Intro to Marketing Notes

Pranati Katta

Chapter 1: Creating Customer Relationships and

Value through Marketing

Marketing: Delivering Value to Customers

Marketing: the activity, set of institutions, and processes for creating, communication, delivering,
and exchanging offerings that have value for customers, clients, partners, and society at large

Marketing seeks to:

1.​ Discover the needs and wants of prospective customers
2.​ Satisfy the needs and wants of prospective customers

What is needed for marketing to occur:

1.​ Two or more parties (individuals or organizations) with unsatisfied needs
2.​ A desire and ability on their part to have their needs satisfied
3.​ A way for the parties to communicate
4.​ Something to exchange

Discovering and Satisfying Consumer Needs

Discovering a consumer’s needs can take the form of customer surveys, concept tests, market
research, crowdsourcing
Meeting a consumer needs focuses on:
1.​ Focusing on what the customer benefit is
2.​ Learning from past mistakes

What about satisfying a consumer’s needs vs wants?

●​ Need: when a person feels deprived of basic necessities such as food, clothing, and
shelter
●​ Want: a need shaped by a person’s knowledge, culture, and personality

Market: people with both the desire and the ability to buy a specific offering
●​ Target market: one of more specific groups of potential consumers toward which an
organization directs in marketing program

The Four Ps
●​ Product: a good, service, or idea to satisfy the consumer’s needs
●​ Price: what is exchanged for the product
●​ Promotion: a means of communication between the seller and buyer
●​ Place: a means of getting the product to the consumer

Marketing Mix: the controllable factors (product, price, promotion, and place) that can be used by
the marketing manager to solve a marketing problem

Environmental forces: forces beyond a marketer’s control that affect a marketing decision
●​ Social, economic, technological, competitive, and regulatory forces

How Customer Relationships are Built

Customer Value: the unique combination of benefits received by targeted buyers that includes
quality, convenience, on-time delivery, before/after sale service
 ●​ Companies do this by trying to be the “best” in a particular category (price, product,
service, etc)
Relationship marketing: links the organization to its individual customers, employees, supplies,
and other partners for their mutual long-term benefit
●​ Personal, ongoing relationship between the organization and its individual customers that
begins before the sale
●​ Marketing program: a plan that integrates the marketing mix to provide a good, service, or
idea to prospective buyers
●​ Market segments: relatively homogenous groups of prospective buyers who:
○​ Have common needs
○​ Will respond similarly to a marketing action

How Marketing Became so Important

Marketing concept: the idea that an organization should:
●​ Strive to satisfy the needs of the consumers while also
●​ Trying to achieve to achieve the organization's goals
Market Orientation: an organization that focuses its efforts on:
●​ Continuously collecting information about customers’ needs
●​ Sharing this information across departments
●​ Using it to create customer value

Customer Relationship Management (CRM): the princess of identifying prospective buyers,

understanding them intimately, and developing favorable long-term perceptions of the
organization and its offering so that buyers will choose them in the marketplace and become
advocates after their purchase

Social Marketing Concept: the view that organizations should satisfy the needs of consumers in
a way that provides for society’s well-being

Ultimate consumers: the people who use the products and services purchased for a household
Organizational buyers: manufacturers, wholesalers, retailers, service companies, nonprofits,
and government agencies that buy products and services for their own se of for resale

Chapter 2: Developing Successful Organizational

and Marketing Strategies
Organization: a legal entity that consists of people who share a common mission
●​ This motivates them to develop offerings (goods, services, ideas) that create value for
both the organization and its customers

Strategy: an organization’s long-term course of action designed to deliver unique customer

experiences while achieving its goals
Organizational structure
●​ Corporate level: where top management directs overall strategy for the organization
●​ Strategic Business-Unit (SBU): a subsidiary, division, or unit of an organization that
markets a set of related offerings to a clearly defined target market
○​ Managers set more specific strategic direction for their businesses
●​ Functional level: where groups of specialists actually create value for the organization
○​ Department: refers to those specialized functions such as marketing and finance

Strategy in Visionary Organizations

Organizational purpose: describes why an organization exists, what problems it wishes to solve,
and who it wants to be to every person to touches though its work
●​ Helps organizations create deeper connections with consumers and suppliers, do more
for the community, etc
Core Values: the fundamental, passionate, and enduring principles that guide an organization;s
conduct over time.
●​ Capture the firm’s heart and soul and serve to inspire and motivate its stakeholders
Mission: a statement of the organization;s function in society that often identifies its customers,
markets, products, and technologies
●​ Sometimes interchangeable with vision, a clear, concise, meaningful statement
Organizational culture: the values, ideas, attitudes, and norms of behavior that are learned and
shared among the members of an organization
Business: the clear, broad, underlying industry or market sector of an organization;s offering
●​ To define this, look at competitors selling similar offerings
Goals/Objectives: statements of an accomplishment of a task to be achieved
●​ Profit: seeking to maximize profits and ROI
●​ Sales: maintaining or increasing sales
●​ Market share: the ratio of sales revenue of the firm to the total sales revenue of all firms in
the industry, including the firm itself
●​ Quality: offer a level of quality that meets or exceeds the cost and performance
expectations of its customers
●​ Customer satisfaction: measured with surveys, complaints
●​ Employee welfare: goal of providing employees with good opportunities and working
conditions
●​ Social responsibility: balance the conflicting goals of stakeholders to promote their overall
welfare, even at the expense of profits

Marketing Plan: a road map for the marketing actions of an organization for a specified future
time period

Marketing Dashboard: the visual display of the essential information related to achieving a
marketing objective

Marketing metric: a measure of the quantitative value or trend of a marketing action or result

