BA 101 Tom Durant Week 2
BA 101 Tom Durant Week 2 BA 101
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This 9 page Class Notes was uploaded by Kristen on Tuesday October 18, 2016. The Class Notes belongs to BA 101 at University of Oregon taught by Tom Durant in Fall 2016. Since its upload, it has received 5 views.
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Date Created: 10/18/16
What is marketing? American Marketing Association definition ● Marketing is an organization function and a set of processes for: ○ Creating, communicating, and delivering value to customers ○ Managing customer relationships in ways that benefit the organization and its stakeholders ■ Anyone who has interest in your company is a stakeholder ● Customer perceived value ○ A customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those competing offers. ○ Providing enough benefit to your customers based on what your going to charge ● Marketing asks… ○ Who are your (potential) customers ■ How big is the market ■ How fast is it growing ■ Can you usefully group you customers (divide the market into segments ○ What do they want from you ■ Product characteristics ■ How much will they pay ■ Where do they go to buy my product ■ How do they learn about my product ● 4Ps ○ Product ■ Doesn’t need to take physical form could be a service ○ Price ○ Place ○ Promotion ● Marketing mix ○ A unique blend of product, distribution (place), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market ■ Marketing is about meeting customer needs and providing value Marketing research ● Marketing ○ Market research ○ Market segmentation and target markets ○ Consumer behavior ● In foundation, you should be able to ○ Determine size of market ○ Define and “ideal” product for both segments ○ Calculate a Customer Survey Score- CSS ● The role of marketing research ○ The process of planning, collecting, and analyzing data relevant to a marketing decision. ○ Note: Your Industry Conditions Report in Foundation shows the information collected by the marketing function (e.g. industry growth, purchase criteria, price, and expected product features for each segment, etc.) ● Secondary Data ○ Data previously collected for any purpose other than the one at hand ● Primary Data ○ Information collect for the first time. Can be used to solving the particular problem under investigation What if my buying criteria were ranked as follows (level of importance)? ● Reliability measured by maintenance costs (low maintenance costs are important, 1st) ● Green car measured by gas mileage (high gas mileage is important, 3rd) ● Style measured by looks (better looking car is important, 2nd) Maintenance+Gas Mileage+Looks 55%+20%+25%=100% Customer Value Assessment ● How would you evaluate the perceived value of the Ferrari using your rakning buying criteria? Maintenance Gas Mileage Looks Ferrari 20 pts. 5 pts. 100 pts. Criteria x 55 % x 2 0% x 25 % Wgt. Value 11 pts. + 1 pt. + 2 5 pts. Total weighted value of 37 points Results: Nano 58 points Ferrari 37 points Camry 67.5 points Primary research ● Observational research ● First time Secondary Research ● Already recorded data ● Found somewhere on the internet Basis for Segmentation ● Dividing a big market into smaller subsets ○ Geography ○ Demographics ○ Psychographics ○ Benefits Sought ○ Usage Rate ● Strategies for Selecting Target Markets ○ Target Markets ■ A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group resulting in mutually satisfying exchanges. ○ Consumer Behavior ■ Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use. ○ Demographic segmentation ■ Age ● Tweens ○ Pre and early adolescents ages 8-14 ○ Population of 29 million ● Purchasing power of $39 billion ○ View tv ads as “just advertising” ○ Emerging as the “most influential generation of history” ● Generation Y (aka Millennials) ○ Born between 1979 and 1998 ○ Population of 75 million ○ Purchasing power of $220 billion annual ○ Researchers have found generation Y”ers to be ■ Impatient ■ family-oriented ■ Inquisitive ■ Opinionated ■ Diverse ■ Time managers ■ “Street Smart” ○ Word of mouth marketing is effective ● Generation X ○ Born between 1965 and 1978 ○ Populations of 40 million ○ Savvy and cynical consumers ○ Time is at a premium and outsourcing is utilized ○ Entering their money-making years ● Baby Boomers (aka the old farts) ○ Born between 1946 and 1964 ○ Population of 77 million ○ $1 trillion in spending power for ages 50 to 60 ○ Income will continue to grow as they continue to work ■ Gender ■ Income ■ Family life cycle ● Benefit segmentation (the sensor market in foundation ○ Benefit segmentation ■ The process of grouping customers into market segments according to the benefits they seek from the product ● Low Tech and High Tech ● Intermarket segmentation ○ Teens show surprising similarity no matter where in the world they live ○ Many companies target teenageres with worldwide marketing campaigns Who are your customers? ● Segmenting Markets ○ What are the market segments in foundation? ○ In terms of units sold, what is the largest (smallest) market segment in Foundation? ○ How fast in demand growing in the low tech segment? High tech segment? ● Demand Analysis ○ Each year (round) ma have a different demand projected for the next ○ For your discussion we will use ■ Low tech: 10% increase ■ High tech: 20% ● Mean Time Before Failure ○ The higher the MTBF the more attractive it is Cost vs. Price ● Cost of good ○ The expenses of obtaining materials and making the products sold. ● Price ○ Price is that which is given up in exchange to acquire goods or services ● Encore leader: Brian ● 12-1 or 1-2 ● Classencore.uoregon.edu ○ Thursday from 1-1:50 Due next class ● Quiz #1 ● Rehearsal tutorial and quiz Review ● Marketing ○ The activities designed to provide goods and services that provide value and satisfy customers. ■ A set