©2000 Prentice Hall Objectives ä Course Organization ä Tasks of Marketing ä Major Concepts & Tools of Marketing ä Marketplace Orientations ä Marketing’s

©2000 Prentice Hall

ObjectivesObjectives

Course OrganizationCourse Organization Tasks of MarketingTasks of Marketing Major Concepts & Tools of MarketingMajor Concepts & Tools of Marketing Marketplace OrientationsMarketplace Orientations Marketing’s Responses to New Marketing’s Responses to New

ChallengesChallenges


Defining MarketingDefining Marketing

Marketing is a societal process by Marketing is a societal process by which individuals and groups obtain which individuals and groups obtain what they need and want through what they need and want through creating, offering, and freely creating, offering, and freely exchanging products and services of exchanging products and services of value with others. value with others.

- Philip Kotler (p. 7)- Philip Kotler (p. 7)


Simple Marketing SystemSimple Marketing System

Industry(a collection

of sellers)

Market(a collection

of Buyers)

Goods/services

Money

Communication

Information


Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that offer the most quality, performance,

or innovative features

Consumers will buy products only ifthe company aggressively

promotes/sells these products

Focuses on needs/ wants of target markets & delivering value

better than competitors

Company Orientations Towards the Marketplace

Company Orientations Towards the Marketplace



Define value & satisfaction - understand Define value & satisfaction - understand how to deliver themhow to deliver them

The nature of high-performance The nature of high-performance businessesbusinesses

How to attract & retain customersHow to attract & retain customers Improving customer profitabilityImproving customer profitability Total quality managementTotal quality management


Resources Organizationand

aligning...

High Performance BusinessHigh Performance Business

ProcessesBy improving critical business...

Stake-holders

Set strategies to satisfy key...


Satisfied Customers:Satisfied Customers:

Are loyal longerAre loyal longer Buy more (new products & upgrades)Buy more (new products & upgrades) Spread favorable word-of-mouthSpread favorable word-of-mouth Are more brand loyal (less price Are more brand loyal (less price

sensitive)sensitive) Offer feedbackOffer feedback Reduce transaction costsReduce transaction costs


Inactive orex-customers

Customer DevelopmentCustomer Development

PartnersAdvocatesClientsRepeat

customersFirst-timecustomers

Suspects

Prospects

Disqualifiedprospects


Customer/Product Profitability AnalysisCustomer/Product

Profitability Analysis

P1

Highlyprofitableproduct

P2Profitableproduct

P3Losingproduct

P4Mixed-bag

product

Products

++

+Highprofit

customer

+

-Mixed-bagMixed-bagcustomercustomer

+

--Losing

customer

C1 C2 C3

Customers



Corporate and division strategic planingCorporate and division strategic planing Business unit planningBusiness unit planning The marketing processThe marketing process Product level planningProduct level planning The marketing planThe marketing plan


Market-Oriented Strategic Planning


Objectives

Skills

Resources

Opportunities




Objectives

Skills

Resources

Opportunities

Profitand

Growth


Corporate Headquarters Planning

Corporate Headquarters Planning

Define the corporate missionDefine the corporate mission Establish strategic business units Establish strategic business units

(SBUs)(SBUs) Assign resources to SBUsAssign resources to SBUs Plan new business, downsize older Plan new business, downsize older

businessesbusinesses


The Marketing PlanThe Marketing Plan

Executive Summary & Table of Contents

Current Marketing Situation

Opportunity & Issue Analysis

Objectives

Marketing Strategy

Action Programs

Projected Profit-and-loss

Controls



Components of a marketing information Components of a marketing information systemsystem

Criteria of good marketing researchCriteria of good marketing research Decision support systems for marketing Decision support systems for marketing

managementmanagement Demand measurement and forecastDemand measurement and forecast


A marketing information system (MIS)marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

A marketing intelligence systemmarketing intelligence system is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment.


Research ApproachesResearch Approaches

BehavioralBehavioral

Focus-groupFocus-group

SurveySurvey

ExperimentalExperimental

ObservationalObservational


Secondary-Data SourcesSecondary-Data Sources

Internal SourcesInternal Sources Government PublicationsGovernment Publications Periodicals and BooksPeriodicals and Books Commercial DataCommercial Data On-LineOn-Line

AssociationsAssociationsBusiness InformationBusiness Information


Good Marketing Research:Good Marketing Research:

Is scientificIs scientific Is creativeIs creative Uses multiple methodsUses multiple methods Realizes the interdependence of models Realizes the interdependence of models

& data& data Acknowledges the cost & value of Acknowledges the cost & value of

informationinformation Maintains “healthy” skepticismMaintains “healthy” skepticism Is ethicalIs ethical


DemandDemand

MarketDemand

CompanyDemand


Estimating Current DemandEstimating Current Demand

Total Market PotentialTotal Market Potential Area Market PotentialArea Market Potential Industry SalesIndustry Sales Market ShareMarket Share


Estimating Future DemandEstimating Future Demand

Survey of Buyers’ IntentionsSurvey of Buyers’ Intentions Composite of Sales Force OpinionComposite of Sales Force Opinion Expert OpinionExpert Opinion Past Sales AnalysisPast Sales Analysis Market Test MethodMarket Test Method




Tracking & Identifying Opportunities in Tracking & Identifying Opportunities in the Macroenvironmentthe Macroenvironment

Demographic, Economic, Natural, Demographic, Economic, Natural, Technological, Political, & Cultural Technological, Political, & Cultural DevelopmentsDevelopments


