Foundations of marketing summary: H1, 2, 3, 5, 6,
Chapter one:
Customer value = perceived benefits – perceived sacrifice
perceived benefits can be derived from the product, the associated service and the image of the
company.
Perceived sacrifice is the total cost associated with buying the product.
Customer value has four core forms:
- Price value (low price)
- Performance value (product performance)
- Emotional value (finding effective ways to differentiate products based on their performance
elements)
- Relational value (quality of service received by the customer)
Organisations are trying to be a value leader on one of these four dimensions. This is because those
companies have clearly defined a customer value proposition or unique selling point (USP).
Marketing: the delivery of value to customers at a profit.
Different kinds of orientations:
- Market orientation
- Product orientation
- Sales orientation
- Societal marketing concept
- Market-driven or outside-in firms (anticipate on as well as identify consumers’ needs
Efficiency: is concerned with inputs and outputs. An efficient firm produces goods economically it
does things right
Effectiveness: means doing the right things. This implies operating in attractive markets and making
products that consumers want to buy.
Value based marketing (Doyle) where the objective of marketing is seen as contributing to the
maximization of shareholder value.
Chain of marketing productivity (Rust et al.) demonstrates how marketing investments eventually are
reflected in firm outcomes.
Marketing planning involves analysing the environment and the organizations capabilities, and
deciding on courses of action and ways to implement those decisions.
Marketing mix (4 p’s): Product, Price, Place, Promotion, People, Process, Physical evidence
Chapter two
Marketing environment is composed of the forces and actors that affect a company’s ability to
operate effectively in providing products and services to its customers. Distinctions have been drawn
between the micro environment and the macro environment.
The micro environment consist of the actors in the firms immediate environment or business system,
that affect its capabilities to operate effectively in its chosen markets. The key actors are suppliers,
distributors, customers and competitors (the inner ring).
,The macro environment consists of a number of broader forces that affect not only the company but
also the other actors in the micro environment. These can be grouped into economic, social,
political/ legal, physical and technological factors (PEST/ STEP/ PESTLE).
Economic forces consists of three major influences on the marketing environment of companies:
economic growth and unemployment, interest rates and exchange rates, taxation and inflation.
GDP: Gross domestic product
Two types of taxes: direct and indirect. Direct taxes are taxes on income and wealth (income tax,
capital gains tax, inheritance tax). Indirect taxes are taxes that are included in the prices of goods and
services that we buy (BTW, excise duties and tariffs). Difference in indirect tax levels across national
boundaries give rise to the problem of parallel importing, whereby goods are bought in a low-cost
country for importation back into a high-cost country. Inflation is a measure of the cost of living in an
economy.
Social forces consists of four factors that had implications for marketing: changes in the demographic
profile of the population, cultural differences within and between nations, social responsibility and
marketing ethics, and the influence of the consumer movement.
The term demographic refers to changes in population. Culture is the combination of values, beliefs
and attitudes that is possessed by a national group or subgroup. Corporate social responsibility (CSR)
refers to the ethical principle that a person or an organization should be accountable for how its
actions might affect the physical environment and the general public. Ethics are the moral principles
and values that govern the actions and decisions of an individual or group.
Political and legal forces describe the close connections that politicians and senior business people
often have.
Physical forces: Environmentalist aim to protect the physical environment from the costs associated
with producing and marketing products and services. They are concerned with the SOCIAL costs of
consumption not just the PERSONAL costs to the consumer. Six environmental issues are of particular
concern: climate change, pollution, scarce resource conservation, recycling and non- wasteful
packaging, environmentally friendly ingredients and animal testing.
Technological forces: -
Microenvironment: customers, distributors, suppliers and competitors.
Environmental scanning: the practice of monitoring and analysing a company’s marketing
environment is known as environmental scanning. Two key decisions that management need to
make are what to scan and how to organize the activity.
Chapter three
In organizational or business to business (B2B) purchasing there are three major types of buyers:
- The industrial market concerns those companies that buy products and services to help them
produce other goods and services (the purchase of memory chips for mobile phones). These
goods can range from raw materials to components to capital goods such as machinery.
- The reseller market comprises organizations that buy products and services to resell
- The government market consists of government agencies that buy products and services to
help them carry out their activities.
Important questions in understanding the behaviour of customers:
- Who is important in the buying decision
, - How do they buy
- What are their choice criteria
- Where do they buy
- When do they buy
Who buys:
1 initiator: the person who begins the process of considering a purchase. Information may be
gathered by this person to help the decision.
