What is Marketing?

Definition: The process of planning and executing the conception, pricing, promotion and distribution of goods and services to facilitate exchanges that satisfy individual and organizational objectives. (Source: American Marketing Association)

Evolution of Marketing

ProductionEra (1800s-1920s)

Produce asmuch as possible

as there is alimitless market

Selling Era(1920s – 1970s)

Focus shiftsfrom Production

to Sales andAdvertising

Marketing Concept Era

(1950s – 2000)3 Orientations

Customer ServiceProfit

CustomerRelationship Era

(1990s – pres)

Learn as much as possible about

customersand do everything

possible tosatisfy and

exceed theirexpectations

Product AdvertisingIdentify and

Fill NeedsBuild

Relationships

Relationship Marketing

Repeat Customers tend to:

Spend moreCost less than one time or first time customersRequire less serviceRefer other customersProvide valuable feedback

Are relationships important from the customer’s perspective? Why or why not?

Relationship Marketing

Firms build relationships through:

Frequency Marketing (Children’s products discounts)Affinity Programs (Credit Cards)Co-branding (Smuckers and PopTarts)Co-marketing (Dell and Intel/Apple and Intel)One on one marketing (Data Mining) (Autobytel)

Non Traditional Marketing

PersonMarketing

Cause Marketing

Event MarketingWhole FoodsWine Tasting

Place Marketing

City Festivals(Apples and Art)

OrganizationMarketing(St. Jude’s)

Marketing: Facilitates Exchange via Utility

Time and Place: Convenience

Possession: Satisfaction

Form: Transformation

Strategic Marketing Planning Process

1. Examine Current Market Situation: Past Performance, Competition, SWOT

2. Assess Product and Market Opportunities: Macro Analysis

3. Set Objectives

4. Develop Marketing Strategy: Segmentation, Target Market, Position Productand Develop the Marketing Mix (4 P’s)

Examine Current SituationSWOT Analysis

Strengths: something the company either possesses or is good atdoing (e.g., assets, skills, knowledge, partnerships)

Weaknesses: an area of current or potential vulnerability

Opportunities: areas of current or potential profitability and/orgrowth that exist in the external environment

Threats: factors that exist in the external environment that havethe potential to erode an organization’s profitability and/or growth

Assess OpportunitiesMarket Research

Data Sources: Primary and Secondary

Secondary (External): Trade Associations, AdvertisingAgencies, Professional Research Firms, Government

Primary: Company Databases, Focus Groups, SurveysObservation

Simple Research Process

• Observation• Identification of Problem Area or Question

of Interest• Develop hypotheses• Data Collection• Interpretation of Data• Refine or develop Theory or Apply to Decision-making process

Set Objectives Market Penetration

Increasing the use of present products in present markets

1. Increasing the rate at which present customers use the product/service (Hospitals creating wellness programs)

2. Attracting competitors’ customers

3. Attracting nonusers of the product (Profiling and contacting potential

cosmetic surgery patients)

Drs. Rodan & Fields have their own private practices, specializing in dermatologic surgery, cosmetic surgery and acne treatments. Seeing over 1,000 patients a month, Drs. Rodan and Fields developed Proactiv Solution to help relieve the endless frustration and suffering of their patients.

                       

Objective Market Development

1. Opening additional geographic markets

2. Attracting other market segments

Selling present products in new markets

Objectives Product Development

Developing new products for present markets

1. Developing new product features

2. Combining quality variations

3. Brand Extension

Creating new products for new markets

Diversification

Key Areas of Marketing

Advertising (and so much more)

Market Research

New Product Development

Product/Brand Management

Distribution Channel Management

Consumer Behavior

Public Relations

Market Management

Develop StrategyMarket Segmentation

Process of dividing a total market into severalrelatively homogenous groups.

Examples of Segmentation Criteria: Geography, products, product usage rate, psychographic (values, lifestyles, attitudes).