Macroenvironmental ForcesMacroenvironmental Forces

World trade enablersWorld trade enablers Asian economic powerAsian economic power Rise of trade blocsRise of trade blocs International monetary crisesInternational monetary crises Use of barter & countertradeUse of barter & countertrade Move towards market economiesMove towards market economies ““Global” lifestylesGlobal” lifestyles


Macroenvironmental ForcesMacroenvironmental Forces

Opening of “new” marketsOpening of “new” markets Emerging transnational firmsEmerging transnational firms Cross-border strategic alliancesCross-border strategic alliances Regional ethnic & religious conflictRegional ethnic & religious conflict Global brandingGlobal branding


Demographic EnvironmentDemographic Environment

Worldwide Population GrowthWorldwide Population Growth

Population Age MixPopulation Age Mix

Ethnic MarketsEthnic Markets

Household PatternsHousehold Patterns

Educational GroupsEducational Groups

Geographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass Market to MicromarketsShift from Mass Market to Micromarkets


Economic EnvironmentEconomic Environment

Income DistributionIncome Distribution

Subsistence economiesSubsistence economies

Raw-material-exporting economiesRaw-material-exporting economies

Industrializing economiesIndustrializing economies

Industrial economiesIndustrial economies

Savings, Debt, & Credit AvailabilitySavings, Debt, & Credit Availability


NaturalEnvironment

Higher PollutionLevels

Higher PollutionLevels

Increased Costsof Energy

Increased Costsof Energy

Shortage of Raw MaterialsShortage of

Raw Materials

Changing Roleof GovernmentChanging Roleof Government


Accelerating Paceof Change

Accelerating Paceof Change

Unlimited Opportunitiesfor Innovation

Unlimited Opportunitiesfor Innovation

IncreasedRegulation

IncreasedRegulation

Issues in the TechnologicalEnvironment

Issues in the TechnologicalEnvironment

VaryingR & D Budgets

VaryingR & D Budgets


Political-Legal

Environment

Political-Legal

Environment

IncreasedLegislation

IncreasedLegislation

Special-InterestGroups

Special-InterestGroups


Social/Cultural EnvironmentSocial/Cultural Environment

OfOfOrganizationsOrganizations

OfOfNatureNature

OfOfOneselfOneself

OfOfSocietySociety

OfOfthe Universethe Universe

OfOfOthersOthers

ViewsThat Express

Values

ViewsThat Express

Values


Social/Cultural EnvironmentSocial/Cultural Environment




Influences on Buying BehaviorInfluences on Buying Behavior Buyer Decision MakingBuyer Decision Making


Simple Response ModelSimple Response Model

StimulusStimulusStimulusStimulus OrganismOrganismOrganismOrganism ResponseResponseResponseResponse


Culture

Cultural FactorsCultural Factors

Subculture

Social Class

BuyerBuyer


Social FactorsSocial Factors

ReferenceGroups

ReferenceGroups

Roles &Statuses

Roles &StatusesFamilyFamily


Influences on Consumer Behavior

Influences on Consumer Behavior

Personal InfluencesPersonal Influences

Age and Family Life Cycle Stage

Age and Family Life Cycle Stage LifestyleLifestyle

Occupation &Economic Circumstances

Occupation &Economic Circumstances

Personality & Self-Concept

Personality & Self-Concept


Psychological FactorsPsychological Factors

PerceptionPerception LearningLearning

Beliefs &AttitudesBeliefs &Attitudes

MotivationMotivation


Four Types of Buying Behavior

Four Types of Buying Behavior

ComplexBuying

Behavior

Dissonance-Reducing Buying

Behavior

Variety-SeekingBehavior

HabitualBuying

Behavior

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

HighInvolvement

LowInvolvement


TotalSet

Decision Making Sets

Aware-nessSet

Consid-eration

SetChoice

Set Decision



How Business & Consumer Markets DifferHow Business & Consumer Markets Differ Organizational Buying SituationsOrganizational Buying Situations Participants in the Business Buying Participants in the Business Buying

ProcessProcess Major Influences on Organizational BuyersMajor Influences on Organizational Buyers Business Buyer Decision MakingBusiness Buyer Decision Making Institutional & Government BuyingInstitutional & Government Buying


Organizational FactorsOrganizational Factors

Purchasing-DepartmentUpgrading

Cross-Functional

Roles

CentralizedPurchasing

Decentralized Purchasing

of SmallTicket Items

InternetPurchasing

Long-TermContracts

Purchasing-PerformanceEvaluation &Pro. Buyers

LeanProduction


Problem RecognitionProblem Recognition

General Need DescriptionGeneral Need Description

Product SpecificationProduct Specification

Supplier SearchSupplier Search

Proposal SolicitationProposal Solicitation

Supplier SelectionSupplier Selection

Order Routine SpecificationOrder Routine Specification

Performance ReviewPerformance ReviewPostPost

PurchasePurchase

PurchasePurchase

InfoInfoSearch/Search/

EvalEval

NeedNeedRecognitionRecognition


Institutional MarketsInstitutional MarketsInstitutional MarketsInstitutional Markets

Captive PatronsCaptive PatronsCaptive PatronsCaptive PatronsLow BudgetsLow BudgetsLow BudgetsLow Budgets


Government MarketsGovernment Markets

Domestic SuppliersDomestic Suppliers

Open BidsOpen BidsCost MinimizationCost Minimization

Public ReviewPublic Review

PaperworkPaperwork



Identifying CompetitorsIdentifying Competitors Evaluating CompetitorsEvaluating Competitors Competitive Intelligence SystemsCompetitive Intelligence Systems Competitive StrategiesCompetitive Strategies Customer vs. Competitor OrientationCustomer vs. Competitor Orientation


