Basic Marketing Concepts Overview

Marketing Review Modules

• Marketing Concepts• Customer Needs• Industry Competition• Target Marketing, Segmentation,

and Marketing Research• New Product Development and

Sales1-5

Basic Marketing Concepts

The Marketing ConceptProfit

CustomerSatisfaction

Total CompanyEffort

TheMarketingConcept

Utility and Marketing

Exhibit 1-1

From Production

From Marketing

Form

Task

Time

Place

Possession

UtilityValue that comesfrom satisfyinghuman needs

1-6

Customer Value

Costs Benefits

• One customer’s views may vary from another customer’s view, so firm may not be able to satisfy everybody

• Customer value concept takes the customer’s point of view, but customers may not explicitly weigh costs and benefits

The Marketing Management Process

Whole-CompanyStrategic

ManagementPlanning

MarketingPlanning

Implement MarketingPlan(s) and Program

Control MarketingPlan(s) and Program

Adjust PlansAs Needed

The Four Ps of the Marketing Mix

Product Place

Price Promotion

C

ProductPhysical GoodsServiceFeaturesQuality LevelAccessoriesInstallationInstructionsWarrantyProduct LinesPackagingBranding

PlaceObjectivesChannel TypeMarket ExposureKinds of

MiddlemanKinds and

Locations of Stores

How to Handle Transporting and Storing

Service LevelsRecruiting

MiddlemenManaging

Channels

PromotionObjectivesBlendSalespeople Kind Number Selection Training MotivationAdvertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares?Sales PromotionPublicity

PriceObjectivesFlexibilityLevel over PLCGeographic

TermsDiscountsAllowances

Four P’s Strategy Decision Areas

Marketing Strategy Planning Process

Customers

Company

Competitors

S.W.O.T.

Segmentation& Targeting

Differentiation& Positioning

Product Place

PromoPrice

Narrowing down to focused strategy with screening criteria

External Market Environment

TargetMarket

External Factors

StrategyPlanning

Internal Factors

Strengths Opportunities

Weaknesses Threats

18-5

SWOT Analysis

Exhibit 15-115-3

Strategy Planning for Advertising

SalesPromotion

Mass Selling

PersonalSelling

Target Market

PricePromotionPlaceProduct

Copy thrustMedia typesKind of advertising

Target audience

Who will do the work?

PublicityAdvertising

Exhibit 13-113-3

Basic Promotion Methods

TargetMarket

PricePromotionPlaceProduct

SalesPromotion

PersonalSelling

PublicityAdvertising

MassSelling

Pricing Objectives

Exhibit 16-416-4

Dollar or UnitSales Growth

Growth in Market Share

TargetReturn

MaximizeProfits

MeetingCompetition

NonpriceCompetition

PricingObjectives

SalesOriented

ProfitOriented

Status QuoOriented

Strategy Planning for Price

Exhibit 16-1

Pricingobjectives

TargetMarket

PricePromotionPlaceProduct

Geographicterm —

who paystransportation

and how

Discounts andallowances—to whom and

when

Price levelsover product

life cyclePrice

flexibility

16-3

Exhibit 17-1

Markup chainin channels

17-3

Key Factors That Influence Price Setting

Pricing objectives

Discounts andallowances

Legal environment

Price flexibility

Geographicpricing terms

Demand

Cost

Price of otherproducts in the line

Competition

Pricesettin

g

24.00

30.00

50.00

Producer Wholesaler Retailer

Cost = 24.00 = 80%

Markup = 6.00 = 20%

Cost = 21.60 = 90%

Markup = 2.40 = 10% Cost = 30.00 = 60%

Markup = 20.00 = 40%

Exhibit 17-217-4

Markups

Customer Needs

A Model of Buyer Behavior

5-5

Purchase ReasonTimeSurroundings

PurchaseSituation

MotivationPerceptionLearningAttitudePersonality/Lifestyle

PsychologicalVariables

FamilySocial ClassReference GroupsCulture

SocialInfluence

Problem-Solving Process

Person Does or Does Not Purchase (Response)

