Cut_Principles

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Published on January 13, 2009

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Marketing Principles : Marketing Principles Dr. Mary Wolfinbarger Class Info : Class Info Syllabus: Find it at my website www.csulb.edu/~mwolfin About Me : About Me Education: Ph.D. 1990, Marketing, University of California, Irvine M.B.P.A. 1985, Business and Public Administration, University of California, Irvine B.S. 1983, English, Vanderbilt University About Me : About Me Professional Experience Internal Marketing : Research for DuPont, Polaroid, Taco Bell, PG&E, Intel, UCIMC Studying online consumer behavior (Center for Research on Information Technology in Organizations) Web strategy consulting: Primal Elements (www.primalelements.com) Present research: Internal Marketing; Senior Internet Usage; email usage for HH decision making for separated spouses (Navy project); Simpsons’ fan sites and discussion groups Lecture: Why Study Marketing? : Lecture: Why Study Marketing? How many of you bought something today? How many have seen or heard an ad today? How many of you consumed something today? How many of you engaged in word of mouth about a product/service today? Reason #1 : Reason #1 Marketing is a fundamental human activity it’s ubiquitous in daily life it happens around the world we can learn to make better consumer decisions Reason #2 : Reason #2 Marketing impacts the economy Marketing (broadly conceptualized) is about 50% of retail sales expenses Healthy marketing systems support economic advance Peter Drucker (writing about lesser developed countries) : Peter Drucker (writing about lesser developed countries) “…in an economy that is striving to break the age-old bondage of man to misery, want and destitution, marketing is…the catalyst for transmutation of latent resources, of desires into accomplishments, and the development of responsible economic leaders and informed economic citizens.” Reason #3 : Reason #3 Marketing management is essential to organizational success Build a better mousetrap? : Build a better mousetrap? …and the world will beat a path to your doorstep. Or does it???? 80-90% of new products fail Same rate for new businesses Reason #4 : Reason #4 Marketing can contribute to societal well-being Reason #5 : Reason #5 It’s about people (consumers) and it’s fun. (Well, it’s more fun than accounting and calculus anyway…) Student Criticisms of Marketing : Student Criticisms of Marketing Marketing communications are not always honest “They can sometimes play on people’s emotions and fears and can cause them to buy things they really don’t need.” It can “psychologically manipulate” consumers (they sell the “sizzle,” not the steak). Youth may be targeted by companies selling adult products (e.g. alcohol) Marketing sells products that can be harmful Some ads are crude “[Sex] is not necessary to sell something, and if it is, the product is not worth much!” Student Criticisms of Marketing : Student Criticisms of Marketing Telemarketers! Spam! Pop-up ads! Adware! “Sometimes I feel like I am being inundated with information involving every medium of communication, particularly advertising.” “Marketing is ubiquitous and unrelenting to the point where it is almost inescapable…it exploits and creates stupid holidays, making us feel guilty if we don’t buy presents for our family and friends.” Sometimes minorities are stereotyped Advertising can be clichéd or corny “99% of commercials are so boring.” Fashion advertising emphasizes an unattainable body My criticism of marketing : My criticism of marketing Exalts the buying and consuming experience (of course) Encourages us to find meaning in things Preaches that buying things makes you happy Implicitly demeans self-control, gratitude, and transcendent (non-material) values (e.g. buy now, you deserve it….) Transforms products into objects of affection and desire through promotions and branding My criticism of marketing : My criticism of marketing Sometimes takes advantage of consumer lack of knowledge (let the buyer beware) Especially true for goods and services with “credence” qualitites Examples: car repair, plumbing, medical services, pharmaceuticals One more criticism?:The “Paradox of Choice” : One more criticism?:The “Paradox of Choice” Sociologist Barry Schwartz shows that more choice can make us less happy Choice has increased over time “Maximizers” may get more than “satisficers” but may be less happy Choice increases the burdens of making “good decisions” and regret over suboptimal decisions Availability of choice raises expectations What’s the solution? What’s good about marketing? : What’s good about marketing? Usually seeks to be successful by focusing on satisfying consumer desires (needs?) Often delivers customers what they want, when they want it, at a price they are willing to pay (More on customer focus later!) What’s the alternative? :  Conceptualizing Marketing What is marketing anyway? Types of Marketing “Offerings” : Types of Marketing “Offerings” Goods are tangible Types of