Marketing Concepts Semester of Notes
Marketing Concepts Semester of Notes MKTG 301
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MKTG 301 Notes 17 PampG Realization that competitors can quickly copy product bene ts such as cleaning power but they can t easily copy how consumers feel about a brand Not just laundry problems but make a difference in something women truly care about fabrics that touch their lives No more side by side comparison of past Tide advertising Successful companies strongly customer focused and heavily committed to marketing MARKETING DEFINITION managing pro table customer relationships Goal 1Attract new customers by promising superior value 2 keep and grow current customers by delivering satisfaction Peter Drucker the aim of marketing is to make selling unnecessary MARKETING activity set of institutions and processes for creating communicating delivering and exchanging offerings that have value for customers clients partners and society at large 5 Core marketplace concepts 1 Needs wants and demands 2 Marketing offers products services and experiences 3 Value and satisfaction 4 Exchanges and relationships 5 Markets Human NEEDS states of felt deprivation physical social individual needs ex clothing affection knowledge WANTS the form of human needs take as shaped by culture and individual personality An American needs food but wants a Big Mac DEMANDS Human wants that are backed by buying power MARKET OFFERING some combination of products services information or experiences offered to a market to satisfy a need or want both product and services Services activities or bene ts offered for sale that are essentially intangible and do not result in the ownership of anything MARKETING MYOPIA the mistake of paying more attention to the speci c products a company offers than to the bene ts and experiences produced by these products EXCHANGE the act of obtaining a desired object from someone by offering something in return MARKET set of all actual and potential buyers of a product or service Buyers also carry on marketing Environmental forces affect the system in the modern marketing ex suppliers consumers etc MARKETING MANAGEMENT the art and science of choosing target markets and building pro table relationships with them Must answer 2 Q 1 What customers will we serve 2 How can we serve theses customers best Finding who it will serve divide market into segment of customers and select which segments it will go after Marketing segmentation and Target Marketing Demarketing to reduce number of customers or shift their demand temporarily or permanently Marketing management is customer management and demand management Company must also decide how it will serve targeted customers how it will differentiate and position itself in the marketplace Value proposition is the set of bene ts or values it promises to deliver to consumers to satisfy their needs Ex BMW ultimate driving machine Apple Touching is believing 5 alternatives concepts under which organizations design and carry out their marketing strategies Production product selling marketing societal marketing concepts PRODUCTION CONCEPT idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution ef ciency PRODUCT CONCEPT the idea that consumers will favor products that offer the most quality performance and features and that the organizations should therefore devote its energy to making continuous product improvements SELLING CONCEPT the idea that consumers will not buy enough of the rm s products unless it undertakes a large scale selling and promotion effort MARKETING CONCEPT holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satsifactiosn better than competitors do Selling concept Inside out starts w factory company s existing products Marketing concept outside in Customer driven VS customer driving marketing SOCIETAL MARKETING CONCEPT idea that a company s marketing decisions should consider consumers wants the company s requirements consumer s long run interests and society s long run interests Ex Fast food Short run wants vs longrun welfare Major marketing tools 4Ps product price place promotion CUSTOMER RELATIONSHIP MANAGEMENT overall process of building and maintaining pro table customer relationships by delivering superior customer value and satisfaction CUSTOMER PERCEIVED VALUE the customer s evaluation of the difference between all the bene ts and all the costs of a marketing offer relative to those of competing offers perceived value is the key CUSTOMER SATISFACTION the extent to which a product s perceived performance matches a buyer s expectations marketer must continue to generate more customer value and satisfaction but not give away the house Basic relationships VS full partnerships w customers Today s companies are building deeper more direct and more lasting relationships w more carefully selected customers Selective relationship management use customer pro tability analysis ex Best Buy New communications tools myspace facebook youtube second life enable marketer to become part of the conversation between consumers BUT they give consumers greater power and control as two way conversation No longer marketing by intrusion but attraction creating market offerings and messages that involve consumers rather than interrupt them ex online social networks Toyota NIKE CONSUMER GENERATED MARKETING marketing messages ads and other brand exchanges created by consumers themselves both invited and uninvited PARTNER RELATIONSHP MANAGEMENT working closely w partners in other company departments and outside the company to jointly bring greater value to customers Today rms are linking all departments in the cause of creating customer value Supply chain describes a longer channel stretching from raw materials to components to nal products that are carried to nal buyers Supply chain management working w all companies along the supply chain Aim of customer relationship management is to create not just customer satisfaction but customer delight even a light drop from complete satisfaction can be a big drop in loyalty CUSTOMER LIFETIME VALUE value of the entire stream of purchases that the customer would make over a lifetime of patronage loss of single customer can be big if you think about lifetime purchases SHARE OF CUSTOMER the portion of customer s purchasing that a company gets in its product categories Amazon com c now sells music videos gifts etc instead of just books CUSTOMER EQUITY the total combined customer lifetime values of all of the company s customers sales and market share reflect the past BUT customer equity suggest the future ex Cadillac VS BMW Building the right relationships w the right customers Butter ies High pro tability short term customers True friends High pro tability long term customers Strangers low pro tability short term customers Barnacles low pro tability long term customers 4 changes digital age rapid globalization call for more ethics and social responsibility growth of not for pro t marketing Digital age INTERNET a vast public web of computer networks which connects users lf all types all around the world to each other and to an amazingly large information repository From traditional marketplaces Y marketspaces Web 20 vX more reasoned and balanced approach to marketing online weblogs vlogs social networking sites Video sharing sites Rapid Globalization Toyota Nokia Nestle Sony Samsung have often outperformed US competitors in American markets The Call for more ethics and social responsibility Worldwide consumerism and environmentalism mature O marketers called upon to take greater responsibility for the social and environmental impact of their actions Caring capitalism building social responsibility and action into their company value and mission statements Ex Patagonia The Growth of Not for pro t marketing Marketing has become major part of the strategies of many not for pro t organizations such as colleges hospitals museums zoos symphony orchestras churches govts So what is marketing 1 Creating value for customers KC 2 Then designs a customer driven marketing strategy a2 How can we best serve targeted customers 3 Constructs an integrated marketing program 4Ps transform marketing strategy into real value for customers 4 Company designs promotion programs that communicate the value proposition to target consumers and persuade them to act on the market offering P30 Reviewing the concepts 1 De ne marketing and outline the steps in the marketing process 5 steps rst 4 steps create value for customers The company reaps the rewards of strong customer relationships by capturing value from customers in the last step 2 Explain the importance of understanding customers and the marketplace and identify the ve core marketplace concepts Core marketplace concepts needs wants demandsmarket offerings value and satisfaction exchange and relationships and markets 3 Identify the key elements of a customer driven marketing strategy and discuss the marketing management orientations that guide marketing strategy research customer needs and managing marketing info 1 What consumers will we serve 2 Divide customers into segments and select Which segment it will cultivate How it will serve targeted customers adopt one of ve competing marketing orientations Production concept product concept selling concept marketing concept societal marketing concept 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return Customer relationship management process of building and maintaining pro table customer relationships by delivering superior customer value and satisfaction Aim to produce higher customer equity Key is creation of superior customer value and satisfaction Build right relationship W right customers In return for creating value for targeted customers it captures values from customers in the form of pro ts and customer equity Must also be good at partner relationship management 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships Boom in computer telecommunications information transportation etc H p new Ways to learn about and track customers create products and services tailored to individual customer needs Target consumers more selectively and build closer 2Way relationships Many connected globally marketing became major part of many not for pro t organizations MJ OR NEW DEVLEOPMENT in marketing RELATIONSHIPS MKTG 301 Notes 112 Company and Marketing Strategy Partnering to Build Customer Relationships NASCAR great marketing organization premier customer driven organization Strategic Planning the process of developing and maintaining a strategic t between the organization s goals and capabilities and its changing marketing opportunities Annual plans and long range plans deal with the company s current business and how to keep them going Strategic plan involves adapting the rm to take advantage of opportunities in its constantly changing environment Marketing planning occurs at the business unit product and market levels Mission statement a statement of the organization s purpose what it wants to accomplish in the larger environment clear mission statement acts as invisible hand that guides ppl in the organization x better organizational and nancial performance Steps in strategic planning De ning the company s mission setting company objectives and goals portfolio Y planning marketing and other functional strategies Mission statement should be market oriented and de ned in terms of customer needs Mission should be realistic Missions also should be speci c Missions should t the market environment Organizations should also base its mission on its distinctive competencies Finally mission statement should be motivating Setting Company Objectives and Goals Company needs to turn its mission into detailed supporting objectives for each level of management Business portfolio the collection of businesses and products that make up the company Best one is one that best ts the company s strengths and weaknesses to opportunities in the environment 2 steps 1 The company must analyze its current business portfolio and decide which businesses should receive more less or no investment 2 It must shape the future portfolio by developing strategies for growth and downsizing Portfolio analysis the process by which management evaluates the products and businesses making up the company Strategic 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 Most common evaluation of SBU attractiveness of the SBU s market or industry and strength of the SBU s position in that market or industry Growth share matrix a portfolio planning method that evaluates a company s strategic business units in terms of their market growth rate and relative market share SBUs are classi ed as stars cash cows question marks or dogs Stars high growth need investment Cash Cow low growth high share business and need less investment Question mark low share business with high growth require lots of cash to hold their share Dogs low growth low share Build share by investing Hold the share at current level Harvest SBU to get short term cash flow Divest the SBU by selling it or phasing it out and use resources elsewhere There is life cycle to SBU so company needs to add products and units continuously Matrix can be dif cult to be used sometimes and it focuses on current business but provide little advice for future planning many companies use more customized approaches Companies place responsibility for strategic planning in the hands of cross functional teams of divisional designing the business managers who are close to their markets Growth is good But we need pro table growth Productmarket expansion grid a portfolio planning tool for identifying company growth opportunities through market penetration market development product development or diversi cation Market penetration a strategy for company growth by increasing sales of current products to current market segments wout changing the product Market development a strategy for company growth by identifying and developing new market segments for current company products Demographic markets vs geographic markets Product development a strategy for company growth by offering modi ed or new products to current market segments Diversi cation a strategy for company growth through starting up or acquiring businesses outside the company s current products and markets Downsizing reducing the business portfolio by eliminating products of business units that are not pro table or that no longer t the company s overall strategy Planning marketing partnering to build customer relationships Marketing 1 Provides a guiding philosophy 2 Provides inputs to strategic planners by helping to identify attractive market opportunities and by assessing the rm s potential to take advantage of them 3 Marketing designs strategies for reaching the unit s objectives Value chain the series of departments that carry out value creating activities to design produce market deliver and support a rm s products Departments should work in harmony to produce value for customers but I practice departmental relations are full of con icts and misunderstandings Value delivery network the