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The Companys Macro environment:
The company and all of the other actors operate in a larger macro environment of forces thatshape opportunities and pose threats to the company. There are six major forces (outlined
below) in the companys macro environment. There are six major forces (outlined below) in
the companys macro environment.
A. Demographic.
B. Economic.
C. Natural.
D. Technological.
E. Political.
F. Cultural.
A. Demographic Environment:
Demographyis the study of human populations in terms of size, density, location, age, sex,race, occupation, and other statistics. It is of major interest to marketers because it involves
people and people make up markets. Demographic trends are constantly changing.
Thus, marketers keep close track of demographic trends anddevelopments in their markets,
both at home and abroad. They track:
(i) Changing Age Structure of the Population
(II) The Changing Bangladeshi Family
(III) Geographic Shifts in Population
(IV) A Better-Educated and More White-Collar Population
(V) Increasing Diversity
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(i) Changing Age Structure of the Population : The most important trend is the changing
age structure of the population. The population is aging because of a slowdown in the birth
rate (in this country) and life expectancy is increasing. A population can be subdivided into
six age groups: preschool, school-age children, teens, young adults age 25 to 40, middle-aged
adults age 40 to 65, and older adults age65 and up. For marketers, the most populous age
groups shape the marketing environment.
(ii) The Changing Bangladeshi Family : The traditional household consists of a
husband, wife, and children (and some times grandparents). In Bangladesh to days we can see
the tren of some of households are diverse or non-traditional, and include single live-
alones, adult live-together of one single-parent families, childless married couples, and empty
nesters.
More people are divorcing or separating, choosing not to marry, marrying later, or marrying
without the intention to have children. Each group has a distinctive set of needs and buying
habits.
(iii) Geographic Shifts in Population : This is a period of great migratory movements
between and within countries. Since the collapse of Soviet eastern Europe, nationalities are
reasserting themselves and forming independent countries. Population movement also occurs
as people migrate from rural to urban areas, and then to suburban areas. Location makes adifference in goods and service preferences.
(iv) A Better-Educated and More White-Collar Population : The population in any
society falls into five educational groups: illiterates, high school dropouts, high school
degrees, college degrees, and professional degrees . The high number of educated people
demand for quality books, magazines, and travel.
(v) Increasing Diversity : The final demographic trend is the increasing ethnic and racial
diversity of the population. Diversity is a force that must be recognized in the next decade.
However, companies must recognize that diversity goes beyond ethnic heritage. One the
important markets of the future are that disabled people (a market larger any of our ethnic
minority groups).
B.Economic Environment
Markets require buying power as well as people. The economic environment consists offactors that affect consumer purchasing power and spending patterns.
(I) Changes in Income
(II) Changing Consumer Spending Patterns
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C. Natural Environment : The Natural environment involves the natural resources that are
needed as inputs by marketers or that are affected by marketing activities.
Marketers should be aware of several trends in the natural environment.
The first involves growing shortages of raw materials. Air and water may seem to be infinite
resources.
A secondenvironmental trend is increased pollution. Industry will almost always damage the
quality of the natural environment.
A thirdtrend is increased government intervention in natural resource management. The
governments of different countries vary in their concern and efforts to promote a clean
environment.
D. Technological Environment: These are forces that create new technologies, creating new
product and market opportunities. The technological environment is perhaps the most
dramatic force shaping our destiny.
Technology has released such wonders as antibiotics, organ transplants, notebook computers,
and the internet. It also has released such horrors as unclear missiles, chemical weapons, and
assault rifles. It has released such mixed blessing as the automobile, television, and credit
cards.
Our attitude toward technology depends on whether we are more impressed with its wonders
or its blunders .
Technological environment changes rapidly. New technology create new markets and
opportunities.
E. Political Environment : The political environment consists of laws, government
agencies, and pressure groups that influence or limit various organizations and individuals in
a given society.
(a) Legislation Regulating Business
(i) Increasing LegislationChanging
(ii) Government Agency Enforcement
(b) Increased Emphasis on Ethics and Socially Responsible Actions
F. Cultural Environment : The cultural environment is made up of institutions and other
forces that affect a societys basic values, perceptions, preferences, and behaviors. People
grow up in a particular society that shapes their basic beliefs and values.
The following cultural characteristics can affect marketing decision making.
I. Persistence of Cultural Values
II. Shifts in Secondary Cultural Values
I). Persistence of cultural values:Peoples core beliefs and values have a high degree of
persistence. Core beliefs and values are passed on from parents to children and are reinforced
by schools, churches, business, and government. Secondary beliefs and values are more open
to change.
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II). Shifts in secondary cultural values: Since secondary cultural values and beliefs are
open to change, marketers want to spot them and be able to capitalize on the change potential.
The major cultural values of a society are expressed in peoples views of themselves and
others, as well as:(a) Peoples Views of Themselves.
