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This 30 page Class Notes was uploaded by Ms. Heath Torphy on Monday October 5, 2015. The Class Notes belongs to MKT304 at Central Michigan University taught by PatrickOkonkwo in Fall. Since its upload, it has received 50 views. For similar materials see /class/218890/mkt304-central-michigan-university in Marketing at Central Michigan University.
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Date Created: 10/05/15
Differences between classes of consumer products 0 Product Quality 7 Overall ability of the product to provide the bene ts customers want gt Level of Consistency gt Consistency of Quality Consumer Product Class Marketing Mix Considerations Consumer Behavior Convenience Products Staples Impulse Emergency Maximum exposure with widespread low cost distribution mass selling by producer usually low price branding is important Widespread distribution with display at point of purchase Need widespread distribution near probable point of need price sensitivity low Routinized habitual low effort frequent purchases low involvement Unplanned purchases bought quickly Purchase made with time pressure when need is great Shopping Products Homogeneous Heterogeneous Need enough exposure to facilitate price Comparison price sensitivity high Need distribution near similar products promotion including personal selling to highlight product advantages less price sensitivity Customers see little difference among alternatives seek lowest Extensive problem solving consumer may need help in making a decision salesperson Website etc Specialty Products Price sensitivity is likely to be low limited distribution may be acceptable but should be treated as a convenience or shopping product in whichever category product would typically be included to reach persons not yet sold on its specialty product status Willing to expend effort to get specific product even if not necessary strong preferences make it an important purchase Internet becoming important information source Unsought Products New Unsought Regularly Unsought Must be available in places where similar or related products are sought needs attentiongetting promotion Requires very aggressive promotion usually personal selling Need for product not strongly felt unaware of benefits or not yet gone through adoption process Aware of product but not interested attitude toward product may even be negative o Staples 7 breakfast cereal canned soup packaged foods 0 Emergency 7 Traffic accident ambulance service thunderstorm raincoat or party ice cubes Homogeneous 7 Spray paints dish soaps orange juice Heterogeneous 7 Furniture clothing and spa memberships New Unsought 7 Dannon s yogurt Litton s microwaves AOL s Netscape browser Regularly Unsought 7 Gravestones life insurance and encyclopedias The overall ability of the product to provide the bene ts customers want The level of quality and the consistency of quality 0 0000000 Degree of Pleasure Durable Reliable Precision Versatile Satis es Needs Ease of Use Product Safety Business Product Classes Characteristics of Business products Marketing Mix Considerations Buying Behavior Installations Usually requires skillful personal selling by producer including technical contacts or understanding of applications leasing and specialized support services may be required Multiple buying in uence including top management and newtask buying are common infrequent purchase long decision period and boomorbust demand are typical Accessory Equipment Need fairly widespread distribution and numerous contacts by experienced and quot 39 quot trained r price competition is often intense but quality is important I Purchasing and operating personnel typically make decisions shorter decision period than for installations Intemet sourcing Raw Materials Grading is important and transportation and storing can be crucial because of seasonal production and or perishable products markets tend to be very competitive Longterm contract may be required to ensure supply online auctions Component Parts and Materials Product quality and delivery reliability are usually extremely important negotiation and technical selling typical on less standardized items replacement after market may require different strategies Multiple buying in uence is common online competitive bids used to encourage competitive pricing Maintenance repair and operating MRO supplies Typically require widespread distribution or fast delivery repair items arrangements with appropriate intermediaries may be crucial Often handled as straight rebuys except important operating supplies may be treated much more seriously and involve multiple buying in uence Professional Services Services customized to buyer s