Industry CompetitionIndustry Competition

Number of Sellers - Degree of Number of Sellers - Degree of DifferentiationDifferentiation

Entry, Mobility, Exit barriersEntry, Mobility, Exit barriers Cost StructureCost Structure Degree of Vertical IntegrationDegree of Vertical Integration Degree of GlobalizationDegree of Globalization


Analyzing CompetitorsAnalyzing Competitors

CompetitorCompetitorActionsActions


Strengths &Strengths &WeaknessesWeaknesses

ReactionReactionPatternsPatterns

StrategiesStrategies


Competitor’s Expansion PlansCompetitor’s Expansion Plans

Markets

Pro

duct

s

IndividualUsers

Commercial & Industrial Educational

PersonalComputers

HardwareAccessories

Software

Dell


Hypothetical Market Structure & Strategies

Hypothetical Market Structure & Strategies

40%

Marketleader

30%

Marketchallenger

20%

Marketfollower

Expand MarketDefend Market Share

Expand Market Share

Attack leaderStatus quo

Imitate

10%

Marketnicher

Special-ize


Defense StrategiesDefense Strategies

AttackerAttacker

(3)(3) PreemptivePreemptivedefensedefense

(4)(4) Counter-Counter-offensiveoffensivedefensedefense Defender

(1)(1)PositionPositiondefensedefense

(5)Mobile

defense

(2) (2) Flank defenseFlank defense

(6) (6) ContractionContractiondefensedefense


Attack StrategiesAttack Strategies

AttackerDefender

(3) Encirclement attack

(4) Bypass attack

(2) Flank attack

(5) Guerilla attack

(1) Frontal attack


Specific Attack StrategiesSpecific Attack Strategies

Price-discountPrice-discount Cheaper goodsCheaper goods Prestige goodsPrestige goods Product proliferationProduct proliferation Product innovationProduct innovation Improved servicesImproved services Distribution innovationDistribution innovation Manufacturing cost reductionManufacturing cost reduction Intensive advertising promotionIntensive advertising promotion


“Nichemanship”“Nichemanship”

End-user specialistEnd-user specialist Vertical-level specialistVertical-level specialist Customer-size specialistCustomer-size specialist Specific-customer specialistSpecific-customer specialist Geographic specialistGeographic specialist Product or product-line specialistProduct or product-line specialist Product-feature specialistProduct-feature specialist Job-shop specialistJob-shop specialist Quality-price specialistQuality-price specialist Service specialistService specialist Channel specialistChannel specialist


BalanceBalance

CompetitionCustomer

+ Fighter orientation+ Alert+ Exploit weaknesses- Reactive

+ ID opportunities+ Long-run profit+ Emerging needs & groups



Identifying Market SegmentsIdentifying Market Segments Choosing Target MarketsChoosing Target Markets


Market-Segmentation Procedure

Market-Segmentation Procedure

SurveySurveyMotivationsMotivationsAttitudesAttitudesBehaviorBehavior

AnalysisAnalysisFactorsFactorsClustersClusters

ProfilingProfiling


Bases for Segmenting Consumer Markets

Bases for Segmenting Consumer Markets

Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or MetroSize, Density, Climate Demographic

Age, Gender, Family size and Life cycle, Race, Occupation, or Income ...

Lifestyle or PersonalityPsychographic


Bases for Segmenting Business Markets

Bases for Segmenting Business Markets

DemographicDemographic Operating VariablesOperating Variables Purchasing ApproachesPurchasing Approaches Situational FactorsSituational Factors Personal CharacteristicsPersonal Characteristics


Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

ActionableActionable

• Size, purchasing power, profiles of segments can be measured.

• Segments must respond differently to

different marketing mix elements & actions.

• Must be able to attract and serve

the segments.

Effective SegmentationEffective Segmentation


Additional Segmentation Criteria

Additional Segmentation Criteria

Ethical Choice of Market TargetsEthical Choice of Market Targets Segment Interrelationships & Segment Interrelationships &

SupersegmentsSupersegments Segment-by-Segment Invasion PlansSegment-by-Segment Invasion Plans Intersegment CooperationIntersegment Cooperation



Identify Differentiating AttributesIdentify Differentiating Attributes Choosing & Communicating Effective Choosing & Communicating Effective

PositioningPositioning Marketing Strategies Along the Product Marketing Strategies Along the Product

Life CycleLife Cycle Marketing Strategy & Market EvolutionMarketing Strategy & Market Evolution


Product DifferentiationProduct Differentiation

FormFea-

turesPerfor-mance

QualityConform-

anceQuality

Dura-bility

Relia-bility

Repair-ability

Style Design


DeliveryDelivery

Services DifferentiationServices Differentiation

OrderingEase

OrderingEase

Maintenance& Repair

Maintenance& Repair

CustomerTraining

CustomerTraining

InstallationInstallation CustomerConsulting

CustomerConsulting

MiscellaneousS

ervices


DifferentiationDifferentiation

PersonnelPersonnel ChannelChannel


Media Atmosphere

Symbols

Events

Image DifferentiationImage Differentiation


Differences WorthDifferences WorthEstablishingEstablishing

AffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant


PositioningPositioning is the act of is the act of designing the company’s designing the company’s

offering and image to offering and image to occupy a distinctive occupy a distinctive

place in the the target place in the the target market’s mind. market’s mind. P 298 P 298


Sales & Profit Life CyclesSales & Profit Life Cycles

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

TimeTimeSal

esS

ales

&

& p

rofi

tsp

rofi

ts (

$) (

$)


Four IntroductoryMarketing Strategies

Four IntroductoryMarketing Strategies

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

PricePrice

LowLow

HighHigh

PromotionPromotionHighHigh LowLow


Maturity StageMaturity Stage

Market ModificationMarket Modification Product ModificationProduct Modification Marketing-Mix ModificationMarketing-Mix Modification


