MARKETINGOctober 8, 2014

Marketing Definition

Marketing: All the activities involved in getting goods and services from the businesses that produce them to the consumers who wish to purchase them.

Two roles of marketing:1. Sell what a business makes2. Manage a business’s brand

Roles of Marketing

Branding – 3 Methods

A brand name is a word or a group of words that a business uses to distinguish its products from competitors’ products.

Many products combine their name with a special symbol that is associated with the product. This symbol is called a logo or trademark.

A slogan is a short, catchy phrase that is usually attached to the company’s name and logo.

Logos

Logos take 5 possible forms1. Word Mark (Coca-Cola)2. Letter Mark (IBM)3. Combination Mark (Adidas)4. Symbol or Icon (Apple)5. Emblem (Harley Davidson)

Brand Identification

Once a company develops a name, slogan, or logo for a product, everything else associated with that product should carry the identification.

Logo Recognition See how many logos you can identify from this

alphabetical list. http://www.joeykatzen.com/alpha/ver5/

Slogan Recognition How many slogans do you recognize from the

list handed out?

The Product Life Cycle

The best marketing can be measured in two ways:1. Sales analysis2. Consumer reaction to the brand –

a reaction based on marketing efforts.

The Product Life Cycle

Effective marketing increases brand equity: the value of the brand in the marketplace.

Good marketing develops brand awareness; customers can name your brand as part of a specific category, whether it is a product, service, non-profit organization, or event.

Better marketing develops brand loyalty.

The best marketing is marketing that develops brand insistence: the customer will accept no substitutes.

The Product Life Cycle

Product life cycle: the changes in a product’s popularity over time.

Style curve: graphic representation of a product’s success in the market, illustrating the volume of sales over time.

The Product Life Cycle

5 Stages Product Introduction (or launch) Growth Maturity Decline Decision Point

Stage 1: Product Introduction

At this stage, consumers don’t know the product exists.

Business needs to inform consumers about the product’s features, availability, package design, and brand identification.

Usually, curious or adventurous buy the product first. These consumers are called early adopters.

Other consumers look to early adopters, or trendsetters for information.

The Product Life Cycle

Stage 2: Growth

In this stage, marketers manage their products very carefully.

As popularity increases, competitors enter the market.

These competitors modify original product by adding features and improving quality, or sell at a lower price.

Competition fuels growth. Consumers want to know what all the fuss is

about.

The Product Life Cycle

Stage 3: Maturity

At this stage, growth is flat. New consumers replace those who leave to

purchase a competing product. Marketers manage mature products through

continued advertising. Reminding consumers of the benefits. (ex. Coca-

Cola, Tide) By now, manufacturers have long since paid

for major production costs. Cost of sales and distribution are low.

These products are very profitable, known as cash cows.

The Product Life Cycle

Stage 4: Decline

At some point, most products fail to attract new customers. Sales decrease and product enters stage of

decline. Seasonal changes or new competition may

cause temporary decline. If decline continues, businesses research

their markets to determine if consumers are rejecting their brand.

Price change or ad campaign may help this. If brand equity drops, that’s a problem.

The Product Life Cycle

Stage 5: The Decision Point

Final stage of product life cycle. Decision must be made

Do we reposition? Try to make it popular in a new market.

“New and improved!” New promotion and pricing?

If campaign succeeds, company may retain sales numbers and brand equity.

If not, product may be removed from market. New technologies may render products

obsolete. Marketing will not help.

The Product Life Cycle

Non-traditional Product Life Cycles

Fads Niches Seasonal

Non-traditional Product Life Cycles: Fads

Fad: a product that is extremely popular for a very short period of time. Ex. Pogs, Tamagatchi, Atkins Diet Imitation products at a cheaper price are

called knock-off products. Fad marketers enter late and stay too long. When fads die, they die fast, leaving many

businesses with large inventory and no buyers.

Non-traditional Product Life Cycles: Niches

Niche: a section of the market in which a product dominates and into which few competitors enter; a place or position particularly suitable to the person or thing.