need personal selling very important inelastic demand often supports high prices Customer may compare outside service with what internal people could provide needs may be very specialized made machines drills Steelcase s filing cabinets the next production process with little handling 0 Farm Products 7 Grown by farmers oranges sugar cane cattle 0 Natural Products 7 Occur in nature timber iron ore oil and coal 7 Intel s Installations 7 Buildings land rights major equipment office buildings custom Accessories 7 Tool and equipment Canon s copy machines Rockwell s portable Raw Materials 7 Unprocessed items logs iron ore and wheat that are moved to included in PC s and TRW s air bags in cars Parts that are finished items or nearly finished items that are ready for assembly into the final product o Supplies 7 Expense items that don t become part of the nished product 0 Maintenance 7 Maintenance and small operating supplies are like convenience products Items are needed but buyers wont spend much time on it 0 Repair 0 Operating Supplies 7 Coal and Fuel 0 Professional Services 7 Specialized services that support a fum s operations Usually expense items IT services Advertising Agencies Food Services Consumer Behavior buying in uences Marketing Mixes All Other Stimuli I Economic Needs I I Psychological Variables I I Social In uences I I Purchase Situation I l l l l Consumer Decision Process Purchase Post Need 7 Decision Purchase Awareness Problem Solving Behav1or A Information Search Identify Alternative Set Criteria Evaluate Alternative 0 Consumer Decision Process 0 Need Recognition 7 Needs can be triggered by I Internal Stimuli 0 Normal Needs become strong enough to drive behavior I External Stimuli 0 Advertisement 0 Friends of Friends 0 Information Search I Consumers exhibit heightened attention or activity search for information I Sources of information Personal Commercial Public 0 Experiential I Word of Mouth 0 Evaluation of Alternatives I Evaluation procedure depends on the consumer and the buying situation I Most buyers evaluate multiple attributes each of which is weighted differently I At the end of the evaluation stage purchase intentions are formed 0 Purchase decisions I Two factors interceded between purchase intentions and the actual decision 0 Attitudes of others 0 Unexpected situational factors 0 Post Purchase Behavior I Satisfaction is important 0 Delighted customers engage in positive wordofmouth Unhappy customers tell on the average 11 other people It costs more to attract a new customer that it does to retain an existing customer 0 In uences 0 Economic I Economy of purchase or use I Convenience I Efficiency in operation or use I Dependability in use I Improvement in earnings 0 Psychological I Motivation I Perception I Learning I Attitudes and Beliefs I Personality I Lifestyle 0 Social I Family Reference Groups Social Class Culture and Subculture Multiple buying in uences 0 Several People play a part in making a purchase decision VVVV Users 7 Production line workers or their supervisors In uencers 7 Engineering or RampD people who help write speci cations or supply information for evaluating alternatives Buyers 7 Purchasing managers who have the responsibility for working with suppliers and arranging the terms of the sale Deciders 7 People in the organization who have the power to select or approve the supplier 7 often a purchasing manager but perhaps top management for larger purchases Gatekeepers 7 People who control the ow of information within the organization 7 perhaps a purchasing manager who shields users or other deciders Gatekeepers can also include receptionists secretaries research assistants and others who in uence the ow of information about potential purchases 0 All part of the buying center VVVVV All people who participate in or in uence a purchase Business purchases often involve multiple in uences Varies from purchase to purchase Doesn t appear on the organizational chart May either be formal or informal structure Consumer and Organizational Behavior buying process Organizational Recognize a Assign Responsibility for Search for Problem making a purchase decision Alternatives Evaluate performance 4 Make a 4 EValuate and of product and supplier Purchase 5616 afld a1ternat1ve Consumer See CONSUMER BUYING BEHAVIOR INFLUENCES Unique characteristics of services Intangibility o It is difficult for customers to evaluate quality especially before purchase and consumption 0 It is difficult to convey service characteristics and benefits in promotion as a result the firm is forced to sell a promise 0 Services have no standardized unit of measurement Therefore service prices are difficult to set and justify 0 Customers cannot take possession of a service