In the activities that communicate the product’s features and

In 1960 Jerome Mccarthy coined various marketing activities
into marketing- mix tools of four kinds which were too broad for marketing
itself. The 4 P’s were product, price, place and promotion. Given modern
marketing realities Kotler and Keller updated the 4p’s to people, processes,
programs and performance which also mirrors a holistic marketing concept.

Mccarthy suggested marketing tools were as followed: product
was defined as the good or service offered by a company to its customers (Mars
Library 2014), the components entailed quality, design, features, brand name,
packaging, sizes, services, warranties and returns. Price is the amount of
money paid by customers to purchase the product. (Mars Library 2014)The
components included list price, discounts, allowances, payment period and
credit terms. Place refers to the activities that make the available to
consumers and the components are channels, coverage, assortments, locations,
inventory and transport. Additionally promotion describes the activities that
communicate the product’s features and benefits and persuade customers to
purchase the product (Mars Library 2014) and its components are sales
promotion, advertising, sales force, public relations and direct marketing.

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In terms of the new and improved 4P’s (marketing mix) people,
processes, programs and performance proposed by Kotler and Keller. People
states that “marketing will only be as good as the people inside the
organization” (Keller & Kotler 2016)  which refers to the importance of the
employees for successful marketing as well as buyers as actual people and not
just customers. Processes- are all the creativity, discipline and structure
brought to marketing management. Sellers should ensure great concepts to
generate mutually positive long term relationship. According to Kotler and
Keller (2016) “Programs are all the firm’s consumer-directed activities which
includes McCarthy’s 4P’s and other marketing activities which doesn’t fit in
with the old marketing mix. “Performance refers the range of possible outcome
measures that have financial and nonfinancial implications and well as
implications beyond the company itself”.

Traditional marketing mix, also known as the old 4P’s served
in marketing management for many years but as marketing reality began to change
the  4P’s also had evolve to fit in and
also reflect the holistic marketing concept which included internal,
integrated, relationship an performance marketing.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.      How can companies monitor (and based on their results)
improve their marketing activities and performance?

 

Companies
can monitor and improve their marketing activities and performance through
marketing plans and marketing control. Marketing control is “the process by
which firms assess the effects of their marketing activities and make necessary
changes and adjustments” (Kotler & Keller 2016).  There are 4 types of marketing control,
namely, annual plan, profitability, efficiency and strategic control. A
strategic approach to marketing control is using a marketing audit which is a
“comprehensive, systematic, independent and periodic examination of a company’s
or business unit’s marketing environment, objectives, strategies and
activities, to identify a problem areas and opportunities and recommend a plan
for improving marketing performance” (Kotler & Keller 2016).  According to Randy Duermyer (2017) a
marketing plan is a “business document outlining a marketing strategy and
tactics” such as budgets, schedules and marketing metrics for monitoring and
evaluating results over a specific period of time. If a marketing plan is not
correctly implemented it cannot improve a company’s performance.

Marketing
performance is measured through marketing metrics, which is a set of measures
that assist to quantify, compare and interpret their performance and track
actual outcomes of marketing programs to know if the company is moving towards
its objectives. Marketing mix model refers to analyzing data from a variety of
sources such as retailer scanner and promotion spending data and others in
order to know specific marketing activities while marketing dashboards are a
structured way to disseminate the insights of both marketing metrics and
marketing-mix modeling.

Companies
use marketing metrics, marketing-mix modeling and marketing dashboard to
monitor marketing productivity and based on the results marketing control can
be used to make improvement on marketing activities and performance.

 

2.      In today’s challenging marketplace, marketing research
is very important.  How can companies
accurately measure as well as forecast market demand?

 

Companies
usually acquire marketing opportunities by conducting marketing research and
collecting marketing intelligence and after they measure and forecast the size,
growth and profit potential of each new opportunities. Finance, manufacturing,
human resources all utilize sales forecast formulated by marketing.