network made up of the company suppliers distributors and ultimately customers who partner with each other to improve the performance of the entire system Competition no longer takes place between individual competitors but it takes between the entire value delivery networks created by the competitors Marketing strategy and the marketing mix Marketing Strategy the marketing logic by which the business unit hopes to create customer value and achieve pro table customer relationships Differentiation and positioning identi es total market and divides into smaller segments selecting the most promising segments Product price place promotion 4ps Market segmentation dividing a market into distinct group of buyers who have distinct needs characteristics or behavior and who might require separate products or marketing programs Market segment a group of consumers who respond in a similar way to a given set of marketing efforts not all ways of segmenting is useful ex Tylenol Market targeting the process of evaluating each market segment s attractiveness and selecting one or more segments to enter should target segments in which company can pro tably generate the greatest customer value and sustain it over time Getting to the niches Ex Ferrari Serve several related segments Ex Abercrombie amp Fitch Positioning arranging for a product to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers why a shopper will pay a little more for your brand If the company promises greater value it must then deliver that greater value Differentiation actually differentiating the market offering to create superior customer value Marketing mix the set of controllable tactical marketing tools product price place and promotion that the rm blends to produce the response it wants in the target market Product goods and services combination the company offers to the target market Price amount of money customers must pay to obtain the product Place company activities that make the product available to target customers Promotion activities that communicate the merits of the product and persuade target customers to buy it 4P seller s view service product 4C buyer s view p Customer Solution Customer cost Convenience Communication Managing the marketing process 1 analysis planning implementation control SWOT analysis An overall evaluation of the company s Strength weaknesses opportunities and threats Marketing Plan Executive summary quickly overviews assessments goals recommendations 4 SWOT analysis A states major objectives for the brand and outlines the speci cs of a marketing strategy for achieving them Marketing strategy positioning the marketing mix marketing expenditure levels Contents of marketing plan Executive summary H current marketing situation H opportunities analysis d objectives and issues H budgets controls details on p54 Marketing implementation the process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives addresses who where when and how of marketing objectives Implementation more important than strategy Good implementation good blending of resource and have good t w company culture Chief marketing o icer CMO head up large marketing organizations Functional organization different marketing activities are headed by functional specialist Geographic organization salesmarketing people assigned to speci c countries Product Management organization product manager develops and implements a complete strategy and marketing program for a speci c product or brand PampG Market or customer management organization responsible for developing marketing strategies and plans for their speci c markets or customers More and more companies are shifting their brand management focus toward customer management Marketing Control the process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objective are achieved sets goals threats and action programs its performance and evaluates difference between expected and actual performance H corrective actions to close the gaps Operating control checking ongoing performance against the annual plan and taking corrective action when necessary Strategic control involves looking at whether the company s basic strategies are well matched to its opportunities Marketing audit a comprehensive systematic independent and periodic examination of a company s environment objectives strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company s marketing performance covers ALL major marketing areas of business Return on marketing investment marketing ROI the net return from a marketing investment divided by the costs of the marketing investment Marketing dashboards meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance R01 is heart of every business another P to marketing Mix for pro t and loss or performance MKTG 301 Notes 114 Analyzing the Marketing Environment McDonald Cultural mirror that re ects the evolution of American eating habits Environment change obesity lawsuits and 5 lattes B Environment 8 rst ever quarterly loss Plan to Win better service simple modern interior healthier eating options forever young brand McCafe Marketing environment the actors and forces outside marketing that affects marketing management s ability to build and maintain successful relationships with target customers Marketers must be the most environmental trend trackers and opportunity seekers Marketers have Marketing research and marketing intelligence for collecting information about the marketing environment Microenvironment the actors close to the company that affect its ability to serve its customers the company suppliers marketing intermediaries customer markets competitors and publics The macroenvironment the larger societal forces that affect the microenvironment demographic economic natural technological political and cultural forces Under marketing concept all of the functions must think consumer Suppliers Good partner relationship management results in success for Wal Mart suppliers and ultimately its customers Marketing intermediaries Firms that help the company to promote sell and distribute its goods to nal buyers resellers physical distribution rms marketing service agencies and nancial intermediaries Reseller distribution channel rms that help the company nd customers or make sales to them Today they are big Wal Mart Target Home Depot Costco Best Buy Physical distribution rms help company to stock and move goods from their points of origin to their destinations Marketing Service agency marketing research rms ad agencies media rms etc Financial intermediaries banks credit companies insurance companies etc Customers Consumer markets consists of individuals and households that buy goods and services for personal consumption Business markets buy goods and services for further processing or for use inthier production Reseller markets buy goods and services to resell at a pro t Government markets made up of govt agencies that buy goods and services to produce public services or transfer the goods and services to others who need them International markets consists of those buyers in other countries including consumers producers resellers and governments Competitors company must provide greater customer value and satisfaction than its competitors do Publics Public any group that has an actual or potential interest in or impact on an organization s ability to achieve its objectives Financial public in uence the company s ability to obtain funds Media publics carry news features and editorial opinion Government publics management must take government developments into account Citizenaction publics a company s marketing decisions may be questioned by consumer organizations environmental groups minority groups and others Local publics include neighborhood residents and community organizations General Public company needs to be concerned about the general public s attitude toward its products and activities Internal publics workers managers volunteers and the board of directors Demography study of human populations in terms of size density location age gender race occupation and other statistics World s population 66 billion P 81 billion by year 2030 opportunities amp challenges Chinese children little emperors and empresses Parents w only 1 child at home now spend about 40 of their income on cherished child US Baby boomers the 78 million people born during the baby boom following WWII and lasting until 1964 don t think they are aging As boomers spending 30 billion yr on anti aging products and services especially nancial market Generation X the 45 million people born between 1965 and 1976 in the birth dearth following the baby boom family comes rst career second Marketing to Gen Xers is dif cult Gen Xers now becoming huge potential as they grew EX Hyatt s Andaz hotel Millennials the 83 million children of the baby boomers born between 1977 and 2000 tweens 812 teens 1318 young adults the twenty somethings diverse ethnically Millennials have utter uency and comfort w computer digital and internet technology Creative marketing strategies required ex Toyota s Scion Generational marketing marketers need to form more precise age speci c segments within each group More important de ning ppl by their birth date may be less effective than segmenting them by their lifestyle life stage or the common value they see in the products they buy No more traditional families more women work 0 career oriented women s business rise such as child day care center Peapod internet supermarket Shift in population from geography micropolitan areas Telecommuting program popular ppl work at home SOHO Better educated more white collar more professional population Melting pot p salad bowl maintain diversity by retaining and valuing important ethnic and affect markets cultural differences Target on gay and lesbian consumers they spent 690 billion on goods and services last year Lesbian Gay Bisexual Transgender LGBT 54 million adults w disabilities attractive diversity segment Economic Environment factors that affect consumer buying power and spending patterns Subsistence economies consume most of their own agricultural and industrial output few market opportunities Industrial economies constitute rich markets for many different kinds of goods Value marketing right combination of product quality and good service at a fair price Income distribution skewed Upperclass middle class working class stick close to basics of food clothing and shelter and must try hard to save Underclass welfare and retirees Rich have grown richer middle class has shrunk poor have remained poor Many companies tailor their marketing offers across a range of markets Consumer spending patterns Engel found that as family income rises spent on food declines housing remains about constant and both the spent on other categories and that devoted to savings increase Engel s laws differences noted over a century ago by Ernst Engel in how ppl shift their spending across food housing transportation health care and other goods and services categories as family income rises Biz w adequate warning can take advantage of changes in the economic environment Natural environment natural resources that are needed as inputs by marketers or that are affected by marketing activities Growing shortages of raw materials problem Increased pollution Increased government intervention in natural resource management Environmentally sustainable strategies and practices developing More and more are recognizing the link between a healthy ecology and a healthy economy Technological environment forces that create new technologies creating new product and market opportunities Radio frequency identi cation RFID transmitters or smart chips Every new technology replaces an older technology Necessity to make practical affordable versions of the products Political environment laws government agencies and pressure groups that in uence and limit various organizations and individuals in a given society Government develop public policy to guide commerce Marketers must keep up with changes in regulations and their interpretations Business legislation enacted for number of reasons 1 To protect companies from each other by FTC Antitrust Division of Attorney General s Of ce 2 To protect consumers from unfair business practices 3 To protect the interests of society against unrestrained business behavior Socially Responsible Behavior do the right thing Do businesses obtain too much information of the customers cookies Facebook Cause related marketing buy starbucks and help bring clean water is it more a strategy for selling than strategy for giving But overall it can be very effective Cultural environment Institutions and other forces that affect society s basic values perceptions preferences and behaviors PPl s core beliefs and values have a high degree of persistence Core beliefs vs Secondary beliefs more open to change ex believing in marriage is core believing that ppl should get married early is a secondary belief Do it yourselfers recent movers vs Adventurers Outside vs Home ppl prefer staying home these days People s lack in faith in organizations 2 got to win consumer and employee con dence Post 911 higher patriotism Marketers respond w patriotic products and promotions but must be careful when responding to such strong national emotions People started to recognize that nature is nite and fragile that it can be destroyed or spoiled by human activities 5 ppl seek natural organic lifestyles of health and sustainability LOHAS and nutritional products to fuel ef cient cars and alternative medicine Spends 300 billion annually renewed interest in spirituality z People s view on universe religion 0 affect products 3 kinds of companies those who make things happen those who watch things happen and those who wonder what s happened Whenever possible smart marketing manager will take a proactive rather than reactive approach to the marketing environment Review Microenvironment internal environment marketing channel rms Five types of customer markets consumer business reseller government international markets Competitors publics 2 tier market Rich getting richer poor remain poor 3 major trends in natural environment shortages of certain raw materials higher pollution levels and more government intervention in natural resource management Technological environment creates both challenges and opportunities 3 changes in political environment 1 Increasing legislation regulating business strong government agency enforcement greater emphasis on ethics and socially responsible actions MKTG 301 Notes 119 Customer Driven marketing strategy Creating value for target customers Dunkin Doughnuts not going after Starbucks Segmentation Targeting Positioning Value proposition Rachel Ray the same driving force as Dunkin Doughnuts Company must build right relationships w right customers Target marketing identifying market segments selecting one or more of them and developing products and marketing programs tailored to each shotgun approach to ri e approach Market segmentation dividing a market into smaller groups w distinct needs characteristics or behaviors that might require