Simultaneous Production and Consumption 0 Customers or their possessions must be present during service delivery 0 Other customers can affect service outcomes including service quality and customer satisfaction 0 Service employees are critical to service delivery 0 Services are difficult to distribute Perishability 0 Services cannot be inventoried for later use Therefore unused service capacity is lost forever 0 Service demand is very time and place sensitive As a result it is difficult to balance supply and demand especially during periods of peak demand 0 Service equipment and facilities sit idle during periods of offpeak demand Heterogeneity 0 Service quality varies across people time and place making it very difficult to deliver good service consistently 0 There are limited opportunities to standardize service delivery Clientbased Relationships 0 Most services live or die by maintaining a satisfied clientele over the long term 0 Generating repeat business is crucial for the firm s success Brand equity Refers to the value of company and brand names A brand name that has high awareness perceived quality brand loyalty and brand association among customers has brand equity Starbucks Volvo and Dell are companies with high brand equity Perceived Quality Name Awareness Brand Loyalty Brand Equity Name Symbol Other Proprietary Brand Assets Brand Associations Provides value to customers by enhancing customer s o 0 Interpretation 0 Con dence in purchase 0 Use satisfaction Provides Value to Film s by enhancing Efficiency and Effectiveness of marketing Programs Brand Loyalty PricesMargins Brand Extensions Trade Leverage Competitive Advantage 0 Superior value through I Lower prices than competition for equivalent bene ts Unique bene ts that more than offsets a higher price Brand decisions Individual Brand Names This policy is followed by Proctor and Gamble Tide Bold Dash Cheer Gain A blanket family brand name for all products This policy is followed by Heinz and GE Separate family names for all products This policy is followed by Sears Knmore for appliances Kerrybrook for women s clothing and Homart for major home installations appliances Company Trade Name combined with individual product names This policy is followed by Kellogg s Kellogg s Rice Crispies and Kellogg s Raisin Brans Generic brands 7 Products that have no brands at all other than the identi cation of their contents and the manufacturer or middleman Manufacturer s brands 7 Sometimes called national brands Eg Ford Nabisco Dealer brandprivate brands 7 eg Walmart Kroger brands Licensed brands 7 Wellknown brands that sellers pay a fee to use E g The Sunkist brand name has been licensed to many companies to use on more than 400 products in 30 countries Conditions favorable to Branding 0 Product easy to identify by brand Consistent quality can be maintained Widespread availability is possible Strong demand enables price to the high enough to support branding Economics of scale are possible 0 Favorable shelf locations can be obtained Levels of Brand Familiarity 0 Brand Rejection I Potential customers won t buy a brand unless its image is changed May suggest a change in the product or perhaps only a shift to target customers who have a better image of the brand Overcoming a negative image is difficult and can be expensive 0 Stay in a dirty Hilton hotel in one country may make a tourist not return 0 Brand NonRecognition I Final consumers don t recognize a brand at all 7 even though intermediaries may use the brand name for identi cation and inventory control 0 School supplies inexpensive dinnerware hardware store items dotcoms on the Internet 0 Brand Recognition I Customers remember the brand May recall it when they see it on the shelf with other less familiar brands 0 Brand Preference I Target customers usually choose the brand over other brands because of habit or favorable past experiences 0 Brand Insistence O O O O I Customers insist on a rm s branded product and are willing to search for it Characteristics of a Good Brand Name 0 00000000000 Short and Simple Easy to spell and read Easy to recognize and remember Easy to pronounce Can be pronounced in only one way Can be pronounced in all languages Suggestive of product bene ts Adaptable to packaging labeling needs No undesirable imagery Always timely doesn t get out of date Adaptable to many advertising medium Legally available for use not in use by another rm Packaging Opportunity to promote the product 0 0 At point of purchase or consumption Coke s logo when fridge is opened and at restaurants Links product to earlier promotion Energizer bunny keeps going and going Product Information Nabisco s nutrition label helps consumers know which cookie to buy Opportunity to protect