2 influencer: the person who attempts to persuade others in the group concerning the outcome of
the decision. Influencers typically gather information and attempt to impose their choice criteria on
the decision.
3 decider: the individual with the power and/ or financial authority to make the ultimate choice
regarding which product to buy.
4 buyer: the person who conducts the transaction. The buyer calls the supplier, visits the store,
makes the payment and effects delivery.
5 user: the actual consumer/ user of the product.
Multiple roles in the buying group may be assumed by one person.
Organizational buying tends to involve more than one individual and if often in the hands of a
decision making unit (DMU) or buying centre, as it is sometimes called. This is not necessarily a fixed
entity and may change as the decision making process continues.
How they buy:
- Extended problem solving occurs when consumers are highly involved in a purchase,
perceive significant differences between brands and there is an adequate time available for
deliberation. It involves a high degree of information search as well as close examination of
the alternative solutions using many choice criteria. The potential for post-purchase
dissatisfaction or cognitive dissonance is greatest in this buying situation.
- Limited problem solving occurs when the consumers has some experience with the product
in question so that information search may be mainly internal through memory. However, a
certain amount of external search and evaluation may take place. (advertising and
warranties)
- Habitual problem solving occurs in situations of low consumer involvement and a perception
of the limited differences between brands. He or she may recall the satisfaction gained by
purchasing a brand, and automatically buy it again. (advertising)
- Variety seeking behaviour occurs in situations characterized by low product involvement but
where there are significant perceived differences between brands. (extra free products and
sampling).
Awareness set: the array of brands that may provide a solution to the problem
Evoked set: those products or services that the buyer seriously considers before making a purchase.
Four factors that affect involvement:
- Self-image: involvement is likely to be high when the decision potentially affects one’s self-
image.
- Perceived risk: involvement is likely to be high when the perceived risk of making a mistake is
high.
- Social factors: when social acceptance is dependent upon making a correct choice,
involvement is likely to be high.
- Hedonistic influences: when the purchase is capable of providing a high degree of pleasure,
involvement is usually high.
Cognitive dissonance: it is common for customers to experience some post-purchase concerns
Chapter one:
Customer value = perceived benefits – perceived sacrifice
perceived benefits can be derived from the product, the associated service and the image of the
company.
Perceived sacrifice is the total cost associated with buying the product.
Customer value has four core forms:
- Price value (low price)
- Performance value (product performance)
- Emotional value (finding effective ways to differentiate products based on their performance
elements)
- Relational value (quality of service received by the customer)
Organisations are trying to be a value leader on one of these four dimensions. This is because those
companies have clearly defined a customer value proposition or unique selling point (USP).
Marketing: the delivery of value to customers at a profit.
Different kinds of orientations:
- Market orientation
- Product orientation
- Sales orientation
- Societal marketing concept
- Market-driven or outside-in firms (anticipate on as well as identify consumers’ needs
Efficiency: is concerned with inputs and outputs. An efficient firm produces goods economically it
does things right
Effectiveness: means doing the right things. This implies operating in attractive markets and making
products that consumers want to buy.
Value based marketing (Doyle) where the objective of marketing is seen as contributing to the
maximization of shareholder value.
Chain of marketing productivity (Rust et al.) demonstrates how marketing investments eventually are
reflected in firm outcomes.
Marketing planning involves analysing the environment and the organizations capabilities, and
deciding on courses of action and ways to implement those decisions.
Marketing mix (4 p’s): Product, Price, Place, Promotion, People, Process, Physical evidence
Chapter two
Marketing environment is composed of the forces and actors that affect a company’s ability to
operate effectively in providing products and services to its customers. Distinctions have been drawn
between the micro environment and the macro environment.
The micro environment consist of the actors in the firms immediate environment or business system,
that affect its capabilities to operate effectively in its chosen markets. The key actors are suppliers,
distributors, customers and competitors (the inner ring).
,The macro environment consists of a number of broader forces that affect not only the company but
also the other actors in the micro environment. These can be grouped into economic, social,
political/ legal, physical and technological factors (PEST/ STEP/ PESTLE).
Economic forces consists of three major influences on the marketing environment of companies:
economic growth and unemployment, interest rates and exchange rates, taxation and inflation.