separate marketing strategies or mixes Market targeting the process of evaluating each market segment s attractiveness and selecting one or more segments to enter Differentiation actually differentiating the market offering to create superior customer value Positioning arranging for a market offering to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers Geographic segmentation dividing a market into different geographical units such as nations states regions counties cities or neighborhoods Demographic segmentation dividing the market into groups based on variables such as age gender family size family life cycle income occupation education religion race generation and nationality Demographic segmentation is the most popular bases for segmenting customer groups consumer needs wants usage rates often vary closely w demographic variables amp Easier to measure than most other types of variables Age and life cycle segmentation dividing a market into different age and life cycle groups Age is often a poor predictor of person s life cycle health work family status needs and buying power Gender segmentation Dividing a market into different groups based on gender Often used in clothing cosmetics toiletries and magazines Income segmentation dividing a market into different income groups Used in productsservices such as automobiles clothings cosmetics nancial services and travel Psychographic segmentation dividing a market into different groups based on social class lifestyle or personality characteristics Lifestyle and personality variables used to segment markets Behavioral segmentation dividing a market into groups based on consumer knowledge attitudes uses or responses to a product Many marketers believe that behavior variables are the best starting point for building market segments Occasion segmentation dividing the market into groups according to occasions when buyers get the idea to buy actually make their purchase or use the purchased item Bene t segmentation dividing the market into groups according to the different bene ts that consumers seek from the product User status Marketers want to reinforce and retain regular users attract targeted nonusers and reinvigorate relationships w eX users EX consumers facing life stage changes newlyweds and new parents Usage Rate market can be segmented into light medium and heavy product users Loyalty status market can be segmented by consumer loyalty EX Mac and macolytes Marketers usually use multiple segmentation bases to identify smaller better de ned target groups business information services help Business marketers and consumers use many of same variables to segment their markets But business marketers also use additional variables such as customer operating characteristics purchasing approaches situational factors and personal characteristics Many marketers believe that buying behavior and bene ts provide the best basis for segmenting business markets Geographic location grouping countries by regions Economic factors population income levels overall level of economic development Political and legal factors type and stability of govt receptivity to foreign rms monetary regulations and the amount of bureaucracy etc Cultural factors grouping markets according to common languages religions values and attitudes customs and behavioral patterns Intermarket segmentation forming segments of consumers who have similar needs and buying behavior even though they are in different countries To be useful market segments must be Measurable the size purchasing power and pro les of the segments can be measured Accessible the market segments can be effectively reached and served Substantial the market segments are large or pro table enough to serve Di ferentiable the segments are conceptually distinguishable and respond differently to different marketing mix elements and programs Actionable effective programs can be designed for attracting and serving the segments In evaluating different market segments rm must look at 3 factors segment size and growth segment structural attractiveness and company objectives and resources Competitors and substitute products affect segment attractiveness Powerful suppliers who can control prices or reduce the quality or quantity of ordered goods and services segment may be less attractive The company should enter only segments in which it can create superior customer value and gain advantages over competitors A target market a set of buyers sharing common needs or characteristics that the company decides to serve Company can target very broadly undifferentiated marketing very narrowly micromarketing or somewhere in between differentiated or concentrated marketing Undifferentiated marketing segmented marketing a market coverage strategy in which a rm decides to ignore market segment differences and go after the whole market with one offer focuses on what is common rather than what is di ferent Most marketers doubt about the undifferentiated marketing Differentiated marketing segmented marketing a market coverage strategy in which a rm decides to target several market segments and designs separate offers for each Differentiated marketing increases costs company must weigh increased sales against increased costs when deciding on a differentiated marketing strategy Concentrated marketing niche marketing a market coverage strategy in which a rm goes after a large share of one or a few segments or niches whole foods more effectively and ef ciently Niche marketing can turn into broader competitors as well as big companies target niche market as well Mountain Dew Code Red Concentrated marketing can be highly pro table but also higher than normal risks prefer to diversify in several market segments Micromarketing the practice of tailoring products and marketing programs to the needs and wants of speci c individuals and local customer groups includes local marketing and individual marketing Rather than seeing a customer in every individual it sees the individual in every customer companies Local marketing tailoring brands and promotions to the needs and wants of local customer groups cities neighborhoods and even speci c stores Local marketing can create problems such as costs and logistic problems but it often outweigh the drawbacks Individual marketing tailoring products and marketing programs to the needs and preferences of individual customers also labeled marketsofone marketing customized marketing and onetoone marketing Mass Customization process through which rms interact one to one w masses of customers to design products and services tailor made to individual needs Interactive marketing is becoming a marketing principle for the 213 century Selfmarketing individual customers are taking more responsibility for shaping both products they buy and the experience Which strategy is best depends on company resources product variability product s lifecycle state market variability competitor s marketing strategies Target marketing help company and consumers but it can also create problem targeting of vulnerable or disadvantaged customers w controversial or potential harmful products In target marketing the issue is not really who is targeted but rather how and for what Value proposition how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments Product s position the way the product is de ned by consumers on important attributes the place the product occupies in consumers minds relative to competing products Perceptual positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions size relative market share Differentiation and positioning task consists of 3 steps identifying a set of differentiating competitive advantages upon which to build a position choosing the right competitive advantages and selecting an overall positioning strategy Competitive advantage an advantage over competitors gained by offering greater customer value either through lower prices or by providing more bene ts that justify higher prices Product Differentiation differentiated on features performance or style and design Services Differentiation speedy convenient or careful delivery Channel differentiation way they design the channels coverage expertise and performance People differentiation hiring and training better people than their competitors do Image differentiation a company or brand image should convey the product s distinctive bene ts and positioning Company must decide how many differences to promote and which ones Unique selling position USP each brand should pick an attribute and tout itself as number one on that attribute Sometimes it s good to have more than one differentiator but as companies increase the number of claims for their brands they risk disbelief and a loss of clear positioning A difference is worth establishing to the extent that it satis es the following criteria Important The difference delivers a highly valued bene t to target buyers Distinctive Competitors do not offer the difference or the company can offer it in a more distinctive way Superior The difference is superior to other ways that customers might obtain the same bene t Communicable The difference is communicable and visible to buyers Preemptive Competitors cannot easily copy the difference A ordable Buyers can afford to pay for the difference Pro table The company can introduce the difference pro tably Value Proposition the full positioning of a brand the full mix of bene ts upon which it is positioned Why should I buy your brand More for More positioning providing the most upscale product or service and charging a higher price to cover the costs MKTG 301 Notes 121 Managing Marketing Information to Gain Customer Insights ZIBA design marketing research why people want what they want Marketers must use the information to gain powerful customer and market insights Marketers don t need more information they need better information and must make better use of the information they already have Transforming today s vast ever increasing volume of consumer information into actionable marketing insights is the number one challenge for digital age marketers Customer insights fresh understandings of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships getting better at understanding our customers and meeting their needs Marketing information system MIS people and procedures for assessing information needs developing the needed information and helping decision makers to use the information to generate and validate actionable customer and market insights Info users marketing managers internal and external partners others who need marketing information MIS 1 Interacts w information users to assess information needs Interacts with the marketing environment to develop needed information through internal company databases marketing intelligence activities and marketing research Helps users to analyze and use the information to develop customer insights make marketing decisions and manage customer relationships A good marketing information system balances the information users would like to have against what they really need and what is feasible to offer Marketers should weigh carefully the costs of getting more information against the bene ts resulting from it Marketers can obtain the needed info from internal data marketing intelligence and marketing research Internal databases electronic collections of consumer and market information obtained from data sources within the company network ex Pizza Hut Marketing Intelligence the systematic collection and analysis of publicly available information about consumers competitors and developments in the marketing environment Ford Web 3o invaluable source of competitive intelligence Marketing research the systematic design collection analysis and reporting of data relevant to a speci c marketing situation facing an organization De ning the problem and research objectives is often the hardest step in the research process Exploratory research marketing research to gather preliminary information that will help de ne problems and suggest hypotheses Descriptive research marketing research to better describe marketing problems situations or markets such as the market potential for a product or the demographics and attitudes of consumers Casual research marketing research to test hypotheses about cause and effect relationships Research plan should be presented in a written proposal cover management problems addressed and the research objectives the information to be obtained and the way the results will help management decision making Also the costs Secondary data information that already exists somewhere having been collected for another purpose Primary data information collected for the speci c purpose at hand Commercial online databases computerized collections of information available from online commercial sources or via the internet Researcher must evaluate secondary information carefully to make certain it is relevant ts research project needs accuratereliably collected and reported currentup to date enough for current decisions and impartial objectively collected and reported Primary data collection calls for number of decisions on research approaches contact methods sampling plan and research instruments Research approaches include observation surveys and experiments Observational research gathering primary data by observing relevant people actions and situations some things can t be observed and some thing is dif cult to observe and interpret diapers Ethnographic research a form of observational research that involves sending trained observers to watch and interact with consumers in their natural habitat Marriott and IDEO Survey research gathering primary data by asking people questions about their knowledge attitudes preferences and buying behavior suited for gathering descriptive information very exible but some ppl might not unable to answer Experimental research gathering primary data by selecting matched groups of subjects giving them different treatments controlling related factors and checking for differences in group responses suited for gathering casual information McDonald Mail questionnaires can be used to collect large amounts of info at a low cost per respondent not very exible hard to control who at the mailing address lls out the questionnaire Telephone interviewing one of best methods for gathering info quickly and more exible than mail questionnaires BUT cost is higher and ppl might not want to discuss personal questions etc Personal interviewing individual and group interviewing Individual interviewing talking w ppl in their homes or of ces on the street or in shopping malls exible but costly Group interviewing inviting 610 ppl to meet with a trained moderator to talk about a product service or organization Focus group interviewing personal interviewing that involves inviting 610 ppl to gather for a few hours w a trained interviewer to talk about a product service or organization The interviewer focuses the group discussion on important issues Online marketing research collecting primary data online through internet surveys online focus groups web