the product 0 O Reduces cost of shipping and storing Sony s MP3 player is safe with Styrofoam Reduces risk of I Theft Cardboard hangtag on Gillette razors are too big to hide in hand Spoiling Kraft s shredded cheese has a resalable zipper to keep cheese fresh I Tampering Tylenol s safety seal prevents tampering Opportunity to enhance the product 0 O 0 Environment Tide detergent bottle can be recycled Convenience in use Squeezable tube of Yoplait GoGut is easy to eat on the go Added Product Functions Plastic tub is useful for refrigerator leftovers after Cool Whip is gone Improve the basic product 0 O Easier to use more convenient Appeals to new target markets Benefits of Good Packaging 0 O O Lighter packaging may save transportation costs Careful planning of packaging size cube may allow better space utilization More protective packaging may reduce damage and requirements for special handling Environmentally conscious packaging may save disposal costs and improve company s image Retumable containers provide cost savings and environmental benefits Product Line 1 1a 1b 1 0 1d Product Line 2 23 2b Product Line 3 Product line decisions Product Line 7 consists of an assortment of different products tailored to different consumer needs gt Depth Width Product Assortment Decisions 0 Add a new product to a line it is a brand extension I New and better quality brand leveraging or trading up I New and lower quality trading down 0 Reduce brand equity by trading down Product Line Strategies 0 A rms total product offering designed to satisfy a single need for target customers I PampG s line of dish detergent Dawn and Joy Strategies I Full line vs Limited Line I Line stretch Upward downward or twoway I Filling out or contracting 0 Product Line Same customer groups same types of marketing outlets fall within a given price ranges 0 Product Line Strategy Lengthening current product line beyond its current range 0 Each addition should be at least a little different to avoid cannibalization I Refers to a reduction in sales volume sales revenue or market share of one product as a result of the introduction of a new product by the same producer 0 Product Life Cycle 0 Marketing Through the Product Life Cycle 0 Explains how features change over the life of a product 0 Marketing strategies must change and evolve as a product moves through the PLC 0 PLC relates to a product category 0 Product Introduction 0 Full scale launch of new product into marketplace 0 Sales are low high failure rate 0 Little Competition 0 Frequent product modi cation 0 Limited Distribution 0 High marketing and product costs 0 Promotion focused on product awareness and to stimulate primary demand 0 Intensive personal selling to retailers and wholesalers 0 Growth 0 Sales grow at increasing rate 0 Many competitors enter market 0 Large companies may acquire small pioneering firms 0 Profits are healthy 0 Promotion emphasizes brand advertising and comparative ads 0 Wider distribution 0 Toward end of growth stage prices fall 0 Sales volume creates economies of scale 0 Maturity 0 Sales continue to increase but at a decreasing rate 0 Market place is approaching saturation o Typified by annual models of products with an emphasis on style rather than function 0 Product lines are widened extended 0 Marginal Competitors drop out 0 Heavy promotions sales promotions 0 Prices and profits fall 0 Decline o Signaled by a longrun drop in sales 0 Rate of decline is governed by how rapidly consumers tastes change or how rapidly substitute products are adopted 0 Falling demand forces many out of market 0 Few specialty firms left New Product Development Process 1 Idea Generation a Ideas from Customers and Users ii Market Research iii Competitors iv Other Markets V Company people Intermediaries etc S 2 Screening a Strengths and Weaknesses b Fit with Objectives c Market Trends d Rough ROI estimate 3 Idea Evaluation a Concept testing b Reactions from Customers c Rough estimates of costs sales and pro ts 4 Development a D b Develop model or service prototype c Test Marketing MiX d Revise plans as needed e ROI estimate 5 Commercialization Finalize product and marketing plan Start production and marketing Roll out in select markets Final ROI estimates 9 0quotm Characteristics of Business to Business Market Derived Demand Greater total sales volume Smaller number of buyers Greater variability in purchase volume Greater geographical concentration of customers Greater primary demand inelasticity More professional buying More direct buying More speci cation buying More complex negotiation Less frequent negotiation More reciprocal buying Demand for Business Products Derived Demand Because business customers especially producers buy products for direct