Marketing “Offerings” : Types of Marketing “Offerings” Services an experience provided by the application of human or mechanical skill Examples – haircut, dry cleaning, consulting, movies… How services differ : How services differ Can’t inventory Intangible Quality control difficult Often a real time performance Consumer participation A third marketing “offering” : A third marketing “offering” Ideas -- the most intangible of all at worst, “spin” at best, worthy social causes are promoted Is marketing persuasion? (MOTL) Marketing as Selling Ideas : Marketing as Selling Ideas “Social marketing has been with us for a long time. The Greeks and Romans launched campaigns to free slaves. During the Industrial Revolution, campaigns were mounted to abolish debtor prisons and child labor and grant voting rights to women. In the past century social reform campaigns in Selling ideas/Social Marketing : Selling ideas/Social Marketing America have spoken for abolition, temperance and prohibition, and women’s suffrage movements.” --James Mintz, Marketing News Common Social Marketing Concerns : Common Social Marketing Concerns Health Environment Education Safety The Marketing of Ideas/ Causes : The Marketing of Ideas/ Causes “Charitable causes and social services campaigns for funds and donations are everywhere: on TV and radio, in newspapers and magazines, in point of purchase material, in public service announcements between the coming attractions and the main feature at the local movie theater…” Cause-related marketing : Cause-related marketing Supporting causes as part of marketing program Matching: e.g. Coors and clean water Pro bono work : Pro bono work Advertising and media do free work Example: Partnership for a Drug-free America Goods, Services, Ideas and... : Goods, Services, Ideas and... You can market yourself! Marketing Yourself! : Marketing Yourself! “Starting today you are a brand. You’re every bit as much a brand as Nike, Coke, Pepsi, or the Body Shop…start thinking like your favorite brand manager and ask yourself…What is it that my product or service does that makes it different?…Start by identifying the qualities or characteristics that make you distinctive from your competitors or your colleagues…What would your colleagues…say is your greatest and clearest strength? Your most noteworthy personal trait?” -- Tom Peters “The Brand Called You,’ In Fast Company, Sept. 1997 Profit vs. Not-for Profit : Profit vs. Not-for Profit Have “customers” AND donors Customers may not want product Donors may want to be involved in decisions No bottom line Profit vs. Not-for Profit : Profit vs. Not-for Profit Lack of marketing sophistication Marketing as Exchange : Marketing as Exchange The goal of marketing is to facilitate exchanges Alternatives to Exchange : Alternatives to Exchange Origination Force Transfer Requirements for exchange : Requirements for exchange Two or more parties Parties have unsatisfied wants/needs Parties have something of value to exchange Each party has something other party wants Means of Communication & delivery (marketing!) Requirements for Market Exchange : Requirements for Market Exchange A “marketplace” A medium of exchange Specialization of labor Marketing management/coordination Concepts of Marketing : Concepts of Marketing The Marketing Concept : The Marketing Concept Achieve success by focussing on consumer needs Adapt the business to deliver what consumers want Be profitable The most important principle of marketing? “I would say the most important principle of marketing is to know your audience.” (audience=customer) Keys to Implementing the Marketing Concept : Keys to Implementing the Marketing Concept Research Departmental Integration Commitment to “consumer sovereignty” On Research : On Research “More companies are increasing their research activities to pay closer attention to what consumers want. To them, the mission of marketing isn’t just persuasion, but learning how to satisfy consumer wants. Among other things, the customer demand for quality and reliability…has taught companies that it’s easier to sell products that meet the true need of consumers.” Wall Street Journal The Marketing Mix : The Marketing Mix 4 traditional P’s: Product Price Promotion Place (Distribution) 2 more: Preparedness Personnel Definition of Marketing (until last year) : Definition of Marketing (until last year) “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.” American Marketing Association Definition of Marketing, www.marketingpower.com New AMA Definition (late 2004) : New AMA Definition (late 2004) “Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” Key new ideas: “value,” “customer relationships,” (the “new era orientation”), “stakeholders” (note: your text explains the “value chain”) What’s gone? “Create exchanges,” the listing of the 4 P’s, “satisfying individual and organizational goals” Creating value rather than satisfaction; benefiting stakeholders rather than indivs and organs. The Marketing Concept? : The Marketing Concept? “Selling is not marketing. Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product…[selling] does not, as marketing invariably does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs.” – Theodore Levitt, “Marketing Myopia” 1960 Other Marketing Philosophies : Other Marketing Philosophies Production Concept Product Concept Selling Concept Societal or Social Marketing Concept Production Concept : Production Concept Mass production Lower prices Example: Ford’s Model T Production Concept : Production Concept Assumption : consumers will buy it if it’s cheap Makes sense when little differentiation is demanded Makes sense for price sensitive segments The Production Concept : The Production Concept Why did Henry Ford’s production concept finally fail? Product Concept : Product Concept Customers want bells and whistles and will pay “The Engineering Fallacy” May result in unwanted products -- e.g. clear whiskey May make sense for some segments -- e.g. hobbyists Some segments and markets are novelty-driven Product Concept : Product Concept May overlook segments wanting simpler products Selling Concept : Selling Concept Company relies on sales talent May result in high pressure sales tactics Makes more sense when new product’s benefits are hard to understood Selling Concept : Selling Concept Can be fall-back position of marketers without enough product development More likely when salespeople feel they have one opportunity Societal (Social) Marketing Concept : Societal (Social) Marketing Concept Deliver consumers desired satisfactions effectively and efficiently AND serve societal well-being Societal (social) Marketing Concept : Societal (social) Marketing Concept Four considerations consumer needs and wants consumer best interests profit society’s best interest (Whew!) Societal (social) Marketing Concept : Societal (social) Marketing Concept Any problems with this? Consumers can want what isn’t good for them Are businesses qualified to determine what is good for society? Doing social good works can make it more difficult to be profitable Internal and External Environment : Internal and External Environment Internal Environment : Internal Environment Increasing emphasis on internal departmental integration AND teamwork Marketing conflicts Selected Conflicts : Selected Conflicts Selected Conflicts : Selected Conflicts R & D Basic Research Functional Features Marketing Applied Research Sales Features Selected Conflicts : Selected Conflicts Engineering Few Models Long Lead Design Time Marketing Many Models Short Lead Time Selected Conflicts : Selected Conflicts Finance Strict spending rationales Strict budgets Marketing Intuitive spending rationales Flexible budgets Selected Conflicts : Selected Conflicts Accounting Standard Transactions Marketing Special Terms & Discounts Selected Conflicts : Selected Conflicts Credit Low Credit Risks Tough Credit Terms Marketing Medium Risks Easy Terms How to Resolve Conflicts : How to Resolve Conflicts Market Orientation What is Market Oriented? : What is Market Oriented? Market information shared across the company Interfunctional decisions Result: well-coordinated decisions executed with commitment What is Market Oriented? : What is Market Oriented? “Serial communication, when one function passes an idea or request to another routinely without interaction -- like tossing a brick with a message tied to it over a wall -- can’t build the commitment needed in a customer-driven company…” What is Market Oriented? : What is Market Oriented? “…joint opportunity analysis, in which functional and divisional people share ideas and discuss alternative solutions and approaches, leverages the different strengths of each party.” --Benson Shapiro, Harvard Business Review What is Market-Oriented? : What is Market-Oriented? “Marketing…is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.” --Peter Drucker Empirical Study, Marketing Science Institute : Empirical Study, Marketing Science Institute Compared R&D, cost-cutting and market orientation ( “customer focus”) Included new biz ventures in Japan and U. S. Market oriented co’s were more profitable R&D oriented co’s add features customers may not want Cost-cutting strategy often easy to copy External Environment : External Environment Channel: Set of firms that cooperate to make the product available Markets consumer markets business markets government markets international markets secondary markets The External Environment : The External Environment Competitors Publics Financial Publics Media Publics Citizen Action Publics The General Public The External Environment : The External Environment Citizen Action Publics “Most boycott groups…don’t expect or even hope to gut a company’s sales with their protests. Nor do companies fear it. Still, even a small decline can have an effect…a boycott that affects sales by 5% is considered cause for concern by companies. “Further, those likely to boycott are often the most valuable demographic group…two income families, holding college degrees and hailing from the big-spending thirty-something crowd.” Wall Street Journal The External Environment : The External