Decline StageDecline Stage

Decrease investmentDecrease investment Resolve uncertainties - stable Resolve uncertainties - stable

investmentinvestment Selective nichesSelective niches HarvestingHarvesting DivestingDivesting


Market EvolutionMarket Evolution

EmergenceEmergence GrowthGrowth MaturityMaturity DeclineDecline



Challenges in New Product Development (NPD)Challenges in New Product Development (NPD) Organizational Structure & NPDOrganizational Structure & NPD Stages & Management of NPDStages & Management of NPD Diffusion & Adoption of New ProductsDiffusion & Adoption of New Products


Why New Products FailWhy New Products Fail

““Over Championing”Over Championing” Overestimated DemandOverestimated Demand Poor DesignPoor Design Poor Marketing ExecutionPoor Marketing Execution High Development CostsHigh Development Costs Strong Competitive ReactionStrong Competitive Reaction


Challenges in NPDChallenges in NPD

Idea ShortageIdea Shortage Fragmented MarketsFragmented Markets Social & Governmental ConstraintsSocial & Governmental Constraints CostCost Capital ShortageCapital Shortage Need for SpeedNeed for Speed Shorter Product Life CyclesShorter Product Life Cycles


Probability of SuccessProbability of Success

ProbabilityProbabilityof technicalof technicalcompletioncompletion

OverallOverallprobabilityprobabilityof successof success ==

Probability ofProbability ofcommercializationcommercialization

given technicalgiven technicalcompletioncompletion

XXProbability ofProbability of

economiceconomicsuccess givensuccess given

commercializationcommercializationXX


Concept Development & TestingConcept Development & Testing

1. Develop Product Ideas into Alternative Product Concepts

1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

3. Choose the Best One3. Choose the Best One


Consumer-Goods Market TestingConsumer-Goods Market Testing

Sales-Wave

Research

Test offering trail toa sample of consumers insuccessive

periods.

Sales-Wave

Research

Test offering trail toa sample of consumers insuccessive

periods.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.


CommercializationCommercialization

When

Where

Whom

ProductPricePlacePromotion


Characteristics of the Innovation Rate of Adoption

Characteristics of the Innovation Rate of Adoption

Relative advantageRelative advantage CompatibilityCompatibility ComplexityComplexity DivisibilityDivisibility CommunicabilityCommunicability



Factors to Consider Before Going GlobalFactors to Consider Before Going Global Selecting Foreign MarketsSelecting Foreign Markets Foreign Market EntryForeign Market Entry Product Adaption for Global MarketingProduct Adaption for Global Marketing Management & Organization of Global ActivitiesManagement & Organization of Global Activities


Major Decisions in International MarketingMajor Decisions in International Marketing

Deciding whetherto go abroad

Deciding whichmarkets to enter

Deciding how toenter the market

Deciding on themarketing program

Deciding on themarketing organization


Challenges in Going GlobalChallenges in Going Global

Shifting bordersShifting borders Unstable governmentsUnstable governments Foreign-exchangeForeign-exchange CorruptionCorruption Technological piratingTechnological pirating


Criteria for EntryCriteria for Entry

Market AttractivenessMarket Attractiveness RiskRisk Competitive AdvantageCompetitive Advantage


Five Models of EntryInto Foreign MarketsFive Models of EntryInto Foreign Markets

Directinvest-ment

JointventuresLicensingDirect

exportingIndirect

Exporting

Amount of commitment, risk, control, and profit potential


Internationalization ProcessInternationalization Process

No Export

Export via Agents

Sales Subsidiaries

Production Abroad


Five International Productand Promotion StrategiesFive International Productand Promotion Strategies

Dualadaptation

PromotionPromotion

ProductProduct

Productadaptation

AdaptAdaptproductproduct

Straightextension

Do not changeDo not changeproductproduct

Do not changeDo not changepromotionpromotion

Communi-cation

adaptation

AdaptAdaptpromotionpromotion

Develop newDevelop newproductproduct

Productinvention


Pricing ChallengesPricing Challenges

>Price Escalation

>Dumping charges

>Gray markets

>Transfer prices


Whole-channel Concept for International Marketing

Whole-channel Concept for International Marketing

Seller

Seller’s internationalmarketing headquarters

Channels betweennations

Channels withinforeign nations

Final buyers



Product CharacteristicsProduct Characteristics Building & Managing the Product Mix & Product LinesBuilding & Managing the Product Mix & Product Lines Brand DecisionsBrand Decisions Packaging & LabelingPackaging & Labeling


Specialty ProductsSpecialty Products Unsought ProductsUnsought Products

Shopping ProductsShopping ProductsBuy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality • Price & Style

Convenience ProductsConvenience Products

Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations

New innovations> Products consumers don’t want to think about. >Require much advertising & personal selling

Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

Consumer-Goods ClassificationConsumer-Goods Classification


Product MixProduct Mix

WidthWidth - number of different product lines

WidthWidth - number of different product lines

LengthLength - total number of items

within the lines

LengthLength - total number of items

within the lines

Depth Depth - number of versions of each

product

Depth Depth - number of versions of each

product

Product Mix - Product Mix - all the product

lines offered

Product Mix - Product Mix - all the product

lines offered

Co

nsi

sten

cy


Product-Line LengthProduct-Line Length

Line StretchingLine Stretching DownmarketDownmarket UpmarketUpmarket Two-wayTwo-way

Line FillingLine Filling Line ModernizationLine Modernization Line Featuring & Line PruningLine Featuring & Line Pruning


What is a Brand?What is a Brand?