or indirect use in the production of goods and services to satisfy consumers needs the demand for business products derives from the demand for consumer products Inelastic Demand Inelastic demand means that a price increase or decrease Will not signi cantly alter demand for business products Joint Demand Demand for certain business products especially raw materials and components are subject to joint demand Joint Demand occurs when two or more items are used in combination to produce a product Chapterl 0 Free Market SystemOur Economic Market 0 Freedom of Production I Produce what we wand allows creativity 0 Freedom of Consumption I Buy what we want allows produce only what we want 0 2 Types of Economic Systemhow decisions made 0 Command I th decides I Works well if simple economy little variety and adverse conditions 0 MktDirected I Adjusts itself gvt role is limited I Price value measure I Freedom of choice 0 De ne Marketing 0 An organizational function and set of processes for creating communicating and delivering value to customers and for managing customer relationships in ways that bene t the organization and its stakeholders 0 Main goal satisfy customer s needsamp wants 0 Supply Chain Supplier W Orgpurch mat produce FG Customer gt End Result is Cust Sat Can Be Direct WR R orB WR 0 Production is making goods and performing services mktgis making sure right goods and services are produced together they create customer satisfaction 0 Marketing is a set of activities including o A philosophy P products 0 An Attitude L pricing 0 A perspective U promotion distribution 0 A management Orientation S placedistribution o Orientation 7 Production vs Marketing 0 Production making whatever products are easy to produce and then trying to sell them I Little interest in customers needs I Think customers exist to buy firms products 0 Mktg trying to carry out mktg concept I Offering what customers need o How to achieve Mkt Orientation 0 Obtain info about customer 0 Examine info from total bus perspective 0 Determine how to deliver superior customer value 0 Implement actions 0 Establish and maintain mutually rewarding relationships 0 Macro vs Micro 0 Macro social process ow from producers to consumers matches supply with demand 0 Micro set of activities performed by an org processes that make macro happen 0 Functions of Marketing 0 Transactional BuyingSelling o Logistical I Transportation mvmt of goods from one place to another I Warehousing holding goods I Inv Control having right inventory right quantity and on hand I Mat Handling how you move good throughout warehouse I Customer Service how timely inv is o Facilitating I Financing provides necessary cash amp credit to produce transport store promote sell and buy products I Mkt Research know target market how to reach amp satisfy customer needs I Forecasting predicting future to help co adapt 0 Who performs Mktg Functions Eve one 0 Exchange the idea that people give up something to receive something they would rather have heart of marketing 0 Must have I At least 2 parties I Something of value I Communication and delivery I Freedom to accept or reject I Desire to deal with other party 0 Mktg Mgt PhilosophiesConcepts 0 Production Concept I Focus on producing few specific products I Mass marketing I Profited through sales volume 0 Sales Concept selling products people don t want I What product and who will be the salesman I Mass marketing and promotion I Pro t through sales volume 0 Market Concept I Focus on wants and needs of the customer start with customer needs and wants how do satisfy them meet them I Target marketing and marketing mix I Pro t through customer satisfaction 0 Societal Marketing I Focus on satisfying customers needs and wants while enhancing indv and societal wellbeing less toxic more durable reusable products I Target marketing mktg mix and society as whole I Pro t through customer satisfaction have moral and ethics involves up pos effects on society lower neg effects Customer Satisfaction feeling that the product has met or exceeded the cust expectations 0 Maintaining I Provide solutions to customer problems I Cultivate relationships NOT one timetransactions I Meetexceed customers expectations I Be reliable Customer value Requirements 0 Offer products that perform 0 Give customers more than they expect 0 Avoid unrealistic pricing 0 Give buyer facts 0 Offer orgwide commitment in service and after sales reports Relationship Marketing strategy that entails longterm partnerships with customers both indv and rms must have for mktg orientation to work 0 Requirements to build I Who are customers I What do they value I What do they want to buy I How do they prefer to interact o Longterm I Customer oriented personnel I