Marketing Mixes All Other Stimuli

PersonMakingDecision

Exhibit 5-2

5-6

The PSSP Hierarchy of Needs

Physiological Needs

Safety Needs

Social Needs

PersonalNeeds

Exhibit 5-4

Purchase SituationSocial InfluencesPsychological

Variables

Need-want Awareness

Information Search

Set Criteria

Decide on Solution

Purchase Product

Routinized Response

Postpone Decision Postpurchase

EvaluationResponse

Feedback ofinformationas attitudes

Person making decision

Marketing mixes All other stimuli

Exhibit 5-95-13

The Consumer Problem Solving Process

Exhibit 5-115-14

Levels of Problem Solving

Extensive Problem Solving

Limited Problem Solving

Routinized Response Behavior

Involvement Continuum

Low Involvement High Involvement

Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed

High involvementInfrequently purchased

ExpensiveHigh risk

Much information desired

Industry Competition

The Competitive Environment

Information on Competitors

Competitive Barriers

Competitive Rivals

Competitor Analysis

Kinds of Markets

KeyConcepts

in theCompetitiveEnvironment

4-6

Exhibit 12-1

Conven-tionalofferings

Single- andlimited-linestores

Expandedassortmentand service

Specialty shops anddepartment stores

Expandedassortmentand/or reducedmargins/service

Supermarkets, discounthouses, mass-merchandisers,supercenters

Added conveniencehigher marginsless assortment

Telephone/mail order,vending machines,door-to-door, conveniencestores, electronic shopping

Expandedassortmentreduced marginsmore information

Internet

12-4

Types of Retailers

Types of Wholesalers

Exhibit 12-512-9

Does wholesaler own the products?

Limited-functionmerchant

Wholesalers

Servicemerchant

wholesalers

Agent middlemen

How many functions does the wholesaler

provide?

All the functions

Some functions

Yes (merchant wholesaler) No (agent middleman)

Manufacturer or producer

Consumer

Procter &Gamble

DelMonteNissanCitibank

Wholesaler

Wholesaler

Retailer

Wholesaler

RetailerRetailer

10-5

Exhibit 10-2

Four Examples of Basic Channels of Distribution for Consumer Products

Target Marketing, Segmentation &

Marketing Research

Market SegmentationSt

atus

dim

ensi

on

Dependability dimension

A. Product-market showingthree segments

Stat

us d

imen

sion

Dependability dimension

B. Product-market showingsix segments

Marketing Information Systems

7-3

Exhibit 7-1

MarketResearchStudies

InternalData

Sources

ExternalData

Sources

DatabasesDecisionSupportSystem(DSS)

MarketingManager

DecisionsOutcomes

MarketingModels

InformationTechnologySpecialists

Inputs?

AnswersN

ew In

form

atio

n

Feedback

Information

Sources

Questionsand Answers

Decision

MakerResult

s

Definingthe

Problem

Analyzingthe

Situation

GettingProblem-Specific

Data

Inter-preting

Data

Solvingthe

Problem

EarlyIdentification

ofSolution

Feedback to Previous Steps

7-4

Exhibit 7-2

Marketing Research Process

SecondaryData

Sources

Inside Company

Outside Company

Observation

Questioning

PrimaryData

Sources

AllData

Sources

7-5

Exhibit 7-3

Sources of Data

Product Development

Exhibit 13-7Time13-14

The Adoption CurvePe

rcen

t Ado

ptio

n

Innovators(3-5%)

EarlyAdopters(10-15%)

EarlyMajority

(34%)

LateMajority

(34%)

Laggards/Nonadopters

(5-16%)

05

20

50

90

The Adoption Curve

• Innovators: • First to Adopt, Eager to Try• Young, Well-Educated, Mobile• Seek Info from non-salesperson Sources

• Early Adopters• Opinion Leaders• Greater Contact with Salespeople• Word-of-Mouth

The Adoption Curve

• Early Majority: • Avoid Risk, Try Only if Others Have

Usually are Not Opinion Leaders• Late Majority:

• Cautious About New Ideas, Older and More Set in Their Ways

• More Subject to Peer Pressure

The Adoption Curve

• Laggards:• Suspicious of New Ideas• Do Things the Way that They Have

Always Been Done

The Product Life Cycle

9-3

Exhibit 9-1

Total IndustryProfit

+

–

$ 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Total IndustrySales

PlaceProduct PricePromotion

Brand

Type of Brand:Individual or family

Manufacturer or dealer

ProductIdea

Physicalgood/service

FeaturesQuality levelAccessoriesInstallationInstructionsProduct line

Warranty

None, full, orlimited

Package

Protection,Promotion,

or both

Target Market

8-3

Exhibit 8-1

Defining “Product”

The Transporting Function

Modesof

Transportation

Water

Air

Rail Truck

Pipeline

Push-Pull Strategies

Exhibit 13-6

WholesalerPromotion

Push

WholesalerPromotion

Push

RetailerPromotion

Push

FinalConsumer

Pull

BusinessCustomer

Pull

Prom

otio

n to

Bus

ines

s C

usto

mer

sProm

otion toFinal C

ustomers

Promotion toChannel Members

Producer’s Promotion BlendPersonal Selling, Sales Promotion, Advertising, Publicity

13-13