Setting Strategic Directions

Where are we now? Where do we want to go?
●​ Competencies: what do we do the best? The special skills, technologies, and resources
that distinguish
●​ Customers: assessing customer needs and preferences
●​ Competitors: being able to distinguish oneself from other offerings in the market

Business portfolio analysis: quantifies performance measures and growth targets to analyze
their firm’s strategic business units as though they were a collection of separate investments
Diversification analysis: helps a firm search for growth opportunities from among current and
new markets as well as current and new products

●​ Market penetration: increasing sales of current products in current markets

●​ Market development: selling current products in new markets
●​ Product development: selling new products to current markers
●​ Diversification: developing new products and selling them in new markers

The Strategic Marketing Process

Strategic marketing process: the allocation of an organization's marketing mix of resources to
reach its target markets and achieve a competitive advantage

Guiding principles underlying the strategic marketing process:

1.​ Customers are different
2.​ Customers change
3.​ Competitors change and react
4.​ Organizational resources are limited

The Planning Phase

Step 1: Conduct a SWOT analysis
 ●​ Situation analysis: taking stock of where the firm of product has been recently, where it is
now, and where it is headed in terms of the organization’s marketing plans and the
external forces affecting it
●​ SWOT: strengths weakness opportunities and threats
○​ Identify changes and trends in the industry
○​ Analyze the organization;s current and potential competitors
○​ Assess the organization itself, including available resources
○​ Research the organization's present and prospective competitors

Step 2: Develop market-product focus, value proposition, and goals

●​ Market segmentation: aggregating prospective buyers into groups that:
○​ Have common needs
○​ Will respond similarly to market action
●​ Customer value proposition: cluster of benefits that an organization promises customers
or segments to satisfy their needs
○​ Points of difference: characteristics of a product of service that make it superior to
competitive substitutes

Step 3: Design a marketing program

Designing the marketing program and mix (four P’s) and its budget
Implementation components:
●​ Obtaining resources
●​ Designing the marketing organization
●​ Defining precise tasks, responsibilities, and deadlines
●​ Executing the marketing program designed in the planning phase
○​ Marketing strategy: the means by which a marketing goal is to be achieved,
characterized by a specific target market and program to reach it
○​ Marketing tactics: detailed day-to-day operational marketing actions for each
element of the marketing mix
Overall:

Chapter 3: Scanning the Market Environment

Environmental Scanning
Environmental scanning: the process of continually acquiring information on events occurring
outside the organization to identify and interpret potential trends
Social Forces
Social forces: the demographic characteristics of the population and its culture
●​ Demographics: describing a population according to selected characteristics such as
age, gender, ethnicity, income and occupation

Generational Cohorts
●​ Baby boomers: the generation born between 1946 and 1964
○​ Retired, more conservative/traditional, in person communication
●​ Generation X: born between 1965 and 1980
○​ Self-reliant, supportive of racial and ethnic diversity, better educated than previous
generations, compliant (respects laws and rules)
●​ Millennials: born between 1981 and 1996
○​ More equal, work-life balance, sustainability
●​ Generation Z: born between 1997 and 2010
○​ Liberal, tech savvy, financially literate, show more emotions, diverse/inclusive

Multicultural marketing: combinations of the marketing mix, that reflect the unique attitudes,
ancestry, communication preferences, and lifestyles of different races

Culture: the set of values, ideas, and attitudes that are learned and shared among the members
of a group

Value consciousness: the concern for obtaining the best quality, features, and performance of a
product or service for a given price
Economic Forces
Economy: the income, expenditures, and resources that affect the cost of running a business
and household

Income types:
●​ Gross income: the total amount of money made in one year by a person, household, or
family unit
●​ Disposable income: the money a consumer has left after paying taxes to use for
necessities such as food, housing, clothing, and transportation
●​ Discretionary income: the money that remains after paying for taxes and necessities

Technological Forces
Technology: inventions or innovations from applied science or engineering research
●​ New authentication technology based on facial, voice, and fingerprint recognition
●​ Blockchain to facilitate instant and efficient digital advertising
●​ Smart speakers, digital assistants, artificial intelligence
Marketspace: an information and communication based electronic exchange environment
occupied by sophisticated computer and telecommunication technologies and digital offerings
●​ E-commerce: the activities that use electronic communication in the inventory,
promotion, distribution, purchase, and exchange of products and services
Internet of Things (IoT): the network of products embedded with connectivity-enables
electronics

Competitive Forces
Competition: the alternative firms that could provide a product to satisfy a specific market’s
needs
●​ Pure competition: many sellers and each has a similar product
●​ Monopolistic competition: many sellers compete with substitutable products within a
price range
●​ Oligopoly: when a few companies control the majority of industry sales
●​ Pure monopoly: when only one firm sells the product
Barriers to entry: business practices or conditions that make it difficult for new firms to enter the
market
●​ Capital requirements, advertising expenditures, product identity, distribution access, cost
to customers of switching suppliers

Regulatory Forces
Regulation: restrictions state and federal laws place on business with regard to the conduct of its
activities
Consumerism: a grassroots movement starting in the 1960s to increase the influence, power and
right of consumers in dealing with institutions
●​ Consumer bill of rights
 ○​ Safety in the products and services consumed
○​ Informed about potential risks, things to know
○​ Choose products and services the consumer wants
○​ Heard in the forms of customer service
Price fixing: competing companies work together to fix prices for higher profits
Self-regulation: where an industry attempts to police itself
●​ Code of conduct: company specific rules that are legal within society

Chapter 4: Ethical and Social Responsibility for

Sustainable Marketing
Ethics: the moral principles and values that govern the actions and decisions of an individual or
group
Laws: society’s values and standards that are enforceable in the courts

Four Factors that Affect Ethical Marketing Behavior

Societal Culture and Norms
●​ Culture serving as a socializing force that dictates what is morally right and just
●​ Societal values and attitudes also affect ethical and legal relationships among individuals

