Lecture 2 Marketing and Other Business Concepts January 27 February 1 and 3

Lecture 2 Marketing and Other Business Concepts January 27 February 1 and 3

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Unformatted text preview: MKTG 311 Marketing and other Business Concepts (January 27, February 1, and 3) Key takeaways: (1) What is the Marketing Business Model (1) How does it differ from the production, product, or selling business models (1) How does it integrate with CSR (Corporate Social Responsibility) (1) Measurements of success: Customer satisfaction, loyalty, and lifetime value Different ways of understanding Marketing a) Managing buyer-seller exchanges in a way that provides value to both buyers and sellers a) Acquiring buyers (customers) by fulfilling the customers needs (expressed or anticipated) through products or services a) Pricing, promoting, and placing the product/service in a way the offers value to customers a) Deriving value from long-term relationships with customers (customer lifetime value) Seller Solution to the customers need (product, price, promotion, place) Customer Expressed needs translated into a willingness to pay The Marketing philosophy is based on buyer-seller exchanges sustained by value to both sides Marketing Mix (Four Ps) Customer Relationships (Marketers perspective) (Customers perspective) Price Value (does the quality justify the price) Promotion Information to make a good decision Product Solution to a need Place Access (is the product easily available) Example: Shopping Advisors These DVD Players Best Suit Your Needs Customer Needs A Broader Perspective: Cadillac US Army Lincoln Ensure Volvo As you watch the ads, try and identify: (1) Lower versus higher level needs (2) The link between the needs and the brands positioning (3) How the positioning changes over time The Marketing business model is Customers need Product, price, promotion, and place (Solves the need) Profits through customer satisfaction, loyalty and lifetime relationships The Marketing business model is different from the other business models: (1) Production (2) Product (3) Selling (1) The Production Business Model : Production Learning Profits through lower costs The Market Share strategy (To be # 1) e.g., Ford Taurus and the Honda Accord Size does not guarantee profits Learning rate (r): How much are unit costs (as a fraction of the original costs) every time experience doubles . Cumulative production Unit Cost Unit Cost (at r = 40%) (at r = 80%) 100,000 units $5 per unit $5 per unit 200,000 units $2 (0.4 X$5) $4 (0.8X$5) 400,000 units $0.80 (0.4X$2) $3.20 (0.8X$4) Learning rate of r% means that unit costs drop by (100 r)%, i.e., lower learning rates are better (costs drop faster) Example, when r = 40% From 100,000 to 200,000 (production doubling, or increasing by 100%), unit costs fall from $5 to $2, or by $3, (60% of $5) From 200,000 to 400,000 (production doubling, or increasing by 100%), unit costs fall from $2 to $0.80, or by $1.20, (60% of $2) Exercise: (Suppose, we are given the units costs, and asked to calculate the learning rate) At 10 units, cost per unit is $5, at 40 units, cost per unit is $3, what is the learning...
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This note was uploaded on 07/18/2011 for the course MKTG 311 taught by Professor Chatterji during the Spring '08 term at Binghamton University.

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Lecture 2 Marketing and Other Business Concepts January 27 February 1 and 3

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