Principles All Slides Not Illustrated

8/2/2019 Principles All Slides Not Illustrated

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Principles of Marketing

KHAN Muhammad Asif

QADER Muhammad Zeeshan

CESEMED 1, 2011-2012(S2)


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Kotler on Marketing

The future is not ahead of us. It hasalready happened.

Unfortunately, it is unequallydistributed among companies, industries

and nations.


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How Business and Marketing are Changing

Substantial increase in buying power

A greatervariety of goods and services

A greater amount ofinformation about practically anything

A greater ease in interacting and placing and receiving orders

An ability to compare ratings/opinions on products andservices

Companies can collect fuller and richerinformation aboutmarkets, customers, prospects and competitors

Technological push

Globalization

Marketing in the 21th century


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Major Consequences

Internet Marketing

Pure players: Amazon, Dell Computers

Click and Mortar Stores: Barnes and Nobles, FNAC

Internet communications, Complaint Sites

Lesser role of big media (TV, Radio, Billboards)

On line Marketing Research

Design your own product One to one marketing

Brand Communities

More control by the market


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Session Overview

Session 1: Defining Marketing and the Marketing ProcessSession 2: The Marketing Environment and Managing Marketing

InformationSession 3: Markets and Buyer BehaviorSession 4: Customer Driven Marketing Strategy: Creating Value for

Target CustomersSession 5: Product, Services and Branding StrategySession 6: Pricing Products: Understanding and Capturing

Customer ValueSession 7: Marketing Channels and Supply Chain ManagementSession 8: Integrated Marketing CommunicationS

ession 9: Direct Marketing & Sales Force ManagementSession 10: Final Exam


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Session #1: Defining Marketing

and the Marketing Process Marketing: Managing Profitable CustomerMarketing: Managing Profitable Customer

RelationshipsRelationships

Company and Marketing Strategy:Company and Marketing Strategy:Partnering to Build CustomerPartnering to Build Customer


Marketing in the Digital Age: Making NewMarketing in the Digital Age: Making NewCustomer ConnectionsCustomer Connections


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7

Marketing: ManagingMarketing: Managing

Profitable CustomerProfitable Customer


Kotler and Armstrong (2008)

Chapter 1


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Objectives

Be able to define marketingand discuss its core concepts.

Be able to define marketingmanagement and compare the fivemarketing management orientations.

Understand the role of Marketing in thestrategic planning process


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Objectives

Understand customer relationship

management and strategies. Realize the major challenges facing

marketers in the new connectedmillennium.


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Strong sales, no profits

Customer-driven to its core

Each customers

experience is unique

Provides great

selection, good

value, discovery and

convenience

A true online

community

Amazon.comAmazon.com

Discussion:Discussion: Will Amazon.com Survive?Will Amazon.com Survive?

Example


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What is Marketing?

Marketing is managing profitable customerrelationships

Attracting new customers

Retaining and growing current customers

Marketing is NOT synonymous with sales

or advertising


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What is Marketing?

Kotlers social definition:

Marketing is a social and managerialprocess by which individuals andgroups obtain what they need and wantthrough creating and exchangingproducts and value with others.


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Goods Services

Experiences

Events Persons

Places Properties

Organizations

Information Ideas

Many Things Can Be Marketed!Many Things Can Be Marketed!

What is Marketing?


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Needs, wants, anddemands

Marketing offers:including products,services andexperiences

Value andsatisfaction

Exchange,

transactions and

relationships Markets

Core Marketing ConceptsCore Marketing Concepts

What is Marketing?


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Marketing Management

Marketing managementis the art andscience of choosing target markets and

building profitable relationships with them. Creating, delivering and communicating

superior customer value is key.


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Customer Management:

Marketers select customers that can be

served well and profitably.

Demand Management:

Marketers must deal with different demandstates ranging from no demand to too much

demand.


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Production concept

Product concept

Selling concept

Marketing

concept

Societal marketing conceptSocietal marketing concept

Management OrientationsManagement Orientations



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CRM

CRM Customer relationshipmanagement...is the overall process of building andmaintaining profitable customerrelationships by delivering superiorcustomer value and satisfaction.


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CRM

It costs 5 to 10 times MORE to attracta new customer than it does to keep a

current customer satisfied. Marketers must be concerned with

the lifetime value of the customer.


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CRM

Attracting, retaining andgrowing customers

Building customer

relationships and

customer equity

Customer value/satisfaction

Perceptions are key

Meeting/exceeding expectationscreates satisfaction

Loyalty and retention Benefits of loyalty

Loyalty increases as satisfactionlevels increase

Delighting consumers should bethe goal

Growing share of customer

Cross-selling

Key ConceptsKey Concepts


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CRM

Customer equity

The total combinedcustomer lifetime values of

all customers. Measures a firms

performance, but in amanner that looks to thefuture.



Building customer

relationships and

customer equity


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CRM

Customer relationship levelsand tools Target market typically dictates

type of relationship

Basic relationships Full relationships

Customer loyalty and retentionprograms

Adding financial benefits

Adding social benefits

Adding structural ties


Building customer

relationships and

customer equity



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Marketing Challenges

Technological advances, rapid globalization,and continuing social and economic shiftsare causing marketplace changes.

Major marketing developments can begrouped under the theme ofConnecting.


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Via technology

With customers

With marketing

partners With the world

Advances in computers,telecommunications, video-conferencing, etc. are majorforces.

Databases allow forcustomization of products,messages and analysis ofneeds.

The Internet Facilitates anytime,

anywhere connections Facilitates CRM Creates marketspaces

ConnectingConnecting


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Selective relationshipmanagement is key. Customer profitability

analysis separates winnersfrom losers.

Growing share of customer Cross-selling and up-selling

are helpful.

Direct sales to buyers are

growing.