Effective training programs I Empowered employees I Teamwork Why study Marketing 0 12 every dollar spent on mktg 0 better informed consumers 0 play important roles in society 0 vital to business survival 0 affects everyday life 0 offers career opportunities 0 Criticism of Mktg 0 Too many ads are annoying Too many unnecessary items Middleman raises prices but don t add value Makes ppl materialistic Criticisms result from misunderstanding Chapter 2 o What is Strate Planning aka mkt strategy 0 Strategic Marketing Plan planning strategies to guide the whole company 0 What is org main activity 0 How will we reach its goals 0 Strategic Planning managerial process of creating and maintaining a fit btwn org s objectives and resources and evolving mkt opportunities 0 Mkt Strategy activities of selling and describing one or more tgt markets and developing amp maintaining a mkt mix that will produce mutually satisfying exchange wtgt mkts 0 Customers ARE different mkt orientation sameproduction ID S TARGET MKT 0 Target market Homogeneous group of cust org wants to appeal too cust is tgt mkt 0 Marketing Mix 0 Product concerned with developing the right product for tgt mkt I Physical good service features benefits quality level accessories installation instructions warranty product lines packaging branding I Decisions 0 What new products should we introduce o Whatare our objectives w each product 0 Which products should we phase out o What type of service do our cust expect o m concerned with all the decisions involved in getting the right product to the tgt mkts place channel of distribution can be short or long I Objectives channel types market exposure kinds of intermediaries locations of stores how to handle transporting and storing service levels recruiting intermediaries I Decisions 0 Where do our cust shop 0 Should we sell directly to customers 0 How do we ship products 0 Promotion concerned with telling the target market or others in channel of distribution about the righ product personal selling mass selling and sales promotion I Objectives promotion blend salespeoplekind number selection training motivation Advertisingtargets ad type media type publicity I Decisions 0 What are our promotion objectives 0 What medium should we use 0 m concerned with determining right price must consider competition tgt mkt cost of mkt mix Try to estimate cust reaction to possible prices I Objective exibility level over product cycle geographic terms discounts allowances I Decisions 0 What message does our price send 0 Is price consistent with value 0 Should we change our price 0 How will price affect demand 0 Marketing plan guides implementation and control 0 Implementation putting mktg plan into action 0 Break through opportunities opp that help innovators develop hardtocopy mktg strategies that will be very pro table for a long time 0 Competitive advantages rm has a mktg mix better than a competitors mix 0 SWOT Analysis identi es and lists the rms strengths weaknesses opportunities and threats 0 Strategic AltemativesGrowth Strategies opportunities available 0 Mkt Penetration increase mkt share among existing customers Mkt Development Attract new customers to existing products Product Development Create new products for present markets OOO Diversi cation Introduce new products into new mkts I Vert integration I Diverse into related concentric I Diverse into unrelated conglomeration 0 Strategic Plan 0 Situation Analysis 0 Growth strategy 0 Objectives 0 Segmentation 0 Strategy Execution 0 Implementation Chapter 3 0 Objectives set a rms course 0 Performance dimensions fum bus unit should focus on o Tgt level of performance to be achieved 0 Time in which each target should be obtained 0 Market Environment sum of all factors that affect an environment 0 Environmental Scanning collecting and analyzing info about the market environment 0 5 Types of Environments uncontrollable Factors 0 Competitive the numbers and types of competitors the mktg manager must face and how they may behave what type of completive situation am in and then who are my competitors I Four Types 0 Monopoly 7 one seller 0 Monopolistic Competition 7 lots of sellers differentiated products most common 0 Oligopoly 7 few sellers undifferentiated product 0 Pure Competition 7 lots of sellers undifferentiated product I Analyzing Competition 0 Competitor analysis SWOT 0 Competitive Rivals closest competitors 0 Competitive Barriers conditions that make it diff compete in mkt O O O O 0 Competitive Advantage cut costs differentiate product Economic the macroeconomic factors including national income econ growth recession and in ation that affects patterns of consumer business spending I Key Forces 0 Rapid Change downturn spend less 0 