Business Culture and Industry Practices

●​ Business cultures comprise the effective rules of the game, the boundaries between
competitive and unethical behavior, and the codes of conduct in business dealings
●​ Caveat Emptor: let the buyer beware
●​ Consumer Bill of Rights: codified ethics of exchange between buyers and sellers that
include the right to:
○​ Safety – standards for products, risks
 ○​ Be informed – marketers have an obligation to give consumers complete and
accurate information about products and services
○​ Choose – ability to choose between products
○​ Be heard – access to public policymakers regarding complaints about products
●​ Economic Espionage: the clandestine collection of trade secrets or proprietary
information about a company’s competitors

Corporate Culture and Expectations

●​ Code of Ethics: a formal statement of ethical principles and rules of conduct
●​ Whistle-blowers: employees who report unethical or illegal actions of their employers

Personal Moral Philosophy and Ethical Behavior

●​ Moral Idealism: a personal moral philosophy that considers certain individual rights or
duties as universal, regardless of the outcome
●​ Utilitarianism: a personal moral philosophy that focuses on “the greatest good for the
greatest number” by assessing the costs and benefits of the consequences of ethical
behavior

Understanding Social Responsibility for Sustainable Marketing

Social Responsibility: organizations are part of a larger society and are accountable to that
society for their actions

The Three Concepts of Social Responsibility

Profit Responsibility: companies have a simple duty to maximize profits for their owners or
stockholders
●​ Use its resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game (engages in open and free competition without
deception of fraud) – Milton Friendman values

Stakeholder Responsibility: focuses on the obligations an organization has to those who can
affect achievement of its objectives
●​ Consumers, employees, suppliers, and distributors

Societal Responsibility: obligations organizations have to:

●​ The preservation of the ecological environment
●​ The general public
○​ Triple bottom line: recognition of the need for organizations to improve the state of
people, the planet, and profit simultaneously if they are to achieve sustainable,
long-term growth
●​ Sustainable Marketing: seeks to meet today’s (global) economic, environmental, and
social needs without compromising the opportunity for future generations to meet theirs
●​ Green Marketing: efforts to produce, promote, and reclaim environmentally sensitive
products
 ●​ Cause Marketing: when the charitable contributions of a firm are tied directly to the
customer revenues produced through the promotion of one of its products

Social audit: a systematic assessment of a firm’s objectives, strategies, and performance in

terms of social responsibility, consists of five steps:
1.​ Recognition of a firm’s social expectations and the rationale for engaging in social
responsibility endeavors
2.​ Identification of social responsibility causes or programs consistent with the company’s
mission
3.​ Determination of organizational objectives and priorities for programs and activities it will
undertake
4.​ Specification of the type and amount of resources necessary to achieve social
responsibility objectives
5.​ Evaluation of social responsibility programs and activities undertaken and assessment of
future involvement

Sustainable development: conductive business in a way that protects the natural environment
and embraces diversity, equity, and inclusion in its business practices while making economic
progress

Chapter 5: Understanding Consumer Behavior

Consumer Behavior: the actions a person takes in purchasing and using products and services,
including mental and social processes that come before and after these actions

Consumer Purchase Decision Process and Experience

Purchase decision process: the stages a buyer passes through in making choices about which
products and services to buy

1. Problem Recognition – perceiving a difference between a person’s ideal and actual situations
big enough to trigger a decision
2. Information Search – after recognizing a problem, when a consumer begins to search for
information
●​ Scanning memory for previous experiences with products or brands
●​ External search for information when past experience or knowledge is insufficient
○​ Personal sources – relatives, friends, special networking sites
○​ Public sources – product-rating organizations, government agencies
○​ Market-dominated sources – information from sellers including advertising,
company websites, salespeople
3. Alternative Evaluation – clarifies information gathered by:
●​ Suggesting criteria to use for the purchase
●​ Yielding brand names that might meet the criteria
●​ Developing consumer value perceptions
●​ Evaluative criteria – represent both the objective attributes of a brand and the subjective
ones you use to compare different products and brands
4. Purchase Decision – deciding from whom to buy and when to buy
●​ Factors: brand, sales, store/website appeal, ease of shopping experience
●​ Evaluation of product attributes and seller characteristics
5. Postpurchase Behavior – a customer’s use experience or consumption
●​ Cognitive dissonance – buyer’s remorse, seeking information to confirm your choice
○​ Happens when customer has high expectations
○​ Or when the product doesn't work
○​ More common with high risk purchases
■​ Brands can provide warranties, reimbursements, etc to ease this
●​ Customer satisfaction: buying experience, satisfaction, retention

Customer Involvement and Problem Solving

Involvement: the personal, social, and economic significance of the purchase to the consumer
●​ High involvement: expensive item, has serious personal consequences, and/or could
reflect one’s social image
●​ Low involvement products place emphasis on
○​ Maintain product quality
○​ Avoiding stockout situations so that buyers don’t substitute a competing brand
○​ Using repetitive advertising messages that reinforce a consumer’s knowledge or
assure buyers made the right choice
Extended Problem Solving – each of the five stages of the consumer purchase decision process
is used and considerable time and effort are devoted to the search for external information and
the identification and evaluation of alternatives
●​ Used in high involvement purchase situations for items such as automobiles and audio
systems
Limited Problem Solving – consumers seek information or rely on a friend to help them evaluate
alternatives
●​ Use a moderate number of attributes, appropriate for purchase situations that do not merit
a great deal of time or effort
Routine Problem Solving – consumers recognize a problem, make a decision, and spend little
effort seeking external information and evaluating alternatives
●​ Habitual, low-involvement decision making