GDP: Gross domestic product
Two types of taxes: direct and indirect. Direct taxes are taxes on income and wealth (income tax,
capital gains tax, inheritance tax). Indirect taxes are taxes that are included in the prices of goods and
services that we buy (BTW, excise duties and tariffs). Difference in indirect tax levels across national
boundaries give rise to the problem of parallel importing, whereby goods are bought in a low-cost
country for importation back into a high-cost country. Inflation is a measure of the cost of living in an
economy.
Social forces consists of four factors that had implications for marketing: changes in the demographic
profile of the population, cultural differences within and between nations, social responsibility and
marketing ethics, and the influence of the consumer movement.
The term demographic refers to changes in population. Culture is the combination of values, beliefs
and attitudes that is possessed by a national group or subgroup. Corporate social responsibility (CSR)
refers to the ethical principle that a person or an organization should be accountable for how its
actions might affect the physical environment and the general public. Ethics are the moral principles
and values that govern the actions and decisions of an individual or group.
Political and legal forces describe the close connections that politicians and senior business people
often have.
Physical forces: Environmentalist aim to protect the physical environment from the costs associated
with producing and marketing products and services. They are concerned with the SOCIAL costs of
consumption not just the PERSONAL costs to the consumer. Six environmental issues are of particular
concern: climate change, pollution, scarce resource conservation, recycling and non- wasteful
packaging, environmentally friendly ingredients and animal testing.
Technological forces: -
Microenvironment: customers, distributors, suppliers and competitors.
Environmental scanning: the practice of monitoring and analysing a company’s marketing
environment is known as environmental scanning. Two key decisions that management need to
make are what to scan and how to organize the activity.
Chapter three
In organizational or business to business (B2B) purchasing there are three major types of buyers:
- The industrial market concerns those companies that buy products and services to help them
produce other goods and services (the purchase of memory chips for mobile phones). These
goods can range from raw materials to components to capital goods such as machinery.
- The reseller market comprises organizations that buy products and services to resell
- The government market consists of government agencies that buy products and services to
help them carry out their activities.
Important questions in understanding the behaviour of customers:
- Who is important in the buying decision
, - How do they buy
- What are their choice criteria
- Where do they buy
- When do they buy
Who buys:
1 initiator: the person who begins the process of considering a purchase. Information may be
gathered by this person to help the decision.
2 influencer: the person who attempts to persuade others in the group concerning the outcome of
the decision. Influencers typically gather information and attempt to impose their choice criteria on
the decision.
3 decider: the individual with the power and/ or financial authority to make the ultimate choice
regarding which product to buy.
4 buyer: the person who conducts the transaction. The buyer calls the supplier, visits the store,
makes the payment and effects delivery.
5 user: the actual consumer/ user of the product.
Multiple roles in the buying group may be assumed by one person.
Organizational buying tends to involve more than one individual and if often in the hands of a
decision making unit (DMU) or buying centre, as it is sometimes called. This is not necessarily a fixed
entity and may change as the decision making process continues.
How they buy:
- Extended problem solving occurs when consumers are highly involved in a purchase,
perceive significant differences between brands and there is an adequate time available for
deliberation. It involves a high degree of information search as well as close examination of
the alternative solutions using many choice criteria. The potential for post-purchase
dissatisfaction or cognitive dissonance is greatest in this buying situation.
- Limited problem solving occurs when the consumers has some experience with the product
in question so that information search may be mainly internal through memory. However, a
certain amount of external search and evaluation may take place. (advertising and
warranties)
- Habitual problem solving occurs in situations of low consumer involvement and a perception
of the limited differences between brands. He or she may recall the satisfaction gained by
purchasing a brand, and automatically buy it again. (advertising)
- Variety seeking behaviour occurs in situations characterized by low product involvement but
where there are significant perceived differences between brands. (extra free products and
sampling).
Awareness set: the array of brands that may provide a solution to the problem
Evoked set: those products or services that the buyer seriously considers before making a purchase.
Four factors that affect involvement:
- Self-image: involvement is likely to be high when the decision potentially affects one’s self-
image.
- Perceived risk: involvement is likely to be high when the perceived risk of making a mistake is
high.
- Social factors: when social acceptance is dependent upon making a correct choice,
involvement is likely to be high.
- Hedonistic influences: when the purchase is capable of providing a high degree of pleasure,
involvement is usually high.
Cognitive dissonance: it is common for customers to experience some post-purchase concerns