Interest Rates and In ationir increase w in ation up ir down in borrowing Std of living down 0 Global Economytoday economy s connected change in one affects other cuz international trade is increasing Technological How we advance the nature of our products I How we not only advance our product but use other advances to be more efficient I Examples 0 Rapid changes in the Internet and Worldwide web 0 Roboticsbetter quality control lower production costs 0 Computer scannersamp retail checkout counters 0 Worldwide satellites for data communication 0 Automated inv Control 0 Cellphones comm machines PoliticalLegal I L How law pertaining to our industry and business affect how we run results from political environment 0 FTC FDA FCC EPA I P How your company aligns with the country s political system cant contradict democratic system Freedom is Primary Characteristics 0 Nationalism 0 Your allegiance in country 0 Consumerism 0 Movement that forces businesses to do what is beneficial to people 0 Regional economic groupings o NAFTA EU Sociocultural How values and beliefs shape your customers perceptions wants and needs I Examples increase in self trends 0 Women in the workforce o More singleperson households 0 Mare health conscious o More concern about environment Environmental Analysis 0 Technology I To what extent are existing technologies maturing I What tech developments trends are affecting or could affect industry 0 Gov I What changes in regulation are possible Impact I What tax or other incentives are being developed that may affect strategy Political risks of op in gov jurisdiction 0 Economics I What are economic prospects of in ation how will affect strategy 0 Culture I What are current trends Why Implications 0 Demographics I What dem trends Will affect mkt size of the industry or its submarkets What dem trends represents opp or threats 0 General External Analysis I Sig trends amp future events I What threats and opportunities do you see I What are key strategy questions Strategy process by which an organization envisions its future and develops necessary plans to achieve that future match btwn orgs resources skills env opportunities threats risks and purposes it wishes to accomplish Demographicsstatistical data about a population 0 Age gender occupation education marital status expenditures income mobility housing location 0 American Consumer amp rising trends on NOTES 3 Questions for ConsumerTarget Market 0 What are its relative segmenting decisions 0 How big is it 0 Where Is it No Money No Market 0 What do 3rd world countries really need 0 Much segmenting may be needed literacy and Marketing problems Types of Income 0 Disposable Income Income 7 Taxes 0 Discretionary Income Disposable Income iNecessities Different Ethnic of the US Mkt has high growth rate 0 They buy differently 0 Have different Income 0 Avoid Stereotypes o How do you determine the target market 0 Segmentation o Segmentation A twostep process 1 naming a broad product market 2 segmenting markets to select target market 0 Importance imore precise def of customer needswants more accurate mktg objectives improved resource allocation better mktg results 0 All Customer Needs Some Generlc Market One Broad Product Market Homogeneous Product Market Single Tgt Mkt Multiple Tgt Mkt Combined Tgt Mkt 0 Target Market a group of people or org for whichan organization designs implements and maintains a mktg mix intended to meet the needs of that group resulting in mutually satis ed exchanges 0 Single picking on of the homogeneous groups in rms tgt mkt 0 Multiple choosing 2 or more groups and mktg separately to each group 0 Combined combining 2 or more groups and mktg same to both group 0 Criteria for Segmentation 0 Sustainability must be large enough mkt o Identi abilityMeasurability S gmnts must be identi able and size measurable 0 Accessibility Members of tgt d segments must be reachable o Responsiveness unless sgmt responds to mktg mix differently no separate treatment needed 0 Segmentation Bases 0 Geographic mkts by region of the countryworld mkt size mkt density or mkt climate 0 Demographics sgmtg by age gender income ethnic background amp family life cycle 0 Psychographics mkt segmentation on the basis of personality motives lifestylehow is time spent beliefs socioeconomic characteristics and geodemographics 0 Bene ts Sought grouping cust into mkt sgmts according to the bene ts they seek from the product 0 Usage Rate 0 Product Differentiation distinguishing product from others features price physical services Positioning how you provide your product or service brand identi cation as you go to market Perceptual Mapping means of displaying graphing in 2 or more dimensions the location of product brands or groups of