based experiments or tracking consumers online behavior 135 billion spending 17 of all US marketing research spending Internet especially well suited to quantitative research conducting marketing surveys and collecting data 23 of Americans have access to web Marketing researchers rushed to use internet for quantitative surveys they have been slower to adopt qualitative webbased research approaches Online focus groups gathering a small group of people online with a trained moderator to chat about a product service or organization and gain qualitative insights about consumer attitudes and behavior Restricted internet access a less of a problem Who s in the online sample its dif cult to know who they really are Online surveys can be dry and lacking in dynamic web cams can be used Concerns with consumer privacy BUT most industry insiders predict healthy growth for online marketing research Sample segment of the population selected for marketing research to represent the population as a whole Designing the sample requires 3 decisions 1 Who is to be surveyed what is the sampling unit 2 How many people should be surveyed what is the sample size 3 How should the people in the sample be chosen what sampling procedure Probability samples each member has a known chance of being included in the sample and researchers can calculate con dence limits for sampling error Nonprobability samples used when probability sampling costs too much or takes too much time sampling error cannot be measured Two primary instruments for collecting primary data questionnaire and mechanical devices Closedend questions include all the possible answers and subjects make choices among them Multiple Choice Openend questions allow respondents to answer in their own words Open ended questions useful in exploratory research when researcher tries to nd out what ppl think but not measuring how many ppl think in a certain way Wording and ordering of questions important Mechanical instruments ex checkout scanners people meters Neuromarketing Implementing the Research Plan Data collecting generally the most expensive and the most subject to error Interpreting and reporting the ndings researcher should not overwhelm managers with numbers and fancy statistical techniques rather the researcher should present important ndings and insights that are useful in the major decisions faced by management Managers and researchers must work together closely and share responsibility Touchpoint customer purchases sales force contacts service and support calls web site visits satisfaction surveys credit and payment interactions market research studies every contact between the customer and the company Customer relationship management CRM managing detailed information about individual customers and carefully managing customer touch points in order to maximize customer loyalty EX Harrah s Casino game Data warehouse companywide electronic database of nely detailed customer info that needs to be sifted through for gems to have info accessible to be able to use datamining techniques to sift through the data Intranet provides ready access to research info stored reports shared work documents contact info for employees and other stakeholders and more Extranets can access to company s extranet to update accounts arrange purchase and check orders against inventories to improve customer service Marketing research in small business and non pro t organizations Small business can do marketing research as well Ex dry cleaner biz observing surveys experiments secondary data International Marketing research Grown tremendously over the past decade Bc of scarcity of good secondary data international researchers often must collect their own primary data Dif culty language barrier cultural barrier technological differences illiteracy Cost is high to perform international marketing research but cost of not doing it might be even higher Intrusion on consumer privacy companies looking over your shoulder Response to this problem ex Council for marketing and Opinion Research s Your Opinion Counts and Respondent Bill of Rights educate consumers about the bene ts of marketing research and distinguish it from telephone selling and database building Misuse of Research Findings research ethics con dentiality and avoidance of harassment MKTG 301 Notes 27 Products Services and Brands Building Customer Value Las Vegas a brand 2nd hottest brand what happens here stays here Product anything that can be offered to a market for attention acquisition use or consumption that might satisfy a want or need tangible and services Services any activity or bene t that one party can offer to another that is essentially intangible and does not result in the ownership of anything Creating and managing customer experiences w their brands or company to differentiate EX American Girl Dolls amp American Girl Places Core customer value what is the buyer really buying Actual product product and service features design quality level brand name packaging Augmented product delivery and credit after sale service warranty product support Consumer products product bought by nal consumer for personal consumption convenience products shopping products specialty products unsought products Convenience products consumer product that customers usually buy frequently immediately and with a minimum of comparison and buying effort laundry detergent candy magazines fast food Shopping products consumer good that the customers in the process of selection and purchase characteristically compare on such bases as suitability quality price and style furniture clothing used cars major appliances hotel and airline services Specialty products consumer product w unique characteristics or brand identi cation for which a signi cant group of buyers is willing to make a special purchase effort speci c brands of cars designer clothes medicallegal specialists service Unsought products consumer product that the consumer either does not know about or knows about but does not normally think of buying life insurance preplanned funeral services blood donations to the Red Cross require a lot of advertising personal selling and other marketing efforts Industrial products product bought by individuals and organizations for further processing or for use in conducting a business Difference between consumer or industrial product purpose 3 groups of industrial productsservices materials and parts capital items supplies and items Raw materials farm products and natural products Manufactured materials and parts component materials and component parts Capital items industrial products that aid in the buyer s production or operation including installations and accessory equipment Supplies and services operating supplies and repair and maintenance items Organization marketing consists of activities undertaken to create maintain or change the attitudes and behavior of target consumers toward an organization Biz rms sponsor public relations or corporate image advertising campaign to market themselves and polish their images Person marketing consists of activities undertaken to create maintain or change attitudes or behavior toward particular people Tiger Woods Rachael Ray Place marketing involves activities undertaken to create maintain or change attitudes or behavior toward particular places Social marketing the use of commercial marketing concepts and tools in programs designed to in uence individual s behavior to improve their well being and that of society public health campaign to reduce smoking alcoholism obesity Marketers make product and service decisions at 3 levels Individual product decisions product line decisions and product mix decisions Product attributes Product quality the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs Totally quality management approach in which all the company s people are involved in constantly improving the quality of products services and business processes Quality level Performance quality ability of a product to perform its functions companies choose a quality level that matches target market needs and quality levels of competing products Conformance quality freedom from defects and consistency in delivering a targeted level of performance Company can assess each feature s value to customers versus its cost to the company Product style and design Style simply describes the appearance of a product Design very heart of a product ex performance Brand a name term sign symbol or design or a combination of these that identi es the products or services of one seller or group of sellers and differentiates them from those of competitors Packaging the activities of designing and producing the container or wrapper for a product Label identi es the product or brand describe things about the product promote the brand Sellers must ensure that their labels contain all the required information Product Support Service survey customers to assess value of current services and to obtain ideas for new ones Then take steps to x problems and add new services Product line a group of products that are closely related bc they function in a similar manner are sold to the same customer groups are marketed through the same types of outlets or fall win given price ranges Product line length number of items in the product line Product line lling adding more items w in the present range of the line Product line stretching company lengthens its product line beyond its current range downward Honda Fit and upward Lexus both directions Mariott Product mixproduct portfolio the set of all product lines and items that a particular seller offers for sale Product mix width number of different product lines the company carries Product mix length total number of items the company carries win its product lines Product mix depth number of version offered of each product in the line Product mix consistency how closely related the various product lines are in end use production requirement distribution channels or some other way Brand everything that the product or service means to consumers Brand equity positive differential effect that knowing the brand name has on customer response to the product or service Di ferentiation relevance knowledge esteem Brand valuation process of estimating the total nancial value of a rand Fundamental asset underlying brand equity is Customer equity value of the customer relationships that the brand creates Brand positioning Brand name Selection Brand Sponsorship Brand Development Attribute lt Bene t ltbeliefs and values Desirable qualities for brand name include 1 Should suggest something about the product s bene ts and qualities 2 Should be easy to pronounce 3 Should be distinctive 4 Should be extendable 5 Should translate easily into foreign languages 6 Should be capable of registration and legal protection Manufacture has 4 sponsorship options 1 Launch as manufacture s brand 2 Sell to resellers who give private brand Licensed brands Cobrand Store brands private brand a brand created and owned by a reseller of a product or service getting big Co branding the practice of using the established brand names of two different companies on the same product DampG Motorola But got to be careful Ex Martha Stewart Brand Development line extensions brand extensions multibrands new brands Line extension extending an existing brand name to new forms colors sizes ingredients or avors of an existing product category low cost low risk variety BUT possibility of losing speci c meaning 8 confusion Brand extension extends a current brand name to new product categories Ex Swiss Army from multitool knives to ballpoint pens to watches etc need to be careful of confusion and see if name is appropriate to particular new product Multibranding offers a way to establish different features and appeal to different buying motives Drawback each brand might obtain only a small share and none may be very pro table New brand same threats as multibranding 0N Megabrand strategies weeding out weaker brands and focusing their marketing dollars only on brands that can achieve the number one or number two market share positions in their categories Managing Brands Brand experience gt advertising Government private not for pro t organizations business organizations offer services Company must consider 4 special service characteristics when designing marketing programs intangibility inseparability variability and perishability Service intangibility a major characteristic of services they cannot be seen tasted felt heard or smelled before they are bought cosmetic surgery airline passengers 39 customers draw conclusions about quality from the place people price equipment and communications that they can see Evidence management service organization presents its customers w organized honest evidence of its capabilities Service inseparability a major characteristic of services they are produced and consumed at the same time and cannot be separated from their providers Providercustomer interaction special feature of services marketing Service variability a major characteristics of services their quality may vary greatly depending on who provides them when where and how Service perishability a major characteristic of services they cannot e stored for later sale or use Service pro t chain the chain that links service rm pro ts w employee and customer satisfaction Consists of 5 links 1 Internal service quality superior employee selection and training a quality work environment and strong support of those dealing w customers which result in 2 Satis ed and productive service employees more satis ed loyal and hardworking employees which result in 3 Greater service value more effective and ef cient customer value creation and service delivery which results in 4 Satis ed and loyal customers satis ed customers who remain loyal repeat purchase and refer other customers which result in 5 Healthy service pro ts and growth superior service rm performance Service marketing also requires internal marketing and interactive marketing besides just traditional external marketing using 4Ps Internal marketing orienting and motivating customer contact employees and the supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing Interactive marketing training service employees in the ne art of interacting with customers to satisfy their needs Service companies face 3 major marketing tasks service dijferentiation service quality and service productivity O er delivery images Service quality hard to measure retention Good service recovery can turn angry customers into loyal ones 1 step empower front line service employees MKTG 301 Notes 211 Pricing Understanding and Capturing Customer Value Ryanair most pro table cut costs Companies today face a erce and fast changing pricing environment Companies should sell value not price Price amount of money charged for a product or service or the sum of all the values that customers give up in order to gain the bene ts of having or using a product or service Price only element in marketing mix that produces revenue Easiest to Change Yet number one problem Valuebased pricing setting price