Situational Influences: the five influences that have an impact on the purchase decision process
1.​ The nature of the purchase task
2.​ Social surroundings
3.​ Physical surroundings
4.​ Temporal effects
5.​ Antecedent states

Consumer touchpoints: a marketer’s product, service, or brand points of contact with a

consumer from start to finish in the purchase decision process
●​ Consumer journey map: a visual representation of all the touchpoints for a consumer
who comes into contact with a company’s products, services, or brands before, during,
and after a purchase
Psychological Influences on Consumer Behavior
Motivation: the energizing force that stipulates behavior to satisfy a need
●​ Safety needs, social needs, personal needs, self-actualization needs
Personality: a person’s consistent behaviors or responses ro recurring situations
●​ Reveals a person’s self concept, or the way people see themselves and the way they
believe others see them
Perception: the process by which an individual selects, organizes, and interprets information to
create a meaningful picture of the world
●​ Selective perception – a filtering of exposure, comprehension, and retention
○​ Selective exposure – when people pay attention to messages that are consistent
with their attitudes and beliefs and ignore messages that are inconsistent with
them
○​ Selective comprehension – interpreting information so that it is consistent with
your attitudes and beliefs
○​ Selective retention – consumers do not remember all the information they see,
read, or hear, even minutes after exposure to it
○​ Subliminal perception – you see or hear messages without being aware of them
●​ Perceived risk: the anxiety felt because the consumer cannot anticipate the outcomes of
a purchase but believes there may be negative consequences

Learning: those behaviors that result from repeated experience and reasoning
●​ Behavioral learning – the process of developing automatic responses to a situation built
up through repeated exposure to it
○​ Drive, cue, response, and reinforcement
●​ Cognitive learning – making connections between two or more ideas or simply observing
the outcomes of others’ behaviors and adjusting your own accordingly
●​ Brand loyalty: a favorable attitude toward and consistent purchase of a single brand
brand over time

Attitude: a learned preposition to respond to an object or class of objects in a consistently

favorable or unfavorable way

Beliefs: a consumer’s subjective perception of how a product or grand performs on different

attributes. Based on personal experience, advertising, and discussions

Sociocultural Influences on Consumer Behavior

Opinion leaders: individuals who exert direct or indirect social influence over others
Word of mouth: influencing of people during conversations

Reference Groups: people to whom an individual looks as a basis for self-appraisal or as a

source of personal standards
●​ Brand community: a specialized group of consumers with a structured set of
relationships involving a particular brand, fellow customers of that brand, and the product
in use
Social class: the relatively permanent, homogenous divisions in a society into which people
sharing similar values, interests, and behavior can be grouped

Family life cycle: the distinct phases that a family progresses through from formation to
retirement, each phase bringing with it identifiable purchasing behaviors
●​ Information gatherer
●​ Influencer
●​ Decision maker
●​ Purchaser
●​ User

Subcultures: subgroups within the larger, or national, culture with unique values, ideas, and
attitudes

Chapter 6: Understanding Organizations as

Customers

Business-to-Business Marketing and Organizational Buyers

Business-to-business marketing: the marketing of products and services to companies,
governments, or non-profit organizations for use in the creation of products or services that they
can produce and market to others

Organizational buyers: manufacturers, wholesalers, retailers, service companies, and

government agencies that buy products and services for their own use or resale
●​ Industrial markets – reprocess a product or service they buy before selling it again to the
next buyer
●​ Reseller markets – buy physical products and resell them again without any reprocessing
●​ Government markets – federal, state, and local agencies that buy goods and services for
the constituents they serve
NAICS (North American Industry Classification System): the measurement of industrial,
reseller, and government markets, a six digit code system
Characteristics of Organizational Buying

Derived demand: the demand for industrial products and services is driven by or derived from
demand for consumer products and services
Organizational Buying Criteria – objective attributes of the supplier’s products and services and
the capabilities of the supplier itself
1.​ Price
2.​ Ability to meet the quality specifications required for the item
3.​ Ability to meet required delivery schedules
4.​ Technical capability
5.​ Warranties and claim policies
6.​ Past performance
7.​ Production facilities and capabilities
Supplier partnership – when a buyer and a seller adopt mutually beneficial objectives and policies
for the purpose of lowering cost or increasing value

The Organizational Buying Function, Process, and Buying Center

Organizational buying behavior: the decision making process that organizations use to establish
the need for products and services and identify, evaluate, and choose among alternative brands
and suppliers

Buying center: the people in organizations that participate in the buying process who share
common goals, risks, and knowledge important to a purchase decision
●​ Users – the people in the organization who actually use the product or service
●​ Influencers – affect the buying decision, usually by helping define the specifications for
what is bought
 ●​ Buyers – have formal authority and responsibility to select the supplier and negotiate the
terms of the contract
●​ Deciders – have the formal or informal power to select or approve the supplier that
receives the contract
●​ Gatekeepers – control the flow of information in the buying center
Buy classes: consist of three types of organizational buying situations
●​ New buy – a first-time buyer of the product or service
○​ Involves greater potential risks in the purchase, so the buying center is enlarged to
include all those who have a stake in the new buy
●​ Straight rebuy – the buyer reorders an existing product of service from the list of
acceptable suppliers, probably without even checking with users of influencers from
different departments
●​ Modified rebuy – the users, influencers, or deciders in the buying center want to change
the product specifications, price, delivery schedule, or supplier

Online Buying in Business-to-Business Marketing

E-marketplaces: the creation of inline trading communities such as B2B exchanges, e-hubs
1.​ Thousands of geographically dispersed buyers and sellers
2.​ Volatile prices caused by demand and supply fluctuations
3.​ Time sensitivity due to perishable offerings and changing technologies
4.​ Easily comparable offerings between a variety of sellers