(b) Peoples Views of Others
Peoples Views of Organizations
(d) Peoples Views of Society
(e) Peoples Views of Nature
(f) Peoples Views of the Universe
a).Peoples views of themselves.People vary in their emphasis on serving themselves
versus serving others. In the 1980s, personal ambition and materialism increased
dramatically, with significant implications for marketing. The leisure industry was a chief
beneficiary.
b).Peoples views of others : Observers have noted a shift from a me-society to a we-society. Consumers are spending more on products and services that will improve their
lives rather than their image.
c).Peoples views of organizations: People are willing to work for large organizations but
expect them to become increasingly socially responsible. Many companies are linking
themselves to worthwhile causes. Honesty in appeals is a must.
d).Peoples views of society : This orientation influences consumption patterns. Buy
American versus buying abroad is an issue that will continue into the next decade.
e).Peoples view of nature : There is a growing trend toward peoples feeling of mastery
over nature through technology and the belief that nature is bountiful. However, nature is
finite. Love of nature and sports associated with nature are expected to be significant trends
in the next several years.
.
f).Peoples views of the universe : Studies of the origin of man, religion, and thought-
provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This
will probably take the form of spiritual individualism.
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Companywide strategic planning: Defining marketing role :
Plan: To make detailed arrangement for something you want to do in the future or a set of
things to do in order to achieve something, especially one that has been considered in detail
in advance is called plan.
Strategic: It is done as part of a plan that is meant to achieve a particular purpose or to gain
an advance.
Strategic Planning: The process of developing and maintaining a strategic fit between theorganizations goals and capabilities and its changing marketing opportunities .It involves :
1.defining a clear company mission,
2.setting supporting objectives ,
3.designing a sound business portfolio, and
4.coordinating functional strategic.
Corporate level Business unit, product and market level
Figure: Steps in strategic planning
Mission Statement: It is a statement of the organizations purpose- what it wants to
accomplish in the larger environment.
A clear mission statement acts as an invisible hand that guides people in the organization.
There are two kind of mission statementwhich defines the business:
1) Product or technology terms: Some companies define their missions in product and
technology terms.
2) Market oriented mission statement: A market oriented mission statement defines the
business in terms of satisfying basic customer needs.
Examples :
Company Product oriented definition Market oriented definition
Revlon We make cosmetics We sell lifestyle and self
expression, success and
status; memories; hopes and
dreams
America online We provide online services We create customer
connectivity, anytime,
anywhere
Wal-Mart We run discount stores We deliver low prices,
everyday
Defining the
company
mission
Setting company
objectives and
goals
Designing the
business
portfolio
Planning, marketing
and other functional
strategies
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Five characteristics of effective mission statements:
Management should avoid making its mission too narrow or too broad. So characteristics of
effective mission statements should be:
1) Realistic
2) Specific3) Market Environment
4) Distinctive competencies
5) Motivating
1.Missions statement should berealistic.
Suppose, Singapore airlines would be deluding itself if it adopted the mission to become the
worlds largest airline.
2. Missions should also bespecific.
Example-A company want to produce the highest quality products, offer the most service.
3. Missions should fit themarket environment.
Example-The girls scout of America would not recruit successfully in todays environment
with its former mission: to prepare young girls for motherhood and wifely duties.
4. The organization should base its mission on itsdistinctive competencies .
Suppose, McDonalds could probably enter the solar energy business, but that would not take
advantage of its core competencies-providing low cost food and fast service to large
customers.
5. Mission statements should bemotivating.
Example-A companys mission should not be stated as making more sales or profits-profits
are only a reward for undertaking a useful activity.
A companys employees need to feel that their work is significantand that it contributes to
people is lives
Setting company objectives and goals
The companys mission needs to be turned into detailed supporting objectives for each level
of management.
Each manager should have objectives and be responsible for reaching them.
For example: Monsanto operates in many business including agriculture, pharmaceuticals,
and food products.
Their mission is creating abundant food and healthy environment. This mission leads to a
hierarchy of objectives, including :
a. business objectives and
b. marketing objectives.
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Monsantos overall objective is to create environmentally better products and get them to
market faster at lower costs.
By this way, they sale product and get profits. Profits can be improved by increasing sales or
reducing costs. Sales can be increased by improving the company shared U.S. market, by
entering new foreign markets.
These goals then become the companys current marketing objectives.
Designing the business portfolio:
Guided by the companys mission statement and objectives, management plants its business
portfolio.
Business portfolio: It is the collection of business and productthat make up the company is
called business portfolio
Business portfolio planning involves two steps:
First: company must analyze its current business portfolio and decide whichbusinesses should receive more, less or no investment.
Second: company must shape thefuture portfolio by developing strategies for growthand downsizing .
Analyzing the Current Business Portfolio: The major activity in strategic planning is
business portfolio analysis, whereby management evaluates the products and businesses
making up the company.
The company will want to put strong resources into its more profitable businesses and phasedown or drop its weaker ones.
Strategic business unit (SBU): Managements first step is to identify the key businesses
making up the company.
These can be called the strategic business units.
A strategic business unit (SBU) is a unit of the company that has a separate mission and
objectives and that can be planned independently from other company businesses.
An SBU can be:
*a company division,*a product line within a division, or sometimes
*a single product or
*a brand.
The beast-known planning method was developed by theBoston Consulting Group a leading
management consulting firm .
The Boston consulting group approach :Using this approach ,a company classifies all its
SBU according to the growth share matrix shown in figure.
Growth-share matrix: A portfolio-planning method that evaluates a companys strategicbusiness units in terms of their market growth rate and relative market share.
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The growth-share matrix define four types of SBUs:
Stars: Stars are high-growth, high-share businesses or product.
They often need heavy investment to finance their rapid growth.
Eventually their growth will slow down, and they will turn into cash cows.