Different Types of Markets: National and International

GovernmentMarket

(e.g. Military)

ConsumerMarket

Business toBusiness

Market(e.g., Oakland

University

Proctor and Gamble

Develop StrategyMarket Coverage

Undifferentiated: One size fits all

Differentiated: Variety of Products to Several Customer Groups

Concentrated: Narrow target market (Focus on primary segment)

Oink Oink, Inc. (roasted pig ears)

Gap Maternity, Baby Gap, Gap Kids, Women, Men, Gap Body

Marketing 4 P’s (Key Marketing Mix Decisions and Strategy)

Product: Type, Attributes, Package Design, Brand, Warranties

Place (Distribution): Choice of and availability at POS (point of sale) locations

Price: Discount Pricing, Value Pricing, Skimming Pricing

Promotion: Coupons, Rebates, Samples

Marketing 4 Ps: Product

Differentiated or Standardized (e.g., commodities)

Product Line and Mix

Product Life Cycle

Product Identification: Branded versus non branded

Product: Line (Set of Related Products) and Mix (Assortment of Products)

Coca Cola Kraft Foods

Product: Life Cycle

IntroductionThe product is developed for

a particular market and introducedto that market

GrowthKnowledge of

product increasesand sales increase

MaturitySales volumespeak and sales

level off

DeclineSales volumes decreaseand demand for product

declines. Text-messaging

devices

Personal Computers

Typewriters

Brand

Name, term, sign, symbol or design that identifies the products of a firm and distinguishes them from competitive offerings.

Brands

Top 10 Global Brands (Based on Economic Power)

1. Coca Cola (United States)2. Microsoft (United States)3. IBM (United States)4. GE (United States)5. Intel (United States)6. Nokia (Finland)7. Disney (United States)8. McDonalds (United States)9. Toyota (Japan)10.Marlboro (United States)11.Mercedes-Benz (Germany)

Brand

Brand Loyalty: recognition, preference, insistence

Brand Equity: Added value that a widely respected,Highly successful name gives to a product in theMarketplace.

Awareness Loyalty Perceived quality Images

“Levels” of Branding

National Brands

Private Labels

Generic Products

Family of Brands

Trends in Branding

Authenticity – Good performance and good deeds pay off BUT consumers must sense that the actions are sincere and not a PR stunt

Experience - the experience conveys the essence of the brand

Neuromarketing – strengthen emotional bonds to the product

Trends in Branding

Advertainment - to reach TV-shy youngsters, build the message in what they are watching/doing

Multi-constituency – Realize that multiple stakeholders are involved with brand (customers and non customers)

Letting-go - Brands will create social and cultural values; customers must have input in shaping brand image

Promotions

Purpose: Informing, persuading and influencing a purchase decision

Five Key Promotional Objectives

1.Differentiate the Product (e.g., comparison)2.Accentuate Product Value (e.g., warranties)3.Provide Information (e.g., describe features)4.Stabilize Sales (e.g., even out cyclicality)5. Increase Sales (e.g., coupons)

Promotional Mix

Advertising

Personal Selling

Sales Promotion

Public Relations

Advertising (Effectiveness versus Control)

Consider

Market Reach

Credibility

Cost

Detail

• Word of Mouth

• Online and Interactive (engagement rings)

• Outdoor (billboards)

• Media

• Direct Mail

• Sponsorship

Pricing Strategy

Four Pricing Objectives

1.Profitability

2.Volume

3.Meeting Competition

4.Prestige$15.00 ($5.00 per unit)

$2.49 (.83 per unit)

$2.40 per unit

Breakeven Analysis

Breakeven Point (in units) Total Fixed Costs

Contribution to Fixed Costs per Unit(Price per unit – Variable Cost per Unit)

=

Breakeven point (in dollars) = Total Fixed Costs

1 – (Variable Cost per Unit)/Price

Dog Shirts

Total Fixed Costs (USAIIR): $60,000

Variable Cost per Unit: $2.00

Possible Price: $7.00

What is the breakeven point in units and dollars?

Breakeven Analysis

Total Revenue

Total Cost