Traditional auction: a seller puts up an item for sale and would be buyers are invited to bid in
competition with each other
Reverse auction: a buyer communicates a need for a product or service and would be suppliers
are invited to bid in competition with each other

Chapter 8: Marketing Research: From Customer

Insights to Actions

The Role of Marketing Research

Marketing research: the process of defining a marketing problem and opportunity, systematically
collecting and analyzing information, and recommending actions
Define the Problem
Research objectives
●​ Exploratory research – provides ideas about a vague problem or question
●​ Descriptive research – involves trying to find the frequency with which something occurs
or the extent of a relationship between two factors
●​ Causal research – tries to determine to extent to which the change in one factor change
another one
Measures of success: criteria or standards used in evaluating proposed solutions to the problem

Develop the Research Plan

Constraints: the restrictions placed on solutions to a problem such as time and money available
to solve a problem

Collecting data
●​ Concepts – ideas about products or services
●​ Methods – the approaches that can be used to collect data to solve all or part of a problem
○​ Observing behavior
○​ Asking users questions

Collect Relevant Information

Data: the facts and figures related to the project
●​ Secondary data: the facts and figures that have already been recorded prior to the project
at hand
○​ Internal – records within a company
■​ Marketing input data – the effort expended to make sales
■​ Marketing outcome data – relate to the results of the marketing efforts
○​ External – published data from outside the organization
○​ Advantages: time saving since data has already been collected, and low cost such
as free reports
●​ Primary data: the facts and figures that are newly collected for the project
 ○​ Observational data: the facts and figures obtained by watching how people
actually behave
○​ Questionnaire data: the facts and figures obtained by asking people about their
attitudes, awareness, intentions, and behaviors
■​ Individual interviews, depth interviews, focus groups, surveys
■​ Dichotomous questions – allows only “yes” or “no” as a response
■​ Semantic differential scale – five point scale which the opposite ends have
one or two word adjectives that have opposite meanings
○​ Social media, panels/experiments, data analytics, data mining
■​ Information technology: all of the computing resources that collect, store,
and analyze data
○​ Cross tabulation: a method of presenting and analyzing data involving two or
more variables to discover relationships in the data

Develop Findings
●​ Analyze data and find patterns in the findings
●​ Present findings – should be clear and understandable, as succinct as possible

Take Marketing actions

●​ Make action recommendations
●​ Implement the action recommendations
●​ Evaluate the results
○​ Evaluating the decision itself – monitoring the marketplace to determine if action is
necessary in the future
○​ Evaluating the decision process used – what marketing research and analysis
used to develop the recommendations effectively?

Sales Forecasting techniques

Sales forecast: the total sales or a product that a for expects to sell during a specified time period
under specified environmental conditions and its own marketing efforts

Judgements of the Decision Maker

●​ Lost-horse forecast – starting with the last known value of the item being forecast, listing
the factors that could affect the forecast, assessing whether they have a positive or
negative impact, and making the final forecast
Surveys of Knowledgeable Groups
●​ Survey of buyers intentions forecast – asking prospective customers if they are likely to
buy the product during some future time period
●​ Salesforce survey forecast – involves asking the form’s salespeople to estimate sales
during a forthcoming period
Statistical Methods
●​ Trend extrapolation – extending a pattern observed in fast data into the future
Chapter 9: Market Segmentation, Targeting, and
Positioning
Market segmentation: aggregating prospective buyers into groups or segments that have
common needs and will respond similarly to a marketing action
●​ Product differentiation: when a firm uses different marketing mix actions such as product
features and advertising to help consumers perceive the product as being different and
better than competing products

Market-product grid: a framework to relate the market segments of potential buyers to products
offered or potential marketing actions

Segmentation Strategies
One product and multiple market segments – avoids extra costs of developing and producing
additional versions of the product
●​ Magazines, movies, books
Multiple products and multiple market segments – best if it meets customers’ needs better,
doesn't reduce quality or increase price
Segments of One: Mass Customization – each customer has unique needs and wants and
desired exceptional customer service
●​ Manufacturing a product only when there is an order from a customer
Segmentation Trade-Off
●​ Synergy: the increased customer value achieved through performing organizational
functions such as marketing or manufacturing more efficiently
●​ Cannibalization: when the increased customer value involves adding new products or a
new chain of stores, are the new products or chains simply stealing customers and sales
from the older, existing ones?

Steps in Segmenting and Targeting Markets

Step 1: Group Potential Buyers into Segments
Criteria to use in forming the segments
●​ Simplicity and cost-effectiveness of assigning potential buyers to segments
●​ Potential for increased profit
○​ The best segmentation approach is the one that maximizes the opportunity for
future profit and ROI
●​ Similarity of needs of potential buyers within a segment
○​ Similar product feature needs or advertising media used
●​ Difference of needs of buyers among segments
○​ Combine segments if increased sales don’t offset extra costs
●​ Potential of a marketing action to reach a segment

Ways to segment consumer markets

1.​ Geographic segmentation – where prospective customers live or work
2.​ Demographic segmentation – based on objective physical, measurable or other
classification attribute
3.​ Psychographic segmentation – based on some subjective mental or emotional attributes
or needs of prospective customers
4.​ Behavioral segmentation – based on some observable actions or attitudes by prospective
customers
a.​ Usage rate: the quantity consumed or patronage during a specific period
b.​ 80/20 rule: a concept that suggests 80 percent of a form’s sales are obtained from
20 percent of its customers

Customer lifetime value (CLV): the financial worth of a customer to a company over the course of
their relationship

Personas: character descriptions of a brand’s typical customers

●​ Creates fictional character narratives, complete with images, in one page descriptions or
snapshots that capture the personalities, values, attitudes, beliefs, demographics, and
expected interactions of a typical user with a brand

Step 2: Group Products to be Sold into Categories

Grouping the products based on which customer segments would be most likely to purchase and
interact with them