There
are 4 measures of market demand, potential market, available, target market and
penetrated market. Potential market refers to the set of consumers with a
sufficient level of interest in a market offer while available market are
eligible adults who have interest, income, access and qualifications for the
market offer. The qualified available market the company decides to pursue is
the target market and the penetrated market is the set of consumers who are
buying the company’s product. Kotler & Keller (2016) states that “Market
demand for a product is the total volume that would be bought by a defined
customer group in a defined geographical area in a defined time period in a
defined marketing environment under a defined marketing program”.

The market demand
function helps to accurately measure the market demand. It entails market share
which is the fraction of the market that goes to an entity, market forecast
which show the expected demand, not the maximum demand and market potential is
the limit approached by market demand as industry marketing expenditures
approach infinity for a given marketing environment. The market demand function
is determined by the marketing environment but companies play a role by
influencing a particular location on the function when they decide how much to
spend. Company demand is the company’s estimated share of market demand at
alternative levels of company marketing effort in a given time period. It
depends on how the company’s products, services, prices, and communications are
perceived relative to the competitors while company sales based on a chosen
marketing plan and an assumed marketing environment. A sales quota is the sales
goal set for a product line, company division, or sales representative.

Forecasting
is the art of anticipating what buyers are likely to do under a given set of
conditions and good forecasting is an important factor for success. Methods of
sales forecast are surveys of buyers’ intention, composite of sales force
opinions, expert opinion, past-sales analysis and market-test method.

 

 

 

 

 

 

 

 

 

 

 

 

 

3.      What is the 80/20 rule?  Further how is the future profitability of a
customer measured (equated)?  Please
illustrate (use) an example in your response.

 

Building
customer value, satisfaction and loyalty are all apart of market management in
order to keep customers satisfied and loyal to keep the organization going. The
80-20 rule states that 80 percent or more of the company’s profits come from
the top 20 percent of its customers. As much as 150-300 percent of
profitability may come from the most profitable 20 percent of customers while
the least profitable 10-20 percent can decrease profits between 50-200 percent
per account, with the middle 50 and 60 percent breaking even. Midsize customers
who pay nearly full price are often the most profitable and smallest customers
pay full price while the largest customers do not yield the most profit.

According
to Kotler and Keller a profitable customer “is a person, household, or company
that over time yields a revenue stream exceeding by an acceptable amount the company’s
cost stream for attracting, selling and serving that customer”. Future
profitability is measured through customer lifetime value which is the net
present value of the stream of future profits expected over the customer’s
lifetime purchases. Lifetime value calculations is subtracting the expected
costs of attracting, selling and servicing the account of that customer from
the company’s expected revenues.

Example
illustrated are two customers goes to the 5 times per week and both of them
have the same profitability. The first customer is an elder male and the other
one is a college student. The college student has more years to go so his
customer lifetime value will be higher than the elder.

 

 

4.      What are the major psychological processes that
influence consumer buying behavior?  Do
you feel our psyche influences our purchasing power?

 

“Marketing
and environmental stimuli enter the consumer’s consciousness, and a set of
psychological processes combine with certain consumer characteristics to result
in decision processes and purchase decisions” (Kotler and Keller 2016). The
major psychological processes that influence consumer buying behavior are
motivation, perception emotions, learning and memory.

Motivation
refers to a need becoming a motive when it is aroused to a sufficient level of
intensity to drive us to act. Motivation discuss three theories, they state
that behavior is guided by subconscious, driven by lowest unmet need and guided
by dissatisfiers and satisfiers by Sigmund Freud, Abraham Maslow and Frederick
Herzberg respectively. Perception is the process by which we select, organize
and interpret information inputs to create a meaningful picture of the world.
Perception affects consumer actual behavior and have s types; selective
attention, selective distortion and selective retention. Learning induces
changes in our behavior arising from experience, drive, cues, generalization
and discrimination. Emotion can be linked to brands. A brand may have a
consumer feeling proud, confident, amused or even disgusted. Memory can be
short term and long term and it is what and how a consumer remembers a brand.
Memory encoding is how and where information gets into memory while memory
retrieval is the way information gets out of memory.

There is
a buying decision process where the consumer goes through 5 stages but they may
skip or reverse some. Psyche definitely influences purchasing power. Consumer
base final decision to purchase on their personal attitudes and beliefs as well
as attitudes of others, perceived risk and situational factors.