based on buyer s perceptions of value rather than on the seller s cost value based pricing vs cost based pricing Price is considered along w the other marketing mix variables before the marketing program is set Good value is not same as low price Ex Hermes amp Bentley GoodValue pricing offering just the right combination of quality and good service at a fair price ex redesigning existing brands to offer more quality for a given price or the same quality for less Everyday low pricing EDLP charging a constant everyday low price w few or no temporary price discounts Highlow pricing charging higher prices on an everyday basis but running frequent promotions to lower price temporarily on selected items Pricing power power to escape price competition and to justify higher prices and margins wout losing market share Valueadded pricing attaching Valueadded features and services to differentiate a market offering and support higher prices rather than cutting prices to match competitors Costbased pricing setting prices based on the costs for producing distributing and selling the product plus a fair rate of return for its effort and risk Fixed costs costs that do not vary w production or sales level ex rent heat interest executive salaries whatever the company s output Variable costs costs that vary directly w the level or production EX computer chips wires plastic packaging other inputs called variable bc total varies w the number of units produced Total costs the sum of the xed and variable costs for any given level of production Costplus pricing adding a standard markup to the cost of the product lawyers accountants architects and other professionals typically price by adding a standard markup to their costs Standard markups to set price makes sense Generally NO yet popular Why 1 Sellers are more certain about costs than about demand 2 When all rms use pricing method prices tend to be similar and price competition is thus minimized 3 Many ppl feel that cost plus pricing is fairer to both buyers and sellers Sellers earn a fair return on their investment but do not take advantage of buyers when buyers demand becomes great Breakeven pricing target pro t pricing setting price to break even on the costs of making and marketing a product or setting price to make a target pro t Higher the price the lower the company s break even point will be But fails to consider customer value and the relationship between price and demand as price increase demand decreases does not take the price demand relationship into account Pricing strategy largely determined by decisions on market positioning Price only one part of marketing mix Target costing pricing that starts with an ideal selling price then targets costs that will ensure that the price is met Ex Yaris Who sets the price Small company top management Industry pricing departments Others sales managers production managers nance managers accountants Pure competition the market consists of many buyers and sellers trading in a uniform commodity such as wheat copper or nancial securities no control on price S marketing research product development pricing advertising sales promotion play little or no role Monopolistic competition market consists of many buyers and sellers who trade over a range of prices rather than a single market price marketing strategy useful Oligopolistic competition market consists of a few sellers who are highly sensitive to each other s pricing and marketing strategies Product can be uniform steel aluminum or non uniform cars computers Pure monopoly market consists of one seller Government monopoly private regulated monopoly private nonregulated monopoly Regulated monopoly govt permits the company to set rates that will yield a fair return Nonregulated monopoly free to price but do not always charge full price desire not to attract competition desire to penetrate market w lower price or fear of govt regulation Demand curve a curve that shows the number of units the market will buy in a given time period at different prices that might be charged normally inversely related but in case of prestige goods sometimes slope upwards Gibson Guitar Price elasticity a measure of the sensitivity of demand to changes in price Demand elastic rather than inelastic 6 sellers will consider lowering prices Competitor s strategies and prices affect pricing Economic conditions can have strong impact on the rm s pricing strategies boomrecession in ation interest rates Resellers give resellers a fair pro t encourage their support Government social concerns Pricing structure covers different items in its line New product pricing strategies for products in the introductory stage of the product life cycle Product mix pricing strategies for related products in the product mix Price adjustment strategies account for customer differences and changing situations and strategies for initiating and responding to price changes Marketskimming pricing price skimming setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price the company makes fewer but more pro table sales Ex Sony HDTV Market penetration pricing setting a low price for a new product in order to attract a large number of buyers and a large market share Ex Wal Mart DELL 5 product mix pricing situations Product line pricing setting the price steps between products in a product line based on cost differences and customer perception of the value Ex Samsonite Quicken Optionalproduct pricing the pricing of optional or accessory products along with a main product EX GM cars Captiveproduct pricing setting a price for products that must be used along w a main product Ex razor blade cartridges video games printer cartridges T wopart pricing in the case of services xed fee plus a variable usage rate Byproduct pricing setting a price for by products in order to make the main product s price more competitive Product bundle pricing combining several products and offering the bundle at a reduced price Ex meal price 7 adjustment strategies 1 Discount and allowance pricing Discount a straight reduction in price on purchases under stated conditions or during a stated period of time cash discount 2 10n30 quantity discount functional discount seasonal discount Allowances promotional money paid by manufactures to retailers in return for an agreement to feature the manufacture s products in some way tradein allowances promotional allowances paymentsprice reductions to reward dealers for participating in advertising and sales support programs 2 Segmented pricing selling a product or service at two or more prices where the difference in prices is not based on differences in costs customersegment pricing museums product form pricing Evian water and Spray location pricing state tuition time pricing Revenue management segmented pricing companies will sell the right product to the right customer at the right time for the right price Yield management called by airlines hotels restaurants ight tickets 3 Psychological pricing a pricing approach that considers the psychology of prices and not simply the economics the price is used to say something about the product EX Smirnoff Reference prices prices that buyers carry in their minds and refer to when they look at a given product 4 Promotional pricing temporarily pricing products below the list price and sometimes even below cost to increase short run sales Loss lenders attract customers to the store in the hope that they will buy other items at normal markups Special event pricing seasons Cash rebates low interest nancing longer warranties free maintenance discounts O lead to price wars 5 Geographical pricing setting price based on the buyer s geographic location FOB origin pricing free on board title and responsibility pass to the customer Uniformdelivered pricing same price to all customers Zone pricing between FOB origin pricing and uniform delivered pricing Basingpoint pricing selects a given city as a basing point and charges all customers the freight cost form that city to the customer location EX sugar F reightabsorption pricing seller absorbs all or part of the actual freight charges in order to get the desired business EX market penetration Fixed price policies setting one price for all buyers relatively modern idea Large scale retailing 6 Dynamic pricing adjusting prices continually to meet the characteristics and needs of individual customers and situations Shopping bots Yahoo Shopping Bizratecom NeXTagcom epinionscom 7 International Pricing most companies adjust their prices to re ect local market conditions and cost considerations Price escalation Excess capacity or falling demand D Cut prices in a drive to dominate the market through lower costs EX Costco Rising cost squeeze pro t margins and lead companies to pass cost overdemand ex Oil amp Gas When raising price maintain sense of fairness communicate to customers make low visibility price moves rst dropping discounts increasing min order size Price cut vs increase think about how buyers and competitors will react Good or Bad Responding to Price Changes 1 Reduce its price to match the competitor s price 2 Raise the perceived value communicate the value 3 Improve quality and increase price 4 Launch a low price fighting brand adding lower price item to the line or creating a separate lower price rand Public Policy and Pricing 7q Price cuts price increase Price xing states that sellers must set prices Wout taking to competitors Predatory pricing selling below cost With the intention of punishing a competitor or gaining higher long run pro ts by putting competitors out of business how to determine EX Wal Mart Pricing Across Channel Levels Robinson Patman Act prevent unfair price discrimination every retailer entitled to the same price terms from a given manufacturer but discrimination allowed if seller can prove that its costs are different when selling to different retailers OR if seller manufactures different qualities of the same product for different retailers Laws also prohibit retail resale price maintenance a manufacture cannot require dealers to charge a speci ed retail price to dealers EX NIKE Deceptive pricing When seller states prices or price savings that mislead consumers or are not actually available to consumers Scanner fraud Price confusion results When rms employ pricing methods that make it dif cult for consumers to understand just What price they are really paying MKTG 301 Notes 216 Marketing Channels Delivering Customer Value Dealer Pro tability Extraordinary dealer support outstanding delivery speed 48 hrs Communications Dealer Performance Personal relationships Supply chain consists of upstream and downstream partners Upstream raw materials components parts info nances expertise Downstream marketing channels wholesalers and retailers Marketers has focused on the downstream side of the supply chain Make and sell vs sense and respond demand chain Value delivery network the network made up of the company suppliers distributors and ultimately customers who partner with each other to improve the performance of the entire system in delivering customer value Marketing channel distribution channel a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user Information gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange Promotion Developing and spreading persuasive communications about an offer Contact Finding and communicating with prospective buyers Matching Shaping and tting the offer to the buyer s needs including activities such as manufacturing grading assembling and packaging Negotiation Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred Physical distribution transporting and storing goods Financing Acquiring and using funds to cover the costs of the channel work Risk taking Assuming the risks of carrying out the channel work Question who will perform these activities Channel level a layer of intermediaries that performs some work in bringing the product and its ownership closer to the nal buyer Number of intermediary levels indicates the length of a channel Direct marketing channel a marketing channel that has no intermediary levels Indirect marketing channels a channel containing one or more intermediary levels Flows physical flow flow of ownership payment flow information flow promotion flow Channel con ict disagreement among marketing channel members on goals and roles who should do what and for what rewards Horizontal con ict occurs among rms at the same level of the channel Ex dealers Vertical con ict between different levels of the same channel Ex Goodyear selling through mass merchant retailers instead of independent dealer channel more common Conventional distribution channel a channel consisting of one or more independent producers wholesalers and retailers each a separate business seeking to maximize its own pro ts even at the expense of pro ts for the system as a whole lack leadership Vertical marketing system a distribution channel structure in which producers wholesalers and retailers act as a uni ed system One channel member owns the others has contracts with them or has so much power that they all cooperate Corporate VMS a vertical marketing system that combines successive stages of production and distribution under single ownership channel leadership is established through common ownership Contractual VMS a vertical marketing system in which independent rms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone Franchise organization a contractual vertical marketing system in which a channel member called a franchiser links several stages in the production distribution process Manufacturesponsored retailer franchise system Ford and dealers Manufacturesponsored wholesaler franchise system Coca Cola and retailers Service rmsponsored retailer franchise system auto rental fast food Administered VMS a vertical marketing system that coordinates successive stages of production and distribution not through common ownership or contractual ties but through the size and power of one of the parties Ex GE PampG Horizontal marketing system a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity Ex Wal Mart amp McDonald Multichannel distribution system a distribution system in which a single rm sets up two or more marketing channels to reach one or more customer segments often called hybrid marketing channels Changes in technology I impact on nature and design of marketing channels Disintermediation the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries Marketing channel design designing effective marketing channels by analyzing consumer needs setting channel objectives identifying major channel alternatives and evaluating them Customer value delivery network each channel member and level adds value for the customer Types of intermediaries Company sales force Expand the company s direct sales force Assign outside salespeople to territories and have them contact all prospects in the area or develop separate company sales forces for different industries Or add an inside telesales operation in which telephone salespeople handle small or midsize companies Manufacturer s agents Hire manufacture s agents independent rms whose