Environment The Macro Environment Demographics Cultural Forces Economic Forces-disposable income, foreign economies Technological Forces The Regulatory/Legal Environment Government: Federal Trade Commission Non-Government: BBB, NARB, Business and Trade Associations Trends in the Macroenvironment : Trends in the Macroenvironment Demographics Info from www.census.gov Trends in the Macroenvironment : Trends in the Macroenvironment Estimated U. S. Population: About 295,000,000 One birth every 8 seconds One death every 12 seconds Demographics : Demographics Estimated World Population Over 6 billion! (6.4 billion) 4.2 births/second 1.7 deaths/second Changing face of U. S. (2000 Census) : Changing face of U. S. (2000 Census) White 77.1% Black/African American 12.9 American Indian or Alaska Native 1.5 Asian 4.2 Native Hawaiian/other Pacific Islander .3 Some other race* 6.6 *Adds to more than 100% because 2.4% of people reported 2 or more races Hispanic (of any race**) 12.5% **(69% of Hispanics are classified as “white”) Seniors : Seniors 15% of population is currently 65+ Estimate for 2050: One in four! Demographics : Demographics Median Income (2000) U. S. $42, 148 California 46,802 Maryland 51,695 West Va 29,052 Colorado 48,506 Texas 39,842 Alabama 33,105 Demographics : Demographics *75% of jobs in services *Marrieds just over 50% of households *Nearly 1/4 of households are of single people Education (25+) : Education (25+) *H. S. degree or higher 80.4% *B. S. or higher 24.4 *Grad school 15.5 Technology : Technology B2C Commerce: ~$125 billion (including travel) Current retail percentage: 3.5% -5% (and growing) Eventual consumer %? 10%? 15% 25%? About 2/3s of Americans have Internet connections at home About 30% of Americans don’t use the Internet (yet) Broadband connections growing (50% of Internet HH) Marketing Ethics : Marketing Ethics American Marketing Association Code of Ethics AMA Code of Ethics : AMA Code of Ethics Page 67 It is signed by everyone who joins the American Marketing Association AMA Code of Ethics : AMA Code of Ethics Marketers’ professional conduct must be guided by The basic rule of professional ethics; not knowingly to do harm The adherence to all applicable laws and regulations The accurate representation of their education training and experience; and The active support, practice and promotion of this Code of Ethics. AMA Code of Ethics : AMA Code of Ethics Honesty and Fairness. Marketers shall uphold and advance the integrity, honor, and dignity of the marketing profession by Being honest in serving consumers, clients, employees, suppliers, distributors and the public Not knowingly participating in conflict of interest without prior notice to all parties involved; and Establishing equitable fee schedules... AMA Code of Ethics : AMA Code of Ethics Rights and Duties of Parties. Participants in the marketing exchange process should be able to expect that: Products and services offered are safe and fit for their intended uses; Communications about offered products and services are not deceptive; All parties intend to discharge their obligations, financial and otherwise in good faith….. AMA Code of Ethics : AMA Code of Ethics In the area of product development management: Disclosure of all substantial risks associated with product or service usage…. AMA Code of Ethics : AMA Code of Ethics In the area of promotions: Avoidance of false and misleading advertising Rejection of high pressure manipulations, or misleading sales tactics Avoidance of sales promotions that use deception or manipulation AMA Code of Ethics : AMA Code of Ethics In the area of distribution: …Not using coercion in the marketing channel Not using undue influence over the resellers’ choice to handle a product AMA Code of Ethics : AMA Code of Ethics In the area of pricing: Not engaging in price fixing Not practicing predatory pricing Disclosing the full price associated with any purchase AMA Code of Ethics : AMA Code of Ethics In the area of marketing research: Prohibiting selling or fund raising under the guise of doing marketing research Maintaining research integrity by avoiding misrepresentation and omission of pertinent research data Treating outside clients and suppliers fairly AMA Code of Ethics : AMA Code of Ethics Organizational Relationships ….Apply confidentiality and anonymity in professional relationships with regard to privileged information Meet obligations and responsibilities in contracts and mutual agreements in a timely manner Avoid taking the work of others, in whole, or in part, and represent this work as their own or directly benefit from it without compensation or consent of the originator or owner AMA Code of Ethics : AMA Code of Ethics Organizational Relationships (continued) Avoid manipulation to take advantage of situations to maximize personal welfare in a way that unfairly deprives or damages the organization or others Any AMA members found to be in violation of this Code of Ethics may have his or her Association membership suspended or revoked.

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