Attributes Benefits Values

Culture

User

Personality


Brand EquityBrand Equity

No Brand Loyalty(customer will change)

No Brand Loyalty(customer will change)

Satisfied Customer(no reason to change)Satisfied Customer

(no reason to change)

Satisfied & Switching CostSatisfied & Switching Cost

Values the Brand(brand as friend)

Values the Brand(brand as friend)

Devoted to Brand

Devoted to Brand


Brand StrategiesBrand Strategies

BrandExtension

New

Bra

nd

Nam

e

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands


Good Brand Names:Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:PronounceRecognizeRemember


Why Package Crucial as a Marketing Tool

Why Package Crucial as a Marketing Tool

Self-serviceSelf-service Consumer affluenceConsumer affluence Company & brand imageCompany & brand image Opportunity for innovationOpportunity for innovation


LabelsLabels

IdentifyIdentifyIdentifyIdentify

DescribeDescribeDescribeDescribe

PromotePromotePromotePromote



Service Definitions & ClassificationsService Definitions & Classifications How Services Differ GoodsHow Services Differ Goods Improving Service Differentiation, Quality, & ProductivityImproving Service Differentiation, Quality, & Productivity Improving Customer Support ServicesImproving Customer Support Services


Categories of Service MixCategories of Service Mix

PurePureServiceService

TangibleTangibleGoodGood

w/w/ServicesServices

MajorMajorServiceService

w/ Goodsw/ GoodsHybridHybrid

PurePureTangibleTangible

GoodGood


ServicesServices

Inseparability

Services cannotbe separated

from theirproviders

Inseparability

Services cannotbe separated

from theirproviders

Perishability

Services cannotbe stored for

later sale or use

Perishability

Services cannotbe stored for

later sale or use

Intangibility

Services cannotbe seen, tasted,

felt, heard, orsmelled before

purchase

Intangibility

Services cannotbe seen, tasted,

felt, heard, orsmelled before

purchase

Variability

Quality ofservices dependson who providesthem and when,where, and how

Variability

Quality ofservices dependson who providesthem and when,where, and how


ServicesServices

Inseparability

Increaseproductivity of

providers

Inseparability

Increaseproductivity of

providers

Perishability

Match supplyand demand

Perishability

Match supplyand demand

Intangibility

Use cues tomake it tangible

Intangibility

Use cues tomake it tangible

Variability

Standardizeservice

production& delivery

Variability

Standardizeservice

production& delivery


Service DifferentiationService Differentiation

Offer

Delivery

Image


Determinants of Service QualityDeterminants of Service Quality

ReliabilityReliability ResponsivenessResponsiveness AssuranceAssurance EmpathyEmpathy TangiblesTangibles


ServiceExcellence

ServiceExcellence

Strategic ConceptStrategic Concept Top-Management CommitmentTop-Management Commitment High StandardsHigh Standards Monitoring SystemsMonitoring Systems Satisfying Customer ComplaintsSatisfying Customer Complaints Satisfying Both Employees & CustomersSatisfying Both Employees & Customers Managing ProductivityManaging Productivity


Complaint ResolutionComplaint Resolution

Hiring Criteria & Training for EmployeesHiring Criteria & Training for Employees Develop Guidelines for FairnessDevelop Guidelines for Fairness Remove Complaint BarriersRemove Complaint Barriers Analyze Types & Sources of ComplaintsAnalyze Types & Sources of Complaints



Setting the PriceSetting the Price Adapting the PriceAdapting the Price Initiating & Responding to Price ChangesInitiating & Responding to Price Changes


Types of Costs

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels.

Executive SalariesRent

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels.

Executive SalariesRent

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials


Pricing MethodsPricing Methods

Markup PricingMarkup Pricing Target Return PricingTarget Return Pricing Perceived Value PricingPerceived Value Pricing Value PricingValue Pricing Going-Rate PricingGoing-Rate Pricing Sealed-Bid PricingSealed-Bid Pricing


Some important pricing definitionsSome important pricing definitions

Utility: The attribute that makes Utility: The attribute that makes it capable of want satisfactionit capable of want satisfaction

Value: The worth in terms of Value: The worth in terms of other productsother products

Price: The monetary medium of Price: The monetary medium of exchange.exchange.

Value ExampleValue Example:: Caterpillar CaterpillarTractor is Tractor is $100,000$100,000 vs. Market vs. Market

$90,000$90,000$90,000 if equal$90,000 if equal 7,000 extra durable7,000 extra durable 6,000 reliability6,000 reliability 5,000 service5,000 service 2,0002,000 warranty warranty $110,000 in benefits -$110,000 in benefits -

$10,000 discount!$10,000 discount!


Psychological Pricing

Most Attractive?Most Attractive?

Better Value?Better Value?

Psychological reason to price Psychological reason to price this way?this way?

A32 oz.

$2.19

B26 oz.