Cash cows: Cash cows are low-growth, high-share businesses or products.
These established and successful SBUs need less investment to hold their market share.
Thus, they produce a lot of cash that the company uses to pay its bills and to support other
SBUs that need investment.
Question marks: Question marks are low-share business units in high-growth markets. They
require a lot of cash to hold their share, let alone increase it.
Management has to think hard about which question marks it should try to build into stars
and which should be phased out.
Dogs: Dogs are low-growth, low-share businesses and products.
They may generate enough cash to maintain themselves but do not promise to be large source
of cash.
The ten circles in the growth share matrix represent a companys ten current SBUs .
The company has two stars, two cash cows, three questions marks, and three dogs.
The areas of the circles are proportional to the SBUs dollar sales.
One of four strategies can be pursued for each SBU.
The company can investmore in the business unit in order to build its share. Or
It can invest just enough to holdthe SBUs share at current level.
It can harvestthe SBU, milking its short term cash flow regardless of the long term effect.
Finally, the company can divestthe SBU by selling it or phasing it out and using the
resources elsewhere.
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Developing Strategies for Growth and Downsizing:
One useful device for identifying growth opportunities is the product /market expansion grid
shown in figure.
A portfolio planning tool for identifying company growth opportunities through:1.market penetration,
2.market development,
3.product development, or
4.diversification.
Market penetration: It is a strategy for company growth by increasing sales of current
products to current markets segments without changing the product.
Improvements in advertising, prices, service, menu selection, or store design might encourage
customers to stop by more often or to buy more during each visit.
Market development: It is a strategy for company growth by identifying and developing
new market segments for its current products.
Example, managers could review new demographic markets.
Such as senior customers or ethic groups-could be encouraged to visit Starbucks coffee shops
for the first time or to buy more from them.
Managers also could review new geographical markets.
Product development: It is a strategy for company growth by offering modified or new
products to current market segments.
Example, Starbucks has increased its food offerings in an effort to brings customers into its
stores during the lunch and dinner hours and to increase the amount of the average
customers sales ticket.
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Diversification: It is a strategy for company growth through starting up or acquiring
businesses outside the companys current products and markets.
For example, Starbucks is testing two new restaurant concepts-Caf Starbucks and Circadian-
in an effort to offer new formats to related but new markets.
Downsizing:Companies must not only develop strategies for growing their business
portfolios but also strategies for downsizing them.
Downsizing is reducing the business portfolio by eliminating products or business units that
are not profitable or that no longer fit the companys overall strategy.
# There are many reasons that a firm might want to abandon product or markets:
1. The market environment might change, making some of the companys product or markets
less profitable.
2. This might happen during an economic recession or when a strong competitor open next
door.
3. The firm may have grown too fastor entered areas where it lacks experience.
4. This can occur when a firm enters too many foreign markets without the proper research or
when a company introduces new products that do not offer superior customer value.
5. Some products or business units just age and die. When a firm find products or businesses
that no longer fit its overall strategy, it must carefully prune, harvest or divest them.
Strategic Planning Process Of Small Business
The Strategic Planning Process Of Small Business are:
1. Identify the major elements of the business environment in which the organization has
operated over the past five years.
2. Describe the mission of the organization in terms of its nature & function for the next two
years
3. Explain the internal & external forces that will impact the mission of the organization.
4. Identify the basic driving force that will direct the organization in the future.
5. Develop a set oflong term objectives that will identify what the organization will become
in the future.
6. Outline a generalplan of action that defines the logistical, financial & personal factors
needed to integrate the long-term objectives into the total organization.
Clearly, strategic planning is crucial to a small companys future.
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Product and Levels of product:
Product: It is anything that can be offered to a market for attention, acquisition, use orconsumption that might satisfy a want or need. Products include more than just tangible
goods.
Broadly defined, products include physical objects, services, events, persons, places,
organizations, ideas, or mixes of these entities.
Customers define products in terms of the values they provide. Therefore, in a sense, a
product is the sum of all the values it offers.
Levels of Product and Services
Product planners need to think about products and services on Five levels:
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Levels of product
1.Core benefit: is problem-The fundamental service or benefit that the customer is really
buying.
Example-A hotel guests is buying rest and sleep.
2.Basic Product: They need to develop product and service features, design a quality level, a
brand name and packaging.
Example-A hotel room include a bed, bathroom, towels, desk, dresser and closet.
3.Expected product :A set of attributes and conditions buyers normally expect when they
purchase this product.
Example- Hotel guests expect a clean bed, fresh towels, working lamps, and a relative degree
of quiet.
4. Augmented product: Offering additional consumer services and benefits. marketer
prepares it that exceeds customer expectation. It includes warranty, installation, after services
delivery and credit.
Example-Sony and its dealers also might give buyers a warranty on parts and workmanship,
instructions on how to use the camcorder, quick repair services when needed and a toll-free
telephone number to call if they have problems or questions .
5.Potential product: It encompasses all the possible augmentations and transformations theproduct offering might undergo in the future.
Example- Ritz-Carlton Hotels remember guests preferences and assign rooms with these
preferences in mind.
They review the service delivery process to imagine everything that could go wrong and then
take preventive steps.
Product and Service classifications: Marketers have traditionally classified products on thebasis of characteristics:
A. Durability and tangibility
B. Consumer-goods and
C. Industrial Goods
A. Durability and tangibility: Products can be divided into three groups on the basis of
durability and tangibility.