sales forces handle related products from many companies in different regions or industries to sell the new test equipment Industrial distributors Find distributors in the different regions or industries who will buy and carry the new line Give them exclusive distribution good margins product training and promotional support Intensive distribution a stocking the product in as many outlet as possible producers of convenience products and common raw materials seek this Exclusive distribution giving a limited number of dealers the exclusive right to distribute the company s products in their territories Selective distribution the use of more than one but fewer than all of the intermediaries who are willing to carry the company s products Economic criteria company compares the likely sales costs and pro tability of different channel alternatives Control issues company prefers to keep as much control as possible Adaptive criteria keep channel exible so that it can adapt to environmental changes Marketing channel management selecting managing and motivating individual channel members and evaluating their performance over time Public Policy and Distribution Decisions Exclusive distribution seller allows only certain outlets to carry its products Exclusive dealing seller requires that these dealers not handle competitors products Clayton Act of 1914 these acts are legal as long as they do not substantially lessen competition or tend to create a monopoly and as long as both parties enter into the agreement voluntarily Exclusive territorial agreements the producer may agree not to sell to other dealers in a given area or the buyer may agree to sell only in its own territory Tying agreements not necessarily illegal but they do violate the Clayton Act if they tend to lessen competition substantially ex producers of a strong brand sell it to dealers only if the dealer will take some or all of the rest of the line Producers free to select dealers but right to terminate dealers is somewhat restricted 0 cause but cannot if for ex dealers refuse to cooperate in doubtful legal arrangement Marketing logistics physical distribution planning implementing and controlling the physical ow of materials nal goods and related information from points of origin to points of consumption to meet customer requirements at a pro t Outbound distribution moving products from the factory to resellers and ultimately to customers inbound distribution moving products and materials from suppliers to the factory reverse distribution moving broken unwanted or excess products returned by consumers or resellers Supply chain management managing upstream and downstream value added ows of materials nal goods and related information among suppliers the company resellers and nal consumers No logistics system can both maximize customer service and minimize distribution costs K provide to maximize pro ts not sales targeted level of customer service at the least cost Objective P Major logistics functions warehousing inventory management transportation logistics information management Warehousing how many and what types of warehouse it needs and where they will be located Storage warehouses store goods from moderate to long periods Distribution centers a large highly automated warehouse designed to receive goods from various plants and suppliers take orders ll them ef ciently and deliver goods to customers as quickly as possible Automated warehouses advanced computer controlled materials handling systems requiring few employees Inventory just in time logistics systems RFID Tranportation Trucks most ef cient short hauls of high value merchandise Railroads one of most cost effective large amounts of bulk products Water carriers cost very low but is the slowest mode and may be affected by weather Pipelines shipping petroleum natural gas an dchemicals Air carriers costly but high speed distant markets perishables high value low bulk items reduces inventory levels packaging costs and number of warehouse needed Internet digital products Intermodal transportation combining two or modes of transportation Piggyback rail and trucks F ishyback water and trucks T rainship water and rail Airtruck air and trucks Electronic data interchange EDI the computerized exchange of data between organizations Vendor managed inventory systems continuous inventory replenishment systems customers shares real time data on sales and current inventory levels with the supplier Integrated logistics management the logistics concept that emphasizes teamwork both inside the company and among all the marketing channel organizations to maximize the performance of the entire distribution system Third party logistics 3PL provider an independent logistics provider that performs any or all of can drop for the functions required to get its client s product to market MKTG 301 Notes 125 Harley Davidson Brand lifestyle Consumer buyer behavior the buying behavior of nal consumers individuals and households who buy goods and services for personal consumption Consumer market all the individuals and households who buy or acquire goods and services for personal consumption Marketer wants to understand how the stimuli are changed into responses inside the consumer s black box which has two parts 1 Buyer s characteristics in uence how he perceives and reacts to the stimuli 2 Buyer s decision process itself affects the buyer s behavior Marketing stimuli consists of 4Ps and major forces and events in buyer s environment Cultural factors culture subculture social class Culture the set of basic values perceptions wants and behaviors learned by a member of society from family and other important institutions Marketers look for cultural shifts Subculture a group of people with shared value systems based on common life experiences and situations Ex Hispanic African American Asian American and mature consumers Hispanic market fastest growing x 20 of US population by 2020 African American fashion conscious quality and selection Ex PampG Asian American most af uent second fastest growing brand conscious Mature consumers as US population ages more time and money Social class relatively permanent and ordered divisions in a society whose members share similar values interests and behaviors Social factors consumer behavior also is in uenced by social factors such as the consumer s small groups family and social roles and status Group two or more people who interact to accomplish individual or mutual goals Membership groups vs Reference groups directindirect comparison aspiration Opinion leader person win a reference group who bc of special skills knowledge personality or other characteristics exerts in uence on others influentials or leading adopters Buzz marketing ex enlisting or even creating opinion leaders to spread the word about their brands Online social networks online social communities blogs social networking Web sites or even virtual worlds where people socialize or exchange information and opinions Online Social networks effective but hard to measure and control Family most important customer buying organization in society family gear towards opposite gender as well KIDS also affect a lot Role and Status affect what people choose to buy Age and LifeCycle Stage traditional families and nontraditional stages as well Occupation blue collar vs executives etc ex Carhartt Economic Situation redesign reposition re price according to income savings Lifestyle a person s pattern of livings as expressed in his activities interests and opinions EX Pottery Barn s mahogany bed Personality the unique psychological characteristics that lead to relatively consistent and lasting responses to one s environment Brand personality speci c mix of human traits that may be attributed to a particular brand Sincerity down to earth honest wholesome and cheerful Excitement daring spirited imaginative and up to date Competence reliable intelligent and successful Sophistication upper class and charming Ruggedness outdoorsy and tough P buying habit changed in U1I bJgt t Ex JeepApple CNN Dove Selfconceptself image people s possessions contribute to and re ect their identities We are What We have Psychological factors motivation perception learning and beliefs and attitudes Motive a need that is suf ciently pressing to direct the person to seek satisfaction of the need Sigmund Freud assumed that people are largely unconscious about the real psychological forces shaping their behavior Motivation research qualitative research designed to probe consumers hidden subconscious motivations Interpretive consumer research to dig deeply into consumer psyches and develop better marketing strategies Abraham Maslow human needs are arranged in a hierarchy from the most pressing at the bottom to the least pressing at the top Physiolocial need starving people Selfactualization needs latest happenings in the art World Social or esteem needs how they are seen or esteemed by others Safety needs breathing clean air As each important need is satis ed next most important need will come into play Perception process by Which people select organize and interpret information to form a meaningful picture of the World PPL can form different perceptions of the same stimulus bc of 3 perceptual processes 1 Selective attention tendency for people to screen out most of the information to which they are exposed 2 Selective distortion tendency of people to interpret information in a Way that will support What they already believe 3 Selective retention consumers are likely to remember good points made about a brand they favor and to forget good points made about competing brands Subliminal advertising manipulation Learning changes in an individual s behavior arising from experience Learning occurs through the inter play of Drive strong internal stimulus that calls for action Stimuli something that changes drive to motive Cues minor stimuli that determine When Where and how the person responds Response Reinforcement Belief a descriptive thought that a person holds about something Attitude a person s consistently favorable or unfavorable evaluations feelings and tendencies toward an object or idea Buyer decision process consists of 5 stages need recognition information search evaluation of alternatives purchase decision and postpurchase behavior Need recognition buyer recognizes a problem or need Internal stimuli hunger thirsts sex etc External stimuli advertisement discussion etc Information search search the Web asking around Personal sources family friends neighbors acquaintances etc Commercial sources advertising salespeople Websites dealers packaging displays Public sources mass media consumer rating organizations internet searches Experiential sources handling examining using the product Commercial sources normally inform the buyer but personal sources legitimize or evaluate products for the buyer Alternative evaluation how the consumer processes information to arrive at brand choices Purchase decision generally to buy the most preferred brand but 2 factors can come between purchase intention and purchase decision b attitudes of others and unexpected situational factors Postpurchase behavior consumer s expectations and product s perceived performance Cognitive dissonance buyer discomfort caused by postpurchase con ict consumers feel uneasy about acquiring the drawbacks of the chosen brand and losing the bene ts of the brands not purchased Meeting the expectation Z delight the customer 9 encourage customers to complain New product good service or idea that is perceived by some potential customers as new may have been around for a while Adoption process the mental process through which an individual passes from rst hearing about an innovation to nal adoption Adoption decision by an individual to become a regular user of the product Stages in the adoption process Awareness the consumer becomes aware of the new product but lacks info about it Interest The consumer seeks info about the new product Evaluation The consumer considers whether trying the new product makes sense Trial The consumer tries the new product on a small scale to improve his estimate of its value Adoption The consumer decides to make full and regular use of the new product Innovators venturesome Early adopters guided by respect Early majority deliberate Late majority skeptical Laggards tradition bound 5 characteristics important in in uencing an innovation s rate of adoption 1 Relative advantage the degree to which the innovation appears superior to existing products 2 Compatibility the degree to which the innovation ts the values and experiences of potential customers 3 Complexity the degree to which the innovation is dif cult to understand or use Divisibility the degree to which the innovation may be tried on a limited basis 5 Communicability the degree to which the results of using the innovation can be observed or described to others 5 Business Buyer Behavior the buying behavior of the organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a pro t BtoB marketers must do their best to understand biz markets and biz buyer behavior Business market differ from consumer markets market structure and demand the nature of the buying unit and the types of decisions and the decision process involved Business marketer normally deals w far fewer but far larger buyers than consumer market Derived demand business demand that ultimately comes from derives from the demand for consumer goods Ex Intel advertises to consumers Many business markets have inelastic demand total demand for many business products is not affected much by price changes especially in the short run Business markets have more fluctuating demand demand for many business goods and services tends to change more and more quickly than the demand for consumer goods Business purchases involves more decision participants and a more professional purchasing e ort Business buyers usually face more complex buying decisions Business buying process tends to be more formalized In business buying process the buyer and seller are often much more dependent on each other Many companies now practice supplier development systematically ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell to others lKEA s growth depends on nding enough of right kinds of suppliers Straight rebuy a business buying situation in which the buyer routinely reorders something without any modi cations Modi ed rebuy a business buying situation in which the buyer wants to modify product speci cations prices terms or suppliers New task a business buying situation in which the buyer purchase a product or service for the rst time System selling solutions selling selling a complete solution to a problem helping buyers to avoid all the separate decisions involved in a complex buying situation UPS Buying center all the individuals and units that participate in the business buying decision process Both economic and personal factors play in buying decisions Groups of in uences on business buyers environmental organizational interpersonal individual Environmental Factors Economic environment ex level of primary demand cost of money Shortages Culture and customs Organizational Factors each organization has its own objectives policies procedures structure and systems Interpersonal Factors buying center usually includes many participants who in uence each other but dif cult to assess such interpersonal factors and group dynamics Individual Factors each participant in the business buying decision process brings in personal motives perceptions and preferences 8 steps in business buying 1 Problem Recognition can result from internal or external stimuli 2 General Need Description describes the characteristics and quantity of the needed item 3 Product Speci cation Value analysis an approach to cost reduction in which components are studied carefully to determine if they can be redesigned standardized or made by less costly methods of production 4 Supplier Search nd the best vendors 5 Proposal Solicitation buyer invites quali ed suppliers to submit proposals 6 Supplier Selection buying center often will draw up a list of the desired supplier attributes and their relative importance 7 0rder Routine Speci cation includes the nal order w the chosen suppliers and lists items such as technical speci cations quantity needed expected time of delivery return policies and warranties 8 Performance Review may lead the buyer to continue modify or drop the arrangement eprocurement online buying reverse auctions put purchasing requests online and invite suppliers to bid for the business Trading exchanges companies work collectively to facilitate the trading process Company buying sites posts its buying needs invites bids negotiate terms etc Extranet links So far most of the products bought are MRO materials maintenance repair and operations E procurement less costly less time between order and delivery enables purchasing people to focus on more strategic issues Problems erode decades old customer supplier relationship security diasters MKTG 301 Notes 33 Marketing Ethics and Social Responsibility EX Timberland Market concept philosophy of customer value and mutual gain Consumer advocates government agencies and other critics have accused High prices deceptive practices high pressured selling shoddy or unsafe products planned obsolescence and poor service to disadvantage consumers High costs of distribution channel intermediaries mark up price beyond the value of their services high advertising and promotion costs much of the packaging and promotion adds only psychological value rather than functional value excessive markups there is reasons for high markups Deceptive pricing includes practice such as falsely advertising factory or wholesale prices or a large price reduction from a phony high retail list price Deceptive promotion includes practices such as misrepresenting the product s features or performance or luring the customers to the store for a bargain that is out of stock Deceptive packaging includes exaggerating package contents through subtle design using misleading labeling or describing size in misleading terms Deception vs puffery Often said that insurance real estate and used cars are sold not bought Most manufactures want to produce quality goods Too many new products Markets respond that consumers like style changes or they want the latest hi gh tech innovations Marketing seen as creating false wants that bene t industry more than they bene t consumers Good balance of private goods and public goods Cultural pollution our senses are being constantly assaulted by marketing and advertising Consumerism and environmentalism Consumerism an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers Traditional seller s rights include 0 The right to introduce any product in any size and style provided it is not hazardous to personal health or safety or if it is to include proper warnings and controls 0 The right to charge any price for the product provided no discrimination exists among similar kinds of buyers 0 The right to spend any amount to promote the product provided it is not de ned as unfair competition 0 The righ t to use any product message provided it is not misleading or dishonest in content or execution 0 The right to use any buying incentive programs provided they are not unfair or misleading Traditional buyer s rights include 0 The right not to buy a product that is offered for sale 0 The right to expect the product to be safe 0 The right to expect the product to perform as claimed Many believe that power is on the seller s side Consumer advocates call for the following additional consumer rights 0 The right to be Well informed about important aspect of the product 0 The right to be protected against questionable products and marketing practices 0 The right to in uence products and marketing practices in Ways that will improve the quality of life Consumers have not only the right but also the responsibility to protect themselves instead of leaving this function to someone else Environmentalism an organized movement of concerned citizens and government agencies to protect and improve people s living environment Environment sustainability a management approach that involves developing strategies that both sustain the environment and produce pro ts for the company Pollution prevention more than pollution control eliminating or minimizing Waste before it is created Product stewardship minimizing not just pollution from production and product design but all environmental impacts throughout the full product life cycle and all the While reducing costs Design for environment DFE and cradletocradle practices involves thinking ahead to design products that are easier to recover reuse or recycle and developing programs to reclaim products at the end of their lives First internally companies can plan for new clean technology and Sustainable vision serves as a guide to the future Companies should Work at developing all 4 dimensions of environmental sustainability Business Actions Toward Socially Responsible Marketing Enlightened marketing a marketing philosophy holding that a company s marketing should support the best long run performance of the marketing system 5 principles Consumer oriented marketing customer value marketing innovative marketing sense of mission marketing and societal marketing Consumer oriented marketing the philosophy of enlightened marketing that holds that the company should review and organize its marketing activities from the consumer s point of view Customervalue marketing a principle of enlightened marketing that holds that a company should put most of its resources into customer value building marketing investments Innovative marketing a principle of enlightened marketing that requires that a company seek real product and marketing improvements EX Samsung Senseofmission marketing a principle of enlightened marketing that holds that a company should de ne its mission in broad social terms rather than narrow product terms Societal marketing a principle of enlightened marketing that holds that a company should make marketing decisions by considering consumer s Wants the company s requirements consumers long run interests and society s long run interests De cient products products that have neither immediate appeal nor long run bene ts Pleasing products products that give high immediate satisfaction but may hurt consumer in the long run Salutary products products that have low appeal but may bene t consumers in the long run Desirable products products that give both high immediate satisfaction and high long run bene ts Corporate marketing ethics policies broad guidelines that everyone in the organization must follow cover distributor relations advertising standards customer service pricing product development and general ethical standards MKTG 301 Notes 225 Communicating Customer Value Advertising and Public Relations Promotion mix marketing communications mix the speci c blend of advertising public relations personal selling sales promotion and direct marketing tools that the company uses to persuasively communicate customer value and build customer relationships Advertising any paid form of nonpersonal presentation and promotion of ideas goods or services by an identi ed sponsor Sales promotion short term incentives to encourage the purchase or sale of a product or service Personal selling personal presentation by the rm s sales force for the purpose of making sales and building customer relationships Public relations building good relations with the company s various publics by obtaining favorable publicity building up good corporate image and handling or heading off unfavorable rumors stories and events Direct marketing direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships Less broadcasting and more narrowcasting Integrated marketing communications IMC carefully integrating and coordinating the company s many communications channels to deliver a clear consistent and compelling message about the organization and its products Brand contact will deliver a message Company must blend the promotion tools carefully into a coordinated promotion mix Advertisement reach a lot of people but is impersonal one way communication can be costly Personal selling allows all kinds of customer relationships but costly Sales Promotion Buy it now short lived Public Relations news rather than a sales directed communication Direct Marketing nonpublic immediate and customized interactive Push strategy a promotion strategy that calls for using the sales force and trade promotion to push the product through channels The producer promotes the product to channel members to induce them to carry the product and to promote it to nal consumers Pull strategy a promotion strategy that calls for spending a lot on advertising and consumer promotion to induce nal consumers to buy the product If the pull strategy is effective consumers will then demand the product from channel members who will in turn demand it from producers Type of productmarket and product lifecycle factors to consider when designing promotion mix strategies B2C pull more B2B push more 4 important decisions when developing an advertising program setting advertising objectives setting the advertising budget developing advertising strategy message decisions and media decisions and evaluating advertising campaigns Advertising objective speci c communication task to be accomplished with a speci c target audience during a speci c period of time aim is to inform persuade or remind Informative advertising used heavily when introducing a new product category Persuasive advertising becomes more important as competition increase Comparative advertising company directly or indirectly compares its brand w one or more other brands Reminder advertising important for mature products Advertising budget the dollars and other resources allocated to a product or company advertising program 4 common methods used to set total budget for advertising Affordable method setting the promotion budget at the level management thinks the company can afford Percentageofsales method setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price Competitiveparity method setting the promotion budget to match competitor s outlays Objectiveandtask method developing the promotion budget by 1 De ning speci c objectives 2 Determining the tasks that must be performed to achieve these objectives and 3 Estimating the costs of performing these tasks The sum of these costs is the proposed promotion budget Advertising strategy the strategy by which the company accomplishes its advertising objectives It consists of two major elements creating advertising messages and selecting advertising media Madison amp Vine a term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages Message strategy to decide what general message will be communicated to consumers Developing an effective message strategy beings with identifying customer bene ts that can be used as advertising appeals Creative concept the compelling big idea that will bring the advertising message strategy to life in a distinctive and memorable way Advertising appeals meaningful believable distinctive Execution styles the approach style tone words and format used for executing an advertising message Ex Silk Soymilk Slice of life shows one or more typical people using the product in a normal setting Lifestyle shows how a product ts in w a particular life style Ex Kayakers Fantasy creates fantasy around the product or its use Ex Adidas Mood or image builds a mood or image around the product or service such as beauty love or serenity Ex Singapore Airlines Musical shows people or cartoon characters singing about the product Personality symbol creates a character that represents the product Ex GEICO Technical expertise shows the company s expertise in making the product Scientific evidence presents survey or scienti c evidence that the brand is better or better liked than one or more brands Ex Crest toothpaste Testimonial evidence or endorsement features a highly believable or likable source indorsing the product Ex Gatorade Tone words format illustration headline copy main block of text in the ad these 3 elements must work together Advertainment make ads themselves so entertaining or so useful that people want to watch them Branded entertainment brand integrations involves making the brand an inseparable part of some other form of entertainment Ex Ray Ban in movie Advertising media the vehicles through which advertising messages are delivered to their intended audiences 1 Deciding on reach frequency and impact 2 Choosing among major media types 3 Selecting speci c media vehicles and 4 Deciding on media timing 1 Deciding on reach frequency and impact Reach measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time Frequency measure of how many times the average person in the target market is exposed to the message Media impact qualitative value of a message exposure through a given medium Advertiser wants to choose media that will engage consumers rather than simply reach them Media engagement hard to come by for most media 2 Choosing among major media types Media planner must know the reach frequency and impact of each of the major types 3 Selecting Speci c Media Vehicles Media vehicles speci c media win each general media type EX Newsweek Vogue Audience quality Audience engagement Editorial quality 4 Deciding on Media Timing Continuity scheduling ads evenly win a given period Pulsing scheduling ads unevenly over a given time period Return on advertising investment the net return on advertising investment divided by the costs of the advertising investment Communication e ects whether the ads and media are communicating the ad message well Sales and pro t e ects often much harder to measure Advertising agency a marketing services rm that assists companies in planning preparing implementing and evaluating all or portions of their advertising programs International Think globally but act locally Develop global strategies but adapt advertising programs Public Relations Press relations or press agency creating and placing newsworthy information in the news media to attract attention to a person product or service Product publicity publicizing speci c products Public a airs building and maintaining relations with legislators and government of cials to in uence legislation and regulation Investor relations maintaining relationships with shareholders and others in the nancial community Development Public relations with donors or members of nonpro t organization to gain nancial or volunteer support Tools News speeches special events written materials audiovisual materials corporate identity materials public service activities buzz marketing campaigns take advantage of social networking websites MKTG 301 Notes 218 Communicating Customer Value Personal Selling and Sales Promotion CDW lasting one to one customer relationships Account managers Personal selling vs Sales promotion Personal selling personal presentation by the rm s sales force for the purpose of making sales and building customer relationships Salesperson an individual representing the company to consumers by performing one or more of the following activities prospecting communicating selling servicing information gathering and relationship building Order taker Order getters creative selling amp relationship building In many cases salespeople serve both masters the seller and the buyer They represent the company to customers They represent customer to the company Company can increase communications between sales and marketing create joint assignments Joint objectives and reward systems Marketingsales liaisons people from marketing who live with the sales force Chief revenue oj cer chief customer o icer high level marketing executive who oversees both marketing and sales Sales force management the analysis planning implementation and control of sales force activities It includes designing sales force strategy and structure and recruiting selecting training supervising compensating and evaluating the rm s sales people Territorial sales force structure if company sells only on product line to one industry with customers in many locations Product sales force structure a customer sales force structure if company sells many products to many types of customers Territorial sales force structure a sales force organizations that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company s full line Sales merchandisers sales representatives retail supervisors directors of retail sales operations regional sales managers general sales managers VP and general sales manager Product sales force structure a sales force organization under which salespeople specialize in selling only a portion of the company s products or lines Extra cost can occur Ex several salespeople end up calling same client etc compared W the bene ts of better product knowledge and attention to individual products Customer sales force structure a sales force organization under which salespeople specialize in selling only to certain customers or industries Ex Lear auto parts Sell wide variety of products to many types of customer over a broad geographic area several type of sales force structure Sales force size Workload approach company rst groups accounts into different classes according to size account status or other factors related to the amount of effort required to maintain them It then determines the number of salespeople needed to call on each class of accounts the desired number of times Outside sales force eld sales force outside salespeople who travel to call on customers in the eld Inside sales force inside salespeople who conduct business from their of ces via telephone the internet or visits from prospective buyers s cost must be Combine Technical sales support people provide technical information and answers to customer s questions Sales assistants provide administrative backup for outside salespeople Telemarketers and Web sellers use phone and Internet to nd new leads and qualify prospects or to sell and service accounts directly Team selling using teams of people from sales marketing engineering nance technical support and even upper management to service large complex accounts Salesperson may have trouble learning to work w and trust others on team confuse customers evaluating individual contributions may be dif cult Four key talents of salespeople intrinsic motivation disciplined work style the ability to close a sale ability to build relationships with customers Company needs to select good candidate ef ciently train ex internet Companies are now designing compensation plans that reward salespeople for building customer relationships and growing the long run value of each customer Supervision goal is to help salespeople work smart by doing the right things in the right ways Motivation goal is to encourage salespeople to work hard and energetically toward sales force goals Call plan shows which customers and prospects to call on and which activities to carry out T imeandduty analysis in addition to time spent selling the salesperson spends time travelling waiting taking breaks and doing administrative chores Sales force automation systems computerized digitized sales force operations that let salespeople work more effectively anytime anywhere Salespeople often need special encouragement to do their best Organizational climate feeling that salespeople have about their opportunities value and rewards for a good performance Internet powerful tool but there are problems and things you can t do online Sales quotas a standard that states the amount a salesperson should sell and how sales should be divided among the company s products positive incentives sales meetings sales contests Evaluation Sales reports call reports expense reports Company wants to measure its return on sales investment Selling process the steps that the salesperson follows when selling which include prospecting and qualifying preapproach approach presentation and demonstration handling objections closing and follow up Prospecting the step in the selling process in which the salesperson or company identi es quali ed potential customers Qualify leads how to identify the good ones and screen out the poor ones Preapproach the step in selling process in which the salesperson learns as much as possible about a prospective customer before making a sales call Salesperson should set Call objectives best approach timing overall sales strategy Approach the step in the selling process in which the salesperson meets the customer for the rst time Presentation the step in the selling process in which the salesperson tells the value story to the buyer showing how the company s offer solves the customer s problems C ustomersolution approach ts better w today s relationship marketing focus than does a hard sell or glad handling approach Develop solutions to present before they can present customer solutions Qualities that buyers dislike most in salespeople pushy late deceitful unprepared or disorganized Value most good listening empathy honesty dependability thoroughness follow through Handling objections the step in the selling process in which the salesperson seeks out clari es and overcomes customer objections to buying Closing the step in the selling process in which the salesperson asks the customer for an order Followup last step in the selling process in which the salesperson follows up after the sale to ensure customer satisfaction and repeat business Transaction oriented aim is to help salespeople close a speci c sale with a customer Selling process must be understood in the context of building and maintaining pro table customer relationships Sales Promotion Sales promotion short term incentives to encourage the purchase or sale of a product or service Whereas advertising offers reasons to buy a product or service Sales promotion offers reasons to buy now Targeted toward nal buyers consumer promotion retailers and wholesalers trade promotions business customers business promotions members of the sales force sales force promotions More demand and competition 0 promotion clutter Consumer promotions sales promotion tools used to boost short term customer buying and involvement or to enhance long term customer relationships Samples offers of a trial amount of product most effective but most expensive Coupons certi cate that give buyer a saving when they purchase speci ed product Cash refunds rebates like coupons except that the price reduction occurs after the purchase rather than at the retail outlet Price packs cento deals offer consumers savings off the regular price of a product Ex two for one Premiums goods offered either free or at low cost as an incentive to buy a product Advertising specialties promotional products useful articles imprinted with an advertiser s name logo or message that are given as gifts to consumers PointofPurchase POP promotions displays and demonstrations that take place at the point of sale Contests sweepstakes and games give consumers the chance to win something such as cash trips or goods by luck or through extra effort Event marketing creating a rand marketing event or serving as a sole or participating sponsor of events created by others Manufactures direct more sales promotion dollars toward retailers and wholesalers than to nal consumers Trade promotions sales promotion tools used to persuade resellers to carry a brand give it shelf space promote it in advertising and push it to consumers Discounts off the list price Allowance in return for the retailer s agreement to feature the manufacturer s products in some way Free goods extra cases of merchandise Push money cash or gifts to dealers or their sales force to push the manufacturer s goods Specialty advertising items ex pens with company name Business promotions sales promotion tools used to generate business leads stimulate purchases reward customers and motivate salespeople Conventions and trade shows Sales contest contest for salespeople or dealers to motivate them to increase their sales performance over a given period Marketers must decide Size of the incentive set conditions for participation how to promote and distribute the promotion program itself Length of the promotion Evaluation MKTG 301 Notes 222 New Product Development and Product Life Cycle Strategies Apple Product lifecycle presents two major challenges 1 bc all products eventually decline a rm must be good at developing new products to replace aging ones newproduct development 2 Firm must be good at adapting its marketing strategies in the face of changing tastes technologies and competitions as products pass through life cycle stages product lifecycle strategies Firm can obtain new products in 2 ways Acquisition buying a whole company patent license to produce someone else s product Newproduct development the development of original products product improvements product modi cations and new brands through the rm s own product development efforts New Product Development Process Idea Generation the systematic research for new product ideas Ex IBM Using internal sources company can nd new ideas through formal research and development Distributors and suppliers competitors customers etc Idea screening screening new product ideas in order to spot good ideas and drop poor ones as soon as possible Ex Kao Product concept a detailed version of the new product idea stated in meaningful consumer terms Product idea idea for a possible product that the company can see itself offering to the market Product concept detailed version of the idea stated in meaningful consumer terms Product image way consumers perceive an actual or potential product Concept testing testing new product concepts with a group of target consumers to nd out if the concepts have strong consumer appeal Marketing strategy development designing an initial marketing strategy for a new product based on the product concept 1 part describes the target market the planned value proposition and the sales market share and pro t goals for the rst few years 2nd part outlines the product s planned price distribution and marketing budget for the rst year 3rd part describe the planned long run sales pro t goals and marketing mix strategy Business analysis a review of the sales costs and pro t projections for a new product to nd out whether these factors satisfy the company s objectives Product development developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable marketing offering Test marketing the stage of new product development in which the product and marketing program are tested in realistic market settings Commercialization introducing a new product into the market Timing where market rollout Customercentered newproduct development New product development that focuses on nding new ways to solve customer problems and create more customer satisfying experiences Sequential product development approach one company department works individually to complete its stage of the process before passing the new product along to the next department and stage Can bring control but can be dangerously slow Team based newproduct development An approach to developing new products in which various company departments work closely together overlapping the steps in the product development process to save time and increase effectiveness Innovation management system to collect review evaluate and manage new product ideas Product life cycle the course of a product s sales and pro ts over its lifetime 1 Product development begins when the company nds and develops a new product idea 2 Introduction period of slow sales growth as the product is introduced in the market 3 Growth period of rapid market acceptance and increasing pro ts 4 Maturity period of slowdown in sales growth because the product has achieved acceptance by most potential buyers 5 Decline period when sales fall off and pro ts drop Product class gasoline powered automobiles product form SUVs brand Ford Escape Style a basic and distinctive mode of expression Fashion currently accepted or popular style in a given eld Fads temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity Introduction stage the product life cycle stage in which the new product is rst distributed and made available for purchase Market pioneer must choose a launch strategy that is consistent w the intended product positioning Growth stage the product life cycle stage in which a product s sales start climbing quickly Maturity stage the product life cycle stage in which sales growth slows or levels off Modifying the market company tries to increase the consumption of the current product Modifying the product changing characteristics such as quality features style or packaging to attract new users and to inspire more usage Modifying the marketing mix improving sales by changing one or more of the marketing mix elements Decline stage the product life cycle stage in which a product s sales decline Maintain its brand Reposition or reinvigorate the brand Harvest reducing various costs and hoping that sales hold up Or Drop the product from the line Product Decisions and Social Resposibility Conform with the Law International product and Service marketing
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