$1.99

Assume Equal Quality


Discriminatory PricingDiscriminatory Pricing

Time

Product-form

Customer Segment

Location



Work Performed by Marketing ChannelsWork Performed by Marketing Channels Channel-Design DecisionsChannel-Design Decisions Channel-Management DecisionsChannel-Management Decisions Channel DynamicsChannel Dynamics


How a Distributor Reduces theNumber of Channel Transactions

= = CustomerCustomer= = ManufacturerManufacturer

A. Number of contacts A. Number of contacts without a distributorwithout a distributor

M x C = 3 X 3 = 9M x C = 3 X 3 = 9

11

3322

445566

778899


How a Distributor Reduces theHow a Distributor Reduces theNumber of Channel TransactionsNumber of Channel Transactions

= = DistributorDistributor= = CustomerCustomer= = ManufacturerManufacturer

B. Number of contacts B. Number of contacts with a distributorwith a distributorM x C = 3 + 3 = 6M x C = 3 + 3 = 6

Store

11

22

33

44

55

66


Distribution Channel FunctionsDistribution Channel Functions

OrderingOrdering

PaymentsPayments

CommunicationCommunicationTransferTransfer

NegotiationNegotiation

FinancingFinancingRisk TakingRisk Taking

PhysicalDistribution

PhysicalDistribution

InformationInformation


Customers’ Desired Service LevelsCustomers’ Desired Service Levels

Lot sizeLot size Waiting timeWaiting time Spatial convenienceSpatial convenience Product varietyProduct variety Service backupService backup


Channel Management DecisionsChannel Management Decisions

SelectingSelecting

FE

ED

BA

CK

MotivatingMotivating

TrainingTraining

EvaluatingEvaluating


Types of Vertical Marketing SystemsTypes of Vertical Marketing Systems

CorporateCommon Ownership at Different

Levels of the Channel

CorporateCommon Ownership at Different

Levels of the Channel

ContractualContractual Agreement Among

Channel Members

ContractualContractual Agreement Among

Channel Members

AdministeredLeadership is Assumed by One or

a Few Dominant Members

AdministeredLeadership is Assumed by One or

a Few Dominant Members


Conventional Distribution Channel vs. Vertical Marketing Systems

VerticalVerticalmarketingmarketingchannelchannel

Manufacturer

Retailer

ConventionalConventionalmarketingmarketingchannelchannel

Consumer

Manufacturer

Consumer

Retailer

Wholesaler

Wh

ole

sale

r


Causes of Channel ConflictCauses of Channel Conflict

IncompatibilityIncompatibility Difference in PerceptionDifference in Perception DependenceDependence

Legal & Ethical Issues in Channel Relations

Legal & Ethical Issues in Channel Relations

Exclusive DealingExclusive Dealing Exclusive TerritoriesExclusive Territories Tying AgreementsTying Agreements Dealers’ RightsDealers’ Rights



RetailingRetailing WholesalingWholesaling Market LogisticsMarket Logistics


Four Levels of Retail ServiceFour Levels of Retail Service

Self-serviceSelf-service Self-selectionSelf-selection Limited-serviceLimited-service Full-serviceFull-service


Classification Of Retailer TypesClassification Of Retailer Types

Specialty StoresSpecialty Stores

Department StoresDepartment Stores

SupermarketsSupermarkets

Convenience StoresConvenience Stores

Off-Price RetailerOff-Price Retailer

SuperstoresSuperstores

Catalog ShowroomCatalog Showroom

Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items

Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items

Wide Variety of Food, Laundry, & Household ProductsWide Variety of Food, Laundry, & Household Products

Limited Line of High-Turnover Convenience GoodsLimited Line of High-Turnover Convenience Goods

Inexpensive, Overruns, Irregulars, and Leftover GoodsInexpensive, Overruns, Irregulars, and Leftover Goods

Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services

Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services

Broad Selection, Fast Turnover, Discount PricesBroad Selection, Fast Turnover, Discount Prices

Narrow Product Line, Deep AssortmentNarrow Product Line, Deep Assortment

Store Type Length and Breadth of Product Assortment

Discount StoresDiscount Stores Broad Product Line, Low Margin, High VolumeBroad Product Line, Low Margin, High Volume


Types of NonStore RetailingTypes of NonStore Retailing

Direct SellingDirect Selling

Direct MarketingDirect Marketing

Buying ServicesBuying Services

NonStore Retailing Accounts for More Than 12% of All Consumer Purchases, and is trending up.

Automatic VendingAutomatic Vending


Low PriceLow StatusLow Margin

Mid PriceMid StatusMid Margin

High PriceHigh StatusHigh Margin

Wheel of RetailingWheel of Retailing


Why are Wholesalers Used?Why are Wholesalers Used?

WholesalerFunctions

ManagementServices & Advice

ManagementServices & Advice

Selling andPromoting

Selling andPromoting

MarketInformation

MarketInformation

Buying andAssortment Building

Buying andAssortment Building

Risk BearingRisk Bearing Bulk BreakingBulk Breaking

TransportingTransporting

FinancingFinancing WarehousingWarehousing


Goals of the Logistics SystemGoals of the Logistics System

• Provide a Targeted Level of Customer Service at the Least Cost.

• Maximize Profits, Not Sales.

Higher Distribution Costs/ Higher Customer Service Levels

Lower Distribution Costs/ Lower Customer Service Levels


InventoryWhen to order

How much to orderJust-in-time

InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

Distribution

WarehousingStorage

Distribution

Order ProcessingSubmittedProcessed

Shipped

Order ProcessingSubmittedProcessed

Shipped

Logistics

FunctionsTransportation Water, Truck, Rail, Pipeline & Air

Logistics SystemsLogistics Systems


RailNation’s largest carrier, cost-effective for shipping bulk products, piggyback

RailNation’s largest carrier, cost-effective for shipping bulk products, piggyback

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

WaterLow cost for shipping bulky, low-value

goods, slowest form

WaterLow cost for shipping bulky, low-value

goods, slowest form

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

AirHigh cost, ideal when speed is needed or to

ship high-value, low-bulk items

AirHigh cost, ideal when speed is needed or to

ship high-value, low-bulk items

Transportation ModesTransportation Modes


1. Speed.

2. Dependability.

3. Capability.

4. Availability.

Checklist for Choosing

Transportation Modes


Rating Transportation Modes

RailRail 33 44 22 22 33

WaterWater 44 55 11 44 11

TruckTruck 22 22 33 11 44

PipelinePipeline 55 11 55 55 22

AirAir 11 33 44 33 55

Source:Source: See Carl M. Guelzo; See Carl M. Guelzo; Introduction to Logistics Management Introduction to Logistics Management Englewood Cliffs, NJ:Englewood Cliffs, NJ:Prentice Hall, 1986), p. 46.Prentice Hall, 1986), p. 46.