products in customers mind Generic Mkt Product Type Variants Brands Segment Mkt Choose Targeting Options Single mult combined Segmentin Dimensions Age psych bene t o How should we fully define Marketing Marketing is the process of planning and executing conception pricing promotion and distribution of ideas goods and services to create exchanges that satisfy organization and individual objectives 4P s of the marketing mix price product promotion place Micromicro marketing MICRO the performance of activated that seek to accomplish an organization s objectives by anticipating customer or client needs and directing a flow of need satisfying goods and services from producers to customers or clients MACRO a social process that directs an economies flow of goods and services from producers to customers to a way that effectively matches supply and demand and accomplishes the objectives of society What is good for some producers and consumers may not be good for society as a whole ProductionSales MarketingSocietal orientation See handouts of marketing eras Production 19001945 How do we make the product how can we best distribute the product how do we sell the product Achieved through manufacturing efficiency through ef cient distribution channels through sales volume Marketing l945present How can we best satisfy customer s needs how can we best satisfy everyone affected by our organization Achieved through satisfaction of customers through longterm satisfaction of consumers and society Adoption of the marketing concept The marketing concept a customer needs and wants orientation backed by integrated marketing effort aimed at generating customer satisfaction as the key to satisfying organizational goals Start with customer needs and wants Decide how to satisfy these needs and wants meet organizational goals by delivering customer satisfaction Marketing strategy planning Marketing plan a written statement ofa marketing strategy and the time related details for carrying out the strategy Spells out marketing mix target market how long resources needed resuts expected Strategy a pattern of major objectives purposes or goals and essential policies and plans for achieving those goals stated in such a way as to define what business the company is in or it to be in and the kind of company it is or is to be Marketing mix Four Elements ofthe Marketing Mix Product Mix quality features style options brand name packaging warranties Place Mix number ofmiddlemen locations inventory levels transportation Price Mix list price discounts allowances credit terms payment period rental Promotion Mix advertising personal selling sales promotion point of purchase Growth strategy Market Penetration Current Markets Current Products Increase profit share increase product uses Product Development Current Market New Products Product Improvements productline extensions new products for same market Market Development Current Products New Markets expand markets for existing products Diversi cation New Market New Products vertical integration diversi cation into related business diversification into unrelated business Market segmentationTargetingProduct differentiationP0sitioning Market Segments Targetingthe process of evaluating segments and focusing marketing efforts on a country region or group of people that has signi cant potential to respond Bases for segmentation A Consumer B Industrial Differentiation a strategy that some firms use to distinguish their products from those of competitors brand name color smell Positioning a process that in uences potential customers overall perception of a brand product line or organization in general Position the place a product of brand or group of products occupies in consumers minds relative to competing offers Product Market For every product there is a speci c market Homogenous Demand all consumers have same preferences Clustered Demand consumer exhibit a small number of preferences Diffused Demand each consumer had unique preference individual marketing Mass Marketing single marketing mix for all consumers Multi segmented strategy different marketing mixes for each segment Market Concentration focusing on one specific segment Niche strategy focusing on one speci c part of a segment niche market 0 Marketing Internal Environment Internal environment availability of resources organizational culture and structure review of current objectives strategy and performance mission statements and objectives Marketing External Environment economic growth and stability political trends legal and regulatory issues technological advancements sociocultural trends demographics lifestyle cultural value trends Demographic dimensions
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