Step 3: Develop a Market-Product Grid and Estimate the Size of Markets

A framework to relate the market segments of potential buyers to products offered or potential
marketing actions by an organization
Step 4: Select Target Markets
If a form picks too narrow a set of segments, it many fail to reach the volume of sales and profits it
needs, if it selects too broad a set of segments, it may spread its marketing efforts so thinly that
the extra expense exceeds the increased sales and profits

Criteria for selecting the target segments:

●​ Market size
●​ Expected growth – market size could be small now, but could grow significantly in the
future
●​ Competitive position – the less competition, the more attractive a segment is
●​ Cost of reaching the segment – an inaccessible segment should not be pursued
●​ Compatibility with the organization’s objectives and resources

Step 5: Take Marketing Actions to Reach Target Markets

Developing and executing an action plan in the form of a marketing program
●​ Repeat, modify, or drop advertising actons
●​ Keeping an eye on competition

Marketing synergies – an opportunity for efficiency in terms of market segment

Product synergies – an opportunity for efficiency in research and development and production

Positioning the Product

Product positioning: the place a product occupies in consumers’ minds based on important
attributes relative to competitive products
●​ Product repositioning: changing the place a product occupies in a consumers’ mind
relative to competitive products

Head to head positioning – competing directly with competitors on similar product attributes i the
same target market
Differentiation positioning – seeking a less competitive smaller market niche in which to locate a
brand

Product positioning statement – succinct written statement derived from the company’s
customer value proposition that apply to specific products
Discovering the perceptions in the minds of potential customers:
1.​ Identify the important attributes for a product or brand class
2.​ Discover how target customers rate competing products or grands with respect to thee
attributes
3.​ Discover where the company’s product or brand is on these attributes in the minds of
potential customers
4.​ Reposition the company’s product or brand in the minds of potential customers
Perceptual map: a means of displaying in two dimensions the location of products or brands in
the minds of customers, enabling a manager to see how consumers perceive competing
products or brands

Chapter 10: Developing New Products and Services

What are Products and Services?

Product: a good, service, or idea consisting of a bundle of tangible and intangible attributes that
satisfies consumers’ needs and is received in exchange for money or something else of value
●​ Good – has tangible attributes that a consumers’ five sense can perceive
○​ Nondurable Good – an item consumed in one or few uses such as food products
and fuel
○​ Durable Good – one that usually lasts over many uses such as appliances, cars,
and smartphones
●​ Services: intangible activities or benefits that an organization provides to satisfy

Consumer products: products purchased by the ultimate consumer, differ in terms of

1.​ The effort the consumer spends on the decision
2.​ The attributes used in making the purchase decision
3.​ The frequency of the purchase

●​ Convenience products: items that the consumer purchases frequently, conveniently, and
with a minimum shopping effort
●​ Shopping products: items for which the consumer compares several alternatives on
criteria such as price, quality, or style
●​ Specialty products: items that the consumer makes a special effort to search out and buy
●​ Unsought products: items that the consumer does not know about or knows about but
does not initially want

Business products: products organizations buy that assist in providing other products for resale
●​ Components – items that become part of the final product
●​ Support products – items used to assist in producing other products and services
○​ Installations
○​ Accessory equipment
○​ Supplies
○​ Industrial services

Services can be classified according to whether they are delivered by

1.​ People or equipment
2.​ Business firms or nonprofit organizations
3.​ Government agencies

Product item: a specific product that has a unique brand, size, or proce
Product line: a group of product or service items that are closely related because they satisfy a
class of needs, are used together, are sole to the same customer group, are distributed through
the same outlets, or fall within a given price range

Product mix: all the product lines offered by an organization

New Products and Why they Succeed or Fail

What is a new product?
●​ If a product is functionally different from existing products, it can be defined as new
●​ In terms of their effects on consumption, classifying new products according to the degree
of learning required by the consumer

●​ Legal terms –a product up to six months after it enters regular distribution

●​ Organization terms
○​ Product line extension
○​ Significant jump in innovation or technology
○​ Brand extension involving putting an established brand name on a new product in
an unfamiliar market
○​ Revolutionary product that creates value for the consumer
Protocol: a statement that, before product development begins, identifies
1.​ A well-defined target market
2.​ Specific customer needs, wants, and preferences
3.​ What the product will be and do to satisfy consumers

New product failures

●​ Insignificant point of difference – not having superior characteristics that deliver unique
benefits to the user
●​ Incomplete market and product protocol before product development starts – design a
vague product for a phantom market
●​ Failure to satisfy customer needs on critical factors – problems on one or two critical
factors can kill the product, even though the general quality is high
 ●​ Bad timing – product is introduced too soon, too late, or when consumer tastes and
preferences are shifting dramatically
●​ No economical access to buyers
●​ Poor execution of the marketing mix – brand name, package, price, promotion, or
distribution kills the product
●​ Too little market attractiveness – target market is too small or competitive to warrant the
huge expenses necessary to reach it
●​ Poor product quality – a product is not thoroughly tested

Organizational Inertia in new product failures

●​ Encountering “groupthink” in task force and committee meetings – people are afraid to
speak up if they think a product is negative
●​ Avoiding the “not invented here (NIH)” syndrome – great ideas get rejected because they
come from outside
○​ Open innovation: practices and processes that encourage the use of external as
well as internal ideas and internal as well as external collaboration when
conceiving, producing, and marketing new products and services

The New-Product Development Process

New-product development process: the seven stages an organization goes through to identify
opportunities and convert them into salable products or services

Stage 1: New-Product Strategy Development

New-product strategy development: defines the role for a new product in terns of the firm’s
overall objectives
●​ Uses SWOT analysis & environmental scanning to assess its strengths and weaknesses
relative to the trends it identifies as opportunities or threats
●​ Rooted in its business model