of process or activities that provide value and satisfied customers ● Consumer behavior ○ Processes a consumer uses to make purchases decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use. ● Attractiveness score ○ Attractiveness (CSS) scores represent market research that has been provided for your use. It summarizes how you and your product are perceived by your customers ■ You will ALWAYS be provided the attractiveness score info. We will never “create” an attractiveness score. ○ CSS components ■ Product position (performance and size) ■ MTBD (mean time between failure) ● Expressed in hours ● How long is this product going to last ■ Price ■ Age (years since initial introduction) ■ Awareness (how aware your customers are about your product) ■ Accessibility (how easily your customers are able to find/purchase your product) ■ Accounts Receivable Policy (your customer’s ability to purchase your product on credit) ● Reflects the kind of credit you would offer to your customers ● Pay in a form other than cash ● 30 days in order to make the purchase ● Pay in installments ● The more lenient the credit policy - the more customers you will draw in ● Low tech and High tech have a different expectation and importance of the criterias. ● We can look at these criterias in various ways ● Low Tech ○ MTBF: 14000-20000 (21%) ■ 20000= 100 points ■ 14000= 1 point ○ Price: $15.00-$35.00 (41%) ■ $15.00= 100 points ■ $35.00= 1 point ○ Age (29%) ■ From a graph: ■ Age is the x-axis ■ Score is the y-axis ○ Position (9%) ■ Ideal is the center of segment ■ As we move towards the edges of the circle score lowers ● Industry condition report ○ Report in foundation ● High tech ○ MTBF: 17000-23000 (13%) ■ 23000= 100 points ■ 17000= 1 point ○ Price: $25.00-$45.00 (25%) ■ $25.00= 100 points ■ $45.00= 1 point ○ Age (29%) ■ From a graph: ■ Age is the x-axis ■ Score is the y-axis ■ Always wants newest product ○ Position (33%) ■ Lower right hand quadrant for ideal project ● MTBF ○ Higher the MTBF, the more attractive the product ● Price ○ The lower the price, the more attractive ● Age ○ The closer to the ideal, the more attractive ● Position ○ Slow left hand side ○ Fast right hand side ○ Low tech segment ■ Smack dab in the middle of the circle ○ High tech segment ■ Lower right of middle circle ● Profit Maximization ○ Setting prices so that total revenue is as large as possible relative to total costs ● Who are my customers ○ Segmenting markets: target markets ■ Whar are the market segments in foundation ■ In terms of units sold, what is the largest (smallest) market segment in foundation ■ How fast is demand growing in the low tech segment? High tech segment? ● Marketing ○ Who are your customers ○ How big is the market ○ How fast is it growing ○ Can you usefully group your customers? ○ What do they want from you? The 4 Ps + Service ■ Product: What are the product characteristics? ■ Price: How much will they pay? ■ Place: Where do they buy my product? ■ Promotion: How do they learn about my product? ■ Service: What level of service will I experience? ○ The impact of service ■ The service element can be particularly influential for “commodity” products – those products that are similar to each other without meaningful differentiation. ● Product Questions ○ What do they wants? ■ What are the characteristics of the product that are important to customers ● Size ● Position ● Age ● MTBF (reliability) ■ What is the most important product characteristic in the low tech? and high tech? ● Low tech ○ Price, age, reliability, position ● High tech ○ Position, age, price, reliability ■ What is the “perceived age” of a product ● July 1, 2010 age 0 ● December 31, 2010 age .5 ● December 32, 2011 age 1.5 ○ Reposition ○ June 30, 2010 almost 2 years ○ July 1, 2010 age is cut in half 1 year ■ A change in size and/or performance to an existing product creates a “revision date” that appears on the spreadsheet. When that date occurs, the age of the product is divided by two (“cut in half”) to reflect the “new and improved” status of the changed product. ■ How is reliability measures ■ What will increase material costs? ● Timing ○ Able is revised in Round 2 in the year 2011 ○ The revision date takes 15 months and the product is not available until 2012 ○ You will not be able to change Able again until after that date has passed ■ The R&D cells are locked ● Low Tech ○ Price 41% $15- $35 ○ Age 29% 3 years ○ Reliability 21% 14,000 - 20,000 ○ Position 9% .5 faster, .5 smaller ● Revenue = price per unit * number of units ○ Higher price = more revenue per unit ○ Higher price = fewer units ○ Lower price = less revenue per unit ○ Lower price = more units ● Price leadership strategy ○ Being lowest price product in comparison to competition ■ What is the price range low tech customers are willing to pay ● $15-$35 ■ What is the price range high tech customers are willing to pay? ● $25-$45 ○ Create a company that will allow you to compete on price (lower your prices) and still meet your performance targets ■ Lower your material costs ■ Lower your labor costs ○ Pricing strategy ■ Impacts: volume ■ Impacts: marginal revenue ● What is the difference between your price and unit cost? ○ Contribution margin per unit ○ Promotion and sales ■ Impacts: increased period costs and sales ● In Foundation … ○ You will invest money in a “promotion” budget and create awareness. ○ It relates to your advertising efforts. ○ The awareness you create is specific to a single product. ○ Commercials are one example of this. ■ You will invest money in a “sales” budget and create “access” to your products. ■ You must invest in “sales” for each individual product as it serves one or both market segments. ■ ● Promotion and awareness ○ promotion= your message ○ awareness= percent of market that received the message.
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