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BCOR 2201 principles of marketing CU Boulder midterm
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What is Marketing? "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." Four P's of the Marketing Mix Product, Price, Place, Promotion Who markets? Every organization markets, even non-profits and political canidates What is marketed? Goods, services, and ideas are marketed. Goods are physical objects, such as toothpaste, smartphones, or automobiles, that satisfy consumer needs. Services are intangible items such as airline trips, financial advice, or art museums. Ideas are thoughts about concepts, actions, or causes. In this book, goods, services, and ideas are all considered "products" that are marketed. So a product is 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. Value (or "Utility")
The benefits or customer value received by users of the product; it is what consumers pay for in an exchange transaction. Four types of utility form, place, time, possession Form Utility The production of the product or service Place Utility Having the offering available where consumers need it Time Utility Adding value to products by making them available when they're needed. Possession Utility The value of making an item easy to purchase through the provision of credit cards or financial arrangements Target Market
Mutually Beneficial Exchange an exchange that benefits both parties What is 'strategy'? Strategy is a business' long-term plans (What we will do) made to achieve specific goals (What we hope to accomplish). Book:. For our purpose, strategy is an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals. The Organization (Why?) Values - What are our beliefs? Mission - What do we want to be? Culture - How will we act? Organizational Direction (What Business Are We In?): Portfolio Analysis, BCG Matrix The Boston Consulting Group (BCG), an internationally known management consulting firm, has developed business portfolio analysis. It is a technique that managers use to quantify performance measures and growth targets to analyze their firms' SBUs as though they were a collection of separate investments.31 The purpose of this tool is to determine which SBU or offering generates cash and which one requires cash to fund the organization's growth opportunities.
Question Marks (BCG Matrix) (upper right quadrant) SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management's dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest. Options: Build or Harvest Stars (BCG Matrix) (Upper left quadrant) are SBUs with a high share of high-growth markets that may need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows. Options: Build or Maintain Cash Cows (BCG Matrix) (Lower Left quadrant) SBUs that generate large amounts of cash, far more than they can use. They have dominant shares of slow-growth markets and provide cash to cover the organization's overhead and to invest in other SBUs. Options: Maintain or Harvest Dogs (BCG Matrix) (Lower right Quadrant) SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they may no longer be or may not become real winners for the organization. Dropping SBUs that are dogs may be required if they consume more cash than they
SWOT analysis (Internal) strengths, weaknesses, (External) opportunities, threats Ansoff's Matrix - diversification Why do companies go abroad? Companies go abroad to expand their market and increase growth. If the expand with the same product to a new market, this is market development. If they create a new product for the new market, this is diversification. Many companies achieve their growth objectives by expanding internationally. Consumer ethnocentrism the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products comparative advantage The ability of a country to produce a good at a lower cost than another country can. Protectionism
is the practice of shielding one or more industries within a country's economy from foreign competition through the use of tariffs or quotas Cross-Cultural Analysis To market effectively on a global scale, one must analyze the similarities and differences of consumers across global geographies in 5 key areas: Values Customs Cultural Symbols Language Ethnocentricity Values (Cross-Cultural Analysis) what do the residents of a country or region value and hold dear? Customs (Cross-Cultural Analysis) are there traditional ways of behaving in a society that are different from the country that your company comes from? Cultural Symbols (Cross-Cultural Analysis) there are symbols that have deep meaning in certain countries
con: you can lose control of your brand and product Joint venture connecting with an already established company in the country you want to enter. Costs more money but results in higher profit Direct investment Entering a foreign market by developing foreign-based assembly or manufacturing facilities the most risky proposition. Requires the most investment but can provide the biggest profit Country of Origin Effects the belief that a product is superior based on specific attributes and/or rationale Marketing to Bottom of the Pyramid Consumers Affordability Availability Acceptance Awareness Marketing to Bottom of the Pyramid Consumers: Affordability
it must be affordable. One way to achieve this is to create a smaller size to reduce price Marketing to Bottom of the Pyramid Consumers: Availability how will you get the product to your consumer? lower-income consumers lack access to typical retailers; bike delivery system; drones to air-drop Marketing to Bottom of the Pyramid Consumers: Acceptance understanding the daily-lives of these consumers, how will they use this product? Are they more likely to accept it if someone they know is using it? Marketing to Bottom of the Pyramid Consumers: Awareness how do you create awareness? word of mouth campaigns Marketing Research Marketing research is the planning, gathering, and analysis of information in order to make more informed marketing decisions...thereby REDUCING RISK (whole purpose) Risks of Marketing Research Technical risk: Can we make the app? People risk: Will the key players stay together? Financial risk: Can we keep the company well financed? Market risk: Can we get the dogs to eat the dog food?
"What features are most-important to our buyers?" Types of Market Research: Causal / Experimental : assess impact from a variable, determine impact of one factor on another (causation) "Which ad campaign best drives awareness for our product?" "How will our new package design impact sales?" primary data facts and figures that are newly collected for the project Secondary data facts and figures that have already been recorded prior to the project at hand Statistical Inference: Using a probability sample to make generalizations about a larger population MUST USE PROBABILITY SAMPLE to avoid bias
Why segment markets? A business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits. We want homogeneity within the segment... And heterogeneity between segments. ... So that segments react differently to the marketing mix Criteria for Creating Segments geographic: Where you live demographic: income, age, ethnicity, education, family psychographic: What I think- attitudes, beliefs, lifestyle behavioral: What I do- usage, shopping patterns We often COMBINE these criteria to best-segment the market. One Product and Multiple Market Segments
a means of displaying in two dimensions the location of products or brands in the minds of consumers. This enables a manager to see how consumers perceive competing products or brands, as well as the firm's own product or brand "Columbia Uses Ads" article Columbian government displays emotional ads during soccer games to persuade guerrillas to demobilize Ansoff Matrix (Lowest Risk to Highest) The lowest risk strategy is for a company to sell its existing products into existing markets as it knows its customers, has established channels and so on. This strategy Ansoff termed 'Market Penetration'. This is only possible where markets are still growing, or where organizations are prepared to use other elements of the marketing mix (such as price discounting and additional promotional activity) to penetrate the market at the expense of competitors. The second strategic option in the Ansoff Matrix is to develop new products for existing markets (customers), through a 'Product Development' strategy. Here the 'Product' and 'Promotion' elements of the marketing mix will change (as a minimum), so the risk is higher than market penetration. The success of this strategy is dependent on the organization being able to effectively conduct research and insight into their customer and market needs as well as their own internal capabilities and competencies for driving innovation. The third strategic option involves taking existing products into new markets using a 'Market Development' strategy. This is also considered to be risker than market penetration as it can be difficult to understand the complexities of new markets. Key changes in the marketing mix are likely to be 'Place', with consideration of new channels and routes to market, as well as 'Promotion', through promoting to new target segments. The final strategy in the Ansoff Matrix is 'Diversification', which is developing new products for new markets. This is seen as the riskiest strategy of all four, as the organization is moving into an unfamiliar market. However, this risk can be mitigated by undertaking 'related' diversification and it could have the potential to gain the highest returns.
Barriers for Wal-Mart in India Bad roads gov regulations inability to keep food refrigerated and fresh Thugs demanding bribes MAJOR inefficiency Target: How companies learn your secrets Analyzing purchase habits to predict if women were pregnant backfired Cue and Reward Marketing (Febreze) Indians with the razors Had to WACTH the people shave to actually figure it out Coke Targets Marketing to foodies paying people to post instagram with coke and healthy food