Stage 2: Idea Generation

Idea generation: developing a pool of concepts to serve as candidates for new products, building
upon the previous stage’s results
●​ Goal is to move from “what is” questions that describe the present situation to “what if”
questions that focus on solutions and marketing actions
●​ Suggestions from employees and friends
●​ Customer and Supplier Suggestions – talk to customers and suppliers to discover new
product ideas
○​ “Crowdsourcing” – generating insights leading to actions based on ideas from
massive numbers of people
●​ Research and Development Laboratories – internal and external professional R&D and
innovation laboratories
●​ Competitive Products
●​ Smaller Firms, Universities, and Inventors
 ○​ Partnering with smaller innovators to develop new products and ideas

Stage 3: Screening and Evaluation

Screening and evaluation: internally and externally evaluates new product ideas to eliminate
those that warrant no further effort
●​ Internal Approach – evaluate the technical feasibility if a proposed idea to determine
whether it meets the objectives defined in the new product strategy development stage
●​ External Approach – use concept tests, external evaluations with consumers that consist
of preliminary resting of a new product rather than ana actual finished product

Stage 4: Business Analysis

Business analysis: specifies the features of the product or service and the marketing strategy
needed to bring it to market and make financial projections
●​ Assess the total “business fit” of the proposed new product with the company’s mission
and objectives
●​ Detailed sales and profit financial projections, assessments of the marketing and product
synergies related to existing operations

Stage 5: Development
Development: the stage of the new product development process that turns the idea on paper
into a prototype
●​ Demonstrable, producible product that involves manufacturing the product efficiently and
performing lab and consumer tests

Stage 6: Market Testing

Market testing: involves exposing actual products to prospective consumers under realistic
purchase conditions to see if they will buy
●​ Test marketing – offering a product for sale on a limited basis in a defined area for a
specific time period. There are standard, controlled, and simulated tests
○​ Standard test market – develops a product and then attempts to sell it through
normal distribution channels in a number of test market cities
■​ Regional rollout – product is introduced sequentially into geographical
areas to allow production levels and marketing activities to build up
gradually to support the product
○​ Controlled test market – contracting the entire test program to an outside service
which pays retailers for shelf space
○​ Simulated test markets – qualified participants are shown the product or the
concept and asked about usage, reasons for purchase, and important product
attributes

Stage 7: Commercialization
Commercialization: positions and launches a new product in full scale production and sales
Chapter 11: Managing Successful Products,
Services, and Brands

Charting the Product Life Cycle

Product life cycle: the stages a new product goes through in the marketplace

Introduction stage
Occurs when a product is introduced to its intended target market
●​ Sales grow slowly and profit is minimal
●​ Marketing objective is to create consumer awareness and stimulate the initial purchase of
a product by a consumer
●​ Stimulate primary demand – the desire for the product class rather than for a specific
brand since there are few competitors with the same product
●​ Skimming – company sets a high initial price to help recover the costs of development as
well as capitalize on the price insensitivity of early buyers
●​ Penetration pricing – discourages competitive entry by pricing products low to build unit
volume

Growth Stage
Characterized by a rapid increase in sales
●​ More competitors and more aggressive pricing
○​ Results in increase in profit, peaks in this stage
●​ More repeat purchasers – people who tried the product, were satisfied, and bought again
●​ Changes appear in the product to differentiate a brand from competitors like improved
versions or new features
Maturity Stage
Slowing of total industry sales or product class revenue
●​ Marginal competitors leave the market
●​ Consumers are either repeat purchasers or have tried and abandoned it
●​ Profit declines due to fierce price competition among many sellers and the higher cost of
gaining new buyers

Decline Stage
Occurs when sales drop
●​ Product deletion – dropping the product from the company’s product line
●​ Harvesting – company retains the product but reduces marketing costs

Aspects of Product Life Cycles

Length of the life cycle – consumer products have shorter cycles, technological change
shortens life cycles as innovation replaces old products

Shape of the life cycle – each type suggests different marketing strategies

●​ High learning product –significant customer education is required and there is an

extended introductory period
●​ Low learning product – sales begin immediately since little learning is required by the
consumer and the benefits of purchase are readily understood
○​ Marketing strategy to to broaden distribution quickly to ward off competitors
●​ Fashion product – a style of the times, they are introduced, decline, and then seem to
return
●​ Fad product – experiences rapid sales on introduction and then an equally rapid decline

Product class: the entire product category or industry

 ●​ Product form: pertains to variations of a product within the product class

Diffusion of innovation

●​ Factors affect whether a consumer will adopt a new product or not: usage barriers, value
barriers, risk barriers, and psychological barriers

Managing the Product Life Cycle

Brand/Product manager – manages the marketing efforts for a close knit family of products or
brands
●​ Developing and executing a marketing program for the product line, approving ad copy,
media selection, and package design, extensive data analysis such as sales, market
share, and profit trends
Product modification: altering one or more of a product;s characteristics such as its quality,
performance, or appearance, to increase the product’s value to customers and increase sales

Market modification: a company tries to find new customers, increase a product’s use among
existing customers or create new use situations

Product repositioning: changes the place a product occupies in a consumer’s mind relative to
competitive products
●​ Can do this by changing one or more of the four marketing mix elements
●​ Trading up: adding value to the product though additional features or higher quality
materials
●​ Trading down: reducing a product’s number of features, quality, or price
●​ Reposition as a reaction to a competitor that is adversely affecting sales and market share
●​ Wanting to reach a new market
●​ Catching a rising trend
Branding and Brand Management
Branding: an organization uses a name, phrase, design, symbols, or combination of these to
identify its product and distinguish them from those of competitors
●​ Brand name: any word, device (design, sound, shape, or color) or combination of these
used to distinguish a seller’s products and services
○​ Trademark – identifies that a firm has legally registered its brand name or trade
name so the firm has its exclusive use, preventing others from using it

