-end questions: include all possible answers, and subjects make choices among them Provide answers that are easier to interpret and tabulate Open-end questions: allow respondents to answer in their own words Useful in exploratory researchMechanical Instruments: People meters, Checkout scanners, Neuro-marketing, Eye Cameras (track consumers eyes as they look at marketing materials Print Ads, Web pages, other web applications?)

3. Step Implementing the Research Plan

When the researcher puts the marketing research plan into action. Involves collecting, processing, analyizing, interpreting the data. This can be made by the firms research staff or by outside firm.

4. Step Interpreting and Reporting the FINDS

Analyzing and Using the Marketing Information

Customer Relationship Management (CRM) CRM consists of sophisticated software and analytical tools that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships carefully managed customer touchpoints to maximize customer loyalty Customer Relationship Management Touchpoints Customer purchases, Sales force contacts, Service and support calls, Web site visits, Satisfaction surveys, Credit and payment interactions, Research studies

Distributing and Using Marketing Information Marketing has no value until it is used to gain customer insights and make better marketing decisions. Thus MIS make information readily available to managers and others who need it. Information distribution involves entering information into databases and making it available in a timeuseable manner Intranet provides information to employees and other stakeholders Extranet provides information to key customers and suppliers

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