1.Non durable goods are tangible goods normally consumed in one or a few purchases.
Example-Beer, soap.
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Marketing strategy is to make them available in many locations, charge only a small mark up,
and advertise heavily to induce trial and build preference.
2.Durable goods are tangible goods that normally survive many uses.
Example-Refrigerator machine tools, cloths.
Marketing strategy is to require more personal selling and service, command a higher margin
and seller guarantees.
3.Services are intangible, inseparable, variable, and perishable products.
Example-Haircut, and repairs.
Marketing strategy is to require more quality control, supplier credibility and adaptability.
B. Consumer Products: Consumer products are products and services bought by final
consumers for personal consumption.
Marketers usually classify these products and services further based on how consumers go
about buying them.
i). Convenience Products: Convenience products are consumer products and services that
the customer usually buys frequently immediately and with a minimum of comparison and
buying effort.
Examples include soap, candy, newspapers and fast food.
convenience goods can e further divided:
*Staples goods: These are goods consumers purchase on a regular basis.
Example-Toothpaste
*Impulse goods: These are purchase without planning or search effort.
Example-Candy bars and magazines.
*Emergency goods: These goods are purchase when a need is urgent.
Example-drug during fever, umbrella during raining.
ii) Shopping products: These are less frequently purchased consumer products and services
that customers compare carefully on suitability, quality, price and style.
When buying shopping products and services, consumers spend much time and effort in
gathering information and making comparison.
Exp: Clothing, used cars, hotel and airlines.
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iii) Specialty Products: These are consumer products and services with unique
characteristics or brand identification for which a significant group of buyers is willing to
make a special purchase effort.
Exp-Specific brands and type of cars, designer clothes.
iv) Unsought product: These are consumer products that the consumer either does not know
about or does not normally think of buying. Classic examples of known but unsought
products and services are life insurance, and blood donations to the Red Cross.
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Table: Marketing consideration for consumer products
MARKETING CONSIDERATIONS FOR CONSUMER PRODUCTS
Type of Consumer Product
Marketing
Considerations
Convenience Shopping Specialty Unsought
Consumer buying
behavior
Frequent
purchase, little
planning, little
comparison or
shopping
effort, low
customer
involvement
Less frequent
purchase, much
planning and
shopping effort,
comparison of
brands on price,
quality, style
Strong brand
preference and
loyalty, special
purchase effort,
little comparison
of brands low
price sensitivity
Little product
awareness,
knowledge
(or, if aware,
little of even
negative
interest)
Price
Distribution
Low Price
Widespread
distribution,
convenient
locations
Higher price
Selective
distribution in
fewer outlets
High price
Exclusive
distribution in
only one or a
few outlets permarket area
Varies
Varies
Promotion Mass
promotion by
the producer
Advertising and
personal selling by
both producer and
resellers
More carefully
targeted
promotion by
both producer
and resellers
Aggressive
advertising
and personal
selling by
producer and
resellers
Examples Toothpaste,
magazines,
laundry
detergent
Major appliances,
television,
furniture clothing
Luxury goods,
such as Rolex
watches or fine
crystal
Life
insurance,
Red Cross
blood
donations
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2 .Industrial Products: These are those purchased for further processing or for use in
conducting a business. Exp-If a consumer buys a lawn mower for use around home; the lawn
mower is a consumer product. If the same consumer buys the same lawn mower for use
landscaping business, the lawn mower is an industrial product.
The three groups of industrial product and services include:
(a)Materials and parts: These include raw materials and parts. Raw materials consists of
farms products (wheat, cotton, fruits) parts consists of component materials (iron, cement,
wires)
(b) Capital items: These are industrial products that aid in the buyers production or
operations, including installations and accessory equipment .Exp: installation building,
factory ,offices. accessory equipment-hand tools, lift, truck
(c) Suppliers and services: These are include operating supplies (lubricants, coal, paper) andrepair and maintenance items paint, nails, brooms).
Product Life-Cycle Marketing Strategies
Product life cycle (PLC) is the course of a products sales and profits over its lifetime. It
involves 5 distinct stages: Product Development, Introduction, Growth, Maturity, Decline.
People who believe products have a life cycle are making four claims:
1.Products have a limited life.
2.Product sales pass through distinct stages, each posing different challenges, opportunities,
and problems to the seller.
3.Profits rise and fall at different stages of the product life cycle.
4.Products require different marketing, financial, manufacturing, purchasing, and human
resource strategies in each stage of their life cycle.
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1.Product developmentStage: It begins when the company finds and develops a new -
product idea. During product development, sales are zero and the company's investment costs
mount.
2.IntroductionStage: It is a period of slow sales growth as the product is introduced in the
market. Profits are nonexistent in this stage because of the heavy expenses of product
introduction.
3.Growth Stage is a period of rapid market acceptance and increasing profits.
4.Maturity Stage is a period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits level off or decline because of increased
marketing outlays to defend the product against competition.
5.Decline Stage is the period when sales fall off and profits drop. Sales may plunge to zero,
or they may drop to a low level where they continue for many years.
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The PLC concept also can be applied to what are known as styles, fashions, and fads. Their
special life cycles are shown in Figure 10.3.
A style is a basic and distinctive mode of expression.