Brand personality: a set of human characteristics associated with a brand name

Brand equity: the added value a brand name gives to a product beyond the functional benefits
provided
●​ Provides competitive advantage and consumers are willing to pay a higher price for a
certain brand
Brand purpose: the reason why a brand exists, the place it has in consumers’ lives, the solution it
provides to consumers, and the brand’s role in making society better off
●​ Focus on underlying values and beliefs and its identity and meaning

Developing brand equity

1.​ Develop positive brand awareness and an association of the brand in consumers’ minds
with a product class or need to give the brand an identity
2.​ Establish a brand’s meaning in the minds of consumers with respect to functional and
abstract imagery dimension
3.​ Elicit the proper consumer responses to a brand’s identity and meaning
4.​ Create a consumer-brand connection evident in an intense, active loyalty relationship

Brand licensing: a contractual agreement whereby one company allows its brand name or
trademark to be used with products or services offered by another company for a royalty or fee

Picking a good brand name

●​ Should suggest product benefits
●​ Should be memorable, distinctive, and positive
 ●​ Fit the company product or image
●​ Should have no legal or regulatory restrictions
●​ Simple and emotional
●​ Should have favorable phonetic and semantic associations in other languages

Multiproduct branding: a company uses one name for all its products in a product class
●​ Microsoft, Samsung, Sony
●​ Subbranding – combines a corporate or family brand with a new brand to distinguish a
part of its product line from others
○​ Amex gold, blue, green, etc
●​ Brand extension – using a current brand name to enter a different product class

Multibranding: giving each product a distinct name, useful when each brand is intended for a
different market segment
●​ Procter & Gamble
●​ Fighting brands – chief purpose is to confront competitor brands
●​ Higher costs since companies must generate awareness for each new brand name
●​ A product failure won't affect other products since they are in different segments

Private branding: manufactures products but sells them under the brand name of a wholesaler or
retailer

Mixed branding: a firm markets products under its own brand name and that of a reseller
because the segment attracted to the reseller is different from its own market
●​ Whirlpool, Dial

Packaging and Labeling Products

Packaging: any container in which it is offered for sale and on which label information is
conveyed
●​ Label: identifies the product or brand, who made it, where and when it was made, how it is
used, and package contents and ingredients
●​ Communication benefits – directions on how, where, and when to use the product and the
source and composition of the product
 ●​ Functional benefits – providing storage, convenience, or protection to ensuing product
quality
●​ Perceptual benefits – label shape, color, and graphics distinguish one brand from another,
convey brand positioning, and build brand equity

Packaging and Labeling Challenges and Responses

●​ Connecting with Customers – must be continually updated, need to create an aesthetic
and functional design features that attract consumer attention and deliver value
●​ Environmental concerns – amount, composition, and disposal of packaging material
●​ Health, safety, and security – child resistant safety, extending a product’s shelf life
●​ Cost reduction

Chapter 12: Services Marketing

The Uniqueness of Services

Services: intangible activities or benefits that an organization provides to satisfy consumers’
needs in exchange for money or something else of value

Four I’s of Services: intangibility, inconsistency, inseparability, and inventory

●​ Intangible – services can’t be held or touched, or seen before the purchase decision
●​ Inconsistency – services depend on the people who provide them, their quality varies with
each person’s capabilities and day-to-day job performance
●​ Inseparability – consumers cannot and do not separate the deliverer of the service from
the service itself
○​ Depends on the extent to which the consumer must be physically present to
receive the service
●​ Inventory – carrying costs are more subjective
○​ Idle production capacity: when the service provider is available but there is no
demand for the service

Service continuum: the range of tangible to intangible or product-dominant to service-dominant

offerings

Classifying Services
●​ Delivery by people or equipment – equipment based services are more reliable, no need
for an employee to be there (self checkout)
●​ For-profit or nonprofit organizations – nonprofits use excess revenue to allow continuation
of the service
●​ Government sponsored – services provided by the government such as USPS and Peace
Corps
How Consumers Purchase Services
Gap analysis: asks consumers to assess their expectations and experiences in dimensions of
service quality
●​ Influenced by word of mouth, personal needs, past experiences, promotional activities
Customer contact audit: a flowchart of the points of interaction between consumers and the
service provider, or touchpoints
●​ Relationship marketing allows for continuity of a single provider, customized service
delivery, reduced stress, and absence of switching costs

Managing the Marketing of Services

Seven Ps of services marketing: includes people, the physical environment, and process
●​ Product (service) – the marketing mix applies just as much for a service
●​ Price – can be in the form of charges, fees, fares, rates, etc
○​ Off-peak pricing: charging different prices during different times of the day or
during different days of the week to reflect variations in demand for the service
●​ Place (distribution) – important due to the inseparability or services from the producer,
there are rarely intermediaries involved in the distribution of a service
●​ Promotion – shows consumers the benefits of purchasing the service, stressing
availability, location, consistent quality, and efficient courteous service
●​ People – services depend on people for the creation and delivery of the experience
○​ Internal marketing: based on the notion that a service organization must focus on
its employees, or internal market before successful programs can be directed at
customers
○​ Customer experience management (CEM): the process of managing the entire
customer experience with the company
●​ Physical environment – the appearance of the environment in which the service is
delivered
●​ Process – the actual procedures, mechanisms, and flor of activities by which the service
is created and delivered
○​ Capacity management: the service component of the marketing mix that must be
integrated with efforts to influence consumer demand
■​ Demand matches capacity over the duration of the demand cycle
■​ Organization’s assets are used in ways that will maximize the ROI