By the time competitors develop, original producer has already distributed to those that want to purchase.

Not always the most profitable because of factors called barriers to entry.

Non-traditional Product Life Cycles: Niches

Barriers to entering a niche market: Small market size Cost of R&D Advertising expense Factory and equipment cost Design costs Lack of distribution channels Cost of raw materials

High barriers to entry usually means competitors do not enter market.

Non-traditional Product Life Cycles Seasonal

Seasonal Try to sell a snow shovel in August. Patio furniture in December

Many products are only popular during a certain time of year.

With new seasons comes new styles Manufacturers must make the most of

their selling season. Too much inventory is bad!

The balancing of product quantity with sales is called inventory management.

Marketing Concepts

The Four Ps of Marketing Product Price Place Promotion

The Two Cs of Marketing Competitive Markets Consumer Markets

The Four Ps of Marketing

Product (or Service)

Businesses develop products for two reasons:1. They can2. There is a need

Product and service development take into account: Quality Design Features Benefits Service & Support

Product (or Service): Quality

How good is the product? Does it do what it is supposed to do? Does it do this better than competing brands? Will it last long? Consumers will pay for higher quality

Some products are developed to lower standards. Can we meet the consumer needs with a

lower quality product? These products will be less expensive

Product (or Service): Design

How things look. Clothing Cars Coke bottle

Packaging also may protect products from tampering, dirt, air, etc.

Businesses want consumers to recognize and look for their product design.

What about service design?

Product (or Service): Features

Producers consider features such as materials, size, scent, taste, etc.

Service providers also focus on features As a car rental company, will you pick up your

clients? How long does Apple allow you to rent

movies? What style of music does the DJ play?

Product (or Service): Benefits

We are not buying products, we are buying benefits. When you buy a car, you are actually buying

transportation. When you buy food, you are actually buying

nutrition. Consumers must perceive there to be a

benefit for them to actually make the purchase.

Product (or Service): Product/Service Mix

Retail stores do not just sell products Delivery Installation Warranties Alterations Free parking

Every extra service or support offered gives consumers another reason to select that store over another

Service businesses also sell products. Finding the right mix is important.

The Four Ps of Marketing

Price

Businesses must decide at what price to sell products.

Lower prices may encourage more sale, but may not be worth it (remember equilibrium).

Some products are more price sensitive than others: how much sales will go up or down when the price goes up or down.

The Four Ps of Marketing

Place (Channels of Distribution)

Channels of Distribution: the paths of ownership that goods follow as they pass from the producer to the consumer. Direct Channels Indirect Channels Specialty Channels

Also known ad distribution chain. A product does not change in a

distribution chain. If it does change, a new distribution chain

begins.

Place (Channels of Distribution)

Place (Channels of Distribution)

Place (Channels of Distribution): Direct Channels

Direct channels of distribution: A direct connection between the consumer and the producer of a good or service; also known as a maker-user relationship

Does not use intermediaries: businesses that take possession of the goods before the consumer does.

Consumers feel more confident because they know the actual source of the product they are buying.

Place (Channels of Distribution)

Place (Channels of Distribution)

Place (Channels of Distribution): Indirect Channels Indirect channels of distribution: have

one or more intermediaries. These intermediaries can be importers, wholesalers or retailers.

Importers: someone who seeks out foreign products to bring into his or her own country

Wholesalers: buy goods from producers or importers and resell the goods to retailers. Wholesalers buy in volume. Located close to

retailers and have large storage space. Retailers: buys goods from wholesaler and

sells to consumers.

Place (Channels of Distribution)

Place (Channels of Distribution)

Place (Channels of Distribution): Specialty Channels

Specialty channels of distribution: any indirect channel of distribution that does not involve a retail store. Vending machines E-commerce Door to door sales

The Four Ps of Marketing

Promotion

Promotion is any attempt to sell a product.

Sales promotion encourages consumers to buy a product by using coupons, contests, premiums, samples and special events.

Promotion: Coupons

Coupons offer consumers money off the price of a product. They are treated as cash at the checkout counter.