(Door-to-door

deliverytime)

(MeetingScheduleson Time)

(Ability toHandleVarious

Products)

(No. ofGeographic

PointsServed)

(PerTon-Mile)

Speed Dependability Capability Availability Cost


AdvertisingAdvertising

Personal SellingPersonal Selling

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Sales Promotion Short-term Incentives to Encourage Trial or Purchase.

Public Relations

Direct Marketing Direct Communications With Individuals to Obtain an Immediate Response.

Protect and/or Promote Company’s Image/products.

Personal Presentations.

The Marketing Communications MixThe Marketing Communications Mix


Message ProblemsMessage Problems

Selective Attention

Selective Distortion

Selective Retention


Effective CommunicationsEffective Communications

Step 1. Identifying the Target AudienceStep 1. Identifying the Target Audience

PurchasePurchase

Conviction

Preference

Liking

Knowledge

Awareness

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages


Step 3. Designing the MessageStep 3. Designing the Message

Message SourceExpertise,

Trustworthiness,Congruity

Message FormatLayout,

Words, & Sounds,Body Language

Message StructureDraw Conclusions

Argument TypeArgument Order

Message ContentRational Appeals

Emotional AppealsMoral Appeals


Step 4. Select Communications ChannelStep 4. Select Communications Channel

Nonpersonal CommunicationChannels

Personal CommunicationChannels


Step 5. Establish the BudgetStep 5. Establish the Budget

CompetitiveParity

Objective& Task

Affordable% OfSales


Step 6. Decide on Communications MixStep 6. Decide on Communications Mix

AdvertisingPublic, Pervasive, Expressive, Impersonal

AdvertisingPublic, Pervasive, Expressive, Impersonal

Sales PromotionCommunication, Incentive, Invitation

Sales PromotionCommunication, Incentive, Invitation

Public Relations & PublicityCredibility, Surprise, Dramatization

Public Relations & PublicityCredibility, Surprise, Dramatization

Personal SellingPersonal Confrontation, Cultivation, Response

Personal SellingPersonal Confrontation, Cultivation, Response

Direct MarketingNonpublic, Customized, Up-to-Date, Interactive

Direct MarketingNonpublic, Customized, Up-to-Date, Interactive


Step 7. Measure ResultsStep 7. Measure Results

Step 8. Manage the IMC ProcessStep 8. Manage the IMC Process


Factors in Developing Promotion Mix Strategies

Factors in Developing Promotion Mix Strategies

Product Life-Cycle Stage

Type of Product/ Market

Push vs. Pull Strategy

Buyer/ Readiness

Stage


Push Versus Pull Strategy

Producer

Producer

Interme-diaries

Marketingactivities

End users

Marketingactivities

Demand Interme-diaries

Demand

Push Strategy

Pull Strategy

End users

Marketing activities

Demand



Developing & Managing an Advertising ProgramDeveloping & Managing an Advertising Program Deciding on Media & Measuring EffectivenessDeciding on Media & Measuring Effectiveness Sales PromotionSales Promotion Public RelationsPublic Relations


Informative AdvertisingBuild Primary Demand

Informative AdvertisingBuild Primary Demand

Persuasive AdvertisingBuild Selective Demand

Persuasive AdvertisingBuild Selective Demand

Comparison AdvertisingCompares One Brand to Another

Comparison AdvertisingCompares One Brand to Another

Reminder AdvertisingKeeps Consumers Thinking

About a Product.

Reminder AdvertisingKeeps Consumers Thinking

About a Product.

Advertising ObjectivesAdvertising Objectives

Specific Communication Specific Communication Task Task Accomplished with a Specific Accomplished with a Specific TargetTarget Audience Audience During a Specific Period of During a Specific Period of TimeTime


Advertising Budget FactorsAdvertising Budget Factors

Stage in the Product Life Cycle

Market Share &Consumer Base

Competition &Clutter

AdvertisingFrequency

ProductSubstitutability


Profiles of Major Media Types

NewspapersAdvantages: Flexibility, timeliness; good local market coverage;

broad acceptance, high believability

Limitations: Short life; poor reproduction quality; smallpass-along audience

TelevisionAdvantages: Combines sight, sound, motion; high attention; high reach; appealing to senses

Limitations: High absolute costs; high clutter; fleeting exposure;less audience selectivity

Direct MailAdvantages: Audience selectivity; flexibility, no ad compe-

tition within same medium; allows personalization

Limitations: Relative high cost; “junk mail” image


RadioAdvantages: Mass use; high geographic and demographic

selectivity; low cost

Limitations: Audio only; fleeting exposure; lower attention; nonstandardized rates; fragmented audiences

MagazinesAdvantages: High geographic and demographic selectivity;

credibility and prestige; high-quality reproduction;long life; good pass-along readership

Limitations: Long ad purchase lead time; waste circulation; no guarantee of position

OutdoorAdvantages: Flexibility; high repeat exposure; low cost; low message competition

Limitations: Little audience selectivity; creative limitations

Profiles of Major Media Types


Advertising StrategyMessage Execution

Advertising StrategyMessage Execution

TypicalMessageExecution

Styles

TypicalMessageExecution

Styles

TestimonialEvidence

TestimonialEvidence Slice of LifeSlice of Life

ScientificEvidence

ScientificEvidence

LifestyleLifestyle

TechnicalExpertise

TechnicalExpertise

FantasyFantasy

MusicalMusical

PersonalitySymbol

PersonalitySymbol

Mood orImage

Mood orImage

Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest.