For example, styles appear in homes (colonial, ranch, transitional), clothing (formal, casual).
A fashion is a currently accepted or popular style in a given field.
For example, the More formal "business attire" look of corporate dress of the 1980s and early
1990s has now given way to the "business casual" look of today. Fashions tend to grow
slowly, remain popular for a while, and then decline slowly.
Fads are fashions that enter quickly, are adopted with great zeal, peak early, and decline very
quickly. They last only a short time and tend to attract only a limited following.
Tore Jeans Pants" are a example of a fad.
Marketing Strategies of product lifecycles stages
Introduction Stage:In this stage promotional expenditure remains higher because the
company wants to
a) inform the potential consumers,
b) initiate pilot project (trial of product) and
c) secure distribution n retail outlets.
Marketers can take one of the four strategies considering price and promotion.
Rapid Skimming: Launching a new product at a high price and high promotion level.
This strategy makes sense when a large part of the potential consumers are unaware about the
product.
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Slow Skimming: Launching a new product at a high price and low promotion.
This strategy makes sense when the market is limited in size.
Most of the market is aware of the product, willing to pay even at a high price and potential
competition is not imminent.
Rapid Penetration: Launching the product at a low price and spending heavily on promotion.
This strategy makes sense when the market is large, the market is unaware of the product,
most buyers are price sensitive, competition is strong, unit manufacturing cost falls in
companys scale of production and company gains the benefit of experience.
Slow Penetration: Launching a new product at a low price and low promotional expenses.
This strategy makes sense when the market is large and highly aware of the product, market
isprice sensitive and there is a chance of potential competitors.
Growth Stage: Companies have several options:
It can improve the quality of the product, can add new product features or style. It can add new models with different sizes, flavors, colors and so forth. It can enter in to a new market segment. It can enter in a new distribution channel or can increase the coverage of distribution. Advertising message should focus on Product Preference Advertising rather than
Product Awareness Advertising.
It may lower the price of the product in order to attract the next layer of the consumergroup
Maturity Stage: The maturity stage can be divided into three parts: growth, stable and
decaying maturity.
However, the company can adopt 3 strategies in this stage.
Market Modification: The company can try to increase its over all sales volume either by
increasing number of brand users or by increasing usage rate per user.
The company can try to expand the brand users by converting non-users, entering new
market segments, and winning competitors customers.
Product Modification: Products can be modified in three ways quality improvement,
feature improvement and style improvement.
Marketing Mix Modification: Modifying marketing mix elements and sub-elements, a
company can also take strategies at this stage. It includesPrices
,Distribution
,Adverting
,Sales Promotion, Personal Selling, and Services.
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Declining Stage: Every product soon or later faces this stage. Acompany a can take several
steps:
Increase the firms investment. Maintaining the firms investment. Decreasing the firms investment level selectively. HarvestingPicking-up the firms investment to recover cash quickly. DivestingDisposing of its assets.
Consumer market and consumer buyer behavior
Consumer marketare all the individuals and households who buy the products and services
for personal consumption.
Consumer buyer behavior is the buying behavior of final consumers-individuals and
households who buy goods and services for personal consumption.
Consumer behavior is the decision process and physical activity individuals engaged in
acquiring, using or disposing of goods or services.
A Model of Consumer Behavior
What do the purchasers have in common?
What determines the percentage of the audience that buys the cereal?
Would more people have bought the cereal if the rabbit had been blue instead of pink?
What if the commercial had featured a pig?
Are there audience members who would not buy the cereal no matter what the content of the
commercial?
Figuring out how and why people respond to marketing stimuli, and then adjusting the
stimuli to achieve maximum results, is your job as a marketer.
The first step toward accomplishing this task is recognizing how difficult a problem it really
is.
When you get down to it, consumer behavior is complicated because people arecomplicated.
And maybe that's the most important thing to keep in mind for now. The starting point is the stimulus-response model of buyer behavior shown in figure .
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A Model of Consumer Behavior
This figure shows that marketing and other stimuli enter the consumer's black box" and
produce certain responses. Marketers must figure out what is in the buyer's black box.
Buyers Characteristics Buyers Decision
process
Cultural
Social
Personal
Psychological
Problem recognition
Information search
Evaluation of
alternative
Purchase decision
Post Purchase behaviour
The Major Factors Influencing Buying Behavior(Characteristics affecting consumer behavior)
1.Cultural factors
a. Culture
B. Subculture
2.Social factors
a. Social class
b. Reference groups
c. Family
d. Roles and statuses
3.Personal factors
a. Age and Stage in the Life Cycle
b. Occupation and Economic Circumstances
c. Lifestyle
d. Personality and Self-Concept
4.Psychological factors
a. Motivation
b. Perception
c. Beliefs and attitudesd. Learning
1.Cultural factors
A . Culture is the sum total of learned beliefs, values and customs that serve to direct the
consumer behavior of members of a particular society.
-Culture is the set of basic value, perceptions, wants and behavior, learned by members of
society from family and other important institutions.
-For example, a consumers routine behavior, such as adding sugar and milk to coffee,
putting ketchup on hamburgers and putting mustard on frankfurters are customs.
B. Subculture is a group of people with share value systems based on common lifeexperiences and situation.
Marketing
Stimuli
Other Stimuli
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Buyers Decisions
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
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2.Social factors
A. Social class is the division of members of society into a hierarchy of distinct status classes,
so that members of each class have relatively the same status and members of all other
classes have either more or less status.
A group may be defined as two or more people who interact to accomplish either individual
or mutual goals.
B. Reference groups: A reference group is any person or group that serves as a point of
comparison (or reference) for an individual in forming either general or specific values,
attitudes or a specific guide for behavior.
C. Family consists of husband, wife and children.
D. Roles and status: A role consists of the activities a person is expected to perform. Each
role carries a status.
Example-Court justice has more status than a sales manager.
3.Personal factors
a. Age and Stage in the Life Cycle
b. Occupation and Economic Circumstances
c. Lifestyle: A lifestyle is a persons pattern of living in the world as express in activities
,interests, and opinions.
d. Personality and Self-Concept: Personality is defined as those inner psychological
characteristics that both determine and reflect how a person responds to his or herenvironment.
4.Psychological factors
a. Motivation is the driving force within individuals that impels them to action
b. Perception is defined as the process by which an individual selects, organizes, and
interprets stimuli into a meaningful and coherent picture of the world.
Perception is the process by which an individual can select a product through his Beliefs,Experiences, Needs & Expectation.
c. Values and Beliefs: Values are defined here as assumptions about how things ought to be
in the group.
The individual's beliefindicates how he/she thinks that things are, or ought to be.
d. Attitudes: An attitude is a feeling that people hold toward an objective, a person or an idea
that leads to a particular behavior.
e. Learning: Learning about a product can happen when a customer has clear information
about that product.
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The Buying Decision Process
The steps in the buying decision process are:
1.Buying roles :
A .Initiator: The person who suggest the idea of buying the product or services.
Example-Your mother (the initiator) suggests that you might think about buying your father a
new coat for his birthday.
b. Influencer: The person who view or advice influence the decision.
Example-You ask your sister (the influencer) what she thinks. She thinks it's a good idea.
c. Decider : The person who decide to buy a product; whether ,what, how, where to buy.
Example- You (the decider) agree and decide to buy an expensive sports coat at a department
store.
d. Buyer: The person who makes the actual purchase of a product or services.
Example-Suppose you don't have time to go to the store, so you send your husband (the
buyer) to make the actual purchase
e. user: The person who consumes or uses the product or services.
Example-Your father (the user) loves the new coat. At least he says he does. You suspect
that, if it had been up to him, he would have bought a coat in a different style and color.
2.Buying behavior
The Four Types of Buying Behavior are shown in tableHigh involvement Low involvement
Significant differences between brands complex buying behavior variety-seeking buyerbehavior
Few differences between brands dissonance-reducing
buying behavior
habitual buying behavior
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The Stages of the Buying Decision Process
In general, the consumer buying process has five stages.
1.Problem Recognition: Problem Recognition caused by a Difference between the
Consumers Ideal State and ActualState.
The causes of problem may be Very Simple or Very Complex.
These causes may be influenced by both Internal and External Factors.
2.Information Search: When people identify the desired product,they begin to search for
information needed to make a purchase decision.
Consumer information sources fall into four groups
a. Personal sources: family, friendsb. Commercial sources: advertising, display.
c. Public sources: Mass media ,consumer rating organizations .
d Experimental sources: Handling ,using the products
3. Alternative Evaluation: After acquiring information during the Information search stage
of the decision process, the consumer moves to alternative evaluation. In this stage the
consumer compares the various brands or products and services.
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Figure: Steps between evaluation of alternatives and purchase decision
Purchase Decision: At some point in the buying process, the consumer must stop searching
for and evaluating information about alternative brands and makes a Purchase Decision.
Purchase Decision is not the same as an Actual Purchase.
Post-Purchase Evaluation: The Post-Purchase evaluation is important because the feedback
acquired from actual use of a product will influence the likelihood of future purchases.
-Post purchase satisfaction: Here Satisfaction occurs when the consumers expectations are
either met or exceeded; Dissatisfaction results when performance in bellow expectations.
-Post purchase actions: Here Satisfaction occurs when the consumers expectations are either
met or exceeded; Dissatisfaction results when performance in bellow expectations.
-Post purchase use or disposal: Marketers should also monitor how buyers use and dispose
of the products.
Analyzing Business Markets and Business Buying Behavior
Organizational Buying is the decision-making process by which formal organizationestablish the need for purchase products and services and identify, evaluate, and
choose among alternative brands and suppliers.
The business market vs the consumer market
Consumer markets are the buyer who buy the products for their personalconsumption.
Business markets are the buyers who buy the products for further processing or foruse in conducting a business.
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The business market vs. the consumer market
Business Market Consumer market
1.Fewer buyers: Business Marketer normallydeals with fewer buyers.
2.Largers buyers: a few large buyers do most
of the
purchasing in such industries as air crafts
engineers and defense weapons.
3.Close supplier- customer relationship:
because of the smaller customer base,
suppliers can maintained extra relationship.
4.Geograhically concentrated buyers : buyers
are geographically concentrated .
5.Derive demand: The demand for business
goods is ultimately derive from the demand
for consumer goods.
6.Inelastic demand: The total demand for
many business goods and services is
inelastic.
7.Fluctuating of demands: The demand for
business goods and services tend to be more
volatile than the demand for consumer goods
and services.