Advertisers measure effectiveness of a coupon promotion by the redemption rate: the percentage of coupons that consumers actually use. Average redemption rate is 5%. In general, the

larger the value of the coupon, the higher the redemption rate.

Promotion: Contests

Contests are an exciting way to increase brand recognition and sales.

By law, businesses must organize contests so that anyone can enter (“no purchase necessary”)

Laws prohibit gambling in contests. Contests require people top either demonstrate a skill or answer a skill testing question. Rolling up the rim passes as demonstrating a

skill

Promotion: Premiums

Premiums are giveaways – something a consumer gets for free with the purchase of a product.

Many businesses encourage brand loyalty by giving away free products to regular customers. Consumer loyalty cards: a card that is

stamped each time a consumer buys the business’ product. This ensures sales.

Promotion: Samples

Samples encourage a brand trial. Usually a smaller “trial” size. Samples can be delivered door to door, at

point of sale, busy street corners, etc. Price and other product information will

be provided. Very effective. Usually increases sales.

But costs are very high. WORD OF MOUTH

Promotion: Special Events

Marketers organize special events to attract customers and increase product sales. Book signings, celebrity appearances, free

concerts, etc. Often include other types of promotions

such as contests, premiums and samples. Main purpose is to excite consumers.

Consumers will buy more if they are having fun.

Promotion Activity

Students will break into 5 small groups. Each group will be assigned a type of promotion

1. Coupons2. Contests3. Premiums4. Samples5. Special Events

Groups will find a company employing their type of promotion and do some research

Each group will present the details of their promotion (what is actually being done) and decide whether they think it is a good promotion (Will it increase sales? Am I more likely to buy?).

The Two Cs of Marketing

The two major external factors in marketing: the competition and the consumer.

The Competitive Market

The competitive market consists of all the sellers of a specific product, and is expressed most often in terms of the total dollars spent annually on this product. Ex. The American soft drink industry is worth

$68 billion. This means all manufacturers, bottlers, importers, and distributors share that $68 billion.

The percentage of the market that a company or brand has is called market share.

Market Share of Soft Drinks

The Competitive Market

A market segment is a part of the overall market that has similar characteristics. Ex. Soft drink market segments

Root beer Cola Energy drinks Etc

Ways to increase market share1. Increase size of overall market2. Taking sales from a competitor

The Competitive Market

Competition among Products Direct competition: competition between products

or service that are very similar. Coke v. Pepsi

Indirect competition: competition between products or services that are not directly related to each other. Pizza v. Concert tickets

Discretionary income: income you have that is not committed to paying for the basic necessities, such as food, clothing and shelter.

Disposable income: income used to pay for basic necessities. It is the amount of income left over after taxes have been paid.

Direct V. Indirect

This activity can be found on under the BBI section of www.welcometomrgsroom.weebly.com

The Two Cs of Marketing

The two major external factors in marketing: the competition and the consumer.

The Consumer Market

Consumer market: all the potential users of a product or service.

Can be identified in at least two ways:1. Demographics2. Lifestyle

Demographics

Demographics is the study of obvious characteristics that categorize human beings. Age Gender Family Life Cycle Income Level Ethnicity and Culture

Demographics: Age

Young children want toys, teens want computers, adults might be more interested in cars, seniors may want items to do with retirement.

Some age groups are consumers but not customers. Consumers: people who use goods and services. Customers: people who purchase goods and service.

Businesses often target the gatekeeper: the person who makes the buying decisions for a household. Cereal companies will target parents by stating the

health benefits for their children.

Demographics: Gender

Certain products are targeted at all genders, some to specific gender. Women’s athletic shoes targeted at women.

Shopping roles have changed. Power tools are not always targeted at men

anymore.

Demographics: Family Life Cycle

Newly married or cohabitating couples need furniture.

Parents of babies need diapers, crib, car seat.

Your stage in the family life cycle often determines what you want and need

Businesses are aware of this demographic and compete for consumer $ in different ways for various groups.

Demographics: Income level

How much money you make. Kellogg’s Corn Flakes are targeted at

everyone. Mercedes are targeted at those with more

wealth. To determine marketing efforts,

businesses may look for postal codes of upper-class neighbourhoods. They may advertise in Forbes Magazine.

Demographics:Ethnicity and Culture

Canada has a very diverse population. Look around this class!

Businesses compete for various groups by importing products from their home countries.

There are newspapers and magazines available in more than 100 languages

Many companies attracted business from specific groups, then competed for all groups. Non-Italians at Italian restaurants.

Lifestyle

Lifestyle: the way people live, including their values, beliefs, and motivations.

The study of lifestyles is called psychographics.

A person’s beliefs will influence their decision making. Vegans will not purchase steak. A lazy person will not be interested in buying

running shoes.

Marketing Concepts Review

What are the four Ps of marketing? Provide an example of each:

Slogan Family life cycle Premium Specialty channel of distribution Product/service mix

What are the two Cs of marketing? Define and give an example of market share. Explain two possible ways in which a

business could increase its market share.

Advertising

Advertising is the paid use of various types of media to try to convince consumers to buy a particular product. TV Newspaper Internet Radio Etc.

Creating Good Advertising

No one really knows… there is no magic formula for genius.

Advertisers want consumers to remember the brand and the name of the product.

Even if an ad is artistic or funny, if we do not remember the product or brand, the ad has not done its job.

There are four standard rules for creating good advertising: Attract attention, gain interest, build desire, get

action.

Creating Good Advertising

Super Bowl Commercials

https://www.youtube.com/watch?v=HPR3PB_VGVs

Creating Good Advertising

Attract Attention For print – a good headline TV or Radio – hold your attention for 30

seconds when the fridge or bathroom beckon Internet – get you to click

Gain interest Print should be simple and easy to read TV and radio should be easy to understand Make people want to read or watch or listen

Creating Good Advertising

Build desire Help the customer want your product Describe benefits – Snicker: Hungry? Why

wait? Get Action

Ask for the sale! Summarize reasons to buy Make it easy for customers to buy, especially

online TV or radio – repeat phone numbers or

website Print – In North America, most important

information starts to left

Types of Advertising

Remember that advertising is the paid use of various types of media to try to convince consumers to buy a particular product.

Publicity is information about a business, either positive or negative, that appears in the media and is not paid for. More trusted than advertising

Types of Advertising

Direct to home Out of home Radio Television Newspaper Magazine Internet

Comparing Types of Advertising

Reach - # of people exposed Frequency - # of times audience will see or hear Selectivity – ability for the medium to focus on

target audience Durability – how long ad lasts (ie. Radio is 30

seconds, newspaper is 1 day) Lead time – how fast the ad can be ready to run Mechanical requirements – how complex it is to

create ad Clutter – competition for the audience’s attention Cost – accumulated costs of running the ad

Comparing Types of Advertising

Advertising Review

What are the two most selective media? Explain why.

List five types of advertising. What are the four standard rules for

marketing? Why does out-of-home advertising have a

reach score of 10? Describe an advertisement you think is

good. Why do you think that?

Marketing Research

Marketing Research is the collection and analysis of information that is relevant to the marketing strategy.

Types of marketing research: Consumer research – what do consumers want? Market research – what groups are interested? Motivation research – how we think and feel about

buying? Pricing research – what price to sell at? How does price

change demand? Competitive research – look for areas of weak

competition. What is the competition doing? Product research – examines detail of product and how

these impact the market Advertising research – what is the most effective way to

reach potential consumers?

Marketing Research Tools

Secondary data: information that others have collected and researches re-interpret for their own purposes.

Primary data: current information that researchers collect and analyze for a specific purpose. Test marketing – limited release to test interest Internal Information sources – analyze your own sales

records, inventory, advertising and sales to predict future consumer behavior. Also called data mining.

Surveys – carefully planned questions used to gather data. Open-ended & close ended questions

Observation – researches watch consumers behaviour Focus groups – a company arranged meeting of

potential consumers