Advertising EvaluationAdvertising Evaluation

Advertising Program EvaluationAdvertising Program Evaluation

Communication Effects

Is the Ad Communicating Well?

Communication Effects

Is the Ad Communicating Well?

Sales Effects

Is the Ad Increasing Sales?

Sales Effects

Is the Ad Increasing Sales?


Why the increase in Sales Promotion?Why the increase in Sales Promotion?

Growing retailer powerGrowing retailer power Declining brand loyaltyDeclining brand loyalty Increased promotional sensitivityIncreased promotional sensitivity Brand proliferationBrand proliferation Fragmentation of consumer marketFragmentation of consumer market Short-term focusShort-term focus Increased managerial accountabilityIncreased managerial accountability CompetitionCompetition ClutterClutter


Long-Term Promotional Allocation

0

10

20

30

40

50

60

1986 88 90 92 94 1996

Year

%t

of

tota

l -

3 yr

.MA

Trade Promo

Media Adv

Cons. Promo

Cox Direct 19th Annual Survey of Promotional PracticesCox Direct 19th Annual Survey of Promotional Practices


Channels of Sales PromotionsChannels of Sales Promotions

MANUFACTURER

RETAILER

TradeTradePromotionsPromotions

CONSUMER

ConsumerConsumerPromotionsPromotions

Push

PushPullRetailRetail

PromotionsPromotions


Consumer PromotionConsumer Promotion

Consumer-Promotion Objectives

Consumer-Promotion Tools

Point-of-PurchaseDisplays

Point-of-PurchaseDisplays

PremiumsPremiums

Price PacksPrice Packs

Cash RefundsCash Refunds

CouponsCoupons

SamplesSamples

Patronage Rewards

Patronage Rewards

GamesGames

SweepstakesSweepstakes

ContestsContests

AdvertisingSpecialties

AdvertisingSpecialties

Patronage Rewards

Entice Consumers to Try a New Product

Entice Consumers to Try a New Product

Lure Customers AwayFrom Competitors’ Products

Lure Customers AwayFrom Competitors’ Products

Get Consumers to “Load Up’on a Mature Product

Get Consumers to “Load Up’on a Mature Product

Hold & Reward Loyal Customers

Hold & Reward Loyal Customers

Consumer Relationship Building

Consumer Relationship Building


“Deal Proneness,”Liechtenstein, Burton, & Netemeyer, Journal of Retailing, Summer 1997

“Deal Proneness,”Liechtenstein, Burton, & Netemeyer, Journal of Retailing, Summer 1997

Examination of “deal proneness” Examination of “deal proneness” among consumers in a among consumers in a supermarket settingsupermarket setting

Surveys Surveys && Grocery Receipts Grocery Receipts usedused

Eight types of deals:Eight types of deals: Cent-off, One-free, Gift, Cent-off, One-free, Gift,

Display, Rebate, Contest, Display, Rebate, Contest, Sale, & CouponSale, & Coupon

“Deal Proneness,”Liechtenstein, Burton, & Netemeyer

“Deal Proneness,”Liechtenstein, Burton, & Netemeyer

Cluster analysis yielded two Cluster analysis yielded two interpretable results:interpretable results:

49%49% are “deal prone,” are “deal prone,” 51%51% not not 24%24% High “Deal prone,” High “Deal prone,” 50%50%

intermediate, intermediate, 26%26% deal insensitive deal insensitive ““Deal-proneness” a generalized Deal-proneness” a generalized

construct - (crosses type of construct - (crosses type of promotion)promotion)

Younger & Less educated more Younger & Less educated more likely to be deal pronelikely to be deal prone


Trade-Promotion ObjectivesTrade-Promotion Tools

Specialty Advertising

Items

Specialty Advertising

ItemsContestsContests

Free GoodsFree Goods

Buy-BackGuarantees

Buy-BackGuarantees

AllowancesAllowances

Price-OffsPrice-Offs

Patronage Rewards

Patronage Rewards

Push MoneyPush Money

DiscountsDiscounts

PremiumsPremiums

Displays

Persuade Retailers or Wholesalers to Carry a Brand

Persuade Retailers or Wholesalers to Carry a Brand

Give a Brand Shelf SpaceGive a Brand Shelf Space

Promote a Brand in Advertising

Promote a Brand in Advertising

Push a Brand to ConsumersPush a Brand to Consumers

Trade PromotionsTrade Promotions


Business-Promotion Objectives Business-Promotion

ToolsGenerate Business LeadsGenerate Business Leads

Stimulate PurchasesStimulate Purchases

Reward CustomersReward Customers

Motivate SalespeopleMotivate Salespeople

ConventionsConventions

Trade ShowsTrade Shows

Sales ContestsSales Contests

Business-to-Business PromotionBusiness-to-Business Promotion


Major Public Relations ToolsMajor Public Relations Tools

SpecialEvents

SpecialEvents

Written MaterialsWritten

Materials

Corporate Identity Materials

Corporate Identity Materials

SpeechesSpeeches

NewsNews

AudiovisualMaterials

AudiovisualMaterials

Public Service

Activities

Public Service

Activities

Web SiteWeb Site

Documents

©2000 Prentice Hall Objectives ä Course Organization ä Tasks of Marketing ä Major Concepts & Tools of Marketing ä Marketplace Orientations ä Marketing’s