8.Professional purchasing: Business goodsare purchased buy trained purchasing agents.
9.Multiple sales calls: Because more people
are involve in the selling process ,it takes
multiple sales calls to win most business
orders.
10.Direct purchasing: Business buyers buy
directly from manufacturer rather than
intermediaries.
11.Reciprocity:Business buyers also select
suppliers who also buy from them.
12.Leasing:Many industrial buyers lease
instead of buy heavy equipment
like machinery.
1. Consumer Marketer normally dealswith fewer buyers.2. Individual buyers do most of the
purchasing.
3.Because of the larger customer base,
suppliers can not maintained extra
relationship.
4.Buyers are not geographically concentrated
5. The demand for consumer goods is not
ultimately derive from the demand for
business goods
6. The total demand for many business goods
and services is elastic.
7. The demand for consumer goods and
services tend to be less volatile than the
demand for business goods and services.
8. Consumer goods are purchased buy
normal people.
9. less people are involve in the selling
process.
10. Consumers buyers are not buy directly
from manufacturer .
11.Normally it does not happen.
12.Normally it does not happen
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Buying situations
Straight rebuy :The straight rebuy is a buying situation in which the purchasing department
reorder on routine basis.
Modified rebury: The modified rebuy is a buying situation in which the buyers want tomodify products specification ,prices, delivery requirements and others.
New task: It is a buying situation in which a purchasers buys a products or services for the
first time
Participants in the Business Buying Process
# Seven roles in the business purchase decision process Initiators. Those who request that something be purchased. They may be users or
other people in the organization.
Users. Those who will use the product or service. In many cases, the users initiate thebuying proposal and help define the product requirements.
Influencers. People who influence the buying decision. They often help definespecifications and also provide information for evaluating alternatives. Technical
personnel are particularly important influencers.
Deciders. People who decide on product requirements and/or on suppliers. Approvers. People who have formal authority to select the supplier and arrange the
purchase terms.
Buyers. People who have formal authority to select the supplier and arrange thepurchase terms.
Gatekeepers. People who have the power to prevent sellers or information fromreaching members of the buying center.
For example, purchasing agents, receptionists, and telephone operators may prevent
salespersons from contacting users or deciders.
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Levels of market segmentation
1.Undifferentiated(Mass) Marketing: A market-coverage strategy in which a firm decides to
ignore market segment differences and go after the whole market with one offer.
-This mass-marketing strategy focuses on what is common in the needs of consumes rather
than on what is different.
-The company designs a product and a marketing program that will appeal to the largest
number of buyers.
-It relies on mass distribution and mass advertising, and it aims to give the product a superior
image in peoples minds.
2.Differentiated (segment) Marketing:A market-coverage strategy in which a firm decidesto target several market segments and designs separate offers for each.
-A market segmentconsists of a large identifiable group within a market with similar wants,
purchasing power, geographical location, buying attitudes, or buying habits.
Example- Nike offers athletic shoes for a dozen or more different sports, from running,
fencing, golf, and aerobics to bicycling and baseball.
3.Concentrated (niche) Marketing : A market-coverage strategy in which a firm goes after a
large share of one or a few segments or niches.
-A niche marketis a more narrowly defined group seeking a distinctive mix of benefits ,
typically a small market whose needs are not well served.
Example:
-A firm may produce only lenses for microscopes
-A bank that takes loan requests over the phone and hand delivers the money to the customer.
-If a soft drink Co. decides to sell the drinks only at the premises of the universities.
-Through niche marketing ,the firm achieves a strong market position because of its greater
knowledge of consumer needs in the niches it serves and the special reputation it acquires.
-So It can market more effectively and efficiently
4.Micro marketing :Micro marketing is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations.
-Micro marketing includes local marketing and individual marketing :
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i) Local marketing: Local marketing involves tailoring brands and promotions to theneeds and wants of local customer groups-cities, neighborhoods, and even specific
stores.
-Example: Citibank provides different mixes of banking services in its branches, depending
on neighborhood demographics.
ii) Individual Marketing : Individualmarketing involves tailoring products andmarketing programs to the needs and preferences of individual customers.
-Individual marketing has also been labeled one-to-one marketing customized marketing and
markets-of-one marketing.
Example-The tailor custom-made the suit, the cobbler design shoes for the individual.
Designing global market offering
Globalization: It is a way of thinking in which a business regards all of its operations all over
the world as part of one integrated business system.
Global marketing: At this stage, companies treat the world, including their home market, asone market.
-A global strategy occurs when a business sells a uniform product or service throughout the
world.
- the world as a series of country markets (including their home market) with unique sets of
market characteristics for which marketing strategies must be developed,
Global firm: a firm that, by operating in more than one country, gains marketing, production,
R&D, and financial advantages in its costs and reputation that are not available to purely
domestic competitors.
International marketing is the performance of business activities designed to plan, price,
promote, and direct the flow of a companys good and services to consumers or users in more
than one nation for a profit.
-The only difference in the definitions of domestic marketing and international marketing is
that marketing activities take place in more than one country.
Multinational firms: These are business that have production and sales operations in more
than one country and have a mix of international owners and managers.
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Major decision in international marketing
Before deciding whether to operate internationally, a company must understand the
international marketing environment.
1.The international trade system: A company faces various trade restrictions. The most
common is the
*tariff-a tax levied by a government against certain imported products, design to raise
revenue or to protect domestic firms.
Quota: It is a limit on the amount of goods that an importing country will accept in certain
product categories.
*Embargo: It is a ban on the import of a certain product.
*Exchange controls: These are govt. limits on the amount of foreign exchange, with other
countries and on the exchange rate against other currencies.
*Nontariff trade barriers: Nonmonetary barriers to foreign products, such as biases against a
foreign companys bids,or product standards that go against a foreign companys product
features.
World trade organization and GATT
*Regional free trade zones
2.Economic environment: The economic environment consists of factors that affect
consumer purchasing power and spending patterns.
-The countrys Industrial structure shapes its product and service needs, income levels, and
employment levels. The four types of industrial structures are as follows:
a. Subsistence economies,
b. Raw materials exporting economies,
c. Industrializing economies,
d. Industrial economies.
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3.The political environment: consists of laws, government agencies, and pressure groups
that influence or limit various organizations and individuals in a given society.
Nations differ greatly in their politicallegal environment. At least four political-legalfactors should be considered in deciding whether to do business in a given countries.
a. Attitudes toward international buying,
b. Government bureaucracy,
c. Political stability and ,
d. Monetary regulations.
4.The cultural environment : is made up of institutions and other forces that affect a
societys basic values, perceptions, preferences, and behaviors.
a. The impact of culture on marketing strategy
b. The impact of marketing strategy on cultures
B. Deciding Whether to Go Abroad
Before going abroad, the company must several risk and answer many questions about its
ability to operate globally.
-Can the co. learn to understand the preferences and buyer behavior of consumers in other
countries?
-Can it offer competitively attract product?
-will it be able to adapt to other countries business culture and deal effectively with foreignnationals?
-do the companies managers have the necessary international experience?
-has management considered the impact of regulations and political govt. of others countries.
C. Deciding Which Markets to Enter
How many market to enter: It should decide what volume of foreign sales it wants.The company also needs to choose how many countries it wants to market in, a few
countries or many countries.
Regional free trade: Your company might find itself entering a region rather than acountry. Suppose, The European Union, SAFTA, NAFTA,
Evaluating Potential Markets.
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D. Deciding How to Enter the Market
The Company can choice five market entry strategies for entering a market. These
strategies are shown in figure 13.2
1.Export: Exports mean when one country sent products goods or services out of a
country. So exporting means entering a foreign market by selling goods produced in the
companys home country, often with little modification.
-Indirect exporting, working through independent international marketing intermediaries.
-Direct exporting, whereby they handle their own exports.
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Import: Imports mean when one country brought products goods or services fromanother country.
2.Joint venturing: Entering foreign markets by joining with foreign companies to produce ormarket a product or service.
There are four types of joint ventures are:
(i) Licensing: A method of entering a foreign market in which the company enters into an
agreement with a license in the foreign market, offering the right to use a manufacturing
process, trademark, patent, trade secret, or other item of value for a fee or royalty.
(ii) Contract Manufacturing-the company contracts with manufacturers in the foreign
market to produce its product or provides its service.
(iii) Management contracting: Here ,The domestic firm supplies management know-how to
a foreign company that supplies the capital .the domestic firm exports management services
rather than products.
(iv) Joint ownership ventures consist of one company joining forces with foreign investors to
create a local business in which they share joint ownership and control .
2. Direct Investment: Entering a foreign market by developing foreignbased assembly or
manufacturing facilities.
E. Deciding on the Marketing Program
Planning an international marketing program poses similar challenges to those associated
with planning a national marketing program .The Marketing mix: It is the set of controllable,
tactical marketing tools that the firm blends to produce the response it wants in the target
market.
- Global companies normally follow two kinds of marketing mix:
1.Standardized marketing mix: An international marketing strategy for using basically the
same product, advertising, distribution channels ,and others elements of the marketing mix in
all the companys international markets.
2.Adapted marketing mix: An international marketing strategy for adjusting the marketing
mix elements to each international target market, bearing more costs but hopping for a larger
market share and return.
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Five strategies allow for adapting product and promotion to a global market.
Lets break down the factors you need to consider when planning an international
marketing strategy: product, promotion, price, distribution.
Product: Product means the goods and services combination the company offers to the
target market.
-Straight extension means introducing the product in the foreign market without any
change.-Product adaptation involves altering the product to meet local condition or preferences.
-Product invention consists of creating something new.
Promotion: Promotion means activities that communicate the merits of the product and
persuade target customer to buy it.
-Communication adaptation. It is a global communication strategy of fully adapting
advertising message to local market.
-Dual adaptation: If it adapts both the product and the communication, the company
engage in dual adaptation.
Price: Price is the amount of money customers have to pay to obtain the product.
Companies have three choice for setting global market price:
1. Set a uniform price everywhere.2. Set a market based price in each country.
3. Set a cost based price in each country.
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Place: Place includes company activities that make the product available to target
consumers.
-Company should take a whole channel view of the problem of distributing products to
final users.
Figures 13.4 shows the three major links between seller and ultimate users.
Whole channel concept for international marketing
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Assignment OfPrinciples of Marketing
Submitted byTahmina Afrose
Roll: 1126
40th Batch
MBA
Submitted to:
Dr. Ataur RahmanCourse instructor (Principle Of Marketing)
World University of Bangladesh