Via technology

With customers

With marketing



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Partner relationshipmanagement involves:

Connecting inside the

company

Connecting with outsidepartners

Supply chainmanagement

Strategic alliances


Via technology

With customers

With marketing



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Globalization Competition

New opportunities

Greater concern forenvironmental and social

responsibility

Increased marketing bynonprofit and public-sectorentities

Social marketing campaigns


Via technology

With customers

With marketing



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28

Company and MarketingStrategy: Partnering to Build

Customer Relationships


Chapter 2


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Objectives

Understand marketings role in strategicplanning


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Example

Known for films, animation,

theme parks and customerorientation

Parks offer a variety ofattractions as well ascleanliness, order, and warmth

Satisfying the customer is

everyones job Disney has grown via

diversification

Sales and net income havefallen

Walt Disney CompanyWalt Disney Company

Discussion:Discussion: HowCan DisneyRecover?HowCan DisneyRecover?


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Strategic Planning

Business portfolio:the collection of businessesand products that make upthe company.

Designing the business portfolio

is a key element of the strategicplanning process.


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Planning Marketing

Marketing plays a key role in the strategicplanning process.

Marketers must practice CRM andPartnerRelationship Management. Partnering with other departments in the

company as well as other firms in the

marketing system helps to build a superiorvalue delivery-network.


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The Marketing Process

The strategic planningand business portfolioanalysis processes help toidentify and evaluate

marketing opportunities. The purpose of the marketing

process is to help the firmplan how to capitalize on

these opportunities.

Analyzing marketingopportunities

Selecting target markets

Developing the marketingmix

Managing the marketing

effort

Key ElementsKey Elements


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The segmentation processdivides the total market intomarket segments.

Target marketingdetermines

which segment(s) arepursued.

The market positioningfor theproduct is then determined.





effort



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Competitor analysis guidescompetitive marketing strategydevelopment.

Strategy leads to tactics by way of

the marketing mix: The Four Ps product, price,

place, promotion (seller viewpoint)

The Four Cs customersolution, cost, convenience, andcommunication (customer

viewpoint)





effort



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Marketing analysis

Provides information helpful inplanning, implementation, andcontrol

Marketing planning Strategies and tactics

Marketing implementation

Turns plans into action

Marketing control

Operating control

Strategic control

Marketing audit





effort



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Marketing in theMarketing in theDigital Age: Making NewDigital Age: Making New

Customer ConnectionsCustomer Connections


Chapter3


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Objectives

Be able to identify the major forces shapingthe new digital age.

Understand how companies have respondedto the Internet with e-business strategies.

Be able to describe the four major e-commerce domains.


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Objectives

Understand how companies use e-commerce to profitably deliver greater

value to customers.

Realize the promise and challenges thate-commerce presents for the future.


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Invented discount

brokerage category First U.S. major player to

go online

Initially offered two-tiered

trading system

to protect profits / stopcannibalization

Later became first true click-

and-mortar full-servicebrokerage

Now worlds largest

e-commerce site

85% online trades; 21% of

trade volume; Strong stockreturn

Charles SchwabCharles Schwab

Example


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Major Forces Shaping theDigital Age

Digitalization and Connectivity

The flow of digital information requiresconnectivity

Intranets, Extranets, and the Internet

The Internet Explosion

Key driver of the new economy


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New Types ofIntermediaries

Brick-and-mortar firms often facedisintermediation from click-only competitors

The click-and-mortar business model has beenhighly successful

Customization and Customerization

Major Forces Shaping theDigital Age


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Marketing Strategy in theDigital Age

E-business:

uses electronic means and platforms to conductbusiness.

E-commerce:

facilitates the sale of products and services byelectronic means.


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E-marketing:

Includes efforts that inform, communicate,promote, and sell products and services over theInternet.

E-commerce benefits both buyers and

sellers


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Buyer Benefits of E-Commerce:

Convenience

Easy and private

Greater product access/selection

Access to comparative information

Interactive and immediate


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Seller Benefits of E-Commerce:

Relationship building

Reduced costs

Increased speed and efficiency

Flexibility

Global access, global reach


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EE--Marketing DomainsMarketing Domains

E-Commerce Domains

Targeted toTargeted toconsumersconsumers

Initiated byInitiated bybusinessesbusinesses

B2CB2C

Targeted toTargeted tobusinessesbusinesses

Initiated byInitiated byconsumersconsumers

C2CC2C C2BC2B

B2BB2B


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E-Commerce Domains

B2C

B2B

C2C

C2B

Online consumers

Now more mainstream anddiverse

Has created new targeting

opportunities Online behavior differs by age

Online consumers differ fromtraditional off-line consumers

They initiate and control theexchange process

Value information highly

Major DomainsMajor Domains


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E-Commerce Domains

B2C

B2B

C2C

C2B

B2B sales far exceed B2C sales

B2B sales are estimated toreach $4.3 trillion in 2005

Open trading networks

E-marketspace bringingsellers and buyers together

Private trading networks

Links sellers with their owntrading partners



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E-Commerce Domains

B2C

B2B

C2C

C2B

C2C web sites helpconsumers exchange goodsor information eBay is one example

Auction sites facilitate theexchange process Allow access to a much larger

audience

Newsgroups / forums Help consumers to find and

share information



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E-Commerce Domains

B2C

B2B

C2C

C2B

Allow consumers to searchout sellers, learn about offers,initiate purchase, or dictatepurchase terms

Ex: Priceline.com Some sites facilitate the

feedback process betweencustomers and companies Ex: Planetfeed.com



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Conducting E-Commerce

Corporate web sites Build goodwill and

relationships; generateexcitement

Marketing web sites Engage consumers

and attempt to influencepurchase

Web site design

7 Cs of effective web sitedesign

EE--MarketingMarketing

Creating web sites Placing online ads and

promotions

Creating or using webcommunities

Using E-mail andwebcasting


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Seven Cs ofWeb Site DesignSeven Cs ofWeb Site Design


Context Content

Community

Communication Connection

Commerce

Customization


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Online forms of ads andpromotions Banner ads/tickers

Skyscrapers Interstitials

Browser ads

Content sponsorships

Microsites

Viral marketing

Future of online ads


Creating web sites Placing online ads and

promotions




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Web communities allowmembers with specialinterests to exchange views

Social communities Work-related communities

Marketers find well-defineddemographics and sharedinterests useful whenmarketing


Creating web sites Placing on-line ads and

promotions




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E-mail marketing Key tool for B2B and B2C

marketing

Clutter is a problem Enriched forms ofe-mail attempt to breakthrough clutter

Webcasting Auto downloading of

customized content torecipients PCs


Creating web sites Placing on-line ads and

promotions




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Promise and Challenges of E-Commerce

The Promise of E-Commerce

The future of B2B E-commerce is bright A few click-only companies may succeed

Most companies will integrate online marketinginto the marketing mix


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Session #2: The Marketing

Environment and ManagingMarketing Information


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59

The Marketing

Environment


Chapter 4


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Objectives

Know the environmental forces that affectthe companys ability to serve its

customers. Realize how changes in the demographic

and economic environments affect

marketing decisions.


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Objectives

Identify the major trends in the firms naturaland technological environments.

Know the key changes in the political andcultural environments.

Understand how companies can react to themarketing environment.


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Example

Millennial fever set the stage

to bring back the Beetle VWs investment:

$ 560 million

Demand quickly outstrippedsupply

The new VW beetle

enjoyed cross-generationalappeal

Earned many awards

Beetle now accounts forover 25% of company

sales

VolkswagenVolkswagen

Discussion:Discussion: Will the flowerWill the flower--powerMicrobus succeedpowerMicrobus succeednext?next?


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Key Environments

Marketing Environment The actors and forces that affect a firms ability to build

and maintain successful relationships with customers. Aspects of the marketing environment:

Microenvironment

Macroenvironment


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Actors Affecting a Firms AbilityActors Affecting a Firms Ability

to Serve Customersto Serve Customers

The Microenvironment

Company

Suppliers

CustomerMarkets

Competitors

Publics

MarketingIntermediaries


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Departments within the company impact marketingplanning.

Suppliers help create and deliver customer value. Treat suppliers as partners.

Marketing intermediaries help sell, promote, anddistribute goods. Intermediaries take many forms.


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The Macroenvironment

Customer markets must be studied. Consumer, business, government, reseller and international

markets exist.

Successful companies provide better customer valuethan the competition. Size and industry position help to determine the appropriate

competitive strategy.

Various publics must also be considered.


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Types of PublicsTypes of Publics


Financial Media

Government

Local General

Internal

Citizen ActionCitizen Action


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Macroenvironmental ForcesMacroenvironmental Forces


Demographic

Economic

Natural

Technological

Political

Cultural


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Key Demographic Trends World population growth

Changing age structure The U.S. population consists of seven

generational groups. Baby boomers, Generation X, and

Generation Y are key groups.

Distinct segments typically exist withinthese generational groups.


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Born between 1946 and 1964

Represent 28% of the population;earn 50% of personal income

Many mini-segments exist withinthe boomer group

Entering peak earning years asthey mature

Lucrative market for travel,entertainment, housing, and more

Baby Boomers

Generation X

Generation Y

Key GenerationsKey Generations


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First latchkey children

Maintain a cautious economicoutlook

Share new cultural concerns Represent $125 billion in annual

purchasing power

Will be primary buyers of mostgoods by 2010

Baby Boomers

Generation X

Generation Y



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72 million strong; almost as largea group as their baby boomerparents

New products, services, andmedia cater to GenY

Computer, Internet and digitallysaavy

Challenging target for marketers

Baby Boomers

Generation X

Generation Y



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Key Demographic Trends

Changing American household

Geographic population shifts

Better-educated, more white-collar workforce

Increasing Diversity


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The Economic Environment

Affects consumer purchasing power and

spending patterns. Two types of national economies: subsistence

vs. industrial.

U.S. consumers now spend carefully and desire

greater value.


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Key Economic Trends U.S. income distribution is skewed.

Upper class, middle class, working class and theunderclass.

Rich are getting richer, the middle class is shrinking,and the underclass remains poor.

Consumer spending patterns are changing.


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The Natural Environment

Concern for the natural environment has grown

steadily, increasing the importance of thesetrends:

Shortage of raw materials

Increased pollution

Increased governmental intervention


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Key Technological Trends The technological environment is characterized

by rapid change. New technologies create new opportunities and

markets but make old technologies obsolete.

The U.S. leads the world in research anddevelopment spending.


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The Political Environment Includes laws, governmental agencies, and pressure

groups that impact organizations and individuals. Keytrends include:

Increased legislation to protect businessesas well as consumers.

Changes in governmental agency enforcement.

Increased emphasis on ethical behavior and

social responsibility.


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The Cultural Environment Is composed of institutions and other

forces that affect a societys basic values, perceptions,

preferences, and behaviors. Culture can influence decision making.

Core beliefs are persistent; secondary cultural valueschange and shift more easily.

The cultural values of a society are expressed through

peoples views.


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Cultural values are expressedCultural values are expressed

via how people view:via how people view:


Themselves

Others

Organizations

Society

Nature

The Universe


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Responding to the MarketingEnvironment

Reactive: Passive Acceptance and Adaptation

Companies design strategies that avoid threats andcapitalize upon opportunities.

Proactive: Environmental Management Use of lobbyists, PR, advertorials, lawsuits, complaints, and

contractual agreements to influence environmental forces.


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Managing Marketing

Information


Chapter 5


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Objectives

Understand the importance of informationto the company.

Know the definition of a marketinginformation system and be able to discussits subparts.

Learn the steps in the marketing research

process.


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Objectives

Learn how companies analyze and distributemarketing information.

Realize the special issues some marketingresearchers face, including public policy andethical issues.


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Example

New Coke was a fiasco;consumer complaints resulted

in the return of Coke Classicafter only 3 months.

$4 million was spentresearching New Coke.

Key issue: the researchproblem was too narrowly

defined, and consumerfeelings were ignored.

Poor judgment in resultinterpretation was also aproblem.

CokeCoke


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Marketing Info. System

Marketing Information System (MIS)

Consists of people, equipment, and procedures

that gather, sort, analyze, evaluate, anddistribute needed, timely, and accurateinformation to marketing decision makers.


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Assessing Marketing Information Needs The MIS serves company managers as well as

external partners. The MIS must balance needs against feasibility:

Not all information can be obtained.

Obtaining, processing, sorting, and deliveringinformation is costly.


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Internal data is gathered viacustomer databases, financialrecords, and operations reports.

Advantages of internal data

include quick/easy access toinformation.

Disadvantages stem from theincompleteness orinappropriateness of data to aparticular situation.

Internal data

Marketing

intelligence

Marketing research

DevelopingDevelopingInformationInformation


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Marketing intelligence is thesystematic collection and analysisof publicly available informationabout competitors and trends inthe marketing environment.

Competitive intelligence gatheringactivities have growndramatically.

Many sources of competitiveinformation exist.

Internal data

Marketing

intelligence

Marketing research



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Sources ofSources of

Competitive IntelligenceCompetitive Intelligence


Company employees

Internet

Garbage

Published information

Competitors employees

Trade shows

Benchmarking

Channel members andkey customers


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Marketing research is thesystematic design, collection,analysis, and reporting of datarelevant to a specificmarketing situation facing anorganization.

Steps in the marketingresearch process.

Internal data

Marketing

intelligence

Marketing research



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Steps in the Marketing Research Process: Defining the problem and research objectives.

Developing the research plan for collecting information. Implementing the research plan collecting and analyzing

the data.

Interpreting and reporting the findings.


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Step 1: Defining the problem and researchobjectives

Dont confuse the symptoms of the problem with itscause when defining the problem.

Exploratory, descriptive, and causal research eachfulfill different objectives.


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Step 2: Developing the Research Plan Research objectives guide the determination of specific

information needs. Research proposals outline the type of data needed and theresearch plan.

Secondary data: Information collected for another purposewhich already exists.

Primary data: Information collected for the specific purpose at

hand


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Secondary data sources:

Government information

Internal, commercial, and onlinedatabases

Publications

Advantages:

Obtained quickly

Less expensive than primarydata

Disadvantages:

Information may not exist or maynot be usable.

Secondary data Primary data

Types of DataTypes of Data

f S


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Evaluate the Following WhenEvaluate the Following When

Judging Data QualityJudging Data Quality


Relevance

Accuracy

Currency

Impartiality


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Planning primary research:

Research approaches:

Observation, survey, experiment

Contact methods:

Mail, telephone, online, personal

Sampling plan:

Sampling unit, sample size,sampling procedure

Research instruments:

Questionnaire, mechanicalinstruments

Secondary data Primary data

Types of DataTypes of Data


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Research approaches:

Observation research using people or machines

Mystery shoppers, traffic counters, web site cookies aresome examples.

Discovers behavior but not motivations.

Ethnographic research expands observation research toinclude consumer interviews.


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Research approaches: Survey research is widely used to gather

descriptive information. Single source data systems gather information from

consumer panels

Survey research faces many problems

Experimental research investigates cause and

effect relationships.


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Key Contact Methods Include: Mail surveys

Telephone surveys Personal interviewing:

Individual or focus group

Online (Internet) research

Each contact method has strengths and weaknesses

M k ti I f S t


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Strengths and Weaknesses ofStrengths and Weaknesses of

Contact Methods Relate to:Contact Methods Relate to:


Flexibility

Sample control

Data quantity Cost

Interviewer effects

Speed of datacollection

Response rate

M k i I f S


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Sample: subgroup of population from whominformation will be collected

Sampling Plan Decisions: Sampling unit

Sample size

Sampling procedure:

Probability samples

Non-probability samples

M k ti I f S t


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Research Instruments:

Questionnaires

Include open-ended and closed-endedquestions

Phrasing and question order are key

Mechanical instruments

M k ti I f S t


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Step 3 of the Research Process:Implementing the Research Plan

Involves collecting, processing, and analyzinginformation.

Step 4 of the Research Process:Interpreting and Reporting the Findings

M k ti I f S t


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Analyzing Marketing Information

Customer relationship management (CRM) helps

manage information. CRM offers many benefits and can help a firm gain

a competitive advantage.

Technology alone cannot build profitable customer

relationships.

M k ti I f S t


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Distributing and Using Marketing Information Routine reporting makes information available in a timely

manner.

User friendly databases allow for special queries. Intranets and extranets help distribute information to

company employees and value-network members.

Oth C id ti


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Other Considerations

Marketing research in small businesses andnot-for-profit organizations

International marketing research Public policy and ethics

Consumer privacy issues

Misuse of research findings

Session 3: Markets & Buyer


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Session 3: Markets & Buyer

Behavior

Consumer Markets and Consumer Buyer

Behavior

Business Markets and Business Buyer

Behavior


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109

Consumer Markets andConsumer Markets andConsumer Buyer BehaviorConsumer Buyer Behavior


Chapter 6

Obj ti


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Objectives

Be able to define the consumer marketand construct a simple model of

consumer buyer behavior. Know the four major factors that

influence consumer buyer behavior.

Obj ti


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Objectives

Understand the major types ofbuying decision behavior and the

stages in the buyer decisionprocess.

Be able to describe the adoption and

diffusion process for new products.

Example


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Harley Hogs account for

1/5 of U.S. cycle sales

Sales have exceeded

supply for years

1986-2000: Four stock

splits, increase of 7,100%

Fiercely loyal clientele

revolves around 7 core

customer types

Harley owners use their bikes

to express their lifestyle and

attitudes

Advertising reflects the

Harley mystique

HarleyHarley--DavidsonDavidson

Example


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Definitions Consumer Buying Behavior

Buying behavior of individuals and

households that buy products forpersonal consumption.

Consumer Market All individuals/households who buy

products for personal consumption.


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Stimulus Response Model

Marketing and other stimuli enter thebuyers black box and produce certainchoice/purchase responses.

Marketers must figure out what is inside

of the buyers black box and how stimuliare changed to responses.

Model of

Consumer Behavior

Characteristics Affecting


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gConsumer Behavior

Cultural

Social

Personal

Psychological

Culture

Subculture Hispanic consumers African Americans

Asian Americans

Mature consumers Social Class

Key FactorsKey Factors


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Hispanics

35 million consumers purchase $425billion worth of goods and services.

Expected to grow 64% in 20 years.

Spanish media makes group easy toreach.

Brand loyal group.


Consumer Behavior


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African Americans 35 million consumers purchase $527 billion

worth of goods and services.

Growing more affluent / sophisticated.

Price and brand name conscious; quality and

selection are important. Certain media target this group.


Consumer Behavior


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Asian Americans 10 million consumers purchase $229 billion

worth of goods and services.

Fastest growing, most affluent subculture.

Many nationalities comprise this group.

Consumer packaged goods companies nowtarget this group more heavily.


Consumer Behavior


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Mature Consumers 75 million consumers aged 50+ will grow to 115

million within 25 years.

Mature consumers control 50% of alldiscretionary income.

Attractive market for travel, restaurant, andcosmetics products, among others.


Consumer Behavior



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gConsumer Behavior

Cultural

Social

Personal

Psychological

Groups Membership

Reference Aspirational groups

Opinion leaders Buzz marketing

Family

Children can influence

Roles and Status




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Consumer Behavior

Cultural

Social

Personal

Psychological

Age and life cycle

Occupation

Economic situation Lifestyle

Activities, interests, andopinions

Lifestyle segmentation

Personality and self-concept Brand personality




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Brand Personality DimensionsBrand Personality Dimensions


Consumer Behavior

Sincerity

Ruggedness

Excitement

Competence

Sophistication



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Consumer Behavior

Cultural

Social

Personal

Psychological

Motivation Needs provide motives for

consumer behavior

Motivation research

Maslows hierarchy of needs

Perception Selective attention, selective

distortion, selective retention

Learning

Drives, stimuli, cues, responsesand reinforcement

Beliefs and attitudes




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Maslows Hierarchy ofNeedsMaslows Hierarchy ofNeeds


Consumer Behavior

Self-actualization

Esteem Needs

Social NeedsSafety Needs

Physiological Needs

Types of Buying-Decision


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Types of Buying Decision

BehaviorDifferenceDifference

between brandsbetween brands

SignificantSignificantDifferencesDifferences

ComplexComplexbuyingbuying

behaviorbehavior

LowLow

FewFewDifferencesDifferences

DissonanceDissonance--reducingreducingbuyingbuying

behaviorbehavior

Habitual buyingHabitual buyingbehaviorbehavior

VarietyVariety--seekingseekingbuying behaviorbuying behavior

HighHigh

Involvement LevelInvolvement Level


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Five Stages:

Need recognition

Information search

Evaluation of alternatives

Purchase decision Postpurchase behavior

The Buyer Decision Process



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Need recognition

Information search


Purchase decision

Postpurchase behavior

Needs can be triggeredby: Internal stimuli

Normal needs becomestrong enough to drivebehavior

External stimuli

Advertisements

Friends of friends

ProcessProcess

StagesStages



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Need recognition

Information search


Purchase decision


Consumers exhibit heightenedattention or actively search for

information. Sources of information:

Personal

Commercial

Public

Experiential Word-of-mouth

ProcessProcess

StagesStages



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Need recognition

Information search


Purchase decision


Evaluation proceduredepends on the consumer and

the buying situation. Most buyers evaluate multiple

attributes, each of which isweighted differently.

At the end of the evaluation

stage, purchase intentions areformed.

ProcessProcess

StagesStages



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Need recognition

Information search


Purchase decision


Two factors intercedebetween purchaseintentions and the actualdecision: Attitudes of others

Unexpected situational

factors

ProcessProcess

StagesStages



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Need recognition

Information search


Purchase decision


Satisfaction is important: Delighted consumers engage

in positive word-of-mouth. Unhappy customers tell onaverage 11 other people.

It costs more to attract a newcustomer than it does toretain an existing customer.

Cognitive dissonance iscommon

ProcessProcess

StagesStages

B D i i P f


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Buyer Decision Process for

New Products

New Products

Good, service or idea that is perceived bycustomers as new.

Stages in the Adoption Process

Marketers should help consumers movethrough these stages.



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Stages in the Adoption ProcessStages in the Adoption Process


New Products

Awareness

Evaluation

Interest

Trial

Adoption

B D i i P f


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New Products

Individual Differences in Innovativeness

Consumers can be classified into five adoptercategories, each of which behaves differentlytoward new products.

Product Characteristics and Adoption

Five product characteristics influence theadoption rate.



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Adopter CategoriesAdopter Categories


New Products

Innovators

Early Majority

Early Adopters

Late Majority

Laggards



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Product CharacteristicsProduct Characteristics


New Products

Relative Advantage

Compatibility

Complexity

Divisibility

Communicability

B D i i P f


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New Products

International Consumer Behavior

Values, attitudes and behaviors differ greatly inother countries.

Physical differences exist which require changes inthe marketing mix.

Customs vary from country to country.

Marketers must decide the degree to which they willadapt their marketing efforts.


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Business Markets andBusiness Markets andBusiness Buyer BehaviorBusiness Buyer Behavior


Chapter7

Objectives


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Objectives

Be able to define the business marketand explain how business markets

differ from consumer markets. Know the major factors that influence

business buyer behavior.

Objectives


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Objectives

Understand the steps in thebusiness buying decision process.

Understand institutional andgovernment markets and howbuyers in these markets make their

buying decisions.

Example


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Sells jets exclusively

for corporate use 300 500 customers

worldwide

Rational, objective,

and human factors

influence business

buyers decisions

Multiple people are

involved in the decision Buying influences

include the CEO, pilot,

board members, even

spouses

Company has been

highly successful

Gulfstream AerospaceGulfstream Aerospace

p


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Definition Business Buyer Behavior:

The buying behavior of organizations thatbuy goods and services for use in theproduction of other products and servicesor for the purpose of reselling or rentingthem to others at a profit.


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Characteristics of Business Markets Sales in the business market far exceed sales in

consumer markets.

Business markets differ from consumer markets inmany ways.

Marketing structure and demand

Nature of the buying unit

Types of decisions and the decision process

Business Markets

Business Markets


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Business Markets

Marketing Structure and

Demand

Nature of the

Buying Unit

Types of Decisions and

the Decision Process

Compared to consumermarkets: Business markets

have fewer but largercustomers

Business customers

are more geographicallyconcentrated

Demand is different

Demand is derived Demand is price inelastic

Demand fluctuates more, and

changes more quickly

CharacteristicCharacteristicss

Business Markets


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us ess a e s


Demand

Nature of the

Buying Unit



Compared to consumerpurchases: Business purchases

involve more buyers in thedecision process.

Purchasing efforts areundertaken byprofessional buyers.


Business Markets


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Demand

Nature of the

Buying Unit



Compared to consumerpurchases: Business buyers face

more complex buyingdecisions.

The buying process ismore formalized.

Buyers and sellers work

more closely togetherand build long-termrelationships.



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Major Types of Buying Situations

Straight rebuy

Reordering without modification

Modified rebuy

Requires modification to prior purchase

New task First-time purchase

Business Buyer Behavior


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Systems Selling:

Buying a packaged solution to a problemfrom a single seller.

Convenience is a major benefit

Often a key marketing strategy for

businesses seeking to win and holdaccounts.




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Participants in theParticipants in the

Business Buying ProcessBusiness Buying Process

y

Users

Buyers

Influencers

Deciders

Gatekeepers

MajorInfluences on BusinessBuyers


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Buyers

Environmental

Organizational

Interpersonal

Individual

Economic trends

Supply conditions

Technological change Regulatory and political

environments

Competitive developments

Culture and customs




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Buyers

Environmental

Organizational

Interpersonal

Individual

Objectives

Policies

Procedures

Organizationalstructure

Systems




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Buyers

Environmental

Organizational

Interpersonal

Individual

Authority

Status Empathy

Persuasiveness



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Eight Stages:

Stage 1: Problem Recognition

Stage 2: General Need Description

Stage 3: Product Specification

Value analysis helps to reduce costs

Stage 4: Supplier Search Supplier development

Business Buying Process


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Eight Stages:

Stage 5: Proposal Solicitation

Stage 6: Supplier Selection

Stage 7: Order-Routine Specification

Blanket contracts are often used for

maintenance, repair and operating items. Stage 8: Performance Review



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Business Buying on the Internet E-procurement is growing rapidly.

Reverse auctions account for much of the onlinepurchasing activity.

E-procurement offers many benefits: Access to new suppliers

Lower purchasing costs Quicker order processing and delivery


Institutional and Government


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Institutional Markets

Consist of churches, schools, prisons,hospitals, nursing homes and otherinstitutions that provide goods andservices to people in their care.


Markets



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Institutional Markets

Often characterized by low budgets andcaptive patrons.

Marketers may develop separatedivisions and marketing mixes to serviceinstitutional markets.


Markets



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Government Markets

Governmental units federal, state, andlocal that purchase or rent goods andservices for carrying out the mainfunctions of government.


Markets



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Government Markets

More than 82,000 buying units. Require suppliers to submit bids.

Favor domestic suppliers.

Extensive paperwork is required fromsuppliers.


Markets



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Government Markets

Government buyers often favor: Depressed business firms and areas

Small businesses

Minority-owned businesses

Firms which practice non-discriminatorypractices


Markets



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Government Markets

Most firms that sell to government buyersare not marketing oriented.

Some companies have separategovernment marketing departments.

Much of government buying has migratedonline.


Markets

Session 4: Customer Driven

Marketing Strategy Creating


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Marketing Strategy Creating

Value for Target Customers

Segmentation, Targeting, and Positioning

Building the Right Relationships with the

Right Customers

Segmentation Targeting andSegmentation Targeting and


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164

Segmentation, Targeting, andSegmentation, Targeting, and

Positioning: Building the RightPositioning: Building the Right

Relationships with the RightRelationships with the Right

CustomersCustomers


Chapter 8

Objectives


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Be able to define the three steps oftarget marketing: market

segmentation, target marketing, andmarket positioning.

Understand the major bases for

segmenting consumer and businessmarkets.

Objectives


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Know how companies identifyattractive market segments and howthey choose a target marketingstrategy.

Comprehend how companiesposition their products for maximum

competitive advantage.

Example


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Sells multiple brands

within the same

product category for a

variety of products

Brands feature a

different mix of

benefits and appeal todifferent segments

Has also identifieddifferent niches withincertain segments

Product modificationsare useful: Tide offersseven differentproduct formulationsto serve differentniches needs

Procter & GambleProcter & Gamble

D fi iti


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Definition

Market Segmentation:

Dividing a market into distinct groups with

distinct needs, characteristics, orbehavior who might require separateproducts or marketing mixes.

Market Segmentation


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Segmenting ConsumerMarkets

Segmenting BusinessMarkets

SegmentingInternational Markets

Requirements forEffective Segmentation

Geographical segmentation

Marketing mixes arecustomized geographically

Demographic segmentation

Most popular segmentation

Demographics are closely relatedto needs, wants and usage rates

Psychographic segmentation

Lifestyle, social class, andpersonality-based segmentation

Behavioral segmentation

Typically done first

TopicsTopics

Market Segmentation


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Geographic SegmentationGeographic Segmentation

VariablesVariables

World Regionor Country

U.S. region

State

City

Neighborhood

City orMetro Size

Density Climate

Market Segmentation


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Demographic Segmentation VariablesDemographic Segmentation Variables

Age Gender

Family size

Family life cycle

Income

O

ccupation Education

Religion

Race

Generation

Nationality

Market Segmentation


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Behavioral SegmentationBehavioral Segmentation

VariablesVariables

Occasions

Benefits

User Status

User Rates

Loyalty Status

Readiness Stage

Attitude Toward the Product

Market Segmentation


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Demographic segmentation

Industry, company size, location

Operating variables

Technology, usage status,

customer capabilities Purchasing approaches

Situational factors

Urgency, specific application, sizeof order

Personal characteristics

Buyer-seller similarity, attitudestoward risk, loyalty

TopicsTopics

Market Segmentation


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Geographic segmentation

Location or region

Economic factors

Population income or level of

economic development Political and legal factors

Type / stability of government,monetary regulations, amount ofbureaucracy, etc.

Cultural factors

Language, religion, values,attitudes, customs, behavioralpatterns

TopicsTopics

Market Segmentation


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Measurable

Size, purchasing power, and profileof segment

Accessible

Can be reached and served Substantial

Large and profitable enough toserve

Differentiable

Respond differently

Actionable Effective programs can be

developed

TopicsTopics

Target Marketing


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Target Marketing

Evaluating Market Segments Segment size and growth

Segment structural attractiveness Level of competition

Substitute products

Power of buyers

Powerful suppliers Company objectives and resources

Target Marketing


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Target Marketing

Target Marketing Strategies

Undifferentiated (mass) marketing

Differentiated (segmented) marketing

Concentrated (niche) marketing

Micromarketing (local or individual)

marketing

Target Marketing


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Target Marketing

Choosing a Target-Marketing StrategyRequires Consideration of:

Company resources

The degree of product variability

Products life-cycle stage

Market variability

Competitors marketing strategies

Target Marketing


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Target Marketing

Socially Responsible Targeting

Some segments are at special risk:

Children

Inner-city minority consumers

Internet shoppers

Controversy occurs when the methodsused are questionable.

Positioning


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Positioning

Positioning:

The place the product occupies in

consumers minds relative to competingproducts.

Typically defined by consumers on thebasis of important attributes.

Positioning


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Positioning

Choosing a Positioning Strategy: Identifying possible competitive advantages

Products, services, channels, people or image can be

sources of differentiation.

Choosing the right competitive advantage How many differences to promote?

Unique selling proposition

Positioning errors to avoid Which differences to promote?

Positioning


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Criteria forCriteria for

Meaningful DifferencesMeaningful Differences

Important

Superior

Preemptive

Distinctive

Communicable

Affordable

Profitable

Positioning


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Positioning

Choosing a Positioning Strategy: Selecting an overall positioning strategy

More for More Value Proposition More for the Same Value Proposition

The Same forLess Value Proposition

Less for Much Less Value Proposition

More forLess Value Proposition

Positioning


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Positioning

Choosing a Positioning Strategy:

Developing a positioning statement

Positioning statements summarize thecompany or brand positioning

EXAMPLE: To (target segment and need) our(brand) is (concept) that (point-of-difference).

Communicating the chosen position

Session 5: Marketing Decisions I:

S


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Product,S

ervices, and BrandingStrategies


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186

Product, Services, andProduct, Services, andBranding StrategiesBranding Strategies


Chapter 9

Objectives


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Be able to defineproductand know themajor classifications of products andservices.

Understand the decisions companies makeregarding their individual products andservices, product lines, and product mixes.

Objectives


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Understand how firms build and managetheir brands.

Know the four characteristics of servicesand the additional marketing considerationsthat services require.

Review additional product issues related to

social responsibility and internationalmarketing.

Example


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Cosmetics

companies sellbillions of dollars

worth of products

Consumers buy

more than just aparticular smell

The promise,

image, company,name, package, and

ingredients are all

part of the product,

as are the storeswhere it is sold.

The Cosmetics IndustryThe Cosmetics Industry

Definitions


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Definitions

Product Anything offered to a market for attention,

acquisition, use, or consumption that mightsatisfy a need or want.

Service Any activity or benefit that one party can offer to

another that is essentially intangible and does

not result in ownership of anything.

What is a Product?


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What is a Product?

Products, Services, and Experiences

Market offerings, pure tangible goods,pure services, experiences

Levels of Product and Services

Core benefit, actual product, andaugmented product

Product and Service Classifications

What is a Product?


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Convenience

Shopping

Specialty

Unsought

Frequent purchasesbought with minimalbuying effort and little

comparison shopping Low price

Widespread distribution

Mass promotion by

producer

Types ofTypes ofConsumerConsumer

ProductsProducts

What is a Product?


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Convenience

Shopping

Specialty

Unsought

Less frequent purchasesrequiring more shopping effortand price, quality, and stylecomparisons.

Higher than conveniencegood pricing

Selective distribution in feweroutlets

Advertising and personal

selling by producer andreseller


ProductsProducts

What is a Product?


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Convenience

Shopping

Specialty

Unsought

Strong brand preference andloyalty, requires specialpurchase effort, little brandcomparisons, and low price

sensitivity High price

Exclusive distribution

Carefully targeted promotionby producers and resellers


ProductsProducts

What is a Product?


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Convenience

Shopping

Specialty

Unsought

Little product awareness andknowledge (or if aware,sometimes negative interest)

Pricing varies

Distribution varies

Aggressive advertisingand personal selling byproducers and resellers


ProductsProducts

What is a Product?


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What is a Product?

Product and Service Classifications

Consumer products

Industrial products Materials and parts

Capital items

Supplies and services

What is a Product?


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What is a Product?

Product and Service Classifications Organizations, persons, places, and ideas

Organizational marketing makes use of corporate

image advertising Person marketing applies to political candidates,

entertainment sports figures, and professionals

Place marketing relates to tourism

Social marketing campaigns promote ideas

Product and Service Decisions


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Individual Product

Product Line

Product Mix

Product attributes Quality, features, style and

design

Branding

Packaging

Labeling

Product support services

Key DecisionsKey Decisions



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Individual Product

Product Line

Product Mix

Product line length Line stretching: adding

products that are higher orlower priced than theexisting line

Line filling: adding moreitems within the presentprice range




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Individual Product

Product Line

Product Mix

Product line width: number of different

product lines carried bycompany

Product line depth: Number of different

versions of each product inthe line

Product line consistency


Branding Strategy


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Branding Strategy

Brands are powerful assets that mustbe carefully developed / managed.

Brands with strong equity have manycompetitive advantages: High consumer awareness

Strong brand loyalty

Helps when introducing new products

Less susceptible to price competition

Brand Strategy


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Brand Positioning

Brand Name

Selection

Brand Sponsorship

Brand Development

Three levels ofpositioning:

Product attributes Least effective

Benefits

Beliefs and values

Taps into emotions



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Brand Strategy


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Brand Positioning

Brand Name

Selection

Brand Sponsorship

Brand Development

Manufacturer brands

Private (store) brands

Costly to establish and

promote Higher profit margins

Licensed brands

Name and character licensinghas grown

Co-branding Advantages / disadvantages


Brand Strategy


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Brand Positioning

Brand Name

Selection

Brand Sponsorship

Brand Development

Line extensions Minor changes to existing

products

Brand extensions Successful brand names help

introduce new products

Multibrands Multiple product entries in a

product category

New brands New product category


Brand Strategy


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Line ExtensionsLine Extensions

May Feature Different:May Feature Different:

Flavors

Colors

Forms

Ingredients

Package Sizes

Services Marketing


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g

Services

Account for74% of U.S. gross domestic

product. Service industries include business

organizations, government, and privatenot-for-profit organizations.

Services Marketing


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g

Characteristics of Services Intangibility

Consumers look for service quality signals

Inseparability Services cant be separated from providers

Variability Employees and other factors result in variability

Perishability Services cant be inventoried for later sale

Services Marketing


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g

Service Firm Marketing Strategies

The Service-Profit Chain

Internal Marketing Interactive Marketing

Managing Service Differentiation

Managing Service Quality Managing Service Productivity

Additional Product


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Product Decisions and Social

Responsibility Acquisitions and mergers

Legal compliance

Product liability issuesWarranties

Considerations

Additional Product


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International Product and ServicesMarketing

Special challenges: Which products should be marketed

internationally?

Should the products be standardized or adapted forworld markets?

How should packaging be adapted?

How can other barriers be overcome?

Considerations


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212

NewNew--Product Development andProduct Development andProduct LifeProduct Life--Cycle StrategiesCycle Strategies


Chapter 10

Objectives


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Understand how companies find and developnew-product ideas.

L

earn the steps in the new-productdevelopment process.

Know the stages of the product life cycle.

Understand how marketing strategies change

during the products life cycle.

Example


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$50 billion in profits

over 27 years

Early new-product

development relied

heavily on copying

the competition

$4.2 billion annuallyinvested in R & D

Innovation is critical to

Microsofts future

success

Much of R & D efforts

are Internet related

Many new products and

services are indevelopment

MicrosoftMicrosoft

Definition


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New Product Development

Development of original products, product

improvements, product modifications, andnew brands through the firms own R & Defforts.



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New products can be obtained via

acquisition or development. New products suffer from high failure

rates.

Several reasons account for failure.

Strategy



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New Product Development Process:

Stage 1: Idea Generation Internal idea sources:

R & D

External idea sources:

Customers, competitors, distributors, suppliers

Strategy



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Stage 2: Idea Screening Product development costs increase

substantially in later stages.

Ideas are evaluated against criteria; most are

eliminated.

Strategy



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Stage 3: Concept Development and

Testing Product concepts provide detailed

versions of new product ideas.

Concept tests ask target consumers to

evaluate product concepts.

Strategy



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Stage 4: Marketing Strategy Development Strategy statements describe: The target market, product positioning, and sales, share,

and profit goals for the first few years.

Product price, distribution, and marketing budget for thefirst year.

Long-run sales and profit goals and the marketing mixstrategy.

Strategy


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Stage 7: Test Marketing Standard test markets

Controlled test markets

Simulated test markets

Stage 8: Commercialization

Strategy

Product Life-Cycle Strategies


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The Typical Product Life Cycle (PLC) Has

Five Stages Product Development, Introduction, Growth,Maturity, Decline

Not all products follow this cycle: Fads

Styles

Fashions



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The product life cycle concept can beapplied to a:

Product class (soft drinks)

Product form (diet colas)

Brand (Diet Dr. Pepper)

Using the PL

C to forecast brand performance or todevelop marketing strategies is problematic



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Product development Introduction

Growth

Maturity

Decline

Begins when thecompany develops a

new-product idea Sales are zero

Investment costs arehigh

Profits are negative

PLC StagesPLC Stages



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Growth

Maturity

Decline

Low sales

High cost per customer

acquired Negative profits

Innovators are targeted

Little competition


Marketing Strategies:


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Product Offer a basic product

Price Use cost-plus basis to set

Distribution Build selective distribution

Advertising Build awareness among earlyadopters and dealers/resellers

Sales Promotion Heavy expenditures tocreate trial

Introduction Stage



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Growth

Maturity

Decline

Rapidly rising sales

Average cost per

customer Rising profits

Early adopters aretargeted

Growing competition




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Product Offer product extensions, service,warranty

Price Penetration pricing Distribution Build intensive distribution

Advertising Build awareness and interest in themass market

Sales Promotion Reduce expenditures to takeadvantage of consumer demand

Growth Stage



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Growth

Maturity

Decline

Sales peak

Low cost per customer

High profits Middle majority are

targeted

Competition begins to

decline




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Product Diversify brand and models

Price Set to match or beat competition

Distribution Build more intensive distribution Advertising Stress brand differences and benefits

Sales Promotion Increase to encourage brandswitching

Maturity Stage



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Growth

Maturity

Decline

Declining sales

Low cost per customer

Declining profits Laggards are targeted

Declining competition


Marketing Strategies: Decline


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Product Phase out weak items

Price Cut price

Distribution Use selective distribution: phase outunprofitable outlets

Advertising Reduce to level needed to retainhard-core loyalists

Sales Promotion Reduce to minimal level

Stage

Session 6: Marketing Decisions II:


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Pricing Decisions Understandingand Capturing Customer Value


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235

Pricing ConsiderationsPricing Considerationsand Approachesand Approaches


Chapter 11

Objectives


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Understand the internal factors affectinga firms pricing decisions.

Understand the external factorsaffecting pricing decisions, including theimpact of consumer perceptions of priceand value.

Be able to contrast the three general

approaches to setting prices.

Example


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Buyer-drivencommerce concept

offers lower prices toconsumers and theability to sell excessinventory to sellers

13.5 million user

customer base Tremendous growth

Most deals relate totravel or time sensitive /

perishable services Not all ventures have

been profitable

Some customers find itdifficult to commit to

purchase prior tolearning details

Priceline.comPriceline.com

What is Price?


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Price Has Many NamesPrice Has Many Names

Rent Fee

Rate

Commission

Assessment

Tuition Fare

Toll

Premium

Retainer

Bribe Salary

Wage

Interest

Tax

Definition


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Price

The amount of money charged for a

product or service, or the sum of thevalues that consumers